4 votes

What's wrong with Bitcoin?

I've been reading a lot about Bitcoin on Daily Paul, and I just cant see why the folks on DP are so interested in a bits-and-bytes currency when its so vulnerable to identical competition. Call me old fashioned, but I still prefer hard money.

http://shadesofthomaspaine.blogexec.com/index.php/entry/bitc...

Tell me what you think.



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People say that government is the threat...

I don't think so. I think the point articulated in this article is the biggest threat.

I think of the technical difficulties that bitcoin must overcome. (new shopping cart integration plugins, New affiliate program plugins, cold storage security systems, hot storage security systems) the list is significant.

Bitcoin being the rockstar that it is will overcome all of those, and the network effect will mean that its value will soar, and it will be a stand out for quite some time (In tech time that means a year or two)

But here is the problem. Once all of those hurdles are hurdled. The tech hurdles for the next crypto currency will be very small indeed. For example it might cost $3,000 for me to pay my tech team to make my shopping cart accept Bitcoin. But once that is done, it will cost me $20, to accept a thousand other crypto currencies.

Effectively, all crypto currencies inherit the network effect of Bitcoin. For example if I were to advertise my brand new wordpress widget that accepted Bitcoin donations, the next guy to come along would have to make one better and would say, "accept all crypto currencies as donations" widget.

Bitcoin will not face this hurdle for a year or maybe more but it will face it. When that happens Bitcoin is left with one advantage and one advantage only over all crypto currencies. "Prestige/market sentiment"

Is that sufficient to keep Bitcoin price at $10,000, when JohnnyComeLatelyCoin is only 5 cents? Time will tell.

I can't fully articulate why.... but I think it will. Viva la Bitcoin.

www.SuccessCouncil.com
Protect your assets and profit from the greatest wealth transfer in history.

Valid points, but do not

Valid points, but do not forget that we then have a situation of a free market of competing [digital] currencies.

Yes, the hurdle of a competitor might not be as high as it was for Bitcoin, but that does not mean that Bitcoins will become worthless overnight with all value streaming towards 'the new coin on the block'.
The latter has to build support, acceptance, trust, etc. etc.

:)

"Conclusion: We will close by quoting from Ron Paul's most recent column:

As Austrian economist Ludwig von Mises explained, sound money is an instrument that protects our civil liberties against despotic government. Our current monetary system is indeed despotic, and the surest way to correct things simply is to legalize competing currencies."

http://www.thedailybell.com/4186/Competing-Currencies-and-Ro...

You got the point even better than I did.

I think I'll use those points in my next Bitcoin article, if I may.

That was a truly gifted explanation.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

Competition is good, but...

Bitcoin is electronic...it's in "the cloud" and not a real asset. The "government" has an off switch to the internet and can separate you from your cuurency at their will. No thanks. I'd gladly trade you this ammo on Tuesday for a hamburger today!

------------------
BC
Silence isn't always golden....sometimes it's yellow.

"The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them." - Patrick Henry

Not True

You can always have a paper wallet as a backup if they ever did shut down the net. But the govt. is entrenched in the web. It would be very hard for them to do so. Recall what happened during the Arab Spring when they tried a similar stunt in Egypt.

________________________________________

Those who expect to reap the blessings of freedom, must, like men, undergo the fatigue of supporting it. ~Thomas Paine

An internet kill switch

An internet kill switch cannot destroy BC. It would be inconvenient, that's true and the exchange rate would drastically fall, but BC can still survive even if the internet fails.

Bitcoin should only be used for Investment

Lets be honest, when there is a Financial crisis Bitcoin is not going to help you buy stuff. That being said my strategy right now is to hold bitcoin until it reaches the triple digits and SELL. take the profits and turn them into Silver.

There was a Bitcoin crash in 2011 and this was when the currency was at 15-20 bucks. Now its gaining in the lower 80's so a future crash is possible.

His name is Edward Snowden

What is Capitalism?
http://youtu.be/yNF09pUPypw

good rule to consider.. if

good rule to consider.. if you have a price target in mind, its likely that many others think the same, and may act the same. my general rule is to make a sell order just under that number to ensure a sale at a price i can live with either way.

Actually

a financial crisis is EXACTLY WHY people should hold some bitcoins, because they, like gold/silver, have value outside of the fiat currency system.

I disagree

You should know that in a currency crisis only HARD Assets prevail. If you really think that during a MASSIVE civil unrest of more than 300,000,000,000 people who will steal, cheat, and kill to acquire any resources to live and feed their family then what makes you believe you will be using a computer or smartphone in the first place?

Bitcoin is a currency and only has exchange value and no use value outside of that role.

His name is Edward Snowden

What is Capitalism?
http://youtu.be/yNF09pUPypw

There are about 7 billion

There are about 7 billion people alive in the entire world, FYI.

000

too many

Competition is a good thing

I love Bitcoin and the idea behind it, but I would love to diversify into other cryptocurrencies.

The network effect.

OP,
It's called the network effect.
http://en.wikipedia.org/wiki/Network_effect

There have been several Bitcoin clones and many of them have already
come and gone.

There would have to be a competitor with some feature the market really wants to challenge Bitcoin, but even then it is possible to
update Bitcoin with the same feature as long as it has nothing to do with the money supply.

