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Free Minds & Free Markets

Bitcoin Confuses Alan Greenspan

Mainstream economists were trained to believe that currencies need to be managed by central banks. So this new form of money is...hard to grasp.

Bitcoin is valuable—its price has roughly doubled in the last month—because it's a technically superior form of money that governments and other institutions can't control. Mainstream economists, however, were trained to believe that currencies need to be managed by government-controlled central banks. So this new form of free-market money is proving...hard to grasp.

Alan Greenspan hasn't bothered to learn even the basic facts about bitcoin. On Wednesday, the former Federal Reserve chairman compared it to the "Continental" currency issued at the outset of the Revolutionary War, which ultimately lost all of its value because the government kept printing more of it.

"The amount of fiat currency kept rising," Greenspan said on CNBC, "and it's very difficult to tell to what extent bitcoin is fundamentally different from that, but I will say there are very considerable similarities." When asked if bitcoin will eventually be worthless, Greenspan responded, "It depends on how they handle the issue of the quantity that's being put into the market."

Wasn't there a CNBC producer on hand who could shout something into the economist's earpiece about how the supply of bitcoin is capped at 21 million, and that about 80 percent of all bitcoins that will ever exist are already in circulation?

The Yale economist Stephen Roach appeared on CNBC on Tuesday to alert us to his view that bitcoin is a "toxic concept" and a "dangerous, speculative bubble." Roach asked rhetorically, "Have you yet to see anybody with a bitcoin in their pocket?"

It's true that bitcoin isn't widely used as a currency (except as a way to circumvent capital controls and high import taxes). But Roach seems unaware of the reasons for that. For one thing, bitcoin is still in an early stage of development. Sending or receiving bitcoin today involves publishing the transaction to a shared public database called a blockchain, which is an extremely limited resource. (There are just 1mb of data available to record bitcoin transcactions roughly every 10 minutes.) Using this data to post a transaction means paying a significant fee, which makes it prohibitive presently to use bitcoins as pocket money. But there's a new technology in development, called the lightning network, that promises to solve this problem by letting users trade bitcoins in a peer-to-peer fashion without publishing to the blockchain. On Wednesday, lightning's developers released the first version of the protocol and did the first test transaction on the bitcoin network.

Roach is right that buying bitcon is "speculation" that the technology will function as promised and gain widescale adoption. But that doesn't make it "toxic."

A partial exception to the mainstream confusion over bitcoin is the Hoover Institution economist John Cochrane, who argues in a recent blog post that it has value because of its "convenience yield"—i.e., it has unique features as money. Like cash, it's hard to detect, so it provides users with a way around "aspirational laws that if enforced would bring the economy to a halt." It also "facilitates ransomware," "laundering money," and "getting money out of China." Overall, bitcoin is a tool to "avoid both the beneficial and destructive attempts of governments to control economic activity and to grab wealth."

That's all true, but Cochrane doesn't mention that bitcoin also provides a way to escape hyperinflation, which is how it's currently being used in Venezuela. Even the U.S. government prints money to finance debt and pay for the welfare-warfare state without raising taxes, thus distorting the natural rate of interest and fueling a ruinous boom-and-bust cycle. Bitcoin offers refuge from these distortions.

Cochrane also characterizes bitcoin as "an electronic version of gold," which is like calling the internet an electronic version of the post office. Part of bitcoin's "convenience yield" is that it's programmable money that's digitally native. In the future, it has the potential to facilitate machine-to-machine payments, permit "streaming money," provide a value layer to the internet, decentralize web services, and allow for the creation of financial contracts that can be executed in code.

The mainstream misunderstanding of this technology reminds me of a conversation I had a couple years ago with a prominent libertarian writer who has spent his career advocating a return to the gold standard. When I asked what he thought of bitcoin, he said "I don't get it" and changed the subject. We need a new generation of experts.

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  • Crusty Juggler||

    Unfrozen Caveman Federal Reserve Chairman

  • Just Say'n||

    Alan Greenspan, former Ayn Rand confidant. Christ, this guy is the proto-Weigel

  • I am the 0.000000013%||

    Wow, four namedrops in 13 words...

