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Bitcoin Security The Almighty Buck Technology Politics

On the Practicalities of Counterfeit-Proof Physical Bitcoins 121

Posted by timothy
from the stacking-complications dept.
fsterman writes "What do you get when you cross physical one-way-functions, a distributed and secure datastore, with physical Bitcoins? A viable alternative currency for micro-nations and dictatorships with hyper-inflation." Whatever your thoughts on bitcoin, it's interesting to think about the infrastructure and production cost of the tokens we use as money more generally.
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On the Practicalities of Counterfeit-Proof Physical Bitcoins

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  • by JoshuaZ (1134087) on Sunday February 09, 2014 @10:28AM (#46202341) Homepage
    A major reason why dictatorships (or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic) is because of economic pressures as well as undisciplined monetary policies where they try to solve problems by just printing more bills. Bitcoin makes that impossible, so the end result will be that those governments will either not use such a limited currency, or will use it up until the point they want to print more where they will then either abandon the cryptocurrency or declare that some other currency must have some exchange rate with the Bitcoins and print more of those. That's before we get to the issue that functioning governments have legitimate reasons to adjust the money supply. So the summary's claim that this would appeal to countries struggling with heavy inflation doesn't really make sense.
    • by NapalmV (1934294)
      A dick-tatorship could easily mandate that all existing computers (including privately owned PCs, tablets, smartphones etc) shalt run mining software 24/24h, with the results to be surrendered to the government. In fact they could mandate that you run a specific, government made piece of software, on all your devices, or else.
    • A major reason why dictatorships (or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic) is because of economic pressures as well as undisciplined monetary policies where they try to solve problems by just printing more bills.

      Oh really? What evidence do you have that this isn't by design. [youtube.com] You are now aware that there is more data for the null hypothesis against your claim of undisciplined practices.

    • So the summary's claim that this would appeal to countries struggling with heavy inflation doesn't really make sense.

      No, this isn't about "appealing to countries". It's about "appealing to PEOPLE".

      Bitcoin is (possibly) a useful alternative to the individual citizens of countries that are trying to solve economic problems by printing money.

      It is not, on the other hand, a useful alternative for the governments that are just printing money....

      • Re: (Score:2, Troll)

        by PopeRatzo (965947)

        Bitcoin is (possibly) a useful alternative to the individual citizens of countries that are trying to solve economic problems by printing money.

        It is not, on the other hand, a useful alternative for the governments that are just printing money....,

        No, you're right. In fact, since a great deal of what passes for "prosperity" in developed nations is the direct result of governments "just printing money".

        Even if we could stop inflationary policies, I'm not sure most of us would want to, since it would mean a

        • by Jane Q. Public (1010737) on Sunday February 09, 2014 @03:54PM (#46204547)

          "Even if we could stop inflationary policies, I'm not sure most of us would want to, since it would mean a protracted worldwide economic downturn."

          If I may say: I think you've been listening to too many Keynesian economists. The idea that inflation is good is just so much snake oil. The people it benefits are government, banks, and Wall Street. It harms just about everyone else.

          HEALTHY markets are zero or negative inflation. Take computer-related equipment: every year, you get more bang for the buck (even when you consider they're inflated bucks). That's called deflation.

          For nearly 300 years, inflation was essentially zero in North America, and we had a healthy economy (arguably the healthiest in the world). That changed when the government started meddling. It is ridiculously easy to demonstrate this.

          I don't share your stance, which seems overly pessimistic to me. We need to end the Fed, and re-instate a hard money standard. Just those two things would fix many of our ills.

          (Re, the Fed: why should we pay interest on every dollar printed? That's just one of the ills it introduced.)

          • by PopeRatzo (965947)

            If I may say: I think you've been listening to too many Keynesian economists. The idea that inflation is good is just so much snake oil. The people it benefits are government, banks, and Wall Street. It harms just about everyone else.

            Of course you're right, but if you think that Keynes says that "inflation is good" then you haven't read him very closely.

            For nearly 300 years, inflation was essentially zero in North America, and we had a healthy economy

            And then the Europeans came.

            That changed when the gover

            • "lazy-fare"

              Laissez faire".

              See me earlier comment about trying to spell things if you've only heard the word and not read it.

              • I am pretty sure he was making a pun. Not a typo.
              • by PopeRatzo (965947)

                See me earlier comment

                See my earlier comment about the proper way to modify pronouns to show possession.

                I was making a joke with the "lazy-fare" son. It's like "welfare", except for lazy rich people who want profits without actually producing anything of value. See, "rent-seeking".

            • "Of course you're right, but if you think that Keynes says that "inflation is good" then you haven't read him very closely."

