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601 comments

Bitcoin (-1, Troll)

ikador (2457214) | more than 2 years ago | (#37345910)

I know I'm a little late to the game, but last month I decided to invest in Bitcoin mining. It works pretty well if you join one of the largest pools. You get payments every day. There's no sense to mine alone, but with a pool it works well. CPU mining is a thing in the past too - you need AMD graphics card to do it.

I'm currently profiting around $100 a day, depending on that days exchange rate. My setup is 24x AMD 6990 gfx cards on 8 computers. The overall cost to build them was around $20 000. They don't really have any good processor or other parts yet, but I plan to add those later. I don't have electricity costs as I take it from the hallway [tinypic.com]. I had to buy UPS and set up an alarm system tho, as sometimes neighbors are just being dicks and take it off, but it's enough to keep it running for ~5 mins and that's enough time for me to put it back in.

So overall I think Bitcoin is great. I make nice cash that I turn pure profit soon, I got good amount of awesome computers and it's an interesting thing to follow. It also made me more interested about Forex and stock trading and other financial stuff, which I think I will move onto when Bitcoin mining gets too hard.

Re:Bitcoin (0)

Anonymous Coward | more than 2 years ago | (#37345948)

I thought meteorites brought most of the Bitcoins to Earth.

Re:Bitcoin (1)

Anonymous Coward | more than 2 years ago | (#37345952)

Bull. Shit. 24 6990s = about 8.5kW, you're not pulling that through that wimpy plug.

Re:Bitcoin (1)

somersault (912633) | more than 2 years ago | (#37345964)

Have you actually made any money yet? When I looked into it I wasn't too thrilled at how easy it was for people to scam you out of bitcoins by contesting Paypal payments etc

Re:Bitcoin (3, Insightful)

qubezz (520511) | more than 2 years ago | (#37346034)

That's why you don't sell uncounterfeitable, undisputable, unrevocable, instantly transferrable Bitcoins for Paypal payments, which can be disputed, paid with stolen credit cards, accounts frozen, etc. Don't blame Bitcoin for PayPal suckage.

Re:Bitcoin (0)

Anonymous Coward | more than 2 years ago | (#37346044)

Why would Paypal be involved in anything he's doing?

Re:Bitcoin (4, Informative)

zill (1690130) | more than 2 years ago | (#37346164)

how easy it was for people to scam you out of bitcoins by contesting Paypal payments

1. Scammer buys bitcoins on ebay.
2. Seller sends the bitcoins
3. Scammer pretends he never received them, and reports this as a fraudulent transaction to Paypal
4. Paypal asks the seller for evidence that he has sent the goods (i.e. a tracking number)
5. Sellers explains what bitcoins is, digital revolution, bring back the gold standard, Ron Paul 2012 et cetera
6. Instead of a tracking number, Paypal gets a bunch gibberish, so it rules in the scammer's favor
7. Rinse and repeat

This applies to pretty much all virtual goods on eBay, so it's not really a bitcoin problem as much as it is a Paypal problem.

This whole digression is moot in the end because there are dozens of bitcoin exchanges out there now, so there's no need to rely on Paypal. Admittedly it was a problem in the early days before exchanges were established, so that's no longer the case.

Re:Bitcoin (2)

icannotthinkofaname (1480543) | more than 2 years ago | (#37346376)

You'd think the retard selling the bitcoins would just use a block explorer to point to the number of the block containing the transaction and show that as proof that the coins were sent and credited to the buyer's address instead of going through all that bullshit you listed in step 5.

If PayPal wants some kind of "tracking number" for the bitcoins, the block number containing the to/from addresses is as good as you're gonna get.

Re:Bitcoin (3, Insightful)

zill (1690130) | more than 2 years ago | (#37346582)

The fact is "blockexplorer", "block chain", "bitcoin address" are complete gibberish to Paypal (more accurately the minimal wage drone in India working for Paypal). They are trained to either take a USPS, Fedex, or UPS tracking number and verify whether that shipment matches the buyer's and seller's address. That's all they know how to do. No matter how much you explain bitcoins to them they will not understand.

Re:Bitcoin (0)

ikador (2457214) | more than 2 years ago | (#37346072)

Yes, around $100 a day. Of course I'm still a bit on the minus side as I just started and bought the hardware, but overall it's working great. That hardware can of course be sold later too if you want money back from it.

I don't use PayPal for anything anyway, when I exchange money and take it out it's wired to my bank account.

Re:Bitcoin (5, Informative)

zill (1690130) | more than 2 years ago | (#37345970)

First of all, taking electricity from the hallway is obviously theft.

But more importantly you are trolling because each 6990 consumes at least 300 watts during mining, which means you need 7.2kw for your whole setup. This far exceeds what a single outlet can provide.

Re:Bitcoin (1)

ModernGeek (601932) | more than 2 years ago | (#37346004)

That doesn't look like a standard 115AC outlet. Maybe it's 220 or European? I'm surprised that his landlord hasn't said anything about it.

Re:Bitcoin (0)

Anonymous Coward | more than 2 years ago | (#37346056)

Looks like a CEE 7/5 or 7/4 -> 240V/16A ... less than half of what his claimed setup would require.

Re:Bitcoin (0)

ikador (2457214) | more than 2 years ago | (#37346020)

Note that this isn't in the US. Also, the electricity in hallway is for everyone to use. Of course, all people in the building have to pay for it too, but it's there for people to use.

Re:Bitcoin (1)

DigiShaman (671371) | more than 2 years ago | (#37346066)

Not only that, but now you have 7.2kw of heat that may need to be pumped out. Running an AC compressor isn't cheap either.

