I attended Dominic Frisby’s talk at Brian’s, and Brian asked me to write about what I learned.
The talk did not get far into the technicalities of Bitcoin, which was good for me as I already think I know most of it. Until recently I knew some of it, and two articles by Ken Shirriff completed that picture.
But Dominic is not the quiet, contemplative, theoretical person that I am. When he wants to find something out, he goes out and talks to people. This means he has lots of stories. And so I learnt of his experiences attending a Bitcoin auction under a marquee in a London back-street (the most culturally diverse gathering he has ever attended), talking to wealthy Bitcoin owners who live in squats and are part of the Occupy movement, and exploring the myriad Darknet marketplaces that have sprung up after the demise of Silk Road. He compared Bitcoin now to Rock and Roll in the 50s. People are doing it for fun, with irreverence, but also a sense that it is something big and uncontrollable, and with the same pattern of reaction from authorities: horror gradually giving way to acceptance.
This irreverence is particularly on display with the alternative crypto-currency (or altcoin) Dogecoin, which I think should be pronounced doggy-coin because there is a picture of a dog on its logo, but everyone else pronounced it with the o from go and a soft j. Dogecoin was spun off from Bitcoin as a joke, but is finding uses in micropayments because you can pay tiny amounts with big, psychologically pleasing numbers. I actually mined some Dogecoin the evening before the talk, because I wanted to try out mining and it turns out you can’t mine Bitcoins without specialised hardware, but you can mine altcoins. I currently have 600 Dogecoins worth 40p.
A developer of a Dogecoin smartphone app was in attendance, and he told the story of a Dogecoin fundraiser that managed to send the Jamaican bobsleigh team and Luger Shiva Keshavan from India (who became known as the Underdoge) to the Winter Olympics. We all discussed the usefulness of microtransactions for tipping the authors of interesting blog posts. They might need this when all the newspapers run out of money. Here is my Dogecoin address, by the way, hint hint, I have no shame:
Before the talk I was confused about altcoins, wondering why anyone would make yet another crypto-currency, but now I understand. There was discussion about how Bitcoin might fall, be replaced by something else, and eventually there will be a winner. But the other view in the room, and the one I favour, is of all these currencies co-existing. Partly they will compete, and partly they will serve different functions. For example, there will only ever be 21 million Bitcoins but there will be 5 million new Dogecoins every year forever. It is possible that Bitcoin will be used as a store of value and other currencies will be used for daily spending. Whatever inconvenience this causes can be solved with good software: whoever solves it first will be the new Paypal.
There are lots of problems impeding the mainstream acceptance of Bitcoin, and a sense that people are working on solving all of them. The demise of the exchange Mt.Gox will lead to better security practices such as distributed signatures, ways of auditing banks, and peer to peer exchanges. People who want more safety will get deposit insurance and wallets pegged to fiat currencies. And there is no shortage of convenient payment methods. There is even a Bitcoin vending machine in London.
The other cool thing I did that evening was buy a signed copy of Dominic Frisby’s book Life After The State for 0.03 BTC (he would have accepted less, but the novelty of the transaction made me generous). I’ll be sure to read his Bitcoin book, too.
It is possible that Bitcoin will be used as a store of value and other currencies will be used for daily spending.
Unless it’s liquid it’s a useless store of value; and since it’s deflationary that’s a giant incentive to never sell a Bitcoin, assuming they become significantly popular.
I view Bitcoin as a fundamentally bad design from the economic point of view.
So far I haven’t seen anything about any of the cryptocurrencies to make me prefer them to non-deliberately-inflated fiat money.
Sigivald: my understanding is that with a fixed supply of money, if you want to get richer compared to other people, you have to sell your money, buy capital goods, and make profit faster than other people. I don’t believe that everyone will simply sit on their Bitcoins just because the supply is fixed.
It ought to be pronounced “doggy” as it’s named after a dog-based meme. A Dogecoin should be something much grander.
It certainly looks like that was the intent. Perhaps they should have camel-cased it: DogEcoin.
On a more serious note, what is the reason for making deliberately inflationary crypto-currencies — predictably inflationary, in the case of Dogecoin.
Tedd, I can only surmise that it is because its creators have bought into the idea (or at least are pandering to those who have) that secular deflation is somehow a bad thing. Sigivald seems to be one such. I can only point such people to Detlev Schlichter’s book for a thorough refutation of that curious prejudice.
At least this way we find out experimentally, and people have choice.
Also note it’s not a percentage inflation, it’s a fixed amount. Maybe it will solve whatever mining problem is imagined to happen when the rewards stop.
I have two genuine ‘Doge’ coins, Venetian Zecchini, one from the reign of the last Doge, Ludovico Manin. The tearing down of the Ghetto apart, the fall of Venice led to another assault on liberty and civilisation via the attack on sound money. This ‘dogecoin’ is contemptible sacrilege.
Good point, I didn’t pick up on that subtlety until you mentioned it. As the number of units in circulation increases the relative increase asymptotically approaches zero.
The reason it’s pronounce “doje coin” is because it’s actually based on the doge meme. Although, there are actually many different pronunciations out there, all equally valid. As a friend of mine pointed out, it’s somewhat absurd for people to argue over the pronunciation of a made up word that was typed long before it was ever spoken.
I’ve been hesitant to jump on the bandwagon of many of the altcoins, not because I think a diversity of coins is bad, but I simply don’t like running wallets for so many. I currently am restricting myself to Bitcoin and Dogecoin. I’m dabbling in Namecoin but so far i’m not really enthusiastic about it.
One of the biggest attractions to Dogecoin is the community (check out /r/dogecoin). There’s a huge spirit of using and sharing Doge. Contrast that with (in my experience) Bitcoin where you are much more likely to find hoarders or people trying to make a quick buck (and believe me, that ship has sailed). Dogecoin has cool markets like Shibemart where you can trade goods and services for Doge. In fact, a mysterious person actually paid me 200 Doge to comment on this post.
Bitcoin and Dogecoin to coexist etc. . . .
Ah, the return of bimetallism!
“The big news item was that Frisby reckons he has cracked the identity of the founding genius of Bitcoin, a mysterious figure who is currently only known by a Japanese alias. Who is he? Read my Bitcoin book, said Frisby. This will be available some time around late spring or early summer”
Bit late now!
SC – whether or not that is the real Satoshi, I’m a bit worried about him now, given that the journalist revealed his address, and http://xkcd.com/538/
“In fact, a mysterious person actually paid me 200 Doge to comment on this post.” It’s true.
😀
Re Frisby identifying “Satoshi Sakamoto”, he did not say who he was last Friday, but he did indicate the kind of evidence he had used, which was entirely different from what Newsweek cited. Linguistic analysis, roughly. And maybe Frisby will name someone different. Given that the current Newsweek Satoshi Sakamoto denies being Mr Bitcoin, I think Frisby still has a story to tell, and it could get him and his book noticed, a lot. We shall see.
This is beginning to sound like the Man in the Shed in the Hitchhikers’ Guide to the Galaxy series.