              It isn't that. But Keynes was an interventionist, and government intervention deliberately keeps inflation well into positive figures. So it's "Keynesian" only in an indirect sense. Interventionism was obviously a pre-Keynes idea but he adopted it as part of his gospel.

              "And then the Europeans came."

              Haha. No. I was referring to historical inflation rates in America, colonial times to present. [postimg.org]

              It wasn't until after the creation of the Fed, and significant government intervention, that inflation started to rise. About that chart: from 16

              • by PopeRatzo (965947)

                There is no such thing as a "free market" in which the government does not intervene. Remember, markets do not exist in nature. They are only a function of laws. Laws to enforce contracts, to address grievance, to assign public lands to corporate purposes, to make sure the product to you buy is the product you were sold.

                The Keynes question is the extent to which government can intervene at the meta level. The problem is, Keynes preceded globalization, so what's being done in his name today has little to

            • I'm tossing this in because I think you might find it amusing. I stumbled across this on the last page of the Nov. 4 2013 issue of TIME. It is a recent interview of Greenspan, apparently motivated by the imminent release of his new book.

              Q: So how do you propose we measure something as irrational as fear?
              "I prefer to call it nonrational. You measure it indirectly by looking at spreads of interest rates, both by credit rating and by the maturity of the bond. Today, 30-year U.S. Treasury bonds yield more than 5-year notes by the greatest margin in history. Long-lived assets are very heavily discounted. It should be a normal recovery. But it is not, because of the high degree of uncertainty."

              [If I were giving the interview, I'd ask how we could be anything but uncertain with Obama at the helm.]

              Q: Knowing what you know now, what you have done differently during your time as chairman of the Fed?
              "It's not the type of asset -- subprime mortgages or stocks -- it's whether it's leveraged. I always knew debt was important. If I could go back and recalibrate my psyche and fully understand how toxic debt really is, that would have been very helpful."

              [As government goes vastly further into debt than ever before... But more to the point: how could he really not know that over-leveraging is bad? He honestly thought over

              • by PopeRatzo (965947)

                My concern about regulation is that it's more vindictive than curative.

                The problem is, that any regulation that would really be curative would be seen by the 1% as "vindictive".

                When you look at the Fed's behavior over the past 30-plus years, you have to ask yourself, "Who benefits?"

                The answer is not, "those poor people getting benefits".

                There have been some very big winners over the past thirty years. Big, big winners. And they're not people collecting social security and they're not people getting food s

                • Your enemy is not a member of a public employees union, or any kind of union, and does not receive food stamps or unemployment or social security or disability or Obamacare.

                  Well, as even Greenspan acknowledged, they are A problem. The negative effects government benefits have had on the economy are nothing short of horrific. But they are not THE problem, by any stretch of the imagination. On the rest of that we are agreed.

                  (In truth I have some issues with public employee unions, too... I have seen what they have done to our local government and economy first-hand, and I have done quite a bit of reading on the Wisconsin debacle. But that's a discussion for another day.)

                  • by PopeRatzo (965947)

                    The negative effects government benefits have had on the economy are nothing short of horrific.

                    They may only be "negative effects" if the purpose of an economy is to produce the greatest profits for the 1%.

                    • "They may only be "negative effects" if the purpose of an economy is to produce the greatest profits for the 1%."

                      Not so. As Greenspan pointed out, government "benefits" have replaced savings for much of America. That is an astoundingly bad thing.

                      The true wealth of a nation, in a broad sense, can be measured by its production capacity + savings. Today, our savings are shot and production capacity has been one of the lowest points since pre-WWII. You can thank government monetary policy (inflation) for much of the savings loss, and traitor corporations that have shipped much of the production overseas for a lot of th

                    • by PopeRatzo (965947)

                      As Greenspan pointed out, government "benefits" have replaced savings for much of America.

                      How do you know that the reason the savings rate has gone down since the '70s is benefits? And why would you take the word of someone who has been so wrong about everything else?

                      And savings rate is higher today than it was in the mid-2000s.

                      You can thank government monetary policy (inflation) for much of the savings loss

                      So, it's not because of benefits, is it? Maybe benefits are just taking up some of the slack in

                    • "How do you know that the reason the savings rate has gone down since the '70s is benefits?"

                      I didn't claim one caused the other. Only that benefits have largely replaced savings."Crowding out" doesn't necessarily mean one causes the other. It just means that one has been replacing the other. Completely leaving aside any speculation about what the cause is, the effect is still a bad thing.

                      "And why would you take the word of someone who has been so wrong about everything else?"

                      Greenspan didn't create the statistics, he just mentioned them. But since you brought it up, yes, part of my point was: why is Greenspan just now learning these things? He was chair of the f*ing Fed!

                      "And savings rate is higher today than it was in the mid-2000s."