Re:Bitcoin (0)

ikador (2457214) | more than 2 years ago | (#37346144)

It's almost snowing here already, heat isn't a problem. In fact I save in heating costs when I let those things heat the apartment.

Re:Bitcoin (1)

ultranova (717540) | more than 2 years ago | (#37346122)

I'm currently profiting around $100 a day, depending on that days exchange rate.

Getting paid for being actively harmful (using electricity) is precisely why Bitcoin will never amount to anything.

I don't have electricity costs as I take it from the hallway.

Ah, so you're a thieve too.

I had to buy UPS and set up an alarm system tho, as sometimes neighbors are just being dicks and take it off, but it's enough to keep it running for ~5 mins and that's enough time for me to put it back in.

I wouldn't take it off, I would call the cops and the landlord.

So overall I think Bitcoin is great. I make nice cash that I turn pure profit soon, I got good amount of awesome computers and it's an interesting thing to follow. It also made me more interested about Forex and stock trading and other financial stuff, which I think I will move onto when Bitcoin mining gets too hard.

Yes, I guess someone with your talents would be perfectly suited for the financing world.

Re:Bitcoin (4, Insightful)

shutdown -p now (807394) | more than 2 years ago | (#37346262)

. I don't have electricity costs as I take it from the hallway

There ain't no free lunch. Either you're still paying for that electricity indirectly, or someone else is bearing that cost. If the latter - which seems to be more likely - then it's about as moral as tapping that electricity and reselling it directly, then pocketing the profit.

Just because something is provided to you "for free" (really, at the expense of your community) doesn't mean that you should feel free to abuse it for your own sake.

This oughtta be good for... (0, Troll)

Anonymous Coward | more than 2 years ago | (#37345954)

This oughtta be good for at least 50 Libertarian ragers ragging on Keynesian economics, and 100 or so knock-on posts of rebuttald and counter-rebuttals. Throw in another 50 "bitcoin slashvertisement" complaints and carefully crafted trolls. You've got yourself 200 posts or so, not including this one, and some nice pageviews. Keep the ad revs rollin' in.

Re:This oughtta be good for... (1, Troll)

reboot246 (623534) | more than 2 years ago | (#37346258)

Okay, I'll bite. He's a Keynesian. Nothing he says has anything to do with reality so why take him seriously?

Re:This oughtta be good for... (2)

rthille (8526) | more than 2 years ago | (#37346578)

Really? Nothing to do with reality? His predictions have been far better than most. http://tinyurl.com/3bqefxx [tinyurl.com] In particular, the WSJ was saying years ago that rampant inflation was just around the corner. When again?

STOP (1, Insightful)

Anonymous Coward | more than 2 years ago | (#37345960)

You are making bitcoin into something important and noteworthy and it is not.

No wonder taco left.

Re:STOP (3, Insightful)

nedlohs (1335013) | more than 2 years ago | (#37346014)

I'm pretty sure taco wasn't editing the New York Times.

Re:STOP (2, Funny)

Anonymous Coward | more than 2 years ago | (#37346070)

You are making the New York Times into something important and noteworthy and it is not.

No wonder Taco left.

Re:STOP (1)

Anonymous Coward | more than 2 years ago | (#37346032)

If that's your position, maybe you should take it up with Dr. Krugman rather than Slashdot?

On the other hand, I might be interested in what a Nobel laureate in Economics says about Bitcoin. It seems like his conclusion is similar to mine: it's a waste of time.

Re:STOP (0)

nedlohs (1335013) | more than 2 years ago | (#37346162)

Economics isn't even a real nobel prize, and it's as related to reality as the peace prize...

Re:STOP (5, Informative)

AuMatar (183847) | more than 2 years ago | (#37346356)

The peace prize is a real Nobel, it's one of the original group set up by Alfred Nobel. The economics one isn't, it's a separate award that uses a very similar name, set up by the bank that handles the Nobel grant because they wanted to give their field some legitimacy off of the name.

Re:STOP (2)

Kreigaffe (765218) | more than 2 years ago | (#37346548)

nedlohs has it right.
Economics is not a real Nobel -- as you point out.
Further, it's as related to reality as the Peace Prize -- that is, it is not.

He doesn't say the Nobel Prize for Peace is not a real Nobel, he just said it's not related to reality. It's not, just look at the past recipients of the Nobel Peace Prize. There's no way a sane person could correlate those winners to the concept of progressing peace.

Re:STOP (0)

Anonymous Coward | more than 2 years ago | (#37346130)

You're just stupid and uneducated. You're also probably a college student.

Re:STOP (0)

Anonymous Coward | more than 2 years ago | (#37346188)

And you don't even have booksmarts. You are probably a K-9 dropout.

Re:STOP (1)

whiteboy86 (1930018) | more than 2 years ago | (#37346180)

Bitcoin seams to be important only for the underground economy, that is why (i think) EFF and FSF withdrew their support, buying into it you are basically supporting all kinds of blackhats, just look it up at Wikipedia's Bitcoin 'concerns' section http://en.wikipedia.org/wiki/Bitcoin [wikipedia.org]

Re:STOP (0)

Anonymous Coward | more than 2 years ago | (#37346466)

Wikipedia... now there is a reliable source of unbiased information!

Why it's almost as enlightening to the human condition as the Slashdot comment section!

Hoarding's the point. (0)

Anonymous Coward | more than 2 years ago | (#37345978)

Krugman's got a point - the real value of bitcoin is that it's a lottery ticket. To buy one bitcoin, you pay about the price of a fast food meal. Then you back it up and forget about it for a few years.

