It shouldn’t be hard.
Back in the early days of email, we worried about spam. Merchants shaped up by agreeing not to sell our addresses. Spam filters also did their thing. Email got fixed.
Today, Facebook and Google will have to agree not to spy on us. And Firefox has rolled out a ‘spy’ filter. VPNs will become standard. Those who spied on us will try not to pay under class actions, but the tort bar will not relent.
This privacy thing cuts both ways.
Can the reputation mechanism be made robust? Can there be a Law Merchant on the internet if miscreants can hide behind encryption?
In some ways, Bitcoin has spawned a new wild West.
The questions then are:
Can blockchain identify a fraudulent transaction?
Will the community of users pre-agree to a readily enforceable clawback or restitution mechanism?
ANOTHER FLAW OF BITCOIN
Its cost of ‘production’ or mining can only go up because of the nature of the 21 million cap.
When the cost of mining exceeds bitcoin’s price, miners will shut down. What happens then? You can’t transact bitcoin if miners won’t validate the deal. You can’t even have your Minsky Moment.
Ok, it becomes a Disney asset: Frozen. It will be a winter of discontent.
Taleb is right, and Bitcoin is no bubble.
Maybe it’s gum.
A “bubble” becomes a bubble when you run out of nonbankrupt people calling it a bubble. ~ Nassim Taleb
The hard part is deciding when the bubble will pop.
So, when a rich guy tells you something is fundamentally great, he’s enticing you to do the bubble; but it’s not, until he shuts up. Think Buffett and Coke.
If the same guy tells you it’s a bubble, it isn’t, because he wants to slow you down so he can get in. When he shuts up, then it’s bubble time. This goes for seemingly staid banker types.
The rich guy then shuts up when he’s selling and laughing.
Sum-up: A bubble has two elements – a rising price, and an inevitable but unpredictable crash. It doesn’t mean that the smart money can’t get rich at others’ expense.
Disclaimer: I call Bitcoin a bubble. But then my opinion doesn’t count. After all, I’m just an economist, and Nassim Taleb says economists don’t know anything. He’s right.