                      But look at i [postimg.org]

                    • To clarify what I was trying to say:

                      I can see how you might have interpreted my comments as saying that benefits have been "the cause" of savings going down. That may not be so. Or it may. I don't know. But that isn't what I meant to say.

                      Only that when benefits replace savings, you have a problem.

                      But aside from any effect they may -- or may not -- have on savings, government benefits simply do not -- cannot, in fact -- have a positive effect on the economy. Every $1 dollar of government benefits co
          • by wolfemi1 (765089) on Monday February 10, 2014 @05:23PM (#46212725)

            HEALTHY markets are zero or negative inflation. Take computer-related equipment: every year, you get more bang for the buck (even when you consider they're inflated bucks). That's called deflation.

            No, no, no. You cannot parcel up "deflation" and "inflation" on a per-market basis, then use that to determine the strength or weakness of a currency.

            A deflationary currency is a bad thing; you simply have to remember that an economy thrives on people buying things from each other, and breaks down when they stop doing so. It's a bit more complicated, obviously, but primarily you need to be concerned when people have an incentive not to do so.

            Deflation causes a breakdown in this in that it becomes acceptable to get "returns" (i.e. increase in worth) for a currency by simple stuffing it in a mattress. This is very harmful, not least because it's a positive feedback loop; the more people stuffing currency in their mattresses, the smaller the money supply, and the faster the currency deflates. See the Great Depression for an example.

            For nearly 300 years, inflation was essentially zero in North America, and we had a healthy economy (arguably the healthiest in the world).

            If by "essentially zero" you mean "inflation and deflation of double-digits year over year", I suppose that's half-true. It doesn't make for a stable economy, though. And just for kicks, you should look for all of the "Panics" that happened in 19th century America, you might be surprised at the number and their severity.

            We need to end the Fed, and re-instate a hard money standard. Just those two things would fix many of our ills.

            This is very, very much not the case. Why do you think the "Great Moderation" happened? Why do you think that not a single nation in the world is using a "hard money" standard anymore?

      • by jythie (914043)
        Talk about a first world solution.... BTC is a toy for elites, a luxury experiment for groups of people who are already living on solid economic footing. If one is living in a dictatorship with hyper-inflation, chances are they are going to have bigger concerns and are not going to have access to the infrastructure BTC needs to work.
        • by fsterman (519061)

          Did you read the article? Physical bit coins are a solution for people that don't have the infrastructure required to make BTC work.

    • by elucido (870205)

      Bitcoin is already divisible so there are more Bitcoins than dollars. Mining will cause more to generate far into the future so what are you talking about?

      • "Bitcoin is already divisible so there are more Bitcoins than dollars. Mining will cause more to generate far into the future so what are you talking about?"

        Just no.

        First, saying "Bitcoin is already divisible so there are more Bitcoins than dollars" is like saying "Dollars can be divided into pennies so there are more dollars than Deutschmarks." It doesn't make any sense.

        Bitcoins are divisible in the same sense dollars are: you can divide them into fractions (like quarters, dimes, pennies). That is all. The only difference is that Bitcoins can be divided more easily into smaller parts than dollars. It goes far beyond 100ths.

        As for mining: the way Bitco

        • by mythosaz (572040)

          With a potential of 21,000,000 bitcoins, each divisible into 100,000,000 satoshi, that gives us something like 300 thousand satoshi per man woman and child on the planet.

          Even if half of all bitcoins are destroyed in hard drive crashes, and the world population doubles, there's still over 100 thousand satoshi per man woman and child on the planet.

          Compare this to dollars, all 1.23T of them in circulation, which works out to only 17,571 pennies per person on the planet.

    • they try to solve problems by just printing more bills.

      Keep in mind that the "problem" they are almost always trying to solve is "keeping themselves in power". These governments are trading long term economic growth for short term popularity.

    • or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic

      They had to pay huge amounts of money for reparations. It had nothing to do with being non-functioning.

    • Meh (Score:4, Insightful)

      by mr100percent (57156) on Sunday February 09, 2014 @03:15PM (#46204193) Homepage Journal

      I don't see an incentive for them to use Bitcoin over US dollars or some other established currency.

    • by Jane Q. Public (1010737) on Sunday February 09, 2014 @03:47PM (#46204475)

      Bitcoin makes that impossible, so the end result will be that those governments will either not use such a limited currency, or will use it up until the point they want to print more where they will then either abandon the cryptocurrency or declare that some other currency must have some exchange rate with the Bitcoins and print more of those.

      This, except for that very last part. It isn't possible to tie a non-inflationary currency via a fixed exchange rate to another currency, then inflate that other currency. That is a contradiction. You can do one, or the other, but not both.

      Most of the time, the governments in these hyper-inflationary states are printing more money in order to spend more money or to save their own asses, at the peoples' expense. (Just as, to a lesser degree, the U.S. government has.) So they would simply not allow the non-inflationary currency, or abandon it when they saw it didn't suit their purposes.