  • ||

    A new cryptocurrency:

    "TokenPay is a decentralized and self-verifying payment platform project. Based entirely on mathematics it is designed to enable secure transactions between multiple parties. With maximum user security as the focal point, the system is accessed exclusively through the encrypted Tor Browser. Transactions are conducted with its own proprietary and untraceable cryptocurrency called TPAY that is embedded with the latest and most advanced safety features. These characteristics include a stealth addressing system, encrypted messaging, completely anonymous trading and a uniquely designed hashing algorithm that enables fast and secure transactions under any conditions."
    TokenPay: Exclusive Blockchain Technology

  • Diane Reynolds (Paul.)||

    This is the problem with bitcoin, there's nothing stopping a competing currency, or multitudes from coming into the game. Think of Bitcoin like you would MySpace or Friendster. Imagine a mass exodus from Bitcoin to the latest cryptocurrency.

  • Hugh Akston||

    How is that a problem exactly?

  • Diane Reynolds (Paul.)||

    It makes it difficult to trust the value of something when there's nothing intrinsically special about it.

  • Hugh Akston||

    There's nothing intrinsically special about gold, but it has nevertheless endured as a valuable commodity for millennia despite the presence of alternatives like silver and salt.

    The value of anything that's not edible ultimately rests on convention and faith.

  • Diane Reynolds (Paul.)||

    Saying there's nothing intrinsically special about gold is a matter of debate. Gold, being a physical commodity retains certain physical properties that make it unique. Some of those properties range from it's innate ability to not tarnish or oxidize, it has extremely high conductivity which makes it desirable to use in electronics, it's non allergenic making it useful in some medical applications etc. It also has a luster which (for reasons I obviously can't explain or know) has a universal aesthetic appeal among humans.

    I'm not making an argument for a gold standard, I'm merely saying that a physical commodity may have other areas of value that a digital commodity simply can't duplicate.

    As long as people use currency to store their wealth, they're going to want to have some sort of faith that the value of their savings (and wealth) won't disappear rapidly in a sudden collapse of value.

  • BYODB||

    Exactly this. The argument for bitcoin is an argument for a different variety of non-convertible fiat currency at it's heart.

    It will never have intrinsic value. It simply can't, since it only exists as a bit of code out on the interwebs.

  • ace_m82||

    Nothing has "intrinsic value". Value is relative. If value were not relative, no trade would ever happen.

    Some things are more accepted as having value than other things (Gold vs manure), but value is still relative.

  • BYODB||

    All I mean is that something like gold has an inherent value. That value may change, but it never goes to zero unlike a fiat currency.

  • ace_m82||

    There is no such thing as "inherent value". Value is relative, dependent on the person.

    There could be a day in which gold has a zero "value". I'm sure people exist on the earth who have zero value for gold, such as the value for it for a drowning man!

  • GroundTruth||

    Try using gold to get your tomatoes to grow or to build a cannon. It's all about the where and the when.

  • Ray_Cathode||

    Value is not relative, it is objective to each valuer within his context at any given time and respect. At any given time people may have an enormous number of values, but the intensity of one's need for any one of them changes according to one's context. If i am hungry i objectively, actually, in reality, desire food. It is not a whim, my blood sugar is low, my stomach is growling and i objectively desire nothing more than to tear a steak apart
    (You, in the context of your values might most desire an apple). Both of us would be objectively correct, we both actually are hungry, though we each see different methods to satisfying our need for food. Now, if I reflected on it, i might decide 9again objectively, actually, that i could be satisfied with a hotdog at the movies, that would still provide an objective cause for the action of satisfying that desire.

  • ace_m82||

    Relative:
    considered in relation or in proportion to something else

    Yes, value is relative, definitionally, or no trade would happen.

  • Longtobefree||

    And yet, which is which depends on whether you are a farmer or a jeweler.
    So does bitcoin depend on whether you are a one or a zero?

  • Kyfho Myoba||

    FYI, NOTHING has intrinsic value, not even gold. ALL value requires a valuer, and has subjective opinions about all relative value.

  • Mark22||

    Saying there's nothing intrinsically special about gold is a matter of debate. Gold, being a physical commodity retains certain physical properties that make it unique.

