To insulate those sellers against Bitcoin fluctuations, the eBay-like drug site also offers a hedging service. Sales are held in escrow until buyers receive their orders via mail, and vendors are given the choice to turn on a setting that pegs the escrow’s value to the dollar, with Silk Road itself covering any losses or taking any gains from Bitcoin’s swings in value that occur while the drugs are in transit.
I was wondering exactly how vendors could have withstood a > 50% loss of value while their Bitcoins were in escrow. Silk Road is a remarkable service and provides an experience that will keep the value of Bitcoin alive at some level for a long time.
So while Bitcoin’s crash last week from $237 to less than $100 means that the Dread Pirate Roberts was likely forced to pay out much of the extra gains Silk Road made from Bitcoin’s rise, most of his sellers were protected from those price changes and continued to trade their drugs for Bitcoins despite the currency’s plummeting value.
Is that a good assumption that most sellers would have taken this protection? Given how Bitcoin was rising I would have thought at least some would have taken the gamble (and lost), but no idea how many.
I think many were taking the gamble. What ended up happening is that a bunch of vendors who did not take the hedging canceled the orders. Since hedging doesn't protect buyers, the buyers just get their original btc back; this made a lot of people upset and their are multiple threads on reddit and the silk road forums calling out these vendors who essentially cheated the escrow/hedging system.
I wonder if it will have an effect with buyers demanding hedging as well.
> As a result, only about 1,000 sales listings out of more than 11,000 were taken off the site during the crash, according to DPR. “Those were from vendors who didn’t protect themselves,” he (or she) says. “The volatility only hurts vendors who don’t hedge their escrow balance.”
Did the 10,000 take the protection, or did some of them gamble, but chose to honour they sales (and/or had already shipped product with funds still in escrow before the price dropped)?
I think the seller using hedging does insulate buyers from changes in the Bitcoin price if they get refunded. If Silk Road didn't do things that way, it'd be possible for a malicious colluding buyer and seller to profit from Bitcoin's instability at the expense of the Silk Road's operator.
There were a lot of complaints on the Silk Road forums about cancelled orders though, and sellers saying they took a loss in order not to cancel.
Depends, I doubt enough of the information about what is going to be hedged is public, and I'd imagine he takes a view on BTC to help stay anonymous too. (Ie delays certain operations)
It would also be trivial to have choice of exchanges and settlement currencies.
I don't know enough about silk road, having only read about it never played with it, but I'm guessing you can't see the time a merchant has placed an offer to the time they chose the hedging.
Combined with the low overall spend, and ever increasing liquidity of BTC, I would have thought that would be quite a challenge.
It is funny with BTC, I was playing with some exchanges the other day and there did appear to be free money to be had as not only some Bid Offer spreads were above or below other exchanges, there was some free cash to be had fixing the FX market, say selling in USD to buy in EUR with a hedge on a regular forex site. I figure its still pennies in front of bulldozers time mind, but the thing is its not a perfect market. As such hiding in it whilst making reasonable profits should be easy if you charge enough premium for the option.
“If I spend $100 on drugs now and the price of [Bitcoin] doubles in a week, then I’ve effectively spent $200 on those drugs by next week.”
Even if you're buying drugs with hard cash on a street corner, the fact remains that you would probably be financially better off by investing that money rather than trading it for drugs - hell, you could buy some Bitcoins with it as your (somewhat risky) investment if you so wish!
From the same person: "Addicts. People who need their drugs and will pay for them, despite knowing that they could buy twice as much for the same money in a week."
I don't get why he is ignoring the fact that Bitcoin could also halve in value in a week's time (errr, like it just has!), or why Forbes are quoting someone who seems to think that investing in Bitcoin is guaranteed to make you money. Or why that person is a user on Silk Road if he thinks that every week he doesn't spend on there he can double his money.
The fact that it is obvious was exactly my point and the reason I was dismissive of that part of the article, so not only have you missed what I was commenting about, you've also acted like a bit of a dick in doing so. Not really necessary.
No, but he (in the article) was trying to make the argument that it is better financially to not by drugs because of Bitcoin rising in value, my point was that this is generally true regardless of whether Bitcoin is involved.