      It's far past time we kicked these adherents of failed and discredited Keynesian theory out of government economics. Sadly, Janet Yellen, new Fed chief, is a staunch Keynesian and a fan of the "new" Phillips Curve, which was demonstrated pretty thoroughly to be wrong about 20 years ago.

      We already have stagflation under Obama: high inflation (government inflation figures are just plain B.S.) and high unemployment. If Yellen has her way, we could have high inflation, high unemployment, AND high interest rates.

      Be afraid. Be very afraid.

      • > high inflation (government inflation figures are just plain B.S.)

        Citation needed. I know of no economic source, government or otherwise, that demonstrates this. Can you provide sources?

      • discredited Keynesian theory
        Citation needed. Preferably from some non-hack promoting Globalism, within a libertarian think tank promoting economic models that parrot failed third world nations and free market pixie dust.

        The "stagflation" under Obama is due to not taxing people with money to play for all these government services, and not forcing companies to invest profits.

        If this government printed a lot of money and handed poor people -- that would create demand because they'd have something to spend. The

      • by wolfemi1 (765089)

        It's far past time we kicked these adherents of failed and discredited Keynesian theory out of government economics. Sadly, Janet Yellen, new Fed chief, is a staunch Keynesian and a fan of the "new" Phillips Curve, which was demonstrated pretty thoroughly to be wrong about 20 years ago.

        Wait, what? The "new" Phillips curve has only been around since 1995, so I'm not sure how it could have been demonstrated to be wrong before then.

        http://en.wikipedia.org/wiki/P... [wikipedia.org]

        We already have stagflation under Obama: high inflation (government inflation figures are just plain B.S.) and high unemployment.

        What on earth makes you think we have high inflation?

    • A major reason why dictatorships (or for that matter sometimes non-functioning governments of other forms, e.g. the Weimar Republic) is because of economic pressures as well as undisciplined monetary policies where they try to solve problems by just printing more bills. Bitcoin makes that impossible, so the end result will be that those governments will either not use such a limited currency, or will use it up until the point they want to print more where they will then either abandon the cryptocurrency or

  • Production cost (Score:5, Interesting)

    by NapalmV (1934294) on Sunday February 09, 2014 @10:36AM (#46202389)
    I don't get it why they keep saying that "if 1 penny costs 2 pennies to mint then we shouldn't make them anymore". Unless the government looks at "printing money" as a source of revenue. Which they shouldn't if you're looking at money as a transaction facilitator and nothing else. What happens is that it costs us 2 penny to mint 1 penny coin that will subsequently change hands via payments several million times before it gets too degraded (physically) and has to be retired. Thus the minting cost per transaction for that penny is actually very small. What you're really paying is the cost of the convenience of having pennies available for transactions, and judged per transaction it ain't looking that bad.
    • Good point. Let's dig a little deeper, shall we? The Fed *pays* for the minting of coins, whereas the Fed, a private corporation, gets to print their own paper money, that they promptly loan out. So one thing costs the Fed money, the other makes them untold trillions. Which one do you think they are trying to limit? More... [youtube.com]
      • " The Fed *pays* for the minting of coins, whereas the Fed, a private corporation, gets to print their own paper money, that they promptly loan out."

        The Fed doesn't mint coins. The U.S. government does. Look it up.

        • Re:Production cost (Score:4, Informative)

          by justthinkit (954982) <floyd@just-think-it.com> on Sunday February 09, 2014 @05:09PM (#46205073) Homepage Journal
          The Fed pays for coins in that (1) they don't get free money handed to them and (2) they can't accrue interest on coins in circulation.

          My point, that I recalled from memory slightly incorrectly, apparently, is that coinage is a tiny, incidental business. That all involved want to limit.

          Paper money, on the other hand, is what national debt dreams are made of.
          • "The Fed pays for coins in that (1) they don't get free money handed to them and (2) they can't accrue interest on coins in circulation. "

            Well, that's kind of like saying that Wal-Mart "pays" for Kroger. It's not really true. They're simply unrelated.

            "My point, that I recalled from memory slightly incorrectly, apparently, is that coinage is a tiny, incidental business. That all involved want to limit. Paper money, on the other hand, is what national debt dreams are made of."

            We definitely agree on this. But I would throw in that certain interests want to limit coinage because it interferes with their inflationary goals. It may be a relatively "incidental business" but it throws a wrench into the works of fiat money.

            Or it would, anyway, if the coins were real money in themselves (gold, silver, etc.) like they used to be.

            • Fiat Money may not be perfect - but it's better than Gold and Silver coins. You don't want resources wasted digging holes in the ground trying to scratch up more useless Gold to be turned into a vehicle for exchange. Money is best if it represents a good or service -- not if it has intrinsic value.

