[SmartCat]

Originally Posted by ragh_bhushan

How many people who earn daily wage in developing / third world countries are even aware about the concept of stocks or precious metals? For them money is just a means to buy basic necessities of life. Concept of hyperinflation or protecting their daily earnings would be a little far fetched for them.

Oh, I was giving you a solution, not the daily wager. Because you were worried about your well-being if there was hyperinflation. Quoting you -

However, do you mean to say that as a citizen my only option is to trust that my monetary policy makers will keep my best interest in mind but in case they screw up, I should just play along and let my money deteriorate?

Meanwhile, give the daily wager in India some credit - he knows the utility of Gold and Silver as a store of value, and hence a hedge against inflation and hyperinflation. Most poor/rural households in India keep their savings in Gold and Silver.

Originally Posted by ragh_bhushan

Opening a Bitcoin account is as simple as installing an app

Yes, looks quite simple:



So all that the daily wager has to do to deal with bitcoin is have an email ID, PAN card, bank account and Aadhar card.

[ragh_bhushan]

Originally Posted by smartcat

Oh, I was giving you a solution, not the daily wager. Because you were worried about your well-being if there was hyperinflation. Quoting you -



Meanwhile, give the daily wager in India some credit - he knows the utility of Gold and Silver as a store of value, and hence a hedge against inflation and hyperinflation. Most poor/rural households in India keep their savings in Gold and Silver.

You took "me" literally. I was talking about people affected by hyperinflation not myself per se. I wonder what prevents Venezuelans or Zimbabweans from parking their cash in stocks or gold.

Yes, looks quite simple:

So all that the daily wager has to do to deal with bitcoin is have an email ID, PAN card, bank account and Aadhar card.

This is the steep learning curve I was talking about in my earlier post. One does not need Zebpay or any third party exchanges who ask you this ton of information to get started with Bitcoins. There are hundreds of wallets on the app store which won't even ask you your name or email id to get started. They are completely anonymous. But even well educated people who have heard about Bitcoin don't know this or many other important facts about Bitcoin. Hence the adoption will be slow and will be propagated by the community that is growing day by day.

[SmartCat]

Originally Posted by ragh_bhushan

I wonder what prevents Venezuelans or Zimbabweans from parking their cash in stocks or gold.

Gold/Dollar imports are banned in Venezuela. But Indian public has huge amounts of Gold and Silver that can and will be used as currency if required. India specifically has no use of bitcoin as hyperinflation hedge because like bitcoin, Gold and silver are infinitely divisible. And you know what? Supply of gold and silver are limited too - just like bitcoin

By pitching bitcoin as a hedge against hyperinflation, you are going back 500 to 1000 years in time. You are not showing the future.

Nothing prevents Venezuelans from parking their funds in stocks. That's why the stock market is going up (in local currency terms). Nothing prevented Argentinians and Zimbabweans from parking their funds in stocks either. That's why returns (in local currency terms) even beat the hyperinflation rate.
Hyperinflation is not like the end of the world for a country. When you read NYTimes article, you do get such an impression but that's not the case. Argentina has gone into hyperinflation and come out of it 3 or 4 times so far. And they are doing fine now. Remember that countries can have hyperinflation for years together. And people figure out what to do with time and use other means for transacting (Weird example: paper IOUs).

There are hundreds of wallets on the app store which won't even ask you your name or email id to get started.

I know this, but how will you put bitcoins in them? How will the poorest of the poor get access to bitcoins? Let's say 25 years from now?

Hence the adoption will be slow and will be propagated by the community that is growing day by day.

You make it sound like a religion!

[ragh_bhushan]

Originally Posted by smartcat

Gold/Dollar imports are banned in Venezuela. But Indian public has huge amounts of Gold and Silver that can and will be used as currency if required. India specifically has no use of bitcoin as hyperinflation hedge because like bitcoin, Gold and silver are infinitely divisible. And you know what? Supply of gold and silver are limited too - just like bitcoin

I agree with you that gold can be used as currency if required. So what is Bitcoin really? Digital gold perhaps? I pulled up a table from the internet to highlight various properties of different types of possible currencies:

Last point there is "Smart (Programmable)"

By pitching bitcoin as a hedge against hyperinflation, you are going back 500 to 1000 years in time. You are not showing the future.

Isn't digital gold a version of future?

Hyperinflation is not like the end of the world for a country. When you read NYTimes article, you do get such an impression but that's not the case. Argentina has gone into hyperinflation and come out of it 3 or 4 times so far. And they are doing fine now. Remember that countries can have hyperinflation for years together. And people figure out what to do with time and use other means for transacting (Weird example: paper IOUs).

