I witnessed the events as they unfolded yesterday, I'll try to give as objective summary as possible. Here's what happened:
The bitcoin blocksize is currently limited to 1MB. Two out of five bitcoin developers who have access to repository are worried that this is not enough to compete with VISA (in the number of transactions processed per second). The dispute to increase the blocksize has been ongoing for months. The two developers suggested to use the bitcoin built-in voting process (which has been designed in it ages ago), where the voting goes as follows:
1. the software is updated in such a way that larger block sizes are not used unless 750 out of past 1000 blocks are mined by miners who in the blockheader say "yes to bigger blocksize".
2. If such blocks (which are still below 1MB, but simply have this "yes" vote) are not mined, then the status-quo remains and nothing happens.
Three other developers have blocked any commits, and dedicated themselves to maintain the even stronger status-quo, by simply disallowing such vote to proceed. The two other developers finally decided to publish a new bitcoin client, called bitcoin XT, which has only one small change that would allow such voting to proceed. The linked blogpost presents one side of this argument, honestly I couldn't find a blogpost that would present the opposing viewpoint. If someone here has a link to nice writeup done by the other side of this argument please let us know.
The bitcoin reddit got furious yesterday night (to the point of a civil war with moderators), when the top voted and most discussed thread "why is bitcoin forking?" was deleted by one of the moderators. Interesting to note, that it had 528 upvotes at the moment of deletion and currently it has 687 upvotes, and also googling for 'why is bitcoin forking' links to this deleted thread. Before it was deleted the discussion seemed reasonable, now it's just a Streisand effect about censorship and about how few influential people are trying to prevent the voting from happening.
What it means for regular bitcoin users? Here's how it goes:
1. If the voting rejects the larger blocksize then both bitcoin clients, 'bitcoin' and 'bitcoin XT' will work as normal on the same blockchain. And in fact nothing will happen, people will be able to choose which client to use and eventually the 'bitcoin XT' will lose its momentum, fade out and stop being used.
2. If the voting goes in favor of larger blocksize, then both bitcoin clients will start operating on two different blockchains. The 'bitcoin XT' blockchain will have 75% of hashing power (by the definition of how this vote is implemented), and the 'bitcoin' blockchain wil have the remaining 25% of hashing power. Shops and exchanges will run aghast in circles trying to protect from double spending by quickly upgrading their software to use the stronger 'bitcoin XT' blockchain. The weaker blockchain with only 25% hashing power will be susceptible to attacks. And whatever bitcoins you have right now will co-exist twice in each of those blockchains. You would be able to spend them in one of the blockchains and keep them for yourself in the other blockchain. People who have changed to 'bitcoin XT' client beforehand will be safe from whatever might happen with the weaker chain, since their clients work with both blockchains, until they acquire the voting 75% majority.
The voting process as it happens can be seen live on site that shows number of clients and mined blocks that opted for larger blocksize.
I know that perhaps I am not as objective as I wanted to be. I tried to present the facts only, if I failed, then blame me and correct me in the comments. Happy discussing!
(Score: 0, Offtopic) by Anonymous Coward on Sunday August 16 2015, @03:31PM
I don't get it. Are the terrorists winning or did Obama destroy America? TELL ME!!!!!!!11
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @05:11PM
Tyrannical despots are oppressing the people by silencing their voices and ensuring democracy is dead; so its a bad thing.
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @05:14PM
Obviously, Obama is destroying bitcoin because it poses a threat to National Security.
(Score: 5, Insightful) by Nollij on Sunday August 16 2015, @03:34PM
This is one of the reasons why most people will never, ever consider using BitCoin. And they are right not to - this is an absolutely absurd way for currency to be handled.
(Score: 2, Interesting) by Anonymous Coward on Sunday August 16 2015, @03:56PM
Perhaps now is the time to sell?
There are not many alternatives to the rebel that wants to fasionably be anti-social online, though. Perhaps a new anonymous currency is needed.
Considering what has happened to those in charge of the various exchanges (regardless of the ethics those people have followed), I find it unreasonable to believe that anyone would want to take credit or take charge of such an endeavor. It's almost like the 1% wanted to make sure the rest of the 99% didn't have an alternate currency to use that the 1% didn't also have de facto control over.