              The only problem with fiat currency is third parties making counterfeits and the money producers printing excessive amounts. The first is technology while the latter is policy. We the people if we are in control h

              • "Fiat Money may not be perfect - but it's better than Gold and Silver coins."

                Wanna bet? Oh, I suppose you might say it's "better" if you have an inflation fetish. But why would you?

                This is what it has done to prices [postimg.org] -- and as a consequence undermined savings -- over the last 100 years.

                "The only problem with fiat currency is third parties making counterfeits and the money producers printing excessive amounts."

                Wow. No, there are LOTS of problems with fiat currency.

                "We the people if we are in control have an impact on that last part."

                Sure, but we haven't been "in control" since 1913. Loot at that chart again. Monetary policy is under the control of the Fed. And the Fed -- although the chair is appointed by the President -- is a collection of private banks. And much of their

    • By issuing money the Federal government is issuing debt at 0%. It is called seigniorage. You can look it up in wiki. For most major economies it works out the be less then a rounding error, so no big deal. Here is a article.

      http://www.npr.org/blogs/money... [npr.org]

      No, the real concern is that when it takes 2 pennies to mint 1 pennies mining companies will order lots of pennies and melt them down for the copper (or zinc nowadays).

      • by NapalmV (1934294)
        Production cost = material cost (metal) + manufacturing costs (power, tools, wages etc). As long as material cost 1 penny nobody will melt it. OTOH you can also make such melting a criminal offense, as to raise the costs of doing it with some 25 years in jail.
    • by bondsbw (888959)

      Because taxes. If it costs $20 million to mint $10 million of coins, then tax revenue is in the negative $10 million and the government has to tax more to make up for it.

      The replacement would likely be to round all transaction totals the nearest nickel. If the penny is changed hands millions of times, then replacing it with the nickel will result in similar usage. It's not like people just suddenly stop paying for things.

      The penny typically doesn't change hands that often anyway.[citation needed]

      • by noh8rz10 (2716597)

        t's not like people just suddenly stop paying for things.

        I would stop paying for things. Considering I pay for everything in pennies currently, and don't use CCs etc, my system works for me and I'm not going to change it.

    • Re:Production cost (Score:4, Insightful)

      by QuasiSteve (2042606) on Sunday February 09, 2014 @12:06PM (#46202891)

      Thus the minting cost per transaction for that penny is actually very small. What you're really paying is the cost of the convenience of having pennies available for transactions, and judged per transaction it ain't looking that bad.

      Good, good, thinking beyond just the material value vs face value issue - very good.

      Now calculate the costs involved with issuing them, recycling them, transporting them, handling them, the cost per transaction in using them because cashiers have to dig them out of the drawers, the value of time wasted by people waiting in line as somebody in front of them who has received those pennies and goshdarnit will spend four them again to make exact change for that $9.99 item (convenience, you say...), cleanup from pennies wasting away into the environment, and material loss that could otherwise have been used for more appropriate purposes.
      And then of course counter that with the reduced happiness in some people's lives as they can no longer fill entire jars with pennies and reduced income from places that run 'wishing wells' which tend to be another dumping ground for pennies.

      Maybe then we can actually start looking at the cost of a penny in an all-encompassing manner. Or we can just accept that the penny in general is a dumb idea at this - time no matter how much any associated costs are stretched out over the lifetime of a single penny.

      • by NapalmV (1934294)
        You may also want to look at your electronic bank account in the same manner. It's a database record somewhere that needs continuous power, regular maintenance/backups and equipment replacements etc. My wild guess is that in the long run storing 1 penny coin in a jar is less expensive than a 1 penny balance bank account. Of course if your balance is much bigger than just 1 penny then things start to change, but nothing stops you to fill the jar with $100 bills either. Keeping the penny too.
        • nothing stops you to fill the jar with $100 bills either

          A Benjamin jar.. I like that! But only if the U.S. adopts polymer notes.

          And yes, it tends to change rather slightly when it's no longer about a single penny :)

      • by martas (1439879)

        reduced income from places that run 'wishing wells' which tend to be another dumping ground for pennies

        Eh, I highly doubt there would be a significant decrease in charitable giving if the penny was murdered (as it no doubt should be). In fact, I wouldn't be surprised if there was an increase -- psychologically, people might be more willing to give up nickels, dimes, and quarters if the penny no longer the smallest denomination.

      • by fa2k (881632)

        If the shops don't want people to hold up the queue looking for 9.99, they should set the price to 10.00

      • by tlhIngan (30335)

        And then of course counter that with the reduced happiness in some people's lives as they can no longer fill entire jars with pennies and reduced income from places that run 'wishing wells' which tend to be another dumping ground for pennies.