> the fact remains that you would probably be financially better off by investing that money rather than trading it for drugs
False. Investment is risky, the higher the return the riskier. Dealing drugs has potentially a lower rate of return but also a lower financial risk, typically.
It is ridiculous to talk about the Bitcoin "bust" when it is still trading at $60-70 which was the all-time high as of March 20, a mere 4 weeks ago ?!
"Bust" means "a complete failure". Bitcoin, so far, is an incredible success. Let's not let the temporary bubble of the past week blind us from the big picture.
Edit: the only failure are the buyers who lost money because they failed to realize it was stupidly dangerous to buy during a price bubble.
I bought a few Bitcoins a while back when they were something like $5-$10 and thought I was an idiot for buying during a bubble then (but only bought a few to play with, not as a way of making money - the fact that I forgot about them until a few days ago was just a happy coincidence).
Sure right now it looks like you were stupid if you bought them a week ago, but if you bought them when they were at $150 and sold at $250 then who's the idiot?
There's a difference between blind luck and speculation. Of course your point is still debatable, but between the guy who looked at that $150 and said "no way it's about to burst" and the guy who said "this is going to keep going up" (for the record that wasn't/isn't me), how do you settle who's the idiot and who's the genius?
Good answer. But still overlooks the fact that if you buy in before the bubble peaks and sell before it bursts, you can do well. I've no idea if that means that at $150 it was a reasonable gamble to take that it would go up before it comes down, or if it was a reasonable gamble at $40, or never, or... Like I said, I felt it was an unreasonable gamble when I bought at $5-$10 a while ago, and so didn't buy more than a handful.
Come on, people have been doing this stuff for centuries. It doesn't make you a genius, it makes you the lesser fool. Buying something that has little value, because you believe you can find a greater fool to dupe later is both risky and unethical.
If you had said you bought BTC at $88 and sold at $260, I would have thought cool, good job. But you didn't stop there. You said it wasn't hard, you just used common sense. That's when my alarm bells went off and my brain started printing you a "Congratulations, you have been fooled by randomness" certificate to put on your wall.
I'm not saying you are not really smart. I'm not saying your reasoning was wrong. Maybe you did get it totally right, and for the right reasons. But in another dimension, you bought at $88 and it went down to $20. Or you sold at $260 right before it went to $1000.
You placed a bet and this time you won, and I'm glad. But you seem to think you won because you fully understood. That's almost certainly wrong. That's why the guy wrote the book. That's pretty much all his book says.
"Yep, yep, I just thought it through and used my brain and kept my eyes open and placed my trade and made a big profit, not too hard really" -> fooled by randomness.
Obviously it involves some luck and you can't know everything - but you can make a guess based on what you see happening that the price will go up for a little bit before going down and that guess isn't made in a vacuum.
In this case there was an enormous amount of hype and articles had just started pouring out about it with the price jumping from $47 up to $88 very quickly. It seemed likely it would increase for some time before the drop.
I'm not saying I just used 'common sense' (which is a bullshit term), but that you can make a guess about what will happen and then just cash out immediately when things start to turn south. It has nothing to do with being smart - just paying attention, making a guess based on what's going on and getting a little lucky.
Yep big vendors such as OKCupid (today) announced they were accepting bitcoins [1]. A ton of hype was created thanks to the "boom" and people started paying attention.
The only losers were the speculators who hoarded BTC at higher prices and didn't cash out.
The average consumer used it as a decentralized [2] transactional tool and not a rational capital investment.
There is still, very much so, legitmate value in bitcoins. Assuming legitimate value exists, stability always comes after bubbles.
The 'average consumer' has almost no way of obtaining bitcoins, AFAICT, without going through long validation processes at an exchange or paying significantly (50%) more to some other service.
In Canada you signup at https://www.cavirtex.com/ then go to any of the big banks and deposit cash into an account with an account number. No validation required, takes 2-4 hours to complete.
In the USA with http://bitinstant.com/ you go to CVS/Walmart or other vendors and use MoneyGram to deposit cash. No validation required, takes 30-60 minutes to complete.