Bitcoin is digital IOUs which I think is probably better than paper IOUs. Maybe these countries will eventually come out of hyperinflation like in the past but that does not mean we should not even to try to prevent such situations in the future.

I know this, but how will you put bitcoins in them? How will the poorest of the poor get access to bitcoins? Let's say 25 years from now?

Bitcoin is peer to peer. I or anyone in the bitcoin network can transfer Bitcoins to anyone else in the world without asking for any third party approvals. One can pay for goods and services in Bitcoins. That's how you put Bitcoins in empty wallets.

You make it sound like a religion!

Doesn't religion require a central figure? There is no centre here. Just a network

[Samurai]

Originally Posted by ragh_bhushan

Doesn't religion require a central figure? There is no centre here. Just a network

Of course there is a central figure. He is Satoshi Nakamoto, nobody has seen him, nobody knows who it is, and he has even written a bible, I mean manifesto. And just like any central figure of a religion, he is the single richest owner of bitcoins.

Ethereum has Vitalik Buterin, and at least he is not hiding. They have a manifesto too.

And just like religion, this is an invisible product. It is not anchored to any kind of production of goods or services. All believers are willing to throw money at it, while receiving nothing in return, except emotional gratification.

[ragh_bhushan]

Originally Posted by Samurai

Of course there is a central figure. He is Satoshi Nakamoto, nobody has seen him, nobody knows who it is, and he has even written a bible, I mean manifesto. And just like any central figure of a religion, he is the single richest owner of bitcoins.

Ethereum has Vitalik Buterin, and at least he is not hiding. They have a manifesto too.

And just like religion, this is an invisible product. It is not anchored to any kind of production of goods or services. All believers are willing to throw money at it, while receiving nothing in return, except emotional gratification.

Good analogy. Except things have changed so much since Nakamoto's original white paper. The entire development team has changed, evolved, and is still evolving. Few original contributors to the code are dead but the work is being carried on. Anybody from anywhere in the world can become a part of the development community and contribute. It is free and one can contribute in any which way one wishes. Teaching, coding, developing smarter algorithms, new applications, all towards a single goal - To create system of trust without involving a third party.

I do not know how much Bitcoins Satoshi Nakamoto is currently holding so I will refrain from commenting on the same. Regarding Ethereum, I have mentioned earlier that I strongly feel it is a scam. There is nothing in Ethereum that Bitcoin cannot implement.

Why is Bitcoin currently the best cryptocurrency out of 1000s of coins out there?

• Longest Blockchain that hasn't been tampered with
• Largest and smartest community of developers
• Maximum committed mining hardware and software - This keeps changing though
• Not controlled by any individual or institution but rather controlled by the entire community that uses it via consensus algorithm

[vamsi.kona]

Originally Posted by ragh_bhushan

Teaching, coding, developing smarter algorithms, new applications, all towards a single goal - To create system of trust without involving a third party.[/list]

I am still not sure why we would like to have a system without a regulator. It is fine if we say we don't want a private third party but rather a government organisation acting as a middle man, but to completely do away with a regulator of sorts we would be exposing the parties to fraud and cheating. Right now the prime advantage of a third party or middleman as we say is dispute redress mechanism. It has been proved that no matter how strong a system we can make, there are ways to hack them/surpass them. It happens in the current set-up and it will happen in whatever set-up we might come up with. This is where the third party or Regulator comes into play.

Originally Posted by ragh_bhushan

Not controlled by any individual or institution but rather controlled by the entire community that uses it via consensus algorithm[/list]

It would be naive to think that in our world people/institutions wouldn't try to take advantage or manipulate something as rewarding as a crypto currenncy right now.

Researchers found that a single actor was “likely” behind several accounts that bought millions of dollars worth of bitcoin and drove the exchange rate in the US from $150 to $1,000 over the course of two months

Tether ‘Hack’ EXPOSES Bitfinex in Money Laundering

[ashokrajagopal]

Originally Posted by ragh_bhushan

Good analogy. Except things have changed so much since Nakamoto's original white paper. The entire development team has changed, evolved, and is still evolving. Few original contributors to the code are dead but the work is being carried on. Anybody from anywhere in the world can become a part of the development community and contribute. It is free and one can contribute in any which way one wishes. Teaching, coding, developing smarter algorithms, new applications, all towards a single goal - To create system of trust without involving a third party.

I do not know how much Bitcoins Satoshi Nakamoto is currently holding so I will refrain from commenting on the same. Regarding Ethereum, I have mentioned earlier that I strongly feel it is a scam. There is nothing in Ethereum that Bitcoin cannot implement.