    Gold used to be used for both monetary transactions and for storing value long term (including speculation). These days, it's not used much for either because it isn't very good at either.

    Bitcoin is used for both monetary transactions and storing value long term. It isn't good for the latter, but it is good for the former.

    As long as people use currency to store their wealth

    I don't know of anybody who uses "currency to store their wealth". People store their wealth mostly in investments and property. Some people store it in banks, but they store it in investments and just make a contract with people that only a fool would sign.

  • Zeb||

    You are right about the source of value. But that doesn't mean it's totally arbitrary.

    Gold is pretty special in being dense, attractive, relatively inert, rare and occurring naturally in metallic form. If you started history all over again, I'm pretty sure gold would still be special.

  • Mitsima||

    Well, except for occurring naturally in metallic form, I'm golden.

  • Microaggressor||

    I'm getting tired of this "convention and faith" argument. Gold has inherent value because it's one of the best long-term stores of value, especially in the context of an inflating official currency.

    Currency in general derives its value from the ability to store value over long periods of time and also the ability to facilitate transactions more easily. Bitcoin serves both, hence it's inherently valuable. The deflationary aspect and hard upper limit makes it even MORE valuable because you know it can never be inflated away.

  • ace_m82||

    (Sorry for the repeat, but...)

    Nothing has "intrinsic value". Value is relative. If value were not relative, no trade would ever happen.

    Some things are more accepted as having value than other things (Gold vs manure), but value is still relative.

  • Microaggressor||

    Yeah, intrinsic is the wrong word since value is a function of individual assessment. A better way to put it is, a lot of people have found that valuable (especially Venezuelans) for those reasons.

  • Diane Reynolds (Paul.)||

    As Zeb said above, while it's hard to quantify value-- even relative value, if you rewound history to the beginning, it's a good bed that Gold would somehow be retain its same value status.

  • ace_m82||

    hard to quantify value

    Haggling is a good way to quantify approximate value for individuals. If someone haggles for something enough times, you can get a very good idea of their value for it.

  • Kyfho Myoba||

    > Gold has inherent value

    No, NOTHING has inherent value. It may have inherent properties, but all value is imputed by people, and their opinions are subjective.

  • Hank Phillips||

    Objective reality reports that energy has inherent value to life. Life is the ability to bring about a local decrease in entropy via electrochemical reactions. Energy is the ability to do work--specifically the kind that reduces local entropy. It's no surprise then that as per-capita power output increases individuals live longer, happier lives. This argument fails to alter the faithful opinion that death is a value worth seeking, but so what?

  • I am the 0.000000013%||

    The value of anything that's not edible ultimately rests on convention and faith.

    Are you saying anything edible turns to crap?

  • Hank Phillips||

    The value of gold changed on July 16, 1945 due to hyperinflation of extrinsic neutrons, even though the neutron cross-section of gold itself had not changed. Walk into any reactor containment building and you'll find a gold coin framed on the wall. Robert Heinlein realized that plutonium ought to replace gold as the metallic standard. After all, we expect it to be too radioactive to swallow. Hanoi Jane altruism reacted with antinuclear hysteria, demonization of plutonium and demonetization of the planet Pluto (which means wealth).

  • Kyfho Myoba||

    > nothing intrinsically special about it.

    Bullshit. Try "installed base", or "first mover advantage."

  • NotAnotherSkippy||

    Bullshit. Try "switching cost" and "barrier to entry." There is no reason that facebook exists and has value. Myspace had first mover advantage. For purely whimsical reasons facebook seems to have won (for now). But Charles'/Paul's whole point is that there is nothing that locks people into bitcoin in the future, especially given that there is no enforcement mechanism requiring you to use it. And it would be VERY advantageous for me to initiate a new currency that gives ME first mover advantage and nullifies your bitcoin.

  • Mark22||

    It makes it difficult to trust the value of something when there's nothing intrinsically special about it.

    Bitcoin is primarily useful for transactions. For transactions, it only needs to hold its value briefly. Storing value in Bitcoin long term is foolish. That doesn't mean people won't engage in that kind of gambling and speculation, but the technology wasn't designed to give long term stable value or growth.