If you consider a serial bubble generating speculative asset a success, sure. It's not a success as a currency or a payment system though (and this is a good thing, it's really badly suited for those roles).
Ah, I see. I agree with the deflation part, but the chargeback part is just one downside. There are also many upsides, it's exactly like cash. There's nothing preventing escrow services from popping up, like credit card companies do now for cash.
Sure, sure, it is like cash, which is why I don't think it's a great online payment system.
By the time you add in escrow services (which you have to trust and will likely want fees) and other layers... well we already have credit cards and I like the legal and conventional consumer protections provided by them.
I can see the use-case for stuff like wire-transfers, though TBH there are already good, low-fee services for that too.
--EDIT-- obviously there is a silk-road use case too! Though I still think there must be a better scheme waiting in the wings or even just lurking in someone's brain, that expresses crypto-currency differently and manages to balance scarcity without deflation, or even just weights the allocation curve such that early adopters don't stand to become a new aristocracy if it takes off.
It's funny, if some big player were interested in there being a pseudonymous transaction system with low fees, they could step in as a centralized exchange, putting their reputation up in place of all the issues around trust and bootstrapping and currency risk.
That is, Wally-bucks could operate on an open blockchain and still be exchangeable at your local Walmart at fixed rates.
Any facts to support these claims? As a counterargument:
Deflation can solve number of problems like eliminate the debt spiral, restrain evergrowing unproductive governments, restore the right to have savings for people and protect their future. Currently with centrally controlled inflation we are deprived of this fundamental right.
This is from the merchant perspective: because of chargebacks my customers pay about 7% more for the service. 7% is to compensate direct cost of chargebacks, I don't count my time and cost of software I had to write to reduce fraud. The most painful however is that chargebacks are horribly immoral - the extra percent we all pay for everything goes to thieves who abuse the system.
Restore the right to have savings? What are you on?
In a deflationary economy, holding cash (unproductive) enriches you off the back of the productive economy. It also values work yesterday more highly than work today, favours entrenched interests over newcomers etc etc. It's a great recipe for stagnation. Not to mention that, were it to go country-scale, the way BTC were allocated quickly at the beginning would create a new aristocracy that the rest of society (and future generations) could never aspire to joining.
And chargebacks are not immoral. They are a fundamental part of the structure of trust built around ecommerce. Without that facility I would never trust a small vendor like yourself and you would be making $0
"In a deflationary economy, holding cash (unproductive) enriches you off the back of the productive economy"
It's a common misunderstanding. People confuse money with wealth. Holding cash does not enrich anyone.
Money is useless if you can't spend it, so at some point hoarders will say: enough, it's time to use some life. At the end of the day, money is just numbers with the potential to convert it to comfortable life.
My selfish side says: I wish more hoarders who collect numbers and don't convert it, so they don't use real world resources. They leave more for me!
"values work yesterday more highly than work today"
What's wrong with that? You can also say:
values work today more highly than work tomorrow
Most genuine credit card users are not aware of chargeback possibility and they rely on vendor reputation anyway. I wish you have to handle credit card payments so you realize how big burden it is and how it cripples the whole economy.
In an economy with a deflationary currency, those holding cash get relatively richer without doing anything. So yes, it does.
Most genuine credit card users are not aware of chargeback possibility
Of course credit-card users are aware of the possibility of chargeback and contesting payments! Everyone gets screwed by dodgy online retailers sooner or later and goes through it. Where the hell do you live that consumer rights are so secret?
it cripples the whole economy.
No, it enables the whole economy, without the possibility of getting cash back from vendors, e-commerce would never have taken off. It's a guarantee to us, the consumer, that we will get what we pay for and even if you disappear off the face of the planet we won't be screwed.
Sorry you don't like it. Everyone else really does, and we have learned through the whole of history that salesmen will rip us off at any given opportunity. Consumer protections are skewed in our favour, and they should be.
> Deflation can solve number of problems like eliminate the debt spiral, restrain evergrowing unproductive governments, restore the right to have savings for people and protect their future. Currently with centrally controlled inflation we are deprived of this fundamental right.