Why trust in gold or silver as money when it has potential competitors that could replace it? (i.e. Gallium, Indium, Tellurium, Mercury, Bismuth)

“I’m fully diversified. I’ve got some under the mattress, some under the floor boards, some in the backyard.”

What if Amazon did a Bitcoin upstart?

That would get my attention, and probably steal a little Bitcoin thunder.

I'd trust in gold and silver for the same reason that I'd trust iridium, platinum or even copper; their supplies are limited.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

It would get my attention too

However, it would loose a lot of the same appeal Bitcoin has because it would always be known as Amazon coin. And anyone that uses it would expect Amazon to maintain and improve it.

Who owns Bitcoin? Who maintains it? Who improves it?

There's an open invitation to anyone to become the owners of this technology. Instead of finding problems and claiming its doomed; you can instead find a problem and work to be a solution. This has already been a magnet for some really neat innovation.

Here's something I'm working on right now that would help solve the security issues many end users experience:
https://bitcointalk.org/index.php?topic=152517.0

It's pretty cool and worth a look.

“I’m fully diversified. I’ve got some under the mattress, some under the floor boards, some in the backyard.”

Amazon

did launch a virtual currency:

http://www.nbcnews.com/technology/technolog/amazon-introduce...

Amazon is centrally controlled.

They'd be a lot smarter

if they used the Bitcoin model.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

What is the market value of two party anonymous transactions?

Time will tell.

Free includes debt-free!

Nothing

Is stopping competing digital currencies and there are a bunch already. They are basically copies of bitcoin for the most part. Bitcoin has first mover advantage and is light years ahead in terms of infrastructure and acceptance.

If another currency does come along with better benefits people will switch.

Comparing it to Flooze or any other centralized currency that has been tried in the past shows a lack of understanding.

Decentralization is an

Decentralization is an advantage, I agree, over the old school things like Flooz and Beenz. But my point is that Bitcoin is just as vulnerable to competing currencies as Beenz and Flooz, whether its decentralized or not.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

That's like saying that Apple

That's like saying that Apple won't succeed, cause people can simply copy them. Being the first on the scene matters.

Many people tried copying Apple. But they didn't succeed. Why? It's because of trust. If one must invest their money in an idea, it's better to invest it in the original idea, instead of the copy. Most of the times, competitors only succeed, because they have an idea MUCH better than the current one.

In other words, a new crypto currency can only succeed if it totally blows Bitcoin away with its new advanced abilities. Being slightly better doesn't cut it. A new crypto currency that's only marginally better won't inspire people to invest in it and it won't reach critical mass.

And if a new crypto currency far superior DID come along, that would actually be a good thing. Competition is a welcome thing and can only make the world a better place. But even if this new crypto currency came along, it would take awhile to overtake Bitcoin's lead. People can easily divest themselves of Bitcoins without taking too much of a loss (assuming no bugs pop up making the market crash and the government doesn't interfere).

Apple has a real product with extremely high costs to entry

I, for one, couldn't duplicate Apple. I would need about one hundred billion dollars to even get close.

Barrier to entry on Bitcoin is a few days of programming. My point being, the supply of unbacked and free currencies is limitless.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

It would take a lot more than a few "days of programming"

And competition is a good thing.

Gold and silver is money.

Bitcoin can act as a currency.

The Red Coats are coming!

But my point is that

But my point is that brandname matters. The euro and yen are in fact similar to the dollar, yet the dollar is still the reserve currency and hasn't been replaced by other systems (yet). Those alternative currencies can be seen as copies of the dollar, but we can easily see that unlimited supply of copies does not make one the leader in the natural world.

I totally agree that brand REALLY matters.

Bitcoin is in the lead, and will probably lead for a while. Fly by night online currencies probably won't catch on, but if Amazon.com comes up with something that you can use on their site, watch out.

Dollars and Euros and Zambian Kwacha are different though, because they are backed by different forces and leadership. One decentralized online currency versus another one with identical code is what I'm talking about; Amazon bitcoins versus regular bitcoins, identical in every way except you can buy stuff on Amazon with them.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

Amazon wouldn't do a bitcoin

because by definition they couldn't control it.

But a different brand with

But a different brand with identical code (or slightly better code) won't win, that's my I'm trying to say. It must be radically superior in order to hit critical mass. That's the only way a new brand can overtake an older succesful one.

We've basically seen this within businesses as well, where one business tried copying an original idea and had far more liquidity at their disposal to support the copy than the business that came up with the original idea and yet still failed. History is rife with these examples.

Brandname is THAT significant. Even superior backing of a copy won't guarantee victory. Only a far superior idea has a slight chance of succeeding.

Toyota beat GM

without making a flying car. Bitcoin can lose.

Author of Shades of Thomas Paine, a common sense blog with a Libertarian slant.

http://shadesofthomaspaine.blogexec.com

Also author of Stick it to the Man!

http://www.amazon.com/Stick-Man-Richard-Moyer/dp/1484036417

Now you are assuming that the

Now you are assuming that the cars were identical between the two. Toyota beat GM, because they innovated more on their cars and were better suited to their prospective target consumers than GM's cars. Not to mention they had a superior efficiency scheme in producing cars that even ended up in textbooks.

And something like a car brand is a brand that exists out of multiple products.It's simply not comparable to this particular situation.