        Maybe then we can actually start looking at the cost of a penny in an all-encompassing manner. Or we can just accept that the penny in general is a dumb idea at this - time no matter how much any associated costs are stretched out over the lifetime of a single penny.

        The

    • by jythie (914043)
      I think it is less about production cost, and more people melting down pennies when the metal is worth more then the coin.
    • Re:Production cost (Score:4, Interesting)

      by pla (258480) on Sunday February 09, 2014 @12:26PM (#46202995) Journal
      I don't get it why they keep saying that "if 1 penny costs 2 pennies to mint then we shouldn't make them anymore".

      In the case of pennies and nickels, this has nothing to do with the actual cost to make them so much as their inherent value in metal content.

      Yes, melting down pennies to sell for scrap breaks the law. Now look at a random handful of pennies and see how many you can find that predate 1982 (when they went from pure copper to mostly zinc). If you don't think we have people scrapping them for copper, I have a bridge to sell you.

      The same thing happened in 1964 when our dimes-and-up stopped containing any silver (nickels always used copper/nickel, except during WWII) . Although you'll occasionally (rarely!) get lucky and find one mixed in with your change, pre-1964 change has effectively ceased to exist in circulation.


      That said, as far as I can tell the whole "costs more to make" arguments counts as just a rationalization. People hate pennies, and just want them gone. This has nothing to do with value or cost or the phase of the moon - Even in my youth, a few decades ago, a penny would only buy you a single piece of the crappiest candy. Today, even that crappy candy costs a quarter. So why the hell do we keep creating a coin that only has use in the aggregate? Ditch the worthless lump of zinc and stick with coins that have actual buying power.

      People do two things with pennies - Kids thrown them in jars in the closet, and old ladies tie up the checkout line trying to make exact change. Factoid of the day: If you saw a parking lot covered in "free" pennies (say one per square foot), you would need to pick one up every five seconds just to make minimum wage. By comparison, doing crappy agricultural piecework like strawberry harvesting, if you could work at that same rate, you'd make 21x as much for the same type of effort.
      • by Bryan Ischo (893) *

        Not sure whether this supports your argument or refutes it; mostly I think it's just anecdotal evidence that doesn't really say anything either way.

        However, just for fun, I grabbed every penny I could easily find in the house and counted those older than 1982.

        Result:
        Pre-1982: 17
        Post-1981: 110
        Undentifiable: 1 (had been flattened by one of those flatten-a-penny amusement machines with a Sydney Opera House scene)

        It didn't take long before I learned to identify the pre-1982 pennies pretty much on sight (althoug

        • by khallow (566160)
          Incidentally, there are some copper 1982 pennies out there. They actually did the switch to copper plated zinc in the middle of the year. You can visually tell the two apart because the copper pennies have larger dates than than the copper plated zinc.
    • You'd be right except the government doesn't print money, the Federal Reserve does. The government prints T-Bills and the private for profit Federal Reserve isn't going to buy those at a loss.
    • Most U.S. dollars are digital currency, less than 3 percent of the whole of U.S. money is physical.

    • How about there comes a point where it makes no sense to continue subdividing money? In parts of europe registers round to the nearest 0.05 EUR so pennies are not seen anymore. Sometimes it's in your favor and sometimes it's not -- but on average you are flat (since rounding is basically random).

      Really it only makes sense to mint / print money that actually makes a difference in transactions.

      And if you don't like my argument, pray tell why the Hay Penny doesn't exist anymore? Maybe we should bring it bac

      • by Bryan Ischo (893) *

        When I lived in New Zealand I found their approach most sensible. Cash payments are always rounded to the nearest 10 cents.

        Of course, they don't have dollar bills, only dollar coins (and two dollar coins), which is ridiculously annoying - you end up with a pocketful of heavy, clunky coins when bills would have been easier to deal with.

        • Living in europe (with 2 EUR coins) I find that the coins are not much different then normal change once you get used to them. The key is you just have to get used to looking in your pocket for change instead of discarding them the second you get them...

  • Not necessary (Score:4, Informative)

    by haggus71 (1051238) on Sunday February 09, 2014 @10:41AM (#46202415)

    There's already a currency available world-wide, used instead of local currencies of dictatorships. It's also the preferred currency of such nations as Saudi Arabia and other Arab states...as well as Iran. It's called the US dollar.

    There are about as many dollars in circulation outside the us as there are here. It's why more nations invest in the US than in any other nation, with treasury bonds. The Euro stinks, and they can't trust the Chinese to not futz with their system.

    Now, if we keep going with this default business...

    • by NapalmV (1934294)
      You mean this business?
      http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/
    • by fsterman (519061)

      RTFA, dollars are not impervious to counterfeiting and there is no way for locals to check the authenticity. With physical Bitcoins, you can get both.

