Reason and Justice
  • Seek the Truth
  • Who We Are
  • Get In Touch
  • Contribute
  • Seek the Truth
  • Who We Are
  • Get In Touch
  • Contribute



Background on the stories that make national news

​
   

Why has government been instituted at all? ​Because the passions of men will not conform to the dictates of reason and justice, without constraint.
   ~ ​Alexander Hamilton









​
Photo by Andrew Horne

“Beyond the Bitcoin Bubble” - Paul Krugman Commentary on New York Times Article

1/21/2018

0 Comments

 
Picture
The January 16, 2018 article by Steven Johnson (https://www.nytimes.com/2018/01/16/magazine/beyond-the-bitcoin-bubble.html) has been summarized by Nobel Prizewinning economist Paul Krugman in a thread posted to Twitter on January 21. Since he has not published this as an article, here is his thread, with links he included.
​
  1. “This is a really helpful article, but fairly hard to read (and i don’t think I’m dumber than most readers). But maybe I can offer an analogy that I find useful; no doubt crypto guys will tell me I still don’t get it, but here goes.
  2. “As I see it, cryptocurrencies like Bitcoin are in effect like digital gold coins, in the sense that they can't be counterfeited. A gold coin is worth its weight in gold, no more, no less; if you're suspicious, you can bite it to make sure
  3. “Cryptocurrencies use cryptographic techniques plus distributed storage to create non-material entities that are nonetheless impossible to fake. You don't have to worry whether a Bitcoin is a *real* Bitcoin.
  4. “It can, however, be stolen -- just like real gold coins. You can take precautions, but you can do that with gold coins too --or for that matter with money in your bank account, which is also nonmaterial http://fortune.com/2017/12/08/bitcoin-theft/
  5. “The questions you should ask are (1) what problem does this clever solution solve? (2) what determines the fundamental value? As far as I can tell, there are no good answers to either question
  6. “Cryptocurrency lets you make electronic transactions; but so do bank accounts, debit cards, Paypal, Venmo etc. All these other methods involve trusting a third party; but unless you're buying drugs, assassinations etc. that's not a big deal
  7. “And the distributed database + costly mining makes cryptocurrencies clunky and much less useful for ordinary transactions that humdrum methods -- to the extent that even Bitcoin conferences won't accept Bitcoin payments https://slate.com/technology/2018/01/the-most-important-blockchain-conference-of-the-year-wont-take-bitcoin-for-last-minute-sales.html
  8. “Meanwhile, what backstops a cryptocurrency's value? Paper money is ultimately backed by governments that will take it in payment of taxes (and central banks that will reduce the monetary base in case of inflation)
  9. “Gold is actually useful for some things, like filling teeth and making pretty jewelry; that's not most of its value, but it does provide a tether to reality, along with a 5000-year history
  10. “Cryptocurrencies have none of that. If people come to believe that Bitcoin is worthless, well, it's worthless. Its price rise has been driven purely by speculation -- by what Robert Shiller calls a natural Ponzi scheme, in which early entrants make money only bc others buy in
  11. "The Bitcoin market is also, by the way, very vulnerable to manipulation by unknown players. One of these players may have been the government of North Korea. http://voxeu.org/article/price-manipulation-bitcoin-ecosystem  https://ftalphaville.ft.com/2018/01/18/2197837/a-theory-about-the-recent-crypto-price-plunge/
  12. "So the blockchain in interesting, but not yet clear whether it's useful for anything. And investing in Bitcoin still looks a lot less reasonable than investing in cold fusion"

​Krugman’s original thread can be found here.

https://twitter.com/paulkrugman/status/955102684230705158


0 Comments



Leave a Reply.

    Truth is a real thing.

    Archives

    November 2019
    January 2019
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016

    Categories

    All
    2016 Election
    Aleksander Kogan
    Alpha Omega Winery
    Backchannel
    Bots
    Breitbart
    Cambridge Analytica
    Charlottesville
    Cozy Bear
    Department Of Justice
    Devin Nunes
    Donald Trump
    Don McGahn
    Dutch Intelligence
    Facebook
    Fact-checking Trump
    Fancy Bear
    FISA
    Fusion GPS
    Gates
    Glenn Simpson
    Global Warminig
    Gregory Kennedy
    GRU
    Gun Rights Rally
    Haiti
    Hate Groups
    Helskinki
    House Intelligence
    House Of Representatives
    Hurricane Maria
    Indicment
    Internet Research Agency
    James Comey
    Jared Kushner
    Jefferson Beauregard Sessions
    Justice Kennedy
    Justin Kennedy
    King Abdullah II
    Magnitsky Act
    Manafort
    Mariia Butina
    Mark Zuckerberg
    Mercer
    Michael Avenatti
    Michael Cohen
    Michael Flynn
    Mogilevich
    Money Laundering
    Mueller Investigation
    National Rifle Association
    Nuclear Deal
    Obstruction Of Justice
    Oleg Deripaska
    Organized Crime
    Papadopoulos
    President Trump
    Puerto Rico
    Reince Priebus
    Renaissance Technologies
    Rod Rosenstein
    Russian Interference
    Russian Trolls
    Ryan Zinke
    Senate Intelligence
    Senate Judiciary
    Senator Feinstein
    Social Media
    Steve Bannon
    Stormy Daniels
    Supreme Court
    Torshin
    Treasury Department
    Trolls
    Trump Jupiter National Golf Club
    Trump Lawsuit
    Trump Organization
    Trump-Putin
    Trump Transition
    Turkey
    Twitter
    U.S. Treasury Department
    Whitefish
    White Supremacy

    RSS Feed

Proudly powered by Weebly