Archive for the ‘economics’ Category

beautiful mind

April 29, 2012

Like Nick, I’d try to take control. But of course, what happens if he comes upon a player with the same strategy?

Nick declares his intent to sabotage both their chances. In a way, he puts Ibrahim in a position where he must choose to split. And the icing on the cake? Nick’s choice.

To Mark Shuttleworth

November 9, 2011

If this goes through, I want to publicly thank you and Canonical. Perhaps this “dropping” of Mono was purely for technical/practical reasons. Or maybe it was a recognition of the threat to Canonical’s business interests in the form of software idea patents. Or perhaps it was both a technical issue and a long-run, market-based decision.

Regardless, I hope it pays off for you. It already has for Ubuntu GNU/Linux users.

how to fix the United States’ financial woes

August 12, 2011

Sell freedom of speech rights to China. In exchange for assets, allow China to censor American citizens as they see fit.

bitcoin supply

June 30, 2011

If a fiat currency is destroyed, money could be printed to replace the lost supply. In the case of BTCs however, the number of BTCs that will ever be “printed” will, at most, be 21,000,000. Additionally, there exists no central authority that can decide to “print” more BTC because someone say, failed to care properly for their wallet.

Nobody can ever be sure what quantity of BTC has been lost forever but surely some has. I lost a small fraction of 1 BTC when I failed to do a backup. Is this a drawback for BTC? The currency can be broken down to extremely small fractions, so there should be no worry of running out of BTC. However, the network can’t verify when BTCs have disappeared and can no longer be supplied. Is the fact that the amount of BTC in circulation can only be estimated a disadvantage of BTC?

can someone destroy bitcoin?

May 19, 2011

In short, I don’t think it’s realistic even if technically possible.

One might argue that a person (or small conspiracy of people) might try to hoard/delete bitcoins in order to destroy the currency. Given that the quantity supplied of bitcoins is capped (by mathematical definition), one might imagine an attempt to buy it up and then delete it.

Let’s say a future multi-billionaire goes insane and tries to hoard all 21,000,000 bitcoins using his life savings. It’s not so easy. First, he would have to start bidding up the price. He must enter the market like anyone else but must offer the highest price – by far. Of course, he might succeed in buying a large percentage of bitcoins using the most attractive price. However, some sellers still won’t sell. Additionally, the currency can be broken down to the hundred millionths (i.e. make a transaction worth 0.00000001 BTC), so buying “enough” isn’t realistic either. Since the market won’t run out of money, an attempt to buy it all up will simply lead to massive losses on behalf of the buyer. A disincentive to even try is built in. This is why the rich man would have to be insane to make a go at it. It’s financial suicide.

A key factor that will determine the long-term viability of bitcoin will be supplier acceptance. If suppliers desire (and are permitted by governments) to accept bitcoin in exchange for goods and services, the currency has a future. It’s off to a good start in that regard, but broader acceptance needs to continue. The ability to pay one’s utilities for example, would be noteworthy progress.

5 interesting facts about bitcoin

May 18, 2011

I’ve been reading a little about Bitcoin lately. I installed the software, acquired some BTC (currency) by donation, and have tried mining. I think it’s an interesting project. Here are some facts about Bitcoin that caught my attention:

1. Bitcoin is available as free software and can run on GNU/Linux, a free software operating system. Therefore, publicly auditable source is available for a computer running Bitcoin and the software stack it runs on.

2. Bitcoin implements a peer-to-peer (p2p) architecture. It’s not easy for companies or governments to forcibly shut it down.

3. Though Bitcoin software is hard to shut down, governments and companies can choose to shun the BTC currency. For instance, Coinpal, a service to buy/sell BTC using Paypal was suspended. Apparently, Paypal accepted Coinpal for months and then put Coinpal out of business because it decided it was wrong to be involved in a “ecurrency” market. It didn’t appear that any reasons were forthcoming.

4. Quantity supplied of BTC is limited in a different way compared to a physical, nationalized currency. An algorithm to increase supply (“printing” through “mining”) of BTC is set and cannot be changed. Unlike currencies that are printed as deemed necessary by a central bank, Bitcoins are limited to 21,000,000. By the 2030s, BTC production will have slowed considerably.