      • by Anonymous Coward

        It's absolutely naive to believe that physical Bitcoins could be impervious to counterfeiting. They've made it difficult, but nowhere near impervious. Especially the part where you can convert the physical Bitcoin to digital, completely negating the effectiveness of the hologram if someone steals your coin.

  • by TheloniousToady (3343045) on Sunday February 09, 2014 @11:25AM (#46202633)

    Imagine a digital currency in the form of news articles posted on a website. This currency can be minted out at will by the benevolent dictator who runs the site. As in all healthy economies, currency has been supplied at a rate that matches demand in order to keep the economy stable. On the weekends, for example, demand typically has gone down. Thus, the weekend currency supply typically has been reduced to match.

    Imagine, though, that the dictator enacts a new policy that makes The People mad. Grumbling and other political unrest ensue. Noticing this, the dictator tells himself, "The People are revolting." So, he dictator issues a soothing message. That works to some extent but ultimately isn't completely effective, primarily because he doesn't explicitly reverse the unwelcome policy; worse, if one reads his statement carefully, it actually states that the unwelcome policy will remain. Still, the dictator finds The People revolting.

    So, in order to distract The People and make them feel richer, the benevolent dictator who runs the site suddenly begins minting out lots of new currency on the weekend. Notably, weekend demand has not increased but has actually decreased due to disruption of the economy caused by the new policy. Yet supply goes through the roof.

    As in all such cases where supply of a currency greatly outpaces demand, hyperinflation results. The currency is inevitably devalued. Of course, The People notice this. Rather than feeling richer, hyperinflation makes them feel even poorer, and, ironically, actually contributes to the economic disruption that the benevolent dictator was hoping to ameliorate. The People begin to question the benevolence of their beloved dictator even further.

    The dictator soon recognizes the hyperinflation he has created, and realizes that minting out currency is the cause of it. (As Milton Friedman said, "Inflation is always and everywhere a monetary phenomenon.") Yet he keeps minting out currency. Worse, he stubbornly sticks to the bad policy that caused his whole little economy to spiral out of control.

    After all, what's the use of being a dictator if you aren't always right?

  • I may be going against the flow here; but I have the distinct impression that allowing a crypto currency to be exchanged for a fiat currency is one layer of abstraction too far. Thus, I think the Russian central bank got it right by banning the stuff and that the bitcoin bubble is going to burst within the year. If Mt.Gox collapses it might not last the week.
    • by aaarrrgggh (9205)

      The US decided it is a commodity rather than a currency. That simplifies things pretty much and more accurately reflects what it is. Maybe a derivative of a commodity is more reasonable, but that is more of a detail.

      Personally, I have a few gold coins, because the portability is nice. I'm not really worried about the inherent value of the coins when gold eventually comes back down to reality pricing, because it is still an easy way to be able to move money around. Much of the downside of bitcoins also r

  • Bullshit... (Score:5, Insightful)

    by Junta (36770) on Sunday February 09, 2014 @12:17PM (#46202941)

    Even if you think bitcoin is a reasonable path (I personally don't), this concept is pretty bonkers.

    It goes on and on about how the there is no number that can be easily faked. Fiat currency counterfeiters with plain old serial numbers can copy a valid serial number and someone bothering to lookup the serial number could be fooled, not so with Bitcoin. Point taken, but the thing is before that has any value, the recipient of the currency must actually verify that data. There is no point in conveying that info in an expensive physical coin, because such infrastructure could just as easily be fed the data by electronic means or even a printed slip of paper. The physical coin aspect of it becomes the tail wagging the dog, an overpriced way of conveying the counterfeit resistant data. If the data is not actually envisioned to be verified at time of transaction, then it's as useless as the serial number on a dollar.

    The only thing holding Bitcoin from exploding in many markets is a lack of a physical incarnation.

    Incredibly wishful thinking there. Bitcoin has a lot more problems than lack of a physical incarnation. Being outlawed by major governments, at the mercy of speculators without any regulation, and downright vulnerable to an attack by a critical mass of mining resources working together.

    rural farmers in 3rd world countries are not going to get a smartphone and a $100/month data plan just so they can accept Bitcoin.

    Exactly! But just a few sentences above it says:

    anyone with an NFC equipped cellphone can check if a coin is counterfeit.

    You've come round full circle to the problem in the first place: You need functioning internet infrastructure (and a long time) to validate a transaction in the secure way. Without that, you could counterfeit any 'bitcoin' based currency just as easily as any other currency.

    A viable alternative currency for micro-nations and dictatorships with hyper-inflation."