  • Diane Reynolds (Paul.)||

    For example, the US dollar, not backed by anything, there's nothing special about it, hence why the feds are probably scared shitless by cryptocurrencies.

  • Incomprehensible Bitching||

    I'll have you know that the dollar is backed by the full faith and credit of the United States government, mister!

  • juris imprudent||

    Ironically that has more psychological weight than blockchain tech.

  • Kyfho Myoba||

    Not for long.

  • BYODB||

    Uhh...I think you've forgotten that the United States Federal Government has the sole authority to print money in the United States. If Bitcoin supplanted the dollar, guess what? There is no more America.

  • Kyfho Myoba||

    Are all the people and the land and the buildings and the stuff going to evaporate?

  • NotAnotherSkippy||

    Yes. There is intrinsic value to dollars: they are the only means of paying taxes and hence the only means of stopping big men with guns coming to your house and imprisoning you. If you think bitcoin magically solves that problem...

  • Longtobefree||

    Well, actually, there are other ways to stop big men with guns from coming to your house and imprisoning you.
    Look up tea party (the one in Boston)

  • Mark22||

    There is intrinsic value to dollars: they are the only means of paying taxes and hence the only means of stopping big men with guns coming to your house and imprisoning you.

    I think it's unclear how that would work if 99.99% of the US economy switched to cryptocurrencies. I mean, presumably the dollar would be pretty much worthless then, and it would be easy to pay any amount of taxes in it.

  • ||

    How is that a problem exactly?

    Because bitcoin is clearly in a bubble right now, and I don't think there's any controversy to the assessment that if you have money to risk, riding that bubble is attractive at the moment, but inherently very, very risky because it is going to burst, and it's likely to do so suddenly and drastically.

    Doesn't mean people shouldn't be allowed to invest in them, it just means it is very far from being a safe investment.

  • ace_m82||

    Because bitcoin is clearly in a bubble right now

    Not exactly. Will it go down in price in the future? Probably. Will it go up even higher after that? Probably.

    You see, bitcoin looks like a superior money to all currently accepted money (that is inflatable). That means that there may be wide acceptance of it through the world.

    The M2 measure of money is $12.8 trillion. If the US alone were to move completely to bitcoin (assuming M2 is the best measure of money), each bitcoin would be worth about $600,000!

    That's just one country.

    So is it in a "bubble"? Perhaps. Maybe it's a high probability. Or maybe it's everything else that's in a bubble!

  • Diane Reynolds (Paul.)||

    Why would Bitcoin be the special cryptocurrency that the US would move to? Why wouldn't that value get diffused among hundreds, thousands or even millions of cryptocurrency variants?

  • BYODB||

    And Diane just hit upon the reason why fiat currencies are...wait for it...regulated.

  • ace_m82||

    And Diane just hit upon the reason why fiat currencies are...wait for it...regulated.

    They are "regulated" because the monopoly of force in the area has a vested interest in keeping competing currencies out.

    I mean governments use their currency to keep and increase their power.

  • BYODB||


    They are "regulated" because the monopoly of force in the area has a vested interest in keeping competing currencies out.

    They're regulated because the supply of money changes it's value, so over printing would be a massive problem. Hence, a fiat currency must be regulated. Notably, bitcoin is self-regulating because there is a definite finite supply of it (like gold, hmm...). The bonus feature of bitcoin being that it can't be directly manipulated by the issuer.

    If you could make infinite, or functionally infinite, bitcoins they would be worthless. The same is true of dollars. They follow the same rules, just in different ways with their own pros and cons.

  • ace_m82||

    Why would Bitcoin be the special cryptocurrency that the US would move to?

    I'm going to be a really annoying economist by saying "supply and demand".

    Why wouldn't that value get diffused among hundreds, thousands or even millions of cryptocurrency variants?

    Value is relative, dependent upon the person. If you desire millions of currencies, then you've given them all some value.

    Will most people want to go through that nonsense? Probably not. That's the same reason Fed notes are the "reserve" currency of the world (oil) and why it takes time and obvious benefits to move to any new currency.

