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View Diary: The Problem with Crypto-Currencies and Why SolarCoin is Different (124 comments)

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  •  They will (1+ / 0-)
    Recommended by:
    HoundDog

    You can count on it.  People with Solarcoin are going to patronize the people that accept it and the businesses will figure it out.  It is going to be to their advantage to take it.  Their cost of doing business is reduced by accepting it.  Eventually, no Brinks truck, no safe, no sticky fingers in the cash register.

    In many respects, cryptocurrency can and will replace cash due to the added convenience and security associated with it.

    Within 5 years there will be businesses that ONLY accept cryptocurrency for their goods and services.  To begin with, they will be interenet based, but later...

    Ted Cruz: The second coming of Christ, but not Reagan (yet).

    by nuketeacher on Sun Apr 13, 2014 at 06:41:13 PM PDT

    [ Parent ]

    •  I can imagine this. We will need to see highly (0+ / 0-)

      reputable firms putting their names behind them. Who stand behind them. Who issues them?  Who will convert them to regular cash? Who guarantees authenticity?

      Who regulates how many are produced, and that their production is matched to a concombinent reduction of regular currency.

      For example, if the Federal Reserve banks put their names behind it and guaranteed that for every dollar issued of a cryptocurrency, and equivalent dollar of regular currency was taken out of circulation and held at Fort Knox, consumers could have confidence they could always be able to trade them in for equivalent value.

      And, not get stuck like the bit coin people did with a $500 billion gap. People issued the coins, but there was apparently not an equivalent amount of value set aside to back them up.

      "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

      by HoundDog on Sun Apr 13, 2014 at 07:22:11 PM PDT

      [ Parent ]

      •  Cryptocurrencies decentralize the money supply. (1+ / 0-)
        Recommended by:
        HoundDog

        And yes, as you said in another comment, (in theory) they could create inflation. Because basically what's happening is that more "money" (just a different type or form of it) is being created every time some person or organization issues some cryptocurrency.

        The thing is, currencies -- whether government-issued or issued by an NGO or a community or whoever else -- float against each other in markets. The value of any currency is based on (1) supply and (2) how much people like it or believe in it, basically.

        I think a decent analogy of what's going on with the cryptocurrency movement is the Populist movement of the late 1800s. Populists wanted silver to be considered money, instead of just gold. This would have dramatically increased the money supply. It would have increased inflation, but it also would have enabled money to be more equitably distributed among the people, since most of the gold was being hoarded by banks, but silver coinage was easier to come by.

        Many Populists went even farther than this, and believed that communities should be able to issue their own currencies to fund economic development projects. Some in fact did.

        The key issue is that cryptocurrency advocates, along with the Populist money reformers of the 1800s, believe that the people themselves should get to compete with governments for control over the money supply and how it gets issued and distributed. "May the best forms of money win" is the philosophy -- and it's a philosophy that empowers the people, since anyone can create a new form of money and try to persuade other people to use it. We all know how difficult it is to get the government to reform any aspect of the financial system, so some people are saying, "hey, let's just do it ourselves by creating a parallel system of our own design."

        Yes, it's radical, and it's not without potential problems. But it's also an amazing breath of fresh air and opens up incredible possibilities for people-powered change.

        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

        by Eric Stetson on Sun Apr 13, 2014 at 07:45:20 PM PDT

        [ Parent ]

        •  another point on inflation (2+ / 0-)
          Recommended by:
          HoundDog, ypochris

          Inflation hurts the rich more than the poor. In fact, it can actually help the poor, since the poor are usually in debt, and the value of debts decreases as the value of the money decreases. The rich, meanwhile, have a harder time making automatic gains on their capital assets, because inflation cuts into those gains.

          This is actually why the Populists wanted silver to be added as a new form of currency, or various other types of currencies that were proposed in addition to gold, since gold had an extremely low inflation rate and thus helped the rich and hurt the poor.

