[Cryptography] Digital currencies

John Levine johnl at iecc.com
Sat Jun 18 23:43:11 EDT 2016

>All the features that John has mentioned are relatively new, or
>relatively dangerous, advancements in the world of fiat. Central banks
>are an economic disaster, causing more problems than they are worth,
>and have been repeatedly killed (only to be later resurrected) in the
>United States and abroad because of the problems they cause.

I realize this is an article of faith in the Bitcoin community, and
I'm not likely to change anyone's mind, but it is historical nonsense.

Central banking dates from the 1690s when the Bank of England became
the Crown's bank, and was well enough understood by the 1870's that
Bagehot's "Lombard St" described it in a form that remains relevant
today.  The Federal Reserve, the U.S. central bank, was created in
1913 because the US with an unmanaged currency had endless panics and
depressions culminating with the Panic of 1907, and because nobody
outside the US was willing to write contracts in unstable dollars but
instead required managed pounds or francs, putting US merchants at a

None of this is controversial or obscure, and Lombard St is an easy
read, downloadable from Project Gutenberg.  The famous Cross of Gold
speech also leads to some interesting and relevant history.

>Reversing fraudulent transactions is also relatively
>new, and was never a feature built-in to cash.

Right.  Try doing e-commerce (the legal kind, not Silk Road) without
that ability.

As I noted, blockchains can solve all sorts of real transaction
management problems, and it's a shame they've been hijacked by people
who imagine that the gold standard was a good idea.

>I suggest, if you're interested in Bitcoin, go buy a bit, maybe 10
>dollars worth or something. Try to use it.

Absolutely.  We all have our varying tolerance for flakiness of
different kinds.

I've bought cups of coffee with bitcoins, and I'll be tapping my AmEx
card in the future.


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