  • NotAnotherSkippy||

    So the forks of bitcoin and ethereum are all just for the noblest of intentions and in no way seek to shift the market in favor of the new fork. Nope, definitely not.

  • Kyfho Myoba||

    Well, a survey of current BTC holders concluded that the average price at which they were willing to sell was $196,000. According to Goldman Sachs (take it with a grain or two of salt) the current BTC space was financed with a total of about $6,000,000,000. Maybe 3% of the US population has even heard of BTC.

    The bubble is in the $, not BTC.

  • NotAnotherSkippy||

    Right, which explains why the exchanges are failing to complete transactions in a timely manner resulting in massive arbitrage issues (up to 20%!!!!).

  • ||

    Bitcoin is becoming a reserve currency for many of the other cryptocurrencies, like TokenPay, that are coming online.

  • CE||

    If you build your house on sand....

  • Diane Reynolds (Paul.)||

    That may be true for some but not for others. I'm not familiar with all of the cryptocurrency alternatives to bitcoin, but some are positioned as a full alternative.

  • Devastator||

    There are literally kits out to make your own currency and launch it on to the internet for $0. It's going to come crashing thing down. The only interesting thing is blockchain technology which will eventually be worked into financial transactions, digital contracts, and stock buying/selling.

  • NotAnotherSkippy||

    +21 million this ^

  • gphx||

    It really doesn't matter how many there are. So you get your own coin for $0. How many people will accept it? Probably none. Everyone could have their own coin and it wouldn't matter because people would still coalesce around a small amount of core coins. Saying more coins hurts Bitcoin is like saying the USD is destroyed by the Thai baht. The only thing that hurts a reserve currency is if it screws up and ruins its own reputation as a reserve currency. And markets should be able to destroy such a currency because that's what markets are intended to do only the way things are now the people with guns won't let them.

  • $park¥ leftist poser||

    As long as we're just swapping around IOUs it doesn't really matter what form they take.

  • Citizen X - #6||

    This is why my promissory notes are backed exclusively by sexual favors.

  • $park¥ leftist poser||

    Your currency would probably be worth more if they were promises for you do something rather than promises to let holders do stuff to you. Then again, it may just be a wash.

  • ||

    +1 Basketball Diaries

  • Mickey Rat||

    Just another thing that only has theoretical value.

  • Citizen X - #6||

    As long as spenders persist in refusing to call in the value of my notes, i get free stuff, and if anyone ever does, we all get to have a good time. Win-win!

  • Devastator||

    Hand jobs are the basic unit of currency. This could catch on.

  • Phos||

    In that case I don't want to ever have to hand my wallet to a cop.

  • Mark22||

  • Kul||

    yup

  • CE||

    Bitcoin is capped at 21 million units, but there is an infinite supply of alternative crypto-currencies. With an infinite supply in the denominator, you can calculate the per-unit value quite easily, regardless of the numerator.

  • ||

    Not to mention that the 21 million units are divisible and inflatable. There's some nominal limit to the amount of gold on Earth, the amount of paper you can print money on, and the number of instructions you can ultimately execute on financial operations. Nobody advertises those because their users aren't as dumb as some of the bitcoin users. Beanie babies and lots of other similar fads tend to hype themselves up based on ceilings/rarity like that. The Franklin Mint is only going to print so many of their commemorative coins... get yours now!

  • Devastator||

    You don't understand infinity very well. You can divide the number 1 into infinite slices. It's still worth exactly 1. This is the same with bitcoin. If there are 21 million, it's still 21 million after being sliced an infinite number of times.

  • Phos||

    Bitcoin is divisible to 8 places. So you have to get to bitcoin over $100,000.00 before the smallest unit (a Satoshi) is more than 1 cent.

    Bitcoin is 80% of the way to the cap, so the amount it can be inflated (devalued) by additional Bitcoin being mined is limited.

  • gphx||

    Cash in each of your dollars for 100 pennies. Now you're rich! Sorry, divisibility doesn't work that way.

  • gphx||

    There seems to be an infinite variety of new ice cream flavors but chocolate, vanilla, and strawberry remain perennial favorites.