Some of the drama reminds me of how various individuals that show up supporting other counter-cultural causes (at least, counter 1% causes) seem to... be working an agenda to derail the progress. One need not look at too many examples -- the RSA security problems, the occupy wall street coverage, network security standards (beyond RSA, which is for-profit anyway), civil rights, etc.
An alternative currency that is more difficult to track than a credit card certainly would draw the attention of those that wish to draw attention away from it.
(Score: 2) by cosurgi on Sunday August 16 2015, @05:08PM
Some people are moving into litecoins.
#
#\ @ ? [adom.de] Colonize Mars [kozicki.pl]
#
(Score: 5, Insightful) by bradley13 on Sunday August 16 2015, @05:02PM
Why is it more absurd than what happens with the currencies we are accustomed to? At least the Bitcoin fork is up-front, and the potential problems are well-understood, as are the solution. In the most simplest case: just sit on your bitcoings until the fracas is over - they will be valid regardless of the outcome. Moreover, because the total money supply is limited, your money will retain its value (as a proportion of the total currency available).
With national fiat currencies, you have less transparency. Your government can inflate away the value right under your feet. Most Western governments are busy doing exactly this: as they push more and more money into circulation, the value of that money decreases. Those dollars (or Euros, or whatever) in your bank account are losing value every year - depending on the country you are in, probably somewhere between 5% and 10% net annually. There is essentially nothing you can do to stop this.
As an earlier poster pointed out: the biggest danger that Bitcoin faces is its own success. If it actually becomes a viable means of exchange, expect governments to step in and try to control it. They won't want the competition, because otherwise their currencies might just become worthless.
Everyone is somebody else's weirdo.
(Score: 5, Insightful) by SubiculumHammer on Sunday August 16 2015, @05:15PM
And the lack of sufficient inflation for growth or ability to set monetary policy according to economic conditions is why Bitcoin won't ever be a primary currency anywhere. Bitcoin is a rentseekers wet dream, but we will not stand for it.
(Score: 3, Interesting) by JNCF on Sunday August 16 2015, @05:53PM
the lack of sufficient inflation for growth
Bitcoin is designed to be deflationary, but other crypto currencies (like Dogecoin) are inflationary. I feel taht the inflationary/deflationary argument can be totally separated from your next point, which goes to the heart of this blockchain business.
or ability to set monetary policy according to economic conditions
The ability to set monetary policy is also the ability to game monetary policy. I understand that this power can be used in ways that encourage a stronger economy, but I also understand that it is currently being run by corrupt bankers. I don't even think we can effectively reform it (or any part of this system). Replacement seems like a better option, in the long run.
Here's a video [youtube.com] of a US Senator (Sanders) asking Ben Bernanke to disclose which banks got 2.2 trillion dollars worth of loans. That knowledge is a secret which the Federal Reserve does not have to disclose.
(Score: 1) by Francis on Sunday August 16 2015, @08:14PM
Inflation is barely any better than deflation. Ideally it should be set up so that coins come and go roughly proportionally to the amount of coins actually being used. Which is an incredibly difficult problem to solve.
I've never been opposed to the concept of virtual currency, but one that's designed to be deflationary where people early on pay very little for wealth that becomes very expensive with no contribution to anything is a really bad idea.
(Score: 1, Informative) by Anonymous Coward on Monday August 17 2015, @03:37AM
Do you rent or own?
If you rent the deflation can be fine.
If you buy *anything* on credit you do not want deflation. When I say anything I mean anything. Such as a budget deficit or a home loan.
Do you buy or sell?
If you buy things it can be a bit tough because today you buy something but if you waited 1 day deflation would have made your cash worth more and you could buy more.
If you sell you can have a hard time selling things unless you sell goods people absolutely need.
That is what deflation does.
(Score: 2) by JNCF on Tuesday August 18 2015, @04:00AM
I'm not making an argument for or against inflation.
(Score: 5, Informative) by Justin Case on Sunday August 16 2015, @06:47PM
> the [Bitcoin] lack of [government] ability to set monetary policy
That's a feature, not a bug.
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @06:28PM
they will be valid regardless of the outcome
Which i think is the entire key to this, there is no need to be concerned. However if everyone freaks out, their value could crash. ( just like the stock market crash here in the US )
(Score: 1) by tftp on Sunday August 16 2015, @07:33PM
In the most simplest case: just sit on your bitcoings until the fracas is over - they will be valid regardless of the outcome.