5. Key pairs are used for trust between traders. Like a physical currency, BTC can be stolen or lost if the owner of the money is careless (i.e. they fail to encrypt/backup their wallet). The value in a wallet can be transferred to a newer wallet, in order to keep current in regard to security.

What else about Bitcoin/BTC is notable?

a beautiful and “important service announcement”

April 28, 2011

Flattr (or more precisely, the email I received from them today) now seems to say something like, “if you feel you contribute, then let people shower you…even pennies, if they are so generous”. If one (or a corporation of) artist(s) and/or engineer(s) believes they contribute, they’d be wise to allow themselves flattery. Hell, even if you make things you don’t believe contribute, you might as well with this change:

we decided to drop any rules that made the service restrictive or outright complicated

And you want to put him and his helpers in jail?

p.s. I think one more restriction should be waived. Payment. It would be good to be able to flattr things for zero money and/or ideally, with an “appreciate” count (e.g. “like”, “+1”, etc.). What if we can’t afford even pennies at some time of our life, yet want to contribute by showing a way of support by tally?

p.p.s. If you (or “you”) liked this post, you can flattr it here. If you like this (more than 5 years now!) blog in general, you can flattr it here.

general thoughts on economics and government, IMO

March 9, 2011

Some thoughts after a discussion with a friend and self-described “libertarian”:

Government isn’t a means to a socially prosperous end. However, government can serve a positive (or negative) role during the process of social change. It’s a tool that may be beneficial or harmful depending on how it’s put to work. Regarding contemporary economics, implementing a purely laissez-faire or strict command economy will surely stifle. Our nature (which we’ve inherited yet differs from, the animals) demands a nuanced approach. We must be given the freedom to learn as individuals yet our aggression is best kept in check, at least to some degree. I think of our current existence as wounded yet promising. We’re often in conflict; that is our history and present. Confronted with scarcity and a fear of it, greed often dominates and we ruthlessly compete. Yet, we are capable of deep compassion and often, with no strings attached, care for others and the environment. I think government can be useful medication for the wound as we heal; or it can be salt.

sweden: negative interest rates

March 3, 2011

Yglesias:

But is anyone paying attention? Here in the United States, inflation continues to be well below the trend level, we have tons of idle workers, and yet all you ever hear about is the possible need for tightening. Why not at least cut the interest on reserves back to zero?

It’s a very interesting story in the world of economics yet there’s minimal mainstream reporting of it. Adopting a negative interest rate may sound like a crazy idea, but isn’t it arguable that quantitative easing is even crazier?

externalities, smoking, and the DMCA

February 7, 2011

Responding to Joe Gregorio:

Joe, I don’t think giving tobacco companies a “safe harbor” is realistic in this case. People will still smoke. A better approach may be to tax the companies producing cigarettes. Cigarettes have a very inelastic demand so the companies should be able to push most of those costs onto the consumers. If the tax is set at an optimal level (that’s the difficult question to answer), it should somewhat reduce the amount of cigarettes consumed and not stimulate much of a black market. The government can then use that money to improve access to merit goods and education related to cigarette consumption. Essentially, the idea would be to raise the marginal social costs of cigarettes and use that money to close the gap (i.e. reduce the externality) between the marginal social benefits and the marginal private benefits.

I think the DMCA example is off-kilter because I don’t see a negative externality in sharing copies of published works (I think it’s a myth and propaganda that there is harm in non-commercial copying). Requirements that service providers comply with take-down requests are putting the onus on service providers when it should not be their responsibility. This approach acts as a disincentive to launch and operate such sites as the costs of doing so go up. Service providers should only have to comply with a “take-down” if the content itself is illegal (e.g. slanderous comments or child pornography). Copyright violations should be between the copyright holder and person doing the copying – not the companies that provide technology that *could* be used for transmitting copyrighted works. I think the current safe harbor provisions for service providers in the EU are a better approach than the DMCA.