Paul Krugman - New York Times Blog December 28, 2013, 2:35 pm 369 Comments Bitcoin Is Evil It’s always important, and always hard, to distinguish positive economics — how things work — from normative economics — how things should be. Indeed, on many of the macro issues I’ve written about it has been obvious that large numbers of economists can’t bring themselves to make that distinction; they dislike activist government on political grounds, and this leads them to make really bad arguments about why fiscal stimulus can’t work and monetary stimulus will be disastrous. I don’t, by the way, think that this effect is symmetric: although people like Robert Lucas were quick to accuse people like Christy Romer of fabricating macro arguments to support a big-government agenda, this didn’t actually happen.
But I come now to talk not about macro but about money — specifically, about Bitcoin and all that.
So far almost all of the Bitcoin discussion has been positive economics — can this actually work? And I have to say that I’m still deeply unconvinced. To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value. Brad DeLong puts it clearly:
Underpinning the value of gold is that if all else fails you can use it to make pretty things. Underpinning the value of the dollar is a combination of (a) the fact that you can use them to pay your taxes to the U.S. government, and (b) that the Federal Reserve is a potential dollar sink and has promised to buy them back and extinguish them if their real value starts to sink at (much) more than 2%/year (yes, I know).
Placing a ceiling on the value of gold is mining technology, and the prospect that if its price gets out of whack for long on the upside a great deal more of it will be created. Placing a ceiling on the value of the dollar is the Federal Reserve’s role as actual dollar source, and its commitment not to allow deflation to happen.
Placing a ceiling on the value of bitcoins is computer technology and the form of the hash function… until the limit of 21 million bitcoins is reached. Placing a floor on the value of bitcoins is… what, exactly? I have had and am continuing to have a dialogue with smart technologists who are very high on BitCoin — but when I try to get them to explain to me why BitCoin is a reliable store of value, they always seem to come back with explanations about how it’s a terrific medium of exchange. Even if I buy this (which I don’t, entirely), it doesn’t solve my problem. And I haven’t been able to get my correspondents to recognize that these are different questions.
But as I said, this is a positive discussion. What about the normative economics? Well, you should read Charlie Stross:
BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions. Go read the whole thing.
Stross doesn’t like that agenda, and neither do I; but I am trying not to let that tilt my positive analysis of BitCoin one way or the other. One suspects, however, that many BitCoin enthusiasts are, in fact, enthusiastic because, as Stross says, “it pushes the same buttons as their gold fetish.”
So let’s talk both about whether BitCoin is a bubble and whether it’s a good thing — in part to make sure that we don’t confuse these questions with each other.
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
Some made a killing off bitcoins, I remember hearing about it when it first came out and had the opportunity to get in at about $1 per bit, not many expected it to be in such demand in the future I'm kicking myself now but I still don't buy into the whole stability of it.
"In the beginning of a change, the Patriot is a scarce man, brave, hated and scorned. When his cause succeeds, however, the timid join him, for then it costs nothing to be a Patriot."
Some made a killing off bitcoins, I remember hearing about it when it first came out and had the opportunity to get in at about $1 per bit, not many expected it to be in such demand in the future I'm kicking myself now but I still don't buy into the whole stability of it.
Anyone who bought into Bitcoin before November 14th has earned a minimum of 300% on their investment.
Right now a single Bitcoin is around $800.
Bitcoin has more stability than government issued money, which devalues steadily.
Anyone who bought into Bitcoin before November 14th has earned a minimum of 300% on their investment.
Right now a single Bitcoin is around $800.
Bitcoin has more stability than government issued money, which devalues steadily.
Those who bought early did amazingly well, but like our currency what is there to back it. I read 2 people hold the majority of bitcoins, if they dump what would that do? would the demand keep prices stable or would it collapse it. Digital currency might be the future, I still like physical commodities though.
"In the beginning of a change, the Patriot is a scarce man, brave, hated and scorned. When his cause succeeds, however, the timid join him, for then it costs nothing to be a Patriot."
Those who bought early did amazingly well, but like our currency what is there to back it. I read 2 people hold the majority of bitcoins, if they dump what would that do? would the demand keep prices stable or would it collapse it. Digital currency might be the future, I still like physical commodities though.
'faith'
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
Those who bought early did amazingly well, but like our currency what is there to back it. I read 2 people hold the majority of bitcoins, if they dump what would that do? would the demand keep prices stable or would it collapse it. Digital currency might be the future, I still like physical commodities though.
I use digital currency by direct deposit and electronically paying all bills.
All my electronic transactions are backed by government issued, financially unstable, currency, that could become worthless at any given moment.
I had to mail an actual paper check once in the past year.
I actually handle less than $100 a month in real cash.
Like senders said, the only thing keeping electronic wealth, dollars and bitcoins afloat is faith.
In my 'little world'.....cash is still king. Worth less or not....folks are still drooling over the green stuff!!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
The page's disappearance follows reports that the exchange based in Japan suffered a significant theft — a possible fatal blow to efforts to gain legitimacy for the virtual currency.
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
Remember posters on this board hyping BITCOIN??? (LOL! FIGURES!)
From the biggest tech fails of 2014: BITCOIN
Quoted Text
If you haven't heard of bitcoins yet, then I'll tell you this for sure: Stay away. Bitcoins are the all-new cryptocurrency that spent several years gaining momentum and made it big in 2014. Of course, its good press was short-lived and since then it's been nothing but bad news. In fact, this year, bitcoins lost 56% of their value
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. John Kenneth Galbraith
Remember posters on this board hyping BITCOIN??? (LOL! FIGURES!)
From the biggest tech fails of 2014: BITCOIN
I got on the Silkroad site before it shut down. Also another site called Atlantis. What atrip. I wish I saved some of the screen shots. I think the silkroad founder is in jail waiting trial.
You could buy just a bout anything from heroin to rocket launchers. Crazy man.
bitcoin.....a public trial...however, we all know that is where currency is going......currency will have value behind it from something else other than oil and not to mention there will be a different meaning behind it.....
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
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I'm kicking myself now but I still don't buy into the whole stability of it.