That is not quite so, and the summary above even explains why. If the 75% win the vote, the 25% will lose it, and the blockchain will be forked. Your coins will be in both blockchains, and the 25% blockchain becomes immediately vulnerable to the hashing speed of 75%. At the same time, two blockchains allow double-spending, as your purchase will be recorded in one blockchain, not in both. This will create a terrible mess among those few who use BTC. In essence, all merchants would have to choose which blockchain to follow, instantly - or else they'd be paid with coins from a defunct blockchain, and perhaps even stolen from legitimate holders by the overwhelming hashing power of 75%. But when will the vote's results be known? It's not a discrete event, it's a process... have I mentioned already that it will be a mess?
(Score: 2) by sjames on Sunday August 16 2015, @08:55PM
So you should clear the transaction through both block chains for now. That way, no matter which wins in the end, the correct holder of the coins is recorded. Or, just hold (do not transact) until the results are clear.
(Score: 1) by tftp on Sunday August 16 2015, @09:34PM
You paint a dark future for exchanges. Which BTC, from what blockchain, do they convert to other currencies? They also have to make a choice, like merchants - and also instantly, and also all together (otherwise one could double-spend BTC_25% in one store and BTC_75% in another.) This requires nearly omniscience on part of participants. Forking money is not easy. I guess it's good that hardly anyone of importance uses it :-)
(Score: 2) by sjames on Monday August 17 2015, @01:31PM
If I temporarily require that the coins be transferred in BTC_25 and BTC_75 until the clear winner is determined how will you double spend? I'll have a pretty good clue what happened if your transfer to me fails on one or the other.
Of course, none of this matters unless/until 75% of miners vote for the larger size. If they do, you would be pretty safe going with BTC_75 since mining in BTC_25 would become unprofitable rapidly.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @01:49PM
As long as forks are done in a nice civil manner like this, where nothing but the voting option is added, it's simple -- use the voting fork, and vote whichever way you want. If the option wins the vote with 75%, your client will automatically start using the option and follow the supermajority blockchain. If it never does make the 75%, it makes no difference, as both clients work on the same blockchain. This doesn't require omniscience, as you can switch clients long before the blockchain actually splits.
It could become a problem if the fork is directly incompatible (so the blockchain splits immediately, instead of after a voting process lasting a theoretical minimum of 750 blocks), or if the change being voted on is so undesirable that one might rather use the <25% blockchain rather than adopt the new change (but is such a change even likely to get 75% voting for?).
(Score: 2) by frojack on Sunday August 16 2015, @09:25PM
Actually TFS said:
The weaker blockchain with only 25% hashing power will be susceptible to attacks. And whatever bitcoins you have right now will co-exist twice in each of those blockchains. You would be able to spend them in one of the blockchains and keep them for yourself in the other blockchain.
That alone would suggest some solution would have to be found, such that the old blockchain would be (some how) forcibly converted, and eliminated in the old blockchain. Not sure if or how this might be done.
But allowing both to exist, and handling both with the same client, seems fraught with peril.
In the real world, in war zones, or potential war zones, currency at risk of capture in the event of an invasion would be replaced with a provisional currency that could be quickly disowned. See https://en.wikipedia.org/wiki/Hawaii_overprint_note [wikipedia.org]
No, you are mistaken. I've always had this sig.
(Score: 1) by fraxinus-tree on Monday August 17 2015, @08:55PM
Bitcoin is specifically designed to survive forks. Small forks happen every now and then. At least one "big" fork happened in the past around a malicious transaction exploiting a bug in the client. Nothing bad really happened, transactions settled in the longer chain at the end.
(Score: 2) by Bot on Sunday August 16 2015, @08:20PM
Indeed, if stuff equivalent to fractional reserve banking, loans for amounts that ensure they cannot be realistically be returned, quantitative easing, were employed in bitcoin economy, many people would leave in disgust.
Account abandoned.
(Score: 3, Interesting) by Beryllium Sphere (r) on Sunday August 16 2015, @10:59PM
The gold standard means your currency unit is tied to the value of a rock and the money supply depends on gold mining technology and exploration, not the needs of the economy. The only non-emotional argument in favor of it is that it's better than irresponsibly managed paper money.
Money is simply inherently weird.
