Some random thoughts on Bitcoin, the decentralized online currency. Here's something to stir the pot and have some fun:
- In most cases, it's impossible to discuss "currency" as a topic without it quickly devolving into mysticism (sources of value, what everyone wants a currency to be, etc.) or eschatology (order, governance, chaos, etc.). I find that type of discussion a waste of energy. If anybody says with authority: "a currency MUST have..." run from the room.
- Currency, from a pragmatic perspective, is just a simplifying agent in a financial platform. What? It's similar to the role of simple sugars in metabolism. Complex foods are reduced to them. Complex body parts and behaviors are built from them. While there is a limited quantity of sugars, there's a mechanism for efficiently allocating those sugars to various potential uses. Too much or too little sugar, the system breaks down.
- Bitcoin is a currency platform. Thousands of people are developing new applications for it. In this way, it's very similar to the Internet. When the Internet was young, people used to say: why would anyone want to pay for a online subscription to the Internet when you have AOL/CompuServe? It doesn't have any content (intrinsic value), you can't transact on it (e-commerce or financial services), and it may collapse tomorrow (since nobody is in charge). Things changed.
- Lots of people are saying: "The deflation built into bitcoin was a terrible idea. People are getting rich." In fact, it was a brilliant idea. It brought in speculators (people that are buying/selling it as if in a game). It created a bubble. The bubble put it on the map. The bubble has attracted thousands of developers/participants. Think of how the Netscape IPO fueled the Web/Internet.
Yes indeed, the innovation occurring around bitcoins is amazing right now. Although "a" bitcoin bubble burst, the market volatility creates opportunities for everyone. The MMPOG quality of the bitcoin community really does resembles Daemon.
What will be most interesting is to see is who creates another p2p block backed by a real currency. It could be Second Life, it could be a federation of nations or corporations, someone smart out there is going to create a p2p block that changes the currency game world wide in the near future.
John,
To add to me tweet to you from earlier. Stocktwits has a bitcoin ($BCOIN) stream now. FWIW.
Reagrds,
TDL
Don't assume capitalism. A gift economy has no need of those things that economics can't define, such as money and ways of precisely measuring value. Cut the Gordian Knot!
Imagine thousands geniuses not sleeping at night and in their garages developing bitcoin applications. Now imagine how cool would it be if you could invest in this start-up at seed capital stage. Ohhh wait... you actually can do it by simply buying bitcoins or bitcoin mining contract.
RanDomino's on the proper path.
If RanDomino has no need of money, is he willing to make a bet on the future of capitalism?
That's derivative. Only a small fraction of the value created will be seen in the price of the currency.
Bitcoin is more than a currency platform - it is a protocol for exchanging arbitrary tokens between machines in a secure manner. It's current use as a currency is a side-effect. Still, that won't stop me developing a few bitcoin applications in my spare time. I want to see it succeed.
Good luck with that.
*rolls eyes*
Bitcoin for global level stuff. Local mutual credit type things for local stuff. Gift economy for ... umm ... ripe for abuse? i dunno. must be different mindset .. transact without doing any accounting? seems insane. .. i'm open to ideas tho. wonder how this gift econ would *work* (and actually really work).
For now, I'm willing to accept bitcoin for payment of my labor. Seriously fuck Canada. Down with nation states.
...or via glbse.com
"If anybody says with authority: "a currency MUST have..." run from the room."
Perhaps, I'm just a gimlet-eyed snake-oil salesman, but with very little technical expertise in this area, and only the common sense of a layman, I can confidently say that a currency MUST have some stability in terms of value. Would you want to pay an employee in a medium that could skyrocket in value overnight? Would you want to be paid in something that could plummet in value overnight? What about something that wildly oscillates on a day to day basis? How would people determine what to pay each other for goods and services?
No comments on the Mt. Gox disaster?
This will be the true test of Bitcoin's network effect. If the price of Bitcoins recovers rapidly, you'd better start worrying about how you're going to protect your transaction privacy.
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