[ExI] Bitcoin

Anders Sandberg anders at aleph.se
Wed Apr 3 22:21:57 UTC 2013

On 03/04/2013 21:18, Gordon wrote:
> Does anyone here have experience mining or trading in Bitcoins or any 
> of its cousins? These digital currency markets have gone parabolic. 
> It's phenomenal:

Well, the word you were looking for was likely hyperbolic or 
exponential. Squinting on the log-scale I would say hyperbolic.

In a sense nobody has experience with Bitcoins, they are too new. But if 
you plot the all-time plot you will also see the peak 2 years ago, which 
looks fairly similar: accelerating price as the hype builds up, then a 
peak as it crashes. That ought to instill a healthy dose of caution.

 From an economical perspective, we should expect high volatility - it 
is a small currency with a value driven more by speculation than actual 
usage. And as plenty of bitcoin institutions are discovering, 
establishing security and reputations can be tough.

 From a theoretical perspective I feel torn. Bitcoin is a 
crypto-libertarian dream, a currency free from government control where 
you can invent new financial instruments with an afternoon of 
web-programming. This is what we were talking about back in the 90s! 
Yay! At last! But... while I think SilkRoad is very neat and that people 
should be allowed to buy drugs, it shows that bitcoin might make it *too 
easy* to run black market activity. It seems perfect for hiring people 
to rough others up, or even assassination markets - and it might allow 
buyers to avoid the currently tricky step of contacting unsavory 
characters. From our experience with viruses and exploits, the scary 
explosion happens when an economic driver appears and starts to feed a 
bad business.

Anders Sandberg,
Future of Humanity Institute
Philosophy Faculty of Oxford University

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