(Score: 2) by sjames on Sunday August 16 2015, @08:45PM
That thought crossed my mind as well, but then I thought, so what do you do if the fed takes an action you find harmful? Do you even get to vote on that or lodge a meaningful protest?
The answer is no. So even though Bitcoin is far from perfect, I'm thinking that this latest shows a strength rather than a weakness.
(Score: 3, Insightful) by Thexalon on Sunday August 16 2015, @09:07PM
The basic problem is that Bitcoin is based on a fundamentally flawed idea, namely that you can have a currency with absolutely nothing to back it up.
The things that have backed up currency at some point in known history:
- Sometimes the currency is a useful physical resource, such as grain, livestock, bronze tools, or real estate.
- Sometimes the currency is a precious metal of some kind, like gold or silver.
- In more modern times, the currency is valuable because its use in taxes and business transactions (cash is always a legal attempt to settle a debt, at least in the US) is mandated by law. And while that seems extremely abstract, it does mean that if you don't follow the rules of the fiat currency, the government has the right to send people with guns to explain things to you. (The reason fiat currency is an extremely useful economic innovation is that it allows a central bank to create or stop inflation, which helps counter natural business cycles without having to, say, ramp up or down gold mining.)
Compare that to Bitcoin, which is backed by ultimately nothing valuable. You can't eat a Bitcoin, they aren't durable like precious metals, and government isn't enforcing their societal role. Those very characteristics that made Bitcoins so attractive to those of an anarchist or libertarian bent also do a very good job of making it not work as intended.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 3, Informative) by frojack on Sunday August 16 2015, @09:33PM
Well, the miners performed a great deal of computational work, which of course becomes easier with more modern computers, but is still fairly hard to do.
The difficulty of creating/obtaining something (scarcity) is a measure of value that has been recognized far longer than any form of money.
No, you are mistaken. I've always had this sig.
(Score: 3, Insightful) by Thexalon on Sunday August 16 2015, @09:57PM
The problem with that is that the difficulty in obtaining something (a.k.a. the supply) is not the sole factor in something's value. The perceived usefulness of whatever it is also matters a great deal.
For example, let's say somebody invents a new doohickey at a maker lab somewhere, making 1 with a 3-D printer. They try playing around with it for a while, and then come to the conclusion that the doohickey isn't all that useful or exciting, and promptly throws it away. That doohickey is incredibly rare - exactly 1 exists - but because nobody perceives it as useful it has no value (actually, negative value if you factor in the cost of trucking it to the landfill).
By contrast, there are billions of houses in the world, but they're quite valuable because almost everybody sees their potential use.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 2) by frojack on Monday August 17 2015, @01:05AM
Couple points....
1) Anything made on a 3D printer can be replicated any number of times. Because nobody bothered to make another doesn't make it valuable. Because its easy to do should any one want to do so. Remember I said
difficulty of creating/obtaining something (scarcity)
.
2) Perceived Usefulness may appear to be a desirable feature of a medium of exchange, but there are many cases where this is not true [wikipedia.org]. US Dollar bills have just about no value (other than patching bicycle tires) [blogspot.com] were it not for the government edict that it is legal tender.
But often perceived usefulness in a currency is a good idea, especially when you are not too sure of the scarcity. You can always make things out of gold, even if some new discovered reserves doubles the amount of gold in the world. Same with livestock. Use for currency in some places, but you can eat it if the market crashes.
3) There are lots of houses, but building a new one takes a lot of money. So even old houses cost a lot of money. It takes a lot of effort to obtain a house. You will spend at least 30% of your life's earnings on housing (on average). As a unit of exchange houses make a poor currency. Not too liquid, not all that portable, hard to make change. So not a good medium of exchange.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @11:04PM
Except a currency does not need government backing to have a societal role, it only needs societal backing - at any scale of "society".
Just look at any nation where the government totally fucks up monetary policy. People use the "official" currency only for taxes, and something else to perform every other transaction - dollars, euros, yuan, etc. This happens even when said government expressly refuses to back the alternative currency, or forbids it from being used to pay taxes, etc.
And before anyone points out that those dollars are backed by the US government, I'd like to point out that the people of Zimbabwe didn't give two shits that they could pay US taxes with the dollars they were using amongst themselves. What they cared about was accessibility (enough volume available to keep the local economy going), stability (will be worth approximately the same tomorrow as today), and reliability (difficult to counterfeit).