          The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

          by Eric Stetson on Sun Apr 13, 2014 at 08:02:35 PM PDT

          [ Parent ]

          •  Agreed, which is why if we are unable to budge (1+ / 0-)
            Recommended by:
            Eric Stetson

            this Republicans from those totally obstructive opposition to any further increased revenues, and they insist on maintaining high military spending then I favor pushing inflation even higher than 2% per year.

            I'll grant there is some danger zone above 5% may be as lower a 4% depending on how we do it, and the relative risk foreign investors see in alternative currencies. where hyperinflation becomes a danger, but we are no where near that danger zone now.

            We essentially inflate our way out of the current debt.

            But, we have to be somewhat discrete in the way we do it.

            If we just say it matter of factly, and global investors had any place else as safe to put their money, why would they buy Tresury bills at 2.7%?  

            They are essentially lending us free money.

            This is why the Chained CPI was and is such an insidious plot as it is trying to get Social Security, Disabled, and Military Pensions to pay this bill.

            As long as cost of living adjustments keep up, lets do it.

            The people I feel bad for are the working poor who have not cost of living adjustments but only have saving for retirement.

            My hope is that we make that up to them with expanded Medicaid, and the ACA subsidies.

            With that on board, then is it not all systems go for a transfer of wealth from the super rich back to consumer?

            One unintended side effect it may take several generation to repair is damaging the culture of savings, but we may have already crossed that bridge.

            Do we have this correct Eric?

            You may be the first person here Ive found who I've been able to talk to about this.  

            It would appear you have quite a few graduate level courses in Macroeconomics under you belt.

            "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

            by HoundDog on Sun Apr 13, 2014 at 09:17:52 PM PDT

            [ Parent ]

          •  Can you actually have bitcoin debt (0+ / 0-)

            IS anyone making loans or issuing bitcoin credit cards - because right now inflation would only serve to make goods priced in bitcoin pricier.

            •  You can trade bitcoin on margin at one exchange. (0+ / 0-)

              But that's not something I would recommend doing. Other than that, I don't think there are any services yet to borrow bitcoins.

              The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

              by Eric Stetson on Mon Apr 14, 2014 at 09:15:03 AM PDT

              [ Parent ]

        •  This is fascinating and a real breakthrough for (1+ / 0-)
          Recommended by:
          Eric Stetson

          me because this not only make sense, but seems to be a feedback mechanism for balancing value between two systems.

          If one gets our of balance with value, it should fall in value relative to the other moving back in the direction of equalibrium.

          Analogous to supply and demand feedback loops.

          To me, this is a minimum requirement of a successful currency - economic system activity, I have not seen explained this well previously, Eric thank you for being patient.

          The thing is, currencies -- whether government-issued or issued by an NGO or a community or whoever else -- float against each other in markets. The value of any currency is based on (1) supply and (2) how much people like it or believe in it, basically.

          I think a decent analogy of what's going on with the cryptocurrency movement is the Populist movement of the late 1800s. Populists wanted silver to be considered money, instead of just gold. This would have dramatically increased the money supply. It would have increased inflation, but it also would have enabled money to be more equitably distributed among the people, since most of the gold was being hoarded by banks, but silver coinage was easier to come by.

          Many Populists went even farther than this, and believed that communities should be able to issue their own currencies to fund economic development projects. Some in fact did.

          I will have to think about this more.

          "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

          by HoundDog on Sun Apr 13, 2014 at 09:04:22 PM PDT

          [ Parent ]

          •  Bitcoin is not a currency (0+ / 0-)

            according to the IRS, so each transaction will have to be processed for capital gains based on the cost of each bitcoin involved. This ruling has effectively doomed bitcoin to be an ideological speculative venture.

            •  The IRS ruling won't have much of an effect. (0+ / 0-)

              The IRS officially requires people to report all purchases they made on the internet and pay sales tax, since online retailers mostly don