[cryptography] (off-topic) Bitcoin is a repeated lesson in cryptography applications - was "endgame"

Benjamin Kreuter brk7bx at virginia.edu
Sun Feb 26 10:28:15 EST 2012

On Sun, 26 Feb 2012 17:57:14 +1000
"James A. Donald" <jamesd at echeque.com> wrote:

>  > On 2012-02-26 1:18 AM, Benjamin Kreuter wrote: The demand
>  > for Bitcoin as a currency is driven by its properties as a
>  > digital cash system; people still need to get their
>  > nation's currency at some point
> Frau Eisenmenger writes in her 1919 diary:

I am not denying that when governments mismanage currencies, crises and
failures ensue.  This is true of all things governments manage:  when
mistakes are made, large numbers of people wind up suffering.  However,
the failure of some countries' currencies does not mean that people are
going to switch from their nation's currency to Bitcoin.  If the US
Dollar were to fail, Bitcoin would be the last thing on anyone's mind;
we would probably wind up switching to some other government's currency
while we sorted out the mess (Yuan perhaps), or we would just spend our
time killing each other and not worrying too much about money.

Perhaps you just need a short list of reasons why Bitcoin is not
going to replace government issued currencies:

1. No offline transactions, which makes Bitcoin useless for a large
   class of transactions.
2. Fixed upper bound on the number of currency units, which creates
   deflationary trends as economies and populations grow.
3. No governments allow tax payments made using Bitcoin, and there is
   no incentive for them to do so.  Even if everyone used Bitcoin for
   day-to-day trades, they would still have to pay property taxes or
   face arrests, property seizures, etc.  When the government becomes
   too ineffective to enforce its own laws, then Bitcoin might have a
   chance, but only as a way to manage trade in some foreign nations'
   currencies (who will still want to trade with people in the region
   where the government failed), and that is assuming that online
   transactions can even happen in such a situation.

Now, I will grant you this:  there is a very, very, very remote
possibility that every fiat currency in the entire world will fail
simultaneously, and that instead of shooting each other people will
continue to engage in trade (and that the Internet survives the mess).
Even in that case, there will need to be some currency for offline
transactions, and so even then Bitcoin will be relegated to second

-- Ben

Benjamin R Kreuter
UVA Computer Science
brk7bx at virginia.edu


"If large numbers of people are interested in freedom of speech, there
will be freedom of speech, even if the law forbids it; if public
opinion is sluggish, inconvenient minorities will be persecuted, even
if laws exist to protect them." - George Orwell
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