In the short term, that's all Bitcoin needs to be an acceptable currency to the masses - availability, stability, and reliability.
(Score: 3, Interesting) by Thexalon on Sunday August 16 2015, @11:33PM
The reason government backing matters is that government has the option, with a fiat currency, of enforcing that currency's value with the legal use of force.
For the purposes of this discussion, assume I am paying a restaurant bill in the US, and the restaurant has not given me any prior instructions about how they expected to be paid.
If I attempt to pay the bill in the US by leaving sufficient amount in US cash to cover the bill on the table as I walk out, I have not committed theft, even if the restaurant doesn't normally accept cash, because as is written on the bill "This note is legal tender for all debts, public and private". If the restaurant tried to either get the police or a civil lawsuit to intervene, they wouldn't succeed because I made a legal offer of payment and it's not my fault that the restaurant was unwilling to take it. And if they decided to engage in another action to recover the value (say, opening my car and taking something worth the same amount as my meal), I can use the governmental authority, including police officers making use of lethal force if necessary, to get my stuff back (yes, it's highly unlikely that anyone's going to get into a shootout over a hamburger, but theoretically it's possible).
If I try the exact same thing with Bitcoins or any other non-governmental currency, the restaurant now has a legal right to refuse my proffered payment and demand I use something else in order to settle my debt with them.
The US government also requires that employers pay their employees a certain number of dollars per hour (again, enforced by lethal force if necessary), which pretty well guarantees that most people will have dollars on hand, which makes dollars a pretty convenient way to ask people to use to pay their bill.
Both of those make it likely that US-based businesses will only invest in charging people in dollars, because they have to accept them no matter what, and their customers will generally have them on hand. Which makes them by far the most convenient medium of exchange.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1) by khallow on Monday August 17 2015, @12:35AM
The reason government backing matters is that government has the option, with a fiat currency, of enforcing that currency's value with the legal use of force.
In Zimbabwe? I wouldn't be surprised if a good portion of the US Dollar currency in Zimbabwe is relatively high quality counterfeit currency. Even that is better than the native currency when hyperinflation happens.
The point of the previous poster was that the US dollar and other currencies get used in a lot of places that are outside the reach of the legal issuers of the currencies. A good currency has an inherent value beyond what the issuing authority can do.
(Score: 2) by Thexalon on Monday August 17 2015, @11:45AM
In Zimbabwe, the US dollar is valuable because it can be used to buy things from the US at its US-government-enforced value.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 1) by khallow on Monday August 17 2015, @11:44PM
In Zimbabwe, the US dollar is valuable because it can be used to buy things from the US at its US-government-enforced value.
The US government doesn't enforce any particular value. And once again, Zimbabwe is not the US. The US government has no power to enforce value there.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @01:38AM
I think the entire reason this whole thing is happening is because when the developers of bitcoin developed it they didn't think it would blow up in their face. But it did. It grew much larger much faster than they expected and so now much more effort is needed to ensure it is secure and capable of withstanding a much larger user base.
Think of WEP encryption. It wasn't designed well because, initially, it wasn't intended to have a huge user base. It was intended to be a quick ad-hoc, imperfect, solution to what was perceived to be a limited problem by those who came up with it at the time. But then as the need for encryption grew it blew up and new upgrades were needed to make it more secure for a much larger user base.
Same thing with IPv4. 32 bits was thought to be ridiculous back then but, as the Internet unexpectedly blew up in everyone's face, they started coming up with IPv6.
(Score: 2) by Runaway1956 on Sunday August 16 2015, @04:02PM
I've not yet figured out how bitcoin (or any other computer generated currency) might be better OR worse than US currency. It's all make believe, right?
I guess the best thing to do, is generate as many bitcoins as possible, and use them to purchase more durable goods. Ice cream, maybe?