  • Phos||

    Bitcoin is the big guy on the block, but there are about 10 others that trade over $100,000 per day. (Although several of those are Bitcoin forks.) Bitcoin has about 40-50% of market share. That has dropped from about 85% in 2015. There are about 16 cryptocoins each with a market capitalization over 1 billion dollars.

    Different coins have different best use cases. Ethereum and it's derivative coins have programmability. Others have lower transaction costs, privacy, faster transactions, etc.

  • Frito Chews||

    The most generous interpretation of Greenspan's remarks is that the quantity of bitcoin he is referring to is the sum of all the possible cryptocurrencies. Even if you hold him to the specific label "bitcoin", there is still no limit to the quantity of the sum of all the "bitcoin X" cryptocurrencies. And there are already several "bitcoin X"es. Mathematically, 21 million times X, where X is an unbounded positive integer.

    I am as bullish as anyone on the potential uses of distributed public ledgers, and on the incredible human flourishing that could result from an utterly free market in money creation, but what is the history of governments when it comes to controlling money? How hard will they fight for seigniorage and/or the right to be the only legal counterfeiter of their fiat currency?

  • Diane Reynolds (Paul.)||

    The most generous interpretation of Greenspan's remarks is that the quantity of bitcoin he is referring to is the sum of all the possible cryptocurrencies.

    Yes. I suspect Greenspan wasn't thinking about this, but others are. My guess here is that Greenspan may be accidentally right. What I don't know, and can't predict is if cryptocurrency (as a concept) takes off, why will Bitcoin be THE predominant currency, and what will happen to the value when other currencies (like Litecoin for example) take off. Markets are funny, and commodity markets (which cryptocurrencies are) can be even funnier.

  • Mark22||

    The most generous interpretation of Greenspan's remarks is that the quantity of bitcoin he is referring to is the sum of all the possible cryptocurrencies.

    But people aren't buying or selling "the sum of all possible cryptocurrencies", they buy and sell ones that they believe to be valuable.

    That is, the creation of a new cryptocurrency doesn't devalue the old one, any more than printing another dollar bill devalues the Euro; quite the opposite, actually.

  • juris imprudent||

    We need a new generation of experts.

    Something about economists in thrall to dead men. The other lesson here is about basic human behavior in the face of something new/incompatible with existing 'knowledge'.

  • Hank Phillips||

    Reagan-Bush advisers saw in Greenspan a perfect non-prohibitionist stalking-horse behind which to nationalize half the money in South America and redirect it against the local Stalinistas, and use the proceeds from the dope to arm Mohammedan berserkers in Afghanistan against the Soviet communists. Greenspan was a jazz player in the Depression and still failed to grasp that tax-law-Prohibitionism caused all three financial collapses. But Milton Friedman also missed what was abundantly clear to Clark Warburton (the economist who coined the term Gross National Product) in 1932.

  • ||

    Bitcoin's Achilles heel is the amount of electricity needed for it to function. China is raising electrical rates in an effort to strangle Chinese Bitcoin miners.

  • Diane Reynolds (Paul.)||

    That's not confirmed. That's more of a conspiracy theory.

  • Mickey Rat||

    One the 21 million limit is reached, there won't be any bitcoin miners, which eould seem to be sooner tat her than later if we are already at 80% of total.

  • ||

    Problem is that there's going to be exponential growth in the energy required before that limit is reached. Even after it is reached, a lot of energy will be required to validate blockchain transactions.

  • Microaggressor||

    This is the ultimate reason Bitcoin will eventually be replaced. By something more efficient. The technology will only improve from here, and the best will win out.

  • ||

    They may just change Bitcoin to a low energy authentication process.

  • Mark22||

    The likely reason that Bitcoin will get replaced is that people lose Bitcoins; that is, deflation.

    And that's alright. It's good to start over every few decades.

  • Kyfho Myoba||

    Nope, BTC mining is hard coded in, set to complete in 2140 A. D.

  • Phos||

    Hard coded? What is it burned into ROM? If the miners agree they can make changes.

  • Mark22||

    The miners that agree will in effect be starting a new, different cryptocurrency. Existing holders of Bitcoin have little incentive to go along.

