Tuesday, May 17, 2011

Bitcoins: a new money

You can see the future of money here.  But given the time and energy it takes to make a bitcoin, I'm not sure that it is a fiat money.  It may be a new form of commodity money. There goes monetary policy.
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6 comments:

  1. JaredCohenMay 17, 2011 at 5:56 AM

    This is the first I have heard of this. I don't know what to make of the article, the author apparently thinks we are heading for Armageddon.

    The article mentions that 6m of these bitcoins exist, but only 21m will exist by 2140...I think that is a typo and the author meant to say 2014.

    A few of the comments to the post that I thought were interesting/funny:

    "I would say these are more like gold than cash, since the supply of bitcoins is essentially constant. So maybe like cash used to be when it was asset-backed.

    What's with all the scare-mongering in the post? The problem seems to be that you can pay for drugs and hookers with bitcoin? Like you can pay with drugs and hookers with cash?

    I think the thing that's worth being scared about is that this represents a return to fixed-supply currency systems. If Bitcoin were widely adopted we could end up not being able to control currency supply effectively - think Great Depression."

    "You people are SO DANG LATE AND BEHIND!

    The REAL action is in DERIVATIVES of bitcoin.

    Futures and options and credit default swaps on bitcoin are the future.

    Adapt or die!"

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  2. EMeisheMay 17, 2011 at 9:33 AM

    Yeah this is some crazy stuff. One thing I am skeptical of is the untraceable and unhackable properties of bitcoin. With how fast technology changes who is to say someone might find a way to do those things, especially if it becomes very profitable.
    I agree with the author though that this could have far reaching implications so we will have to see if it catches on despite the imminent criminalization.

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  3. MARKMay 17, 2011 at 11:02 AM

    Our government will probably step in and make transactions with this currency illegal at some point (competition against cash will not be tolerated).

    How would a government be able to monitor something like this? It looks to be a great innovation for underground markets, right? How would you trace transactions?

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  4. Laura KochMay 17, 2011 at 12:56 PM

    SO CRAZY. Perhaps we don't need the government to monster it and let the market take care of it. Im not sure how the algorithm works and why it takes 5 years to make on.

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  5. Ankur JainMay 17, 2011 at 1:32 PM

    I agree with Eric, it seems like bitcoin can be susceptible to hackers. I agree with Dr. McKinney that this is more of a commodity that a comment described can be, "hoarded and gambled on". There still no real trade value to bitcoin in my opinion. I feel like we wouldn't be having this discussion if the dollar was backed by something like gold.

    Jared, the last comment was hilarious.

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  6. UnknownMay 22, 2011 at 3:56 PM

    I don't think it will catch on. I think it is too vulnerable to the technically elite and as that is probably the segment that will use them then I think there could be a problem with hacking. And there is no oversight so essentially you could make these if you had the right equipment. I also wonder how big the coinbit actually is if it takes so long to create? How long would it take to download or transfer? If your connection cut out while you were doing a transfer would you get your payment? Some questions to think about but it was a fascinating topic. Thanks

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