Why is Bitcoin currently the best cryptocurrency out of 1000s of coins out there?

• Longest Blockchain that hasn't been tampered with
• Largest and smartest community of developers
• Maximum committed mining hardware and software - This keeps changing though
• Not controlled by any individual or institution but rather controlled by the entire community that uses it via consensus algorithm

You are going on and on about the salient features of Bitcoin, without accepting the basic premise that there is no actual problem it is solving.

a) System of trust not involving a third party -- this is already in place for decades. And it is called constitution in democracies. Shortcomings of these systems are there manifold in any crypto currency.

b) The popularity of bitcoin is not because people understand the hippie philosophy behind it. It is just because it is currently not tracked by governments, so the transactions happen outside the system. The moment a govt brings in small regulations as to capital gains tax, people will get out and it will crash. Its a medium of hoarding as of now, thats it.

c) The whole beauty of the thing is being expressed as honesty integrity, etc. But basic premise of circular transactions itself is not be tackled -- I can set up a team of 5 people and trade amongst ourselves to increase the price. There is no SEBI built into the system.
So, what is happening as of now, is some people are selling the honesty of the system with lofty idealistic words, while others are minting money out of it with fraud. Come to think of it, it sounds exactly like religion.

[Samurai]

Originally Posted by ashokrajagopal

The moment a govt brings in small regulations as to capital gains tax, people will get out and it will crash. Its a medium of hoarding as of now, thats it.

In US, the moment you sell any bitcoin, you get slapped with 20% capital gains tax. The IRS gets the reports directly from crypto exchanges, so there is no real escape. As a result, lots of people are not cashing out.

[ragh_bhushan]

Originally Posted by vamsi.kona

I am still not sure why we would like to have a system without a regulator.

We have covered this in the previous posts. Summarising again along with examples of countries where this is a problem:

• Restriction on movement of funds - China, North Korea, Venezuela
• Possibility of Hyperinflation - Venezuela, Zimbabwe
• Prone to censorship - US (Cannot donate to Wikileaks etc)
• Prone to seizure - India (If the transactions seem suspicious to Taxmen bank accounts can be frozen)
• Bank Deposits maybe subject to taxes if government feels so - Greece

Now one may argue that there are dozens of solution to all the above problems but what we need to ask is does Bitcoin single handedly solves all the above? The answer is probably Yes. Bitcoin protocol cannot be manipulated by any person, organization or government.

Having said that there are problems with Bitcoin itself:

• Lack of Awareness & Understanding
• Risk and Volatility
• Still Developing

to completely do away with a regulator of sorts we would be exposing the parties to fraud and cheating.

This is where lack of awareness and understanding comes in. If one understands what Bitcoin really is then the risk of fraud and cheating is almost zero.

It would be naive to think that in our world people/institutions wouldn't try to take advantage or manipulate something as rewarding as a crypto currency right now.

Absolutely correct. With Bitcoin, the control is back with the users and it is upto individuals to protect their hard earned money.

Originally Posted by ashokrajagopal

You are going on and on about the salient features of Bitcoin, without accepting the basic premise that there is no actual problem it is solving.

Highlighted above the problems that I feel are problems. We can agree to disagree on whether they are actually problems or just things made up by people like me.

b) The popularity of bitcoin is not because people understand the hippie philosophy behind it. It is just because it is currently not tracked by governments, so the transactions happen outside the system. The moment a govt brings in small regulations as to capital gains tax, people will get out and it will crash. Its a medium of hoarding as of now, thats it.

I cannot see future sir. I honestly don't know if the price will continue to rise or sink like a stone. Bitcoin has been declared dead about 140+ times in the past. One can read about these obituaries here

Can it fail? Of course it can. It will continue to be attacked not just from outside the system but also from within! I am surprised that we have come this far but I am also hopeful that we have much to go.

I can set up a team of 5 people and trade amongst ourselves to increase the price. There is no SEBI built into the system.

Correct. This has happened in the past and will continue to happen. More blatantly recently in altcoins (Pump and Dump) than Bitcoin. That is why price of Bitcoin is irrelevant and immaterial. What it is trying to achieve is far more significant than its price against traditional money.

[Samurai]

Originally Posted by ragh_bhushan

Now one may argue that there are dozens of solution to all the above problems but what we need to ask is does Bitcoin single handedly solves all the above? The answer is probably Yes.

Originally Posted by ragh_bhushan

This is where lack of awareness and understanding comes in. If one understands what Bitcoin really is then the risk of fraud and cheating is almost zero.