"Right to have savings?" What a load of crap. Where in nature do you see ways to save value long-term without degradation? Many of a squirrel's acorns rot every winter. "Perfect stores of value" aren't natural, they're a wholly artificial construct with huge ramifications.
> "Perfect stores of value" aren't natural, they're a wholly artificial construct with huge ramifications.
That's not true, there are plenty of natural examples that end up being rewarded by evolution. This is not a comment about the topic under discussion, only a correction.
As one example, bears put on a lot of weight in the fall, a behavior that allows them to survive the winter. It's a perfect store of value. Studies show the hibernating bears (strictly speaking, it's not hibernation) don't waste anything -- the scheme nature has worked out is very efficient.
Certain species of cicada hibernate for between 13 and 17 years between mating rituals. Their ability to survive in dormancy for so long is remarkable but true. They do it by not wasting anything.
Examples abound. Again, this isn't a comment on the immediate topic, only the argument that it's not natural. It is natural.
Those aren't examples of perfect stores of value. It actually takes energy to merely maintain the fat used to store the energy bears use to hibernate (after all, fat left outside a living body will quickly turn rancid). It might be an efficient store of value, but that's not the same as a perfect store of value.
The overarching problem is that people see currency as something of value, as opposed to a proxy for goods and services. When you view currency for what it is--merely a proxy, the idea of currency that doesn't inflate is exposed for what it is--silly. Say I bake you a cake in return for weeding my lawn. With a non-inflationary currency, you're saying you should be able to "bank" that cake, and come back and ask for it 5, 10, 50 years into the future. With a deflationary currency, you're saying you should be able to "bank" that cake, and come ask for two cakes in 5 years or 5 in 10 years.
> Those aren't examples of perfect stores of value.
In fact, they are. They meet the evolutionary requirement that brought them into being, meaning not too much, not too little. If more resources were expended, that species would be outcompeted by another species who expended just the right amount of time and energy. That's what makes them perfect -- they're ideally suited to the environment and its requirements.
> When you view currency for what it is--merely a proxy, the idea of currency that doesn't inflate is exposed for what it is--silly.
But a noninflationary currency doesn't undermine the paper money thesis, all it does is change the rules by which one maximizes utility. A steady-state economy, one in which the value of a loaf of bread doesn't change over time, alongside a paper money system in which the value of a dollar doesn't change over time, works much like this one, but with some small differences, like the fact that one can hoard currency without seeing its value erode.
If this were not true, people wouldn't invest in gold. Think about it.
You mean to say, it protects the future of people so long as they don't have a lease or a mortgage, or debt of any sort, or long term contract obligations.
I agree with the first point, but the second is fairly redundant. Bitcoin is a value transfer system much as the banks have value transfer systems in place between accounts. Chargeback on a credit card is implemented at a higher level, based on a system of trust between the card processors and banks. There's nothing stopping you implementing an escrow service on top bitcoin or a similar irreversible cryptocurrency which is functionally identical to the current credit card system. It requires users to trust you, but then so does the current credit card system.
I'd like to speculate that the name of the founder(s) is a small hint towards them being US-Americans:
The Dread Pirate Roberts is a fictional character from The Princess Bride (book and movie), who in the novel turns out to be not one person, but a title given from one retiring pirate to the next successor because it's easier to work as a pirate when everybody is scared of you.
In this case, it's a fun way to hint that Silk Road is not operated by a single person, but by a group from what I think are US-Americans. There I merely speculate: I think the movie was a success in the US but not much in any other country. In fact, the only people who've quoted the movie to me are US-Americans.
Can people from other countries weigh in on this? Would non-Americans choose this as a pseudonym?
The Princess Bride is extremely popular among 20-40 year olds in the Anglosphere. Australia, Canada, USA, UK.
This narrows down your search for the Dread Pirate Roberts to like 150 million people. So the fact that this English speaking Silk Road founder is from the English speaking world and was probably a child or teenager in the 80s is not really narrowing it down much.
It does narrow it down, but not to any useful level. For all intents and purposes, trying to pick someone from a pool of 150 million vs 7 billion is essentially the same level of impossible.