In the one-in-a-billion chance that 20 years from now the entire world's economy is being transacted in bitcoins, you'll be a multibillionaire.

If you think the odds of Bitcoin taking over the world (or even replacing PayPal for ecommerce) are one-in-a-million, owning one whole bitcoin is a lottery with a 1000:1 payoff. If you think it's a one-in-a-billion event, it's a coin flip. If you think it's a one-in-a-trillion event, buy a Big Mac instead.

Re:Hoarding's the point. (2)

Z34107 (925136) | more than 2 years ago | (#37346178)

RTFA again. Nowhere does Krugman say bitcoins are a "lottery ticket" whose value might soar - their value has soared. His point is that this is problematic - massive deflation leads to hoarding, rather than spending, a currency.

Re:Hoarding's the point. (1)

benjamindees (441808) | more than 2 years ago | (#37346464)

Unfortunately for you and Paul, Bitcoin is undergoing monetary inflation, not deflation. This little fact was conveniently left out of his blog post. New Bitcoins are created every day, at about a 30% annual rate, which actually meets the International Accounting Standards Board definition of hyperinflation [wikipedia.org]. So, for the moment, if you'd like to compare Bitcoin to anything, compare it to Zimbabwe or to the Weimar Republic [wallstreetsurvivor.com] or to what we will soon see here in the US thanks to Keynesian money-printers like Krugman.

Re:Hoarding's the point. (1)

Z34107 (925136) | more than 2 years ago | (#37346526)

Inflation is about a currency's value, not its quantity. At least according to TFA, bitcoin has been undergoing deflation, which makes sense given that there's an upper limit to how many bitcoins there will ever be, and producing new ones gets exponentially harder as time goes on.

Re:Hoarding's the point. (1)

syousef (465911) | more than 2 years ago | (#37346318)

If you think the odds of Bitcoin taking over the world (or even replacing PayPal for ecommerce) are one-in-a-million, owning one whole bitcoin is a lottery with a 1000:1 payoff. If you think it's a one-in-a-billion event, it's a coin flip. If you think it's a one-in-a-trillion event, buy a Big Mac instead.

Let's put it this way: I think the odds of me growing a new orrafice that poops out mutliple currencies AND a pair of wings are greater.

Re:Hoarding's the point. (0)

Anonymous Coward | more than 2 years ago | (#37346428)

What the hell is an orrafice? Sounds nasty!

Re:Hoarding's the point. (2)

zill (1690130) | more than 2 years ago | (#37346510)

In the one-in-a-billion chance that 20 years from now the entire world's economy is being transacted in bitcoins, you'll be a multibillionaire.

I know that "billionaire" part is just a figure of speech, but let's find out how large the bitcoin jackpot really is, for curiosity's sake.

Suppose miraculously bitcoin manage to completely replace both the USD and the Euro tomorrow. There are currently:
980 billion USD in circulation [federalreserve.gov]
863 billion Euros in circulation (~1.2 trillion USD) [ecb.int]
7.2 million bitcoins in circulation [bitcoincharts.com]
Thus each bitcoin would be worth approximately 300k USD. Hardly makes you a millionaire, let alone a billionaire.

Disclaimer: I have never taken an economics course in my life and I have been repeatedly characterized as "terminally retarded" in Internet discussions. The above calculations might not land in the right sport, let alone the right ballpark.

Is this the end, then? (-1)

Anonymous Coward | more than 2 years ago | (#37345988)

With CmdrTaco gone and Slashdot linking to Paul Krugman I suspect the end is nigh for this once might weblog.

Keynesian? (2, Insightful)

MicktheMech (697533) | more than 2 years ago | (#37346006)

Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist". I call shenanigans.

Re:Keynesian? (1, Insightful)

very1silent (2194890) | more than 2 years ago | (#37346094)

There's a large chunk of the economics profession which exists to state that for the rich to own everything, end the rest of us to be serfs is the natural order of things, and is truly in everybody's best interest. They go by various names, such as Freshwater economists or the Austrian school.

Re:Keynesian? (1)

Attila Dimedici (1036002) | more than 2 years ago | (#37346528)

You know this is the first time I have ever heard anyone call Krugman a member of the Austrian School of economics.

Re:Keynesian? (1)

Dahamma (304068) | more than 2 years ago | (#37346592)

Yeah, seriously? Ron Paul = Austrian School devotee. Paul Krugman is pretty close to the opposite there.

Re:Keynesian? (2)

msauve (701917) | more than 2 years ago | (#37346116)

If he were really a Keynesian, he'd be encouraging the Federal Reserve to get busy mining bitcoins.

Re:Keynesian? (4, Insightful)

Jonner (189691) | more than 2 years ago | (#37346150)

Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist".

I call shenanigans.

That analogy would make sense only if the theories of John Maynard Keynes [wikipedia.org] were as universally accepted as those of Einstein. Economics never has been and probably never will be as testable a science (if it's a science at all) as physics.

Re:Keynesian? (4, Insightful)

geekoid (135745) | more than 2 years ago | (#37346320)

But you can learn from historic reactions to varies pressure. For example Austerity has never gotten anyone out of a recession. Now, if people would look at that, look at it's history and act upon that, we wouldn't be having these issue in Washington.

So the testing part is looking at previous success a failure, and the prediction side would be using the previously success as a reaction to current economic situation and seeing the results.

You can't really do it in the lab, yet, but you can apply it.