    Another foolish statement. Again, people are incorrectly assuming there is a technological solution to a socioeconomic problem. The failure of such currencies are a symptom, not a root cause. If it were as simple as all that, the citizens could just as easily move around some stable foreign currency. You can't do a safe, 'sneaky' end run around the force that governs a citizenry. So long as they are empowered to prosecute, shut down internet infrastructure, or just send soldiers into the street, no currency trick is going to work in the face of the fundamental problem.

    • by Ambvai (1106941)

      It's a bit of a fluff article, but there are certainly enough relevant examples of cell phone usage being an active element in improving the lives of 'rural farmers in 3rd world countries': http://www.cnn.com/2012/09/13/... [cnn.com]

      (Also, came across this article, which is a bit more recent and covers specific products: http://www.ventures-africa.com... [ventures-africa.com])

      • by Junta (36770)

        The point being that if you have a cell phone, you have the means of verifying things without need for a physical currency. If you don't have a means of verifying that currency, a 'bitcoin' currency is no more counterfeit resistant than any other currency.

        He makes the case for the currency over purely electronic by saying that 3rd world countries won't tolerate cell phones as it's too expensive. At the same time, he wants to trivialize that requirement when it comes to supporting his point of adding value

        • by Orestesx (629343)
          Please explain to me how it is at all counterfeit resistant. The thing that makes the US dollar counterfeit resistant is not so much the technological countermeasures but the fact that the full weight of US law enforcement will rain a shitstorm down on you if you try to replicate it. Without a government behind the physical bitcoins, there is nothing from stopping a well-funded entity from creating coins physically identical to the real thing.
        • by fsterman (519061)

          He makes the case for the currency over purely electronic by saying that 3rd world countries won't tolerate cell phones as it's too expensive. At the same time, he wants to trivialize that requirement when it comes to supporting his point of adding value to such a currency since 'anyone with an NFC equipped cellphone' can verify the currency.

          If someone already has a cellphone with an NFC reader then it's basically a "free" PUF verifier. Even if you want scanner to verify those payments a PUF physical scanner would be cheaper and more secure than a credit card machine. But the real distinction comes when you are in markets which don't have access to credit card payment systems at all, in which case verifying the currency is still better than judging a bill by the number of creases it has.

          • by Junta (36770)

            If you have a cellphone with an NFC reader, then you don't *need* a physical 'bitcoin' to do bitcoin. If you call out having a cell phone to verify bitcoin transaction as too onerous, and therefore you need physical currency, then *you don't get to claim to have a free verification facility*. It's either cellphones are a trivial requirement and therefore you wouldn't need the physical currency, or cellphones are too big a burden and you can't verify the benefit of a bitcoin backed physical currency. You

    • by fsterman (519061)

      Point taken, but the thing is before that has any value, the recipient of the currency must actually verify that data. There is no point in conveying that info in an expensive physical coin, because such infrastructure could just as easily be fed the data by electronic means or even a printed slip of paper. The physical coin aspect of it becomes the tail wagging the dog, an overpriced way of conveying the counterfeit resistant data. If the data is not actually envisioned to be verified at time of transaction, then it's as useless as the serial number on a dollar.

      If you can start with a trusted reader (A.K.A. a trusted base, the premise with *all* cryptography) then you can sign all of that data. Even if you are able to crack the verification code and feed an offline reader faulty data you would have to control what coins that person comes in contact with. Read up on how UXTO extension works to verify transactions authenticity without having the full block chain.

      The only thing holding Bitcoin from exploding in many markets is a lack of a physical incarnation.

      Incredibly wishful thinking there. Bitcoin has a lot more problems than lack of a physical incarnation. Being outlawed by major governments, at the mercy of speculators without any regulation, and downright vulnerable to an attack by a critical mass of mining resources working together.

      That is in reference to markets with hyperinflation. The whole point is that the local government is tr

  • The article assumes for some strange reason, that those countries use coins. Well hello to the reality, many countries have paper money only and no coins, or after inflation the coins are so worthless, that they're good as collectors items only. Problem solved and other half-baked college theses can be safe stored in the depths of some library to be forgotten for the next millennia.

    • by fsterman (519061)

      The article assumes for some strange reason, that those countries use coins. Well hello to the reality, many countries have paper money only and no coins, or after inflation the coins are so worthless, that they're good as collectors items only.

      Wtf are you talking about? The distinction is between physical and digital versions of a currency, not between paper vs. metal incarnations of the physical currency. And, huh, if you have hyper-inflation they are worthless.

  • They may be illegal to make and/or use in the U.S., thanks to 18 U.S. Code 486 - Uttering coins of gold, silver or other metal [cornell.edu]

    Whoever, except as authorized by law, makes or utters or passes, or attempts to utter or pass, any coins of gold or silver or other metal, or alloys of metals, intended for use as current money, whether in the resemblance of coins of the United States or of foreign countries, or of original design, shall be fined under this title or imprisoned not more than five years, or both.

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