Posts tagged with: Bit

Blog author: jcarter
Wednesday, December 17, 2014
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bitcoin-deadEarlier this year I declared that Bitcoin was (nearly) dead. But as The Princess Bride’s Miracle Max once explained, “There’s a big difference between mostly dead and all dead. Mostly dead is slightly alive. With all dead, well, with all dead there’s usually only one thing you can do.”

Right now, Bitcoin is only mostly dead. As an investment, it was the worst of 2014. As a currency, it was destroyed by the IRS by a single sentence (“For federal tax purposes, virtual currency is treated as property.”). All that really remains is for it to become a financial network. But then it will be likely killed (i.e., all dead) with one word: regulation.

As Henry Farrell explains, Bitcoin has only survived this long because the U.S. government hasn’t really considered it to be a viable financial network:
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Blog author: jballor
Thursday, April 11, 2013
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Bitcoin-coinsWe’ve had some intriguing discussion about Bitcoin at the Acton Institute offices today. It is certainly a phenomenon worth greater attention, and something of significant cultural, social and economic import. But I’m not buying Bitcoin, at least not yet.

My initial skepticism is in part due to my lack of familiarity with the details of the currency and its formation. I certainly need to learn more.

But also in large part my skepticism is due to my doubt about the productiveness of the effort that generates the currency. Is it merely fiat money without the pretensions? Is it the logic of subjective value-theory brought to the final conclusion? I worry that the computing power expended to mine BitCoins is vacuous and parasitic at its core. It does not represent a good or service that has been provided for or contributed to anyone.

A Bitcoin has value simply because people have decided it has value. People “mine” Bitcoins because, as Whately would note, “they fetch a high price.”

But what does a Bitcoin block represent in terms of actual human utility? I worry too that this is a system that relies parasitically on real-world resources, e.g. coal which provides a large part of the electricity, which is used to run computers so that they can then in turn “mine” something entirely virtual.

What is Bitcoin teaching us, really?

If you’ve had experience with Bitcoin or thoughts about the phenomenon, please share them in the comments below.