Re:Keynesian? (1)

mwasham (1208930) | more than 2 years ago | (#37346474)

Well how many recessions have been caused from over extension of debt? Sounds like your theory is missing some sample data.

History also shows Keynesian policies can fail (1)

drnb (2434720) | more than 2 years ago | (#37346550)

History also shows that Keynesian policies can fail to address an economic crisis. This led some Keynesian advocates to rethink things, including the often ignored "future" costs and unintended consequences of "today's" Keynesian stimulus, and develop the approach of Monetarism.
http://en.wikipedia.org/wiki/Monetarism [wikipedia.org]

Is Keynesian theory wrong, not quite, just incomplete. Not a universal solution. Its like physicists moving from Newton to Einstein. Its not that Newton was "wrong", he just had an incomplete understanding and methods that were often useful but universally applicable.

Keynes like Newton (1)

drnb (2434720) | more than 2 years ago | (#37346588)

Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist".

I call shenanigans.

That analogy would make sense only if the theories of John Maynard Keynes [wikipedia.org] were as universally accepted as those of Einstein. Economics never has been and probably never will be as testable a science (if it's a science at all) as physics.

Actually Keynesian theory would be more akin to Newton's. Sometimes useful, but it can fail under some circumstances. As Newton's followers went on to refine things with Einstein's theories, some of Keynes' followers went on to refine things and came up with Monetarism.
http://en.wikipedia.org/wiki/Monetarism [wikipedia.org]

Re:Keynesian? (1)

Dave Emami (237460) | more than 2 years ago | (#37346196)

Qualifying Krugman as a "prominent Keynesian economist" is like calling Stephen Hawking a "prominent Einsteinian physicist". I call shenanigans.

A better analogy would be "like calling John Edward a 'prominent television psychic.'"

i want to know how much bitcoin is paying slashdot (-1)

Anonymous Coward | more than 2 years ago | (#37346064)

Because for what is more or less a scam, they get waaaaay more than their expected share of advert... err, stories here.

Of course the ad is a Gold ad (-1)

Anonymous Coward | more than 2 years ago | (#37346100)

Glen Beck likes Goldline Gold

Terrible summary, decent blog post (5, Insightful)

Baloroth (2370816) | more than 2 years ago | (#37346112)

By "discussing its similarity to the gold standard" the summary means "he points out one way Bitcoin is flawed." Specifically, that people hoard it instead of spending it (creating an unstable monetary system). Fewer transactions actually means less value, since the whole point of a monetary system that lacks intrinsic value (gold at least had that) is that it gets spent. Since the amount of Bitcoins is limited, and as time goes on the early adopters get "richer" (since less is being mined), they have an incentive not to spend. But the system will only succeed if they do spend and create a thriving system.

This is a massive gaping flaw in Bitcoin that I haven't seen pointed out yet. It means that Bitcoin will nearly always be a deflationary system. It also requires people to keep investing computing time, while their return on investment only gets less and less over time, and early adopters have no reason to spend, creating fewer transactions to be verified. And this can't be fixed: the limit to the number of Bitcoins is builtin to the system and cannot be changed.

So to everyone going "not another Bitcoin story!": read it. It actually points out a way that Bitcoin is (possibly) flawed (unlike so many of the stories on /.) And from a real economist, too.

Re:Terrible summary, decent blog post (2)

PCM2 (4486) | more than 2 years ago | (#37346266)

a monetary system that lacks intrinsic value (gold at least had that)

What's the intrinsic value of gold? It has value as a material to make jewelry out of, and that seems to be a lasting thing looking at history, but to my mind it's just a matter of personal preference (I would probably prefer silver jewelry to gold, myself) and therefore a false "value." All it would take would be one famous celebrity soccer mom to come along and claim gold causes autism and the value of gold would drop.

I always wonder why all the gold bugs aren't talking about instating an oil standard. Oil really has intrinsic value, because it can be used to do work. I suspect that this option is off the table, however, because America has Fort Knox but all the oil is owned by the darn A-rabs.

Re:Terrible summary, decent blog post (1)

LordLucless (582312) | more than 2 years ago | (#37346400)

Gold has an intrinsic value as a material for various technological uses, outside of its use for human adornment (which is really just an extension of its scarcity, just like its use as a currency).

Re:Terrible summary, decent blog post (1)

danlip (737336) | more than 2 years ago | (#37346406)

Oil's value is gone once it is used. Gold can be recycled and reused. It has lots of industrial uses too, not just making pretty things. And regardless of whether YOU prefer silver or gold jewelry, the fact is you are pretty much guaranteed you can find someone to trade you something you want for your gold. I agree with you that it's "intrinsic vale" is not really as much as what most people think it is. But unlike money the government can't just print more, so the limited supply is an important feature; it's rare, it's compact for it's value (unlike iron, which is highly useful but you don't want to carry around $1000 worth of iron) and it doesn't spoil, rust, rot, so it makes for pretty good money. But so does paper money if you have sound fiscal policy.

Re:Terrible summary, decent blog post (0)

Anonymous Coward | more than 2 years ago | (#37346422)

pretty much every electronic gizmo you own has some gold in it, bond wires, plated connectors, plated pcb

Re:Terrible summary, decent blog post (1)

brillow (917507) | more than 2 years ago | (#37346532)

I think the truth is that nothing has intrinsic value. Value is, by its very nature, a subjective thing. If gold caused autism it would still have value, because people keep it in vaults anyway.

Oil has value as an energy source, but that differs from intrinsic value, as for someone to value it they have to care about energy.