The number of possible candidates is not the total population of the planet, but rather the number of people on the planet who have the knowledge and skills required to operate such a site.
The 2004 remake of Sid Meiers Pirates also mentioned the name "Dread Pirate Roberts", or fairly close to where the character Bart Roberts refered to himself as "The dread pirate Bart Roberts".
A fairly popular game (and highly pirated) its also possible the name was picked from it.
Nah, the prevailing wisdom among old-timers on SR is that he's from Europe. There were obvious clues early on as to what country he's from, given that DPR was once a seller on the site.
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[ 4.2 ms ] story [ 133 ms ] threadI was wondering exactly how vendors could have withstood a > 50% loss of value while their Bitcoins were in escrow. Silk Road is a remarkable service and provides an experience that will keep the value of Bitcoin alive at some level for a long time.
Is that a good assumption that most sellers would have taken this protection? Given how Bitcoin was rising I would have thought at least some would have taken the gamble (and lost), but no idea how many.
I wonder if it will have an effect with buyers demanding hedging as well.
The article says many didn't take the gamble:
> As a result, only about 1,000 sales listings out of more than 11,000 were taken off the site during the crash, according to DPR. “Those were from vendors who didn’t protect themselves,” he (or she) says. “The volatility only hurts vendors who don’t hedge their escrow balance.”
There were a lot of complaints on the Silk Road forums about cancelled orders though, and sellers saying they took a loss in order not to cancel.
Also if the market is liquid enough and he has the right kind of trades he might even be able to automatically delta hedge.
Or even more simply, he just immediately de-bitcoins it, then re-bitcoins it when releasing the funds from escrow. This is probably the most likely.
It would also be trivial to have choice of exchanges and settlement currencies.
I don't know enough about silk road, having only read about it never played with it, but I'm guessing you can't see the time a merchant has placed an offer to the time they chose the hedging.
Combined with the low overall spend, and ever increasing liquidity of BTC, I would have thought that would be quite a challenge.
It is funny with BTC, I was playing with some exchanges the other day and there did appear to be free money to be had as not only some Bid Offer spreads were above or below other exchanges, there was some free cash to be had fixing the FX market, say selling in USD to buy in EUR with a hedge on a regular forex site. I figure its still pennies in front of bulldozers time mind, but the thing is its not a perfect market. As such hiding in it whilst making reasonable profits should be easy if you charge enough premium for the option.
Even if you're buying drugs with hard cash on a street corner, the fact remains that you would probably be financially better off by investing that money rather than trading it for drugs - hell, you could buy some Bitcoins with it as your (somewhat risky) investment if you so wish!
From the same person: "Addicts. People who need their drugs and will pay for them, despite knowing that they could buy twice as much for the same money in a week."
I don't get why he is ignoring the fact that Bitcoin could also halve in value in a week's time (errr, like it just has!), or why Forbes are quoting someone who seems to think that investing in Bitcoin is guaranteed to make you money. Or why that person is a user on Silk Road if he thinks that every week he doesn't spend on there he can double his money.
No shit?
Truly you are one of the great minds of our times.
False. Investment is risky, the higher the return the riskier. Dealing drugs has potentially a lower rate of return but also a lower financial risk, typically.
"Bust" means "a complete failure". Bitcoin, so far, is an incredible success. Let's not let the temporary bubble of the past week blind us from the big picture.
Edit: the only failure are the buyers who lost money because they failed to realize it was stupidly dangerous to buy during a price bubble.
Sure right now it looks like you were stupid if you bought them a week ago, but if you bought them when they were at $150 and sold at $250 then who's the idiot?
If you buy a lottery ticket and win then who's the idiot? You.
By those who analyze historical trends and make rational future projections, such as this person (who is the latter):
https://scottlocklin.wordpress.com/2013/04/17/btc-bubbles/
The former disregards the odds of winning in a lottery or the signs that a bubble exists and could pop at any moment.
Come on, people have been doing this stuff for centuries. It doesn't make you a genius, it makes you the lesser fool. Buying something that has little value, because you believe you can find a greater fool to dupe later is both risky and unethical.