  • ||

    Bitcoin's Achilles heel is the amount of electricity needed for it to function. China is raising electrical rates in an effort to strangle Chinese Bitcoin miners.

    And, at least for a while still, the network itself. I don't mean to bolster NN arguments much but there is a very valid point that, even with Tor and 'The Dark Web' there's still effectively only one internet. You don't exactly call up Comcast, AT&T, or Verizon and choose which internet (services) you'd like to connect to (yet).

    Whether you and I trust the government or not, we can hand each other cash with or without the governments approval or connections to any network points. What can be done with bitcoins in a similar scenario would *at best* be described as *similar* and is more frequently referred to more as 'cold storage' (and, even then, a freezer full of cash has benefits that a cold-storage bitcoin wallet/storage medium doesn't).

  • ||

    If it came to it, cryptocurrencies could be facilitated with shortwave radio. Perhaps not very well.

  • ||

    If it came to it, cryptocurrencies could be facilitated with shortwave radio. Perhaps not very well.

    Right, and you could use some other power source or supplier to mine in the absence of a state-run power grid. Point being, right now, the choices are build and defend your own infrastructure to escape the fiat or rely on the existing and exceedingly cheap infrastructure. That even if you solve your power problems, either by switching cryptocurrencies or power supplies, your network as it ties directly into both the cryptography and the ledger can be effectively controlled and throttled. A weakness that cash doesn't intrinsically (in any modern, reasonably literate nation) suffer.

  • Citizen X - #6||

    Re: the video, since when did Greenspan turn into the dude from those Six Flags commercials?

  • Mickey Rat||

    1983?

  • Diane Reynolds (Paul.)||

    Bitcoin mining is so five minutes ago.

  • $park¥ leftist poser||

    Four weeks to mine 1/10 of a Bitcoin, eh? Pass.

  • Diane Reynolds (Paul.)||

    $1700 in four weeks? Might be worth it.

  • BYODB||

    Depends on what the cost of electricity is where you live, I'd guess.

  • Kyfho Myoba||

    Depends on the cost of the mining rig, the electricity is not as big a factor as everyone seems to think.

  • Phos||

    And the mining rig make a nice space heater on cold winter mornings!

  • BYODB||

    Look, Greenspan is older than dirt. He probably doesn't even understand the internet, let alone the technology or theory behind something as artificial as bitcoin. Also I doubt he really cares. He's probably more worried about his impending death (not a threat, I mean just look at the guy).

  • ||

    ^ This. Greenspan is still relieved that greenbacks finally came back up to par with gold.

  • Careless||

    Yeah, not much point picking on a 91 year old. Not much point ta king policy recommendations from one, either.

  • Devastator||

    Sure he does. It's a series of tubes.

  • NotAnotherSkippy||

    It is a series of tubes or more generically pipes.

  • ||

    An overview of blockchain technology:

    ""Blockchain" has become a buzzword in the technology and financial industries. It is often cited as a panacea for all manner business and governance problems. "Blockchain's" popularity may be an encouraging sign for innovation, but it has also resulted in the word coming to mean too many things to too many people, and—ultimately—almost nothing at all."
    : Everyone loves tech's hottest buzzword, but no one seems to know what it means.

  • ||

    Link:

    What Is "Blockchain" Anyway?: Everyone loves tech's hottest buzzword, but no one seems to know what it means.

  • Devastator||

    Blockchain will become a standard transactional technology. If you don't understand that then you don't understand the technology at all. It's as basic as the internet.

  • Set Us Up The Chipper||

    Blockchain is basically a link list with a fancy algorithm for generating the next element in the list.

  • Enemy of the State||

    Only its the blockchain that provides all those benefits, not bitcoin...

  • ZorbaTheBuddha||

    What is stopping circulation of Bitcoin to increase than the belief set at 21 million ?

    Who controls the circulation ?

    Just curious, anyone ? Thanks

  • Mark22||

    It's in the protocol and definition of Bitcoin. If you try to "change" that limit, you end up with a different currency, i.e., one that is not interoperable with Bitcoin, and it's up to users whether they want to use the old or the new version of Bitcoin. If people want that kind of change, they don't have to go through the trouble of doing that with Bitcoin, they can already choose from dozens of other already existing cryptocurrencies. So, as far as Bitcoin is concerned, 21 million is it.