Plus, if we were on an oil standard, that would be insane. We'd immediately stop burning oil and have no energy, then everyone would build solar, wind, nuclear, hydroelectirc etc, power stations like mad to make up the difference. At this point the oil has no value as we would have replaced it with superior technology, its use as a form of currency would be as meaningless as gold's.

I've read somewhere though, that there are a lot of good reasons gold is an ideal unit of trade. It's rare (but not too rare), its easy to work and shape, melts at a relatively low temperature, is too soft to be useful as a structural material (copper in this way could not be a good unit of trade because people would smarter to use it to make tools and weapons), does not tarnish or corrode, not easily counterfeited, etc.

These properties are not present in any other element.

Re:Terrible summary, decent blog post (1)

brillow (917507) | more than 2 years ago | (#37346424)

There's an important thing you're both missing though, bitcoins are divisible by 8 decimal places. That means its possible for things to cost very few bitcoins in a way which is not possible in current monetary systems. Even if bitcoins have a very high trade value you will still be able to spend it 0.00000001 BTC at a time.

I think that increases the ability to hoard them as much as you like, AND still spend them. I dunno if this completely nullifies the argument though. I think people mistake BTC as being a digital version of a dollar, when its not quite that close. It is more like gold if it were possible to trade gold by the atom.

Re:Terrible summary, decent blog post (1)

Baloroth (2370816) | more than 2 years ago | (#37346504)

Actually, gold can be traded almost by the atom (just about as close as you can get a physical object anyways): Gold leaf [wikipedia.org]

Re:Terrible summary, decent blog post (1)

brillow (917507) | more than 2 years ago | (#37346596)

I should restate: "if it were practical to trade gold by the atom"

Hammering your gold coins into leaf yourself and being able to credibly verify its mass, quality, and composition is not practical.

Re:Terrible summary, decent blog post (1)

Anonymous Coward | more than 2 years ago | (#37346438)

These all have been discussed repeatedly, and for years on end. The fact that you, and Krugman, have not heard about it doesn't change that fact.

To summarize:
*Bitcoins can be subdivided to an extremely high amount. This mitigates to some extent deflation.
* That bitcoins have an ultimate cap is known, and expected. There is some debate in how much bitcoin could be used as a replacement currency. People who understand how bitcoin works tend to understand that in a world with decentralized currency, one version of it won't rule, and there would be exchange markets between them. Just like currencies now.
* If/when they have value, the cost to mine goes up, and only people with either some innovative or economic advantage will participate in the mining. This is exactly like mining for gold, which people still do, for the same reasons.
* The problem with Bitcoin is that, as software, there is not enough software yet that can utilize and leverage bitcoin. This is hampering the usefulness and the acceptance of bitcoin. EVERYBODY INTO BITCOIN KNOWS THIS.

Every anti-Bitcoin statement on the Internet falls into a few simple categories:
1. Re. your argument. We already know this, it's an experimental currency. We want to see what happens.
2. Your criticisms apply equally to existing currencies. What does this say about your criticism?
3. Your criticisms are about ways in which bitcoin does not work like traditional currencies. This is not an argument in of itself.
4. I HATE LIBERTARIANS/HACKERS/PEOPLE TRYING THINGS I THINK WILL FAIL.

I'm not blaming you specifically, but this is what I see. I will specifically say that Krugman's column is shit. He deserves his acclaim as an economist, but he hardly puts the level of effort and rigor into his blog than in the work that got him his Nobel. He just spews shit, post after post.

Patently Incorrect. (0)

Anonymous Coward | more than 2 years ago | (#37346124)

So at the beginning of the article he says, "In effect, Bitcoin has created its own private gold standard world, in which the money supply is fixed rather than subject to increase via the printing press."
Which is seriously wrong. The money supply is nowhere near fixed. How can his opinion on this be valid when he doesn't have an understanding of what he's criticizing in the first place?

Re:Patently Incorrect. (1)

Anonymous Coward | more than 2 years ago | (#37346152)

The money supply is nowhere near fixed.

It is fixed in that it becomes exponentially harder to print more of it as coins are mined.

Krugman is not an economist. (0, Troll)

roman_mir (125474) | more than 2 years ago | (#37346146)

Why do people care about what Krugman has to say? This is the guy who believes that destruction of wealth is the necessary stimulus that USA needs and that it would be great to have destruction even if by wars or natural disasters?

He believes there is a real difference in economics between 'micro' and 'macro', which is same nonsense as when the same differences are applied to evolution, so if you ask him - would he like his own house to be destroyed by a tsunami/tornado/flood, I am sure he'd answer - no. It's not good when done to a particular person. Only entire nations need to suffer altogether in wars and alien invasions [huffingtonpost.com].

This is guy is a Keynesian charlattan, he has nothing to do with economics, but his type of 'economics' is pervasive, because the politicians love these guys. The politicians invite these sort of 'economists' to be in the white house to help with policy, and this is the kind of help you get, while the universities then decide to have only these kinds of 'economists' propagate this nonsense further, so you end up with only Keynesian ideology in higher education. Thus all the underlying problems in the economy - because politicians use this charlatanism to give excuse for their only real agenda - stealing your money.

OK, from TFA:

What we want from a monetary system isn't to make people holding money rich; we want it to facilitate transactions and make the economy as a whole rich. And that's not at all what is happening in Bitcoin.

- that's the problem. The entire fiscal policy of USA destroys the value of savings by inflation and this is what destroys the economy. [slashdot.org]

Bear in mind that dollar prices have been relatively stable over the past few years â" yes, some deflation in 2008-2009,

- RELATIVE TO WHAT, YOU DUMBO? Relative to other flawed currencies? :) Well, not to Swiss Franc. Not to Canadian dollar. Not to NZ dollar. Not to Australian Dollar.