It's not entirely random, just good timing and keeping an eye on things.
If you had said you bought BTC at $88 and sold at $260, I would have thought cool, good job. But you didn't stop there. You said it wasn't hard, you just used common sense. That's when my alarm bells went off and my brain started printing you a "Congratulations, you have been fooled by randomness" certificate to put on your wall.
I'm not saying you are not really smart. I'm not saying your reasoning was wrong. Maybe you did get it totally right, and for the right reasons. But in another dimension, you bought at $88 and it went down to $20. Or you sold at $260 right before it went to $1000.
You placed a bet and this time you won, and I'm glad. But you seem to think you won because you fully understood. That's almost certainly wrong. That's why the guy wrote the book. That's pretty much all his book says.
"Yep, yep, I just thought it through and used my brain and kept my eyes open and placed my trade and made a big profit, not too hard really" -> fooled by randomness.
In this case there was an enormous amount of hype and articles had just started pouring out about it with the price jumping from $47 up to $88 very quickly. It seemed likely it would increase for some time before the drop.
I'm not saying I just used 'common sense' (which is a bullshit term), but that you can make a guess about what will happen and then just cash out immediately when things start to turn south. It has nothing to do with being smart - just paying attention, making a guess based on what's going on and getting a little lucky.
The only losers were the speculators who hoarded BTC at higher prices and didn't cash out.
The average consumer used it as a decentralized [2] transactional tool and not a rational capital investment.
There is still, very much so, legitmate value in bitcoins. Assuming legitimate value exists, stability always comes after bubbles.
[1] http://thenextweb.com/insider/2013/04/16/okcupid-partners-wi...
[2] http://paulbohm.com/articles/bitcoins-value-is-decentralizat...
Huge barrier to entry there.
In Canada you signup at https://www.cavirtex.com/ then go to any of the big banks and deposit cash into an account with an account number. No validation required, takes 2-4 hours to complete.
In the USA with http://bitinstant.com/ you go to CVS/Walmart or other vendors and use MoneyGram to deposit cash. No validation required, takes 30-60 minutes to complete.
Or just use http://bitlocal.com/
It's as easy as paying a bill...
http://howdoyoubuybitcoins.com/
Localbitcoins relies on someone close by selling at near market rate, which seems unlikely (bitlocal.com is not a bitcoin site, btw.)
If you consider a serial bubble generating speculative asset a success, sure. It's not a success as a currency or a payment system though (and this is a good thing, it's really badly suited for those roles).
Why do you say that?
By the time you add in escrow services (which you have to trust and will likely want fees) and other layers... well we already have credit cards and I like the legal and conventional consumer protections provided by them.
I can see the use-case for stuff like wire-transfers, though TBH there are already good, low-fee services for that too.
--EDIT-- obviously there is a silk-road use case too! Though I still think there must be a better scheme waiting in the wings or even just lurking in someone's brain, that expresses crypto-currency differently and manages to balance scarcity without deflation, or even just weights the allocation curve such that early adopters don't stand to become a new aristocracy if it takes off.
That is, Wally-bucks could operate on an open blockchain and still be exchangeable at your local Walmart at fixed rates.
Deflation can solve number of problems like eliminate the debt spiral, restrain evergrowing unproductive governments, restore the right to have savings for people and protect their future. Currently with centrally controlled inflation we are deprived of this fundamental right.
This is from the merchant perspective: because of chargebacks my customers pay about 7% more for the service. 7% is to compensate direct cost of chargebacks, I don't count my time and cost of software I had to write to reduce fraud. The most painful however is that chargebacks are horribly immoral - the extra percent we all pay for everything goes to thieves who abuse the system.
And chargebacks are not immoral. They are a fundamental part of the structure of trust built around ecommerce. Without that facility I would never trust a small vendor like yourself and you would be making $0
It's a common misunderstanding. People confuse money with wealth. Holding cash does not enrich anyone. Money is useless if you can't spend it, so at some point hoarders will say: enough, it's time to use some life. At the end of the day, money is just numbers with the potential to convert it to comfortable life. My selfish side says: I wish more hoarders who collect numbers and don't convert it, so they don't use real world resources. They leave more for me!
