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Bitcoin, Considered and Reconsidered



But it is a manufactured cap just the same. No different than OPEC deciding to limit production of oil. (Actually, it is a lot different because the actual oil supply IS finite and there ARE marginal costs to extract oil.)

You obviously know nothing about cybersecurity and cryptocurrencies.

Need I go through the litany of "breakthrough improvements" over the last 50 years that the Luddites couldn't possibly understand but were assured by experts -- all distinguished, well-meaning men and women of their field-- that they were perfectly safe for them and made their lives better? (Asbestos **cough***, Saccharine ***cough***, Red Dye #2 ***cough***, Portfolio Insurance ***cough***, Levered ETFs ***cough****)

To be clear, the technology is worthwhile, no doubt. What is dubious is the value of a virtual currency made scarce by manufacturing a cap.

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Don't you understand that this is the future?

Actually, what I don't understand is why we are diverting resources to "mining" virtual currency and that people actually place value on the practice.

Can we place value on the technology of transferring an item from one computer to another? Absolutely. This is breakthrough.

But bitcoin as money?

If this is about "the future," I wonder why we are using all of these resources towards mining things in the virtual word instead of trying to figure how to mine things in the real world, cure cancer or develop a more fuel efficient car.

A market economy is about the efficient allocation of resources. If we are allocating resources towards solving ever-increasing-in-difficulty hash blocks in order to "mine" digital bits in virtual reality rather than solving real world problems, I think we have lost our way a little bit...

Have you even studied the protocol going through the hexidecimal hash-blocking algorithm which creates value to bitcoin as a currency?

I have seen the slide show, yes. I think what is happening is people are so focused on engrossing themselves in the details and processes that they are missing the larger picture.

Best explanation of it was given to me by Walt Whitman:

WHEN I heard the learn'd astronomer;

When the proofs, the figures, were ranged in columns before me;

When I was shown the charts and the diagrams, to add, divide, and measure them;

When I, sitting, heard the astronomer, where he lectured with much applause in the lecture-room,

How soon, unaccountable, I became tired and sick;

Till rising and gliding out, I wander'd off by myself,

In the mystical moist night-air, and from time to time,

Look'd up in perfect silence at the stars.


This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Eric Oberg worked in fixed income, currencies and commodities for Goldman Sachs for 17 years before retiring as a managing director.
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