Besides, 2008-2009 is a TERRIBLE time to compare, as too many people completely misunderstood what was happening in the real economy and plunged head first into the dollars, which was the absolute wrong thing to do (and it is wrong thing to do now too, but now people understand it. Look at kitco.com) Too many people actually think that Keynesian charlatanism is economics, so they fall in this trap of following completely wrong ideas.

Anyway, yes, it's deflation of assets in real terms, so in terms of gold/silver assets are falling in price. It's cheapest gasoline ever today - under 10cents for a gallon, but those are silver cents.

But the inflation is in dollars, which is why real money is going up.

then some inflation as commodity prices rebounded, but overall consumer prices are only slightly higher than they were three years ago. What that means is that if you measure prices in Bitcoins, they have plunged; the Bitcoin economy has in effect experienced massive deflation.

- GOOD. Good for those who hold Bitcoins. Bad for those who hold dollars.

And because of that, there has been an incentive to hoard the virtual currency rather than spending it. The actual value of transactions in Bitcoins has fallen rather than rising. In effect, real gross Bitcoin product has fallen sharply.

- This Keynesian wants you to be poor, do you understand that?

He wants you to pay 3.50USD for your gas, and BTW, he doesn't think it's high enough. They have a target to make it much higher. But he doesn't want you to pay 10 cents for that gallon.

So to the extent that the experiment tells us anything about monetary regimes, it reinforces the case against anything like a new gold standard â" because it shows just how vulnerable such a standard would be to money-hoarding, deflation, and depression.

- Except there was NEVER a case of depression that had anything to do with the gold standard. Yes, bank runs happened, resource mis-allocations happened in some cases, but it took a fiat system to create case for real depression.

Depression is destruction of economy, it happens due to the business cycle that the federal reserve creates. Krugman is not an economist, and the Nobel Prize committee should be ashamed of itself for giving out prizes in Economics constantly to guys like him (and Obama, for peace?)

Re:Krugman is not an economist. (2)

h4rr4r (612664) | more than 2 years ago | (#37346194)

that's the problem. The entire fiscal policy of USA destroys the value of savings by inflation

Thats not a bug, its a feature. You don't seem to understand what the purpose of money is. It is not an investment.

Re:Krugman is not an economist. (2, Insightful)

roman_mir (125474) | more than 2 years ago | (#37346240)

I never said money is investment. You seem to misunderstand me completely.

Money is savings, it's not an investment. Real money is gold, it's not an investment. It is NOT an investment. Investment is a business. Business that makes money. Be it your own business or somebody else's business that you invest in.

Money is store of value, medium of exchange and unit of account. USD doesn't work as a store of value, here is the proof:

sugar [indexmundi.com] Dec 2003: 20.40 cents/pound, Apr 2011: 36.97 cents/pound, price up by over 81%
Beef [indexmundi.com] Dec 2003: 105.40 cents/pound, Apr 2011: 193.00 cents/pound, price up by over 83%
Barley [indexmundi.com] Dec 2003: 100.77 USD/Metric Ton, Apr 2011: 208.70 USD/Metric Ton, price up by over 107%
Rice [indexmundi.com] Dec 2003: 197.00 USD/Metric Ton, Apr 2011: 500.57 USD/Metric Ton, price up by over 154%
Cocoa Beans [indexmundi.com] Dec 2003: 1,646.58 USD/Metric Ton, Apr 2011: 3,113.52 USD/Metric Ton, price up by over 89%
Tea [indexmundi.com] Dec 2003: 205.22 cents/KG, Apr 2011: 325.33 cents/KG, price up by over 58%
Rubber [indexmundi.com] Dec 2003: 57.31cents/pound, Apr 2011: 265.49cents/pound, price up by over 363%
Corn [indexmundi.com] Dec 2003: 111.98 USD/Metric Ton, Apr 2011: 318.45 USD/Metric Ton, price up by over 184%
Bananas [indexmundi.com] Dec 2003: 371.43 USD/Metric Ton, Apr 2011: 1,013.47 USD/Metric Ton, price up by over 172%
Propane [indexmundi.com] Dec 2003: 0.63 USD/Gallon, Apr 2011: 1.45 USD/Gallon, price up by over 130%
Wheat [indexmundi.com] Dec 2003: 165.57 USD/Metric Ton, Apr 2011: 336.30 USD/Metric Ton, price up by over 103%
Oranges [indexmundi.com] Dec 2003: 583.00 USD/Metric Ton, Apr 2011: 881.00 USD/Metric Ton, price up by over 51%
Salmon [indexmundi.com] Dec 2003: 3.12 USD/Kg, Apr 2011: 7.86 USD/Kg, price up by over 151%
Chicken [indexmundi.com] Dec 2003: 68.98 cents/pound, Apr 2011: 86.42 cents/pound, price up by over 25%
Pork [indexmundi.com] Dec 2003: 48.68 cents/pound, Apr 2011: 92.06 cents/pound, price up by over 89%
Silver [indexmundi.com] Dec 2003: 565.33 cents/Troy ounce, Apr 2011: 4,279.79 cents/Troy ounce, price up by over 657%
Alluminum [indexmundi.com] Dec 2003: 1,557.78 USD/Metric Ton, Apr 2011: 2,667.44 USD/Metric Ton, price up by over 71%
Uranium [indexmundi.com] Dec 2003: 13.35 USD/pound, Apr 2011: 57.84 USD/pound, price up by over 333%
Iron Ore [indexmundi.com] Dec 2003: 13.82 cents/dry Metric Ton, Apr 2011L: 179.26 cents/dry Metric Ton, price up by over 1197% (yeah, almost 1200%)
Gasoline [indexmundi.com] Dec 2003: 0.89 USD/Gallon, Apr 2011: 3.18 USD/Gallon, price up by over 257%

Re:Krugman is not an economist. (2)

h4rr4r (612664) | more than 2 years ago | (#37346340)

I can buy things in USD not in rice, so I disagree. Money can lose or gain value and still be a store of value. Gold is a commodity. It is not money anymore than uranium is money.