"values work yesterday more highly than work today" What's wrong with that? You can also say: values work today more highly than work tomorrow
Most genuine credit card users are not aware of chargeback possibility and they rely on vendor reputation anyway. I wish you have to handle credit card payments so you realize how big burden it is and how it cripples the whole economy.
In an economy with a deflationary currency, those holding cash get relatively richer without doing anything. So yes, it does.
Most genuine credit card users are not aware of chargeback possibility
Of course credit-card users are aware of the possibility of chargeback and contesting payments! Everyone gets screwed by dodgy online retailers sooner or later and goes through it. Where the hell do you live that consumer rights are so secret?
it cripples the whole economy.
No, it enables the whole economy, without the possibility of getting cash back from vendors, e-commerce would never have taken off. It's a guarantee to us, the consumer, that we will get what we pay for and even if you disappear off the face of the planet we won't be screwed.
Sorry you don't like it. Everyone else really does, and we have learned through the whole of history that salesmen will rip us off at any given opportunity. Consumer protections are skewed in our favour, and they should be.
"Right to have savings?" What a load of crap. Where in nature do you see ways to save value long-term without degradation? Many of a squirrel's acorns rot every winter. "Perfect stores of value" aren't natural, they're a wholly artificial construct with huge ramifications.
That's not true, there are plenty of natural examples that end up being rewarded by evolution. This is not a comment about the topic under discussion, only a correction.
As one example, bears put on a lot of weight in the fall, a behavior that allows them to survive the winter. It's a perfect store of value. Studies show the hibernating bears (strictly speaking, it's not hibernation) don't waste anything -- the scheme nature has worked out is very efficient.
Certain species of cicada hibernate for between 13 and 17 years between mating rituals. Their ability to survive in dormancy for so long is remarkable but true. They do it by not wasting anything.
Examples abound. Again, this isn't a comment on the immediate topic, only the argument that it's not natural. It is natural.
The overarching problem is that people see currency as something of value, as opposed to a proxy for goods and services. When you view currency for what it is--merely a proxy, the idea of currency that doesn't inflate is exposed for what it is--silly. Say I bake you a cake in return for weeding my lawn. With a non-inflationary currency, you're saying you should be able to "bank" that cake, and come back and ask for it 5, 10, 50 years into the future. With a deflationary currency, you're saying you should be able to "bank" that cake, and come ask for two cakes in 5 years or 5 in 10 years.
In fact, they are. They meet the evolutionary requirement that brought them into being, meaning not too much, not too little. If more resources were expended, that species would be outcompeted by another species who expended just the right amount of time and energy. That's what makes them perfect -- they're ideally suited to the environment and its requirements.
> When you view currency for what it is--merely a proxy, the idea of currency that doesn't inflate is exposed for what it is--silly.
But a noninflationary currency doesn't undermine the paper money thesis, all it does is change the rules by which one maximizes utility. A steady-state economy, one in which the value of a loaf of bread doesn't change over time, alongside a paper money system in which the value of a dollar doesn't change over time, works much like this one, but with some small differences, like the fact that one can hoard currency without seeing its value erode.
If this were not true, people wouldn't invest in gold. Think about it.
The Dread Pirate Roberts is a fictional character from The Princess Bride (book and movie), who in the novel turns out to be not one person, but a title given from one retiring pirate to the next successor because it's easier to work as a pirate when everybody is scared of you.
In this case, it's a fun way to hint that Silk Road is not operated by a single person, but by a group from what I think are US-Americans. There I merely speculate: I think the movie was a success in the US but not much in any other country. In fact, the only people who've quoted the movie to me are US-Americans.
Can people from other countries weigh in on this? Would non-Americans choose this as a pseudonym?
This narrows down your search for the Dread Pirate Roberts to like 150 million people. So the fact that this English speaking Silk Road founder is from the English speaking world and was probably a child or teenager in the 80s is not really narrowing it down much.
A fairly popular game (and highly pirated) its also possible the name was picked from it.
There was also a book.