“I have become friends with many school shooters” - Tampon Tim Walz
(Score: 2) by JNCF on Sunday August 16 2015, @04:27PM
Fiat is the wrong word. Bitcoins seem comparable to fiat currencies because they aren't backed by any tangible asset, but this isn't the only property of fiat currencies. A fiat currency has some institution which is responsible for issuing it. Fiat currencies and crypto currencies are both valued based on supply and demand, but in the case of crypto currencies there is no central authority that can arbitrarily increase supply. New bitcoins get 'mined' at a predictable rate, programmed to taper off into nothingness eventually. They're designed to be deflationary. Other crypto currencies (such as Dogecoin) have no cap on total coins, meaning they're inflationary. But even these aren't fiat, because the rate of inflation has been predefined; there is no entity that can decide to make more dogecoins than the code allows to be made during a given time.
(Score: 2) by SubiculumHammer on Sunday August 16 2015, @05:20PM
The U.S. fiat currency is backed up by something called taxes and the threat of prison for not paying those taxes. Bitcoin does not have such legal authority to impose taxes with threat of punishment for not paying them. Thus there is always demand for dollars but not always demand for bitcoins so long as USA remains a thing.
(Score: 2) by JNCF on Sunday August 16 2015, @05:34PM
Threat of force isn't generally considered a tangible asset. I understand that the US government's threat of force adds stability to the price of the dollar, but I don't think this fact is relevant to whether or not it is fiat currency.
I'm certainly not arguing that BTC is less volatile than USD. That would be crazy.
(Score: 2) by Runaway1956 on Sunday August 16 2015, @06:04PM
JNCF answered well enough. I'll add that fiat money includes pretty much any money that has no intrinsic value. Gold doubloons retain their value after hundreds of years, if they are found again. Gold has an intrinic value, no matter how long they lie on an ocean floor, or stay buried in a pirate's chest. Few currencies in the world today have any intrinsic value. One day, Federal Reserve Notes will have just about as much value as Confederate dollars. You and I may be long gone before that happens, but the day is coming, nevertheless. Even our coins will one day be considered valueless, since we continue to decrease the valuable metal content in them. Our coins have been mostly base metals for decades already, they can't be made much more cheaply.
“I have become friends with many school shooters” - Tampon Tim Walz
(Score: 2) by SubiculumHammer on Sunday August 16 2015, @11:35PM
Golf has value because way it does outside of the several useful industrial processes.
(Score: 3, Funny) by SubiculumHammer on Sunday August 16 2015, @11:39PM
Typing on phone sucks.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @11:03AM
Typing on phone sucks.
Well, it definitely results in sub-par comments.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @10:39PM
We're talking about the way golf was badly mis-explained, right? I don't play, but I believe some of the value of golf is related to business transactions, not industrial processes.
(Score: 2) by Justin Case on Sunday August 16 2015, @06:55PM
> The U.S. fiat currency is backed up by something called taxes and the threat of prison
Yes and I can hand out lollipops and threaten to shoot anyone who doesn't bend the knee and worship them, but that doesn't bestow actual value on the candy. Well not more than it already had, which is more than the intrinsic value of green paper.
(Score: 3, Interesting) by tftp on Sunday August 16 2015, @08:16PM
Yes and I can hand out lollipops and threaten to shoot anyone who doesn't bend the knee and worship them, but that doesn't bestow actual value on the candy
This example demonstrates just the opposite to what you are claiming. Imagine that you are an absolute monarch, and you just decreed that anyone who does not worship a certain lollipop will be put to death. Don't you think that this will create a significant demand for lollipops? If previously out of 100,000 citizens a lollipop maker sold 1,000 on weekends, to children, now he needs to supply 100,000 per week - if not per day (don't know how long they last.) The candy maker can now dictate his prices, and people will pay because the alternative is death. As matter of fact, the lollipops will be valued more than money, and they may even become money/barter on their own.
Perhaps you were thinking that your example does not work because you had no intention to ever implement the threat. However governments do not hesitate to arrest, try and imprison people for failing to do what the government tells them to do. If a monarch requires people to own lollipops, and the same time installs gallows, people will pay attention.
(Score: 2) by Justin Case on Sunday August 16 2015, @09:16PM
I'm saying running an economy at gunpoint is not a desirable approach. Although the Soviets had a good run at it, for a while.
(Score: 1) by tftp on Sunday August 16 2015, @11:37PM
The guns come into play not because of fiat money, but because the government wants something from the citizens.
(Score: 2) by linuxrocks123 on Monday August 17 2015, @02:04AM
That has almost nothing whatsoever to do with why dollars are accepted. Dollars are accepted because they are difficult to counterfeit and are useful for obtaining goods and services from businesses and individuals in the United States.