Re:Krugman is not an economist. (1)

geekoid (135745) | more than 2 years ago | (#37346430)

Business don't make money, they collect money. There is a huge difference.

Re:Krugman is not an economist. (1)

Z34107 (925136) | more than 2 years ago | (#37346480)

I don't think you understand what a "store of value" is. You can put dollars into a bank, take them out again, and spend them just as you could before.

Also keep in mind that the current inflation rate is 3.6%, not 1200%. By your definition, there wouldn't be any "stores of value" left in the world.

Re:Krugman is not an economist. (1)

benjamindees (441808) | more than 2 years ago | (#37346534)

Keep in mind the government lies about the true inflation rate, and the Federal Reserve increased their balance sheet by 100% in 2008 alone.

Re:Krugman is not an economist. (2)

istartedi (132515) | more than 2 years ago | (#37346496)

Money is store of value, medium of exchange and unit of account. USD doesn't work as a store of value, here is the proof [long list of commodity price increases, snip]

The "store of value" function isn't boolean. Without some incentive to spend or invest, the money fails. In particular, it fails as a medium of exchange since there is no incentive to spend or invest. Now note, I used the abstract "incentive" without referring to inflation. Inflation is simply the most convenient incentive we've found to compel people to spend or invest their money. Yes, it does gradually erode the store of value function. It's not a bug. It's a feature.

Aside from that, there is a large range of increases in your commodity prices. If it were all due to dollar devaluation, they shoulud be roughly the same. Iron ore is up the most, I suspect, because of China's massive construction boom. You've also chosen a timeframe during which the Fed has engaged in some controversial policies that have driven commodity speculation. If Slashdot existed in 1988, and you chose 1980 as your baseline, this would be a very different discussion.

Re:Krugman is not an economist. (-1)

Anonymous Coward | more than 2 years ago | (#37346212)

Before I weigh in on what you said, I'd like to begin with a simple screener question.

How many Nobels in Economics do you have?

OK, good. And Krugman?

Hmm, maybe that's a bit of an unfair comparison. How about we'll start instead with this... How many publications? [nber.org]

Re:Krugman is not an economist. (0)

JebusIsLord (566856) | more than 2 years ago | (#37346244)

obvious troll is trolling

Re:Krugman is not an economist. (0)

Anonymous Coward | more than 2 years ago | (#37346288)

You know, I had this experience here on /., and I wrote about it in the journal, where I get moderated down indiscriminately and just in a row, every comment in a row, this went on for days. A few people just like you said: this is a troll.

Well here is a hint: just because you disagree with what I am saying does not make my message any less valid and does not make me a troll.

However when you post a comment that basically says that, AFAIC, your comment is trolling.

Re:Krugman is not an economist. (1)

JebusIsLord (566856) | more than 2 years ago | (#37346332)

implying that Krugman advocates war or tragedy either illustrates profound stupidity or an intentional misinterpretation of the concepts he was trying to illustrate. Maybe you've been mislabeled a troll simply because your posts are unbelievably naive?

Re:Krugman is not an economist. (2)

Volante3192 (953645) | more than 2 years ago | (#37346252)

Since we have adopted leaves as legal tender, we have all become immensely rich, but due to high leaf availability we have run across a slight inflation problem meaning it will take three deciduous forests to buy one ship's peanut. Therefore, we are about to embark on a leaf revaluation project... ...and burn down the forest.

(--HHGTTG)

Re:Krugman is not an economist. (0)

Anonymous Coward | more than 2 years ago | (#37346346)

Um, last time I checked it was pretty hard to get the leaves that matter.

That's precisely what central banks *do* (1)

Goonie (8651) | more than 2 years ago | (#37346484)

However, they try to do so with a bit more subtlety than Adams' imagined Golgafrinchan macroeconomists.

And immensely more subtlety than our friend the OP, whom is utterly delusional. Encouraging currency hoarding rates roughly up there with Caucescu's "export everything" policy as the silliest economic policy idea of all time.

Re:Krugman is not an economist. (0)

Anonymous Coward | more than 2 years ago | (#37346280)

Depression is destruction of economy, it happens due to the business cycle that the federal reserve creates.

One of my interests in 19th and early 20th century US business history and you've seen nothing. Before the Fed, the US economy would fluctuate between booms and panics. Businessmen got on Congresses case to create the Fed to help manage the economy and smooth out the business cycle. Business people HATE uncertainty and LOVE predictability.

so if you ask him - would he like his own house to be destroyed by a tsunami/tornado/flood,

No. He would explain to you the parable of the Broken Window [wikipedia.org]

The rest of your post sounds someone who's very angry at something that Krugman touched on.

Re:Krugman is not an economist. (1)

0123456 (636235) | more than 2 years ago | (#37346334)

Before the Fed, the US economy would fluctuate between booms and panics.

Whereas now it fluctuates between booms and decade-long depressions and economic collapse.

