[cryptography] Digital cash in the news...
Sampo Syreeni
decoy at iki.fi
Sat Jun 11 18:52:49 PDT 2011
On 2011-06-11, Eugen Leitl wrote:
>> A requirement for a bubble would be a promise of ever-growing value,
>> the rest is just the marketing.
No. There is also the concept of a rational bubble, where people invest
into something because both them and the others settle into a rational
game-theoretic balance where everybody thinks everybody else values a
commodity, hence they value the commodity themselves, and thus the
commodity in question continues to be valued indefinitely. A cycle
involving boom and bust is just a special case of a rational bubble, and
a very specific one, whereas the general case doesn't much predict any
outcome.
The general case also involves stable valuation of the commodity in
question, when some real backing is present. Which would then usually be
called a (fiat) currency, or (an unbacked) security. As soon as such a
commodity establishes liquid markets wrt other commodities, it has a
real chance of becoming a bona fide currency. No matter where it came
from.
Take for example Virginia tobacco at its time. It became a medium of
exchange, and it remained so long after it had lost its use value by
spoilage, in individual cases.
BitCoins perhaps aren't backed up by anything, but so aren't useless
cigarettes or fiat-pieces-of-paper. Nevertheless, the latter work just
fine. (Modulo independent, political and macroeconomic concerns over
whether they're the best possible currency.)
BitCoins are of course far short of the real cryptocash that we'd want.
But their worst problem isn't about bad economics, practical monetary
concerns, or whathaveyou. Now it's finally about perfecting the
engineering, and about how to advertise to the masses that this sort of
thing now finally exists. The Silk Road articles already did half of the
job, you know...
--
Sampo Syreeni, aka decoy - decoy at iki.fi, http://decoy.iki.fi/front
+358-50-5756111, 025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2
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