Warren Smith wrote: Chaum (subject to reasonable conjectures) had that property. Bitcoin, on the contrary, has the property that I can steal your money by simply outcomputing you, and with no need for me to exponentially outcompute you.
APG: No, you can only steal my money if you can outcompute the sum of the rest of the world's computing power. And if you can do that, then you may as well just mine bitcoins instead, as your profit will be substantially greater. --oh. I had not realized that. But let's assume that is true; this is (a) still far weaker assurance than exponential time (b) still requires computing forever to protect money even if you never use a cent (c) supposedly there will be at most 21 million bitcoins, and if we believe the NSA owns 21 million computers, then, uh... doesn't that mean the NSA can totally dominate everything bitcoin? And let's say the NSA is not interested in making "substantially greater profit"; instead they are interested in power. (d) bitcoins can be stolen, but I thought Chaum's money was unstealable. Question: is the entire record of who-paid-who-when publicly accessible with bitcoins? If so, this is in some ways good, but in other ways a privacy disaster, e.g. "big brother."
Why is Bitcoin trustworthy? Dave Dyer: Money is based on the theory that the value you assign to something today will be similar to the value someone else assigns to it in the future, so it's safe to trade something you value (your time, your house) for money, instead of a direct barter for something else you value (ie; "will work for food") Producing gold requires a lot of work, and the gold itself is durable and portable; which is why gold is traditionally a trustworthy measure of stored value. Similarly creating a bitcoin requires a lot of work. The cleverness in the bitcoin system is that the "work" is intimately linked to the process of recording and verifying transactions in bitcoin.
--WDS: well, first of all, the cost of computing has changed by, like, a factor of 10^6 over my life. That means gold is way more stable in terms of inherent value in terms of labor, no? Second, it is just a fact that the value of bitcoins has changed tremendously over time, far more so than gold, right? So it has already failed hugely by those desiderata? But there is an analogy -- nobody can trivially create more gold, unlike paper money. Ditto bitcoins. Both have that advantage over paper money. But it has been far easier to obtain gold some places and times than others, another reason it did not work too well. But: with gold, that meant lots of human labor was wasted mining gold for no reason. Pollution, energy consumption. It was a stupid waste. Ditto for "mining" bitcoins. And bitcoins are worse because everybody can be a bitcoin miner but only a few could be gold miners, which means there will be more waste; and also gold mining creates more gold, but bitcoin mining will be required even in a planned era of no further bitcoin creation. There is a simpler solution (which I proposed many years ago, not that anybody listened; and this may have been proposed by others too): tie money directly to the ultimate measure of "value": human labor. Specifically, make a law saying there is a minimum wage of $1 per hour, and a maximum wage of $10000/hour (say), and these two numbers are fixed. Now actually, a hard maximum is not needed, just a progressive income tax that goes to 100% asymptotically on a fixed curve. Anyhow, if we really had those laws and they really were unchangeable (and money could not be counterfeited), then it seems to me money would be inflation-proof. A big "if", but that would be all that would be needed. Right now there is no relation between the value of money and the value of human labor aside from habit/tradition. If tomorrow it were declared that all wages and all prices were to double, we'd go on just as before, just moving money at twice the flow-rate. That proves nothing sets the scale and that the total quantity of money is irrelevant. I think lots of the stuff many economists say about the value of money (and other things) is hogwash. APG: There's no central authority. WDS: What is so horrible about needing a "trusted central bank"? For many purposes that might well be a good, not a bad, thing.