[cryptography] Bitcoin, was Nirvana

lodewijk andré de la porte lodewijkadlp at gmail.com
Sun Sep 25 19:35:37 EDT 2011

What I read in the history books (on

> he main motivation for the third central banking system came from the Panic
> of 1907 <http://en.wikipedia.org/wiki/Panic_of_1907>, which caused renewed
> demands for banking and currency reform.

The Panic of 1907 being due to a "loss of liquidity"[1] and (not
suprisingly) "trust". "exacerbated by unregulated side
 at bucket shops<http://en.wikipedia.org/wiki/Bucket_shop_(stock_market)#History_in_the_United_States>."
wikipedia states. That sounds an awefull lot like the complaints about top
bankers their bonuses. I cannot see what you mean with the part of history
you retold, and especially not how it maps to Bitcoin. You mention a
commodity backed system but the reasons for it failing are not the fact that
it's commodity based.

I should note that trust is not required by the Bitcoin system. And
liquidity's creation is limited, but the transfer of it cannot be. Any "lack
of liquidity" will be the result of people unwilling to invest wealth, like
it should be.

[1]  "an inelastic
<http://en.wikipedia.org/wiki/Elasticity_(economics)> currency
and a lack of liquidity." was the weakness and cause of financial panics, so
it says.


P.S.: I started writhing this before I did anything but I wasn't a trader in
the 18th and 19th century, I have no idea whether or not this is true:
No sane country would trade their goods for notes that promise you can get
gold, you want the gold itself after all. Not the bloody paper. The trust
that the paper could always be exchanged wasn't there, and that turned out
to be quite reasonable when the US's gold practically ran out (when?). We
decided to trust everything for convenience, and as long as we do there
really isn't any reason to complain. Even though the US has a dept that they
could never mint their way out of without losing global trust.

2011/9/25 John Levine <johnl at iecc.com>

> >The gold standard was fine as far as I know, as long as the gold flow
> >was steady.
> Um, no.  This isn't the place for a historic treatise, but the 18th
> and 19th centuries were one boom and bust after another, with lots of
> inflation and deflation, and not just because of new gold mines.  The
> reason the US created the Federal Reserve in 1913 is that unlike its
> European trading partners, we had a metal based currency and no
> central bank, which meant that the dollar was so unstable that trading
> partners refused to use it, and all foreign had to be denomated in
> pounds, francs, and occasionally marks.  The Fed was created in
> response to demand from the business and banking community to make the
> dollar more stable.
> > If you have any reason people should not use an unchanging coin
> > without central authority or requirement for trust, I'd REALLY like
> > to hear it.
> I can't force you to learn economic history if you don't want to.
> R's,
> John
> PS: Be sure not to confuse the stuff from the Ron Paul crowd with
> actual history.
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