  • Sedona Vortex Hunter||

    1\10 a bitcoin in a month? Using what? Because I actually mined bitcoin when it first came out and at the time I was mining it was something like .14 cents a bitcoin and usinig my 2010/2011 shitty laptop computer with its integrated GPU after a month of continual 'mining' I had also mined 1/10 of a bitcoin if I recall. It may not have been quite a month of mining, but in any event I stopped doing it because for 1/10 of 14 cents it seemed not worth the effort.

    But , my point is that I think mining 1/10 a bitcoin today would take quite a bit more effort.

  • Mark22||

    But , my point is that I think mining 1/10 a bitcoin today would take quite a bit more effort.

    It does. GPUs are orders of magnitude faster.

    Bitcoin mining is adjusted so that the amount of actual effort on current hardware remains roughly constant.

  • Queen Screwup||

    I think the people using the phrase inherent value don't understand that something only has the value humans give it so there is nothing inherent about value.

  • ||

    "The subjective theory of value is a doctrine of value which advances the idea that the value of a good is not determined by any inherent property of the good, nor by the amount of labor required to produce the good, but instead value is determined by the importance an acting individual places on a good for the achievement of their desired ends."
    Subjective Theory of Value

  • Phos||

    Obviously true on the ultra fine grain analysis.

    I suggest to avoid semantic arguments, to sidestep the term "inherit value". Perhaps a more useful term would be "accepted value".

    Even if one has little use and therefore value for an item (especially in the short-term), if one understands that that item has an widely held average value, and past experience indicates that will likely continue, then based on the "accepted value" that item may be useful as an item of exchange.

    How useful will depend on factors like liquidity, transaction costs, etc.

  • Sanjuro Tsubaki||

    This is cheezy as hell. It's like Drudge or Breitbart putting out another story about how Nancy Pelosi is going senile, only Pelosi is someone with some actual power or influence. Alan Greenspan is an elder statesman but also a has been who gets to appear on exciting financial shows (exciting at least if the anchor is young, female, and easy on the eyes). He is a financial genius like Bob Hope in the late 80's/90's was a brilliant stand up comic. If bitcoin is worth something, people will adopt it and use it like currency (ie purchase things). It will be easily converted to and from other currencies, but it will have widespread appeal in that non-celebrity pensioners will start embracing it. It will level off or slow down in value instead of suddenly dropping like a rock. I don't believe a currency has to be government backed or "protected", but then maybe it's a question of just how many people think the same as me. How is that different from a fiat currency? If you're not a brilliant mathematician, then I guess we'll just find out eventually.

  • madam margaret||

    'Roach is right that buying bitcon is "speculation" that the technology will function as promised and gain widescale adoption.'

    bitcoin… not bitcon

    no freudian slips please

  • Phos||

    "Speculation" is one aspect of reasons to acquire cryptocoin in general. Others are privacy, special use cases (namecoin, bravecoin, swarm tokens, etc), savings, transaction costs, and principles (starve the war-beast).

    And it is hardly speculation that US dollars will be worth less each year.

  • Hank Phillips||

    Greenspan was brought in when Reagan-Bush Adminstration asset-forfeiture and sumptuary legislation was doing the same thing Herbert Hoover and George Waffen Bush asset-forfeiture and sumptuary legislation did. All three Republican administrations wrecked the economy by confiscating bank accounts and other property. True, the victims preferred the "wrong kind" of plant leaf products, but to mystical bigots, lethal aggression for prohibition enforcement is "The Exercise Thereof" assured them by the First, Sixteenth and Eighteenth Amendments.

  • ||

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  • ||

  • Chaturbate||

  • Mark22||

    Roach is right that buying bitcon is "speculation" that the technology will function as promised and gain widescale adoption. But that doesn't make it "toxic."

    No, he's not. Holding Bitcoin is speculation. Buying and then selling it is merely a financial transaction using a form of currency with different legal, economic, and technological properties from other currencies.

  • Buy Bitcoin India||

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