People with no or little income who live in the United States do not owe taxes. They still use dollars. The above is why.
If the US required taxes to be payed in screwdrivers, it would result in an increased production of screwdrivers to pay the government, and everyone would buy screwdrivers with dollars once a year to satisfy that stupid and arbitrary requirement. The government would probably have to set a screwdriver/dollar exchange ratio by fiat since people don't measure their income in screwdrivers, and the value of screwdrivers would otherwise vary wildly throughout the year because of this requirement. And then the government would have a lot of useless screwdrivers, which it would either have to sell or destroy.
The US doesn't require taxes to be paid in screwdrivers because that would be incredibly inefficient. Everyone already uses dollars, so why not use them for taxes?
I personally like the current system a lot better than the screwdriver approach.
(Score: 3, Interesting) by bradley13 on Monday August 17 2015, @06:02AM
I think you misunderstand. If the US government were to use screwdrivers as currency, it would do three things (oversimplified, but you'll get the idea):
- Control screwdriver production: it would be illegal for anyone else to make them.
- Pay people in screwdrivers: tax refunds, social security, government contracts - all would be paid in government-manufactured screwdrivers.
- Require the banking system to use screwdrivers, which then flows down to people's salaries, mortganges, etc).
That's exactly what the US government does with green pieces of paper. Those pieces of paper have value precisely because the US government says they do. That's what a fiat currency is.
Everyone is somebody else's weirdo.
(Score: 3, Insightful) by Beryllium Sphere (r) on Sunday August 16 2015, @10:34PM
All the replies seem to be about intrinsic or long-term value.
The key advantage of Bitcoin is that it's a nearly friction-free way to transmit money and pay for things. Compare the rakeoffs Paypal or Visa or wire transfers require to the cost of a Bitcoin transaction.
Being automatically deflationary, as Bitcoin is, undercuts this advantage. It creates an incentive to pull Bitcoins out of circulation. When your body pulls blood out of circulation and hoards it in tissues it's called "shock" and is life-threatening.
Most of the money in commerce gets re-spent within, I suspect, weeks.
Being a good medium of exchange and being a good store of value actually seem to conflict with each other.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @07:36AM
(Score: 4, Offtopic) by Nerdfest on Sunday August 16 2015, @04:06PM
Of more interest is that Reddit is up to some very unlikeable behaviour again (or still?). How's Voat going?
(Score: 1, Disagree) by JNCF on Sunday August 16 2015, @04:37PM
I modded you off-topic because the issue mentioned in the summary was with the Bitcoin sub-reddit's moderators, not the corporate types of Reddit. Voat still has moderators. I like the idea of Voat replacing Reddit, but I don't think this is related to it at all.
(Score: 2, Offtopic) by Gravis on Sunday August 16 2015, @04:59PM
which VISA are we talking about? [wikipedia.org] Visa Inc. or perhaps Virtual Instrument Software Architecture?
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @06:05PM
https://en.wikipedia.org/wiki/Visa_Inc. [wikipedia.org]
(Score: 2, Interesting) by Anonymous Coward on Sunday August 16 2015, @08:33PM
Kiss Bitcoin goodbye. This uncertainty on the part of businesses accepting Bitcoin is the end.
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @09:03PM
...so are they at 80% of TPS processing of VISA? why the rush?
(Score: 0) by Anonymous Coward on Sunday August 16 2015, @11:30PM
People forget that this is a social experiment. It is good that bitcoin is being tested in this way. The current monetary system makes no sense and needs to be replaced, but it has been good enough apparently. This is not something to be done lightly.
(Score: 1, Interesting) by Anonymous Coward on Monday August 17 2015, @03:24AM
now it's just a Streisand effect about censorship and about how few influential people are trying to prevent the voting from happening.
This event demonstrates further what the #GamerGate event uncovered: Reddit, 4chan, and other places where "open" discourse could occur had dissent squashing censors installed instead of moderators. The discerning discourser has written off both reddit and 4chan at this point as their moderation is openly compromised.
Of course GG wasn't the first event which caused an "exodus" from those sites due to censorship concerns. This will be the 6th time we rebuild our community, and we're exceedingly efficient at it.
(Score: 0) by Anonymous Coward on Monday August 17 2015, @08:45PM
8chan!