Oh, and they've decreased the dollar's value by 99% in the meantime too.

Re:Krugman is not an economist. (1)

geekoid (135745) | more than 2 years ago | (#37346418)

Slow down there, we figure you were stupid after the second paragraph you didn't need to keep pounding it home.

Moving money form the wealthy and into circulation is good for the economy.
And we should pay more for Gas. Seriously. It's a dwindling resource. A critical resource, I might add.

"- RELATIVE TO WHAT, YOU DUMBO? "
The fact that you don't understand what he is talking about means you should research, not fall to as homs.

There is some real issues t discuss about what he says, but you clearly don't understand what he is talking about. Take time tom understand what he talks about, and then refute some of his claims. Until then, you look like another ignorant person waving their dick around calling it a banana.

I saw a guy doing that in Down town Portland today, can't get the image out of my head.

The main problem: Greed (3, Insightful)

imsabbel (611519) | more than 2 years ago | (#37346148)

While bitcoin is quite interesting from a cryptography point of view, it totally fails to address human nature.

In particular, GREED.

2 years ago it was trivially easy to mine 100s of bitcoins. Hell, you could by 1000 for less than a happy meal. Now people sit on those coins, hoping that bitcoin will become a mainstream currency, in which case the value of a bitcoin would need to rise by many orders of magnitudes. If it reached a capitalization compareable to the USD, that bigmac would become equivalent of $25M.

And there are people around with a much much larger fraction of possible bitcoins than there were ever for any real currency. And the deflationary nature of it will mean that the value of those horders (and thus their economical power) WILL have to grow in case of a success of bitcoin.

Re:The main problem: Greed (0)

geekoid (135745) | more than 2 years ago | (#37346452)

bitcoin can't work because people outside of a country would be able to undercut a different countries monetary system.

Re:The main problem: Greed (1)

superwiz (655733) | more than 2 years ago | (#37346604)

Not really. Main cost in generation is cost of energy. And the cost of energy is controlled by cost of world-wide generation and use of natural resources. These are fungible.

Re:The main problem: Greed (0)

Anonymous Coward | more than 2 years ago | (#37346554)

Bitcoin is designed to be a deflationary currency, ie like gold. There is a gradual inflationary boot strap phase where 'mining' creates new bit coins out of nothing, but that is eventually slated to end. Once it has a fixed circulation it is fully deflationary. 'mining' will be rewarded because all the transaction fees associated with a completed block go to the miner.

I'm not sure something like this has ever been tried before, generally the banks and state get involved in some way to always create inflation. What happens if you cryptographically prevent that kind of meddling? Nobody knows for sure, certainly not Krugman, who spent his life studying inflationary economics.

The transaction rate is going to be governed by supply/demand - hording the currency doesn't change that, but it will certainly affect the settlement price, which should fall over time in an environment with significant hording. Yes, the 'GDP' as measured in bit coins will fall, but the 'GDP' measured in exchange of tonnes of oil/food/goods will not change, and is independent.

Dumping your horde is the same as increasing circulation + inflation, and will globally rise prices if the horde is big enough. However, the critical point: having a huge horde is a one time deal. You get to spend it once. It doesn't sit there and earn you a huge free cash flow like we see with fiat today (eg interest). That drastically limits the power a horde has over the entire economy.

Think about it, if you attempt to lend your horde to earn an income off of it, it is now fully circulating.

Psychologically, the biggest problem is that people are unlikely to accept that their paycheques will also decrease proportional to the systemic deflation of the system. People are trained to accept that their paycheques have a constant face value, but decline in purchasing power due to inflation.

On the other hand, human nature being what it is, if you give someone the power to steal your purchasing power they eventually will. The US$ has had drastic inflation in the past 100 years, the economic 'gain' from that inflation was collected/stolen by the big banks and government. This is main way that fiat currencies totally fail to address human nature.

Pick your poison.

Trust this AC just one time (1)

Anonymous Coward | more than 2 years ago | (#37346378)

Trust me (and I know this sounds funny coming from an AC), this particular story is totally worth reading at -1 moderation, because that's where the best comments will be.

Paul Krugman? LOL (0)

Anonymous Coward | more than 2 years ago | (#37346516)

Paul Krugman?

Is this the same guy that said we should fake an alien invasion in order to fix the US Economy?
Is this the same guy that in 2002 that the federal government should create a housing bubble in order to recover from the dot com bubble?

If any one still thinks this guy isn't a lunatic, I have a bridge in Brooklyn I'd like to sell you.

i looked into it (1)

superwiz (655733) | more than 2 years ago | (#37346586)

At the current difficulty (you know what that means if you mine bitcoins) and the current rates of kW-hours in the US, it would take about $0.35 of electricity to generate $0.02 of bitcoins. The cost of power if the main cost of generating. There has been a steady decline in the exchange rate of bitcoins in the past month and at the same time a steady decline in the difficulty. These two are supposed to be inversely proportional. The only conclusion I reached was that the proportion of bitcoins generated with stolen cycles or stolen power is rising. Not coincidentally, there was recently a report of increasing use of botnets for bitcoin generation (that would be the increased number of stolen cycles). Apparently, people with access to electricity paid through commons are contributing to the generation of bitcoins from stolen electricity.

Fundementally flawed (2, Interesting)

gatkinso (15975) | more than 2 years ago | (#37346598)

Bitcoin is the equivalent of a nations currency that has been printed by individuals by permission.

This fact alone is its undoing.

Your GPU's do not constitute value. Nobody will accept the fact that you are a bitcoin millionaire simply because you let a few unused computers run for a few months.

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