Since you have been continuously offering a technological solution for a non-existing economic/financial problem, I have simple question for you. Do you have any formal background in economics or finance?

[ragh_bhushan]

Originally Posted by Samurai

Since you have been continuously offering a technological solution for a non-existing economic/financial problem, I have simple question for you. Do you have any formal background in economics or finance?

No Sir. I have a very basic understanding of economics and I am just a techie. However I would like to quote one Noble prize winning economist Paul Krugman's view on Internet from 1998.

"By 2005 or so, it will become clear that the Internet's impact on the economy has been no greater than the fax machine's"

I personally think Bitcoin is internet of money. I rest my case.

[Samurai]

Originally Posted by ragh_bhushan

No Sir. I have a very basic understanding of economics and I am just a techie.

Thanks. In that case I won't hound you anymore to explain bitcoin using economics/finance.

Originally Posted by ragh_bhushan

However I would like to quote one Noble prize winning economist Paul Krugman's view on Internet from 1998.

Since you obviously respect Paul Krugman, do read what he says about bitcoin.

[ksameer1234]

Originally Posted by ragh_bhushan

Noble prize winning economist Paul Krugman's view on Internet from 1998.

Found his reply to being quoted on internet remark (link):

First, look at the whole piece. It was a thing for the Times magazine's 100th anniversary, written as if by someone looking back from 2098, so the point was to be fun and provocative, not to engage in careful forecasting; I mean, there are lines in there about St. Petersburg having more skyscrapers than New York, which was not a prediction, just a thought-provoker.

But the main point is that I don't claim any special expertise in technology -- I almost never make technological forecasts, and the only reason there was stuff like that in the 98 piece was because the assignment required that I do that sort of thing. The issues about Bitcoin, however, are not technological! Everyone agrees that it's technically very sweet. But does it work as money? That's a very different kind of question.

And the fact that people are throwing around my 98 quote actually shows that they don't get this point -- that they're confusing technology with monetary economics.

I have a query about whether Bitcoin can substitute conventional currency for activities such as buying things. Say a seller accepts bitcoins as payment for some goods. Now, if the value of bitcoin is going to increase continuously as everyone predicts, why would the buyer want to part with bitcoin knowing very well that it will get him more goods in future than today? On the other hand, if the value of bitcoin enters downward spiral, why would seller accept bitcoin knowing that the value of bitcoin won't hold in future.

Now say if the value of bitcoin actually remains stable over a long period, why would anyone bother hoarding it? I don't hoard currency notes since their value isn't going to change dramatically and don't pay for bread using gold hoping it will appreciate. Is bitcoin really the currency which everyone hopes it is? Wouldn't conventional currency combined with best features of blockchain be a far more logical solution?

[ragh_bhushan]

Originally Posted by Samurai

Thanks. In that case I won't hound you anymore to explain bitcoin using economics/finance.

Nobody can explain Bitcoin using conventional economics/finance. That would be unfair to both technology as well as economics.

Since you obviously respect Paul Krugman, do read what he says about bitcoin.

The "value behind Bitcoin" point has been discussed at length in the previous posts. I do not have anything further to add.

Originally Posted by ksameer1234

Found his reply to being quoted on internet remark

So what is the context of his current views on Bitcoin? Another thought provoking idea or careful forecasting?

I have a query about whether Bitcoin can substitute conventional currency for activities such as buying things. Say a seller accepts bitcoins as payment for some goods. Now, if the value of bitcoin is going to increase continuously as everyone predicts, why would the buyer want to part with bitcoin knowing very well that it will get him more goods in future than today? On the other hand, if the value of bitcoin enters downward spiral, why would seller accept bitcoin knowing that the value of bitcoin won't hold in future.

Accepting Bitcoin as a currency cannot happen until the price stabilises. When will it stabilised? Maybe once there is enough adoption. Right now less than 2.5% people in the world hold Bitcoin. This percentage needs to go up for the price to stabilise.

Now say if the value of bitcoin actually remains stable over a long period, why would anyone bother hoarding it? I don't hoard currency notes since their value isn't going to change dramatically and don't pay for bread using gold hoping it will appreciate. Is bitcoin really the currency which everyone hopes it is? Wouldn't conventional currency combined with best features of blockchain be a far more logical solution?

They won't hoard it if the price does not move much. Best feature of blockchain is a relative term. What's good for individuals might be bad for banks. And what works for banks and governments might not be good for individuals. Decentralised and distributed system is the best feature in my personal opinion but that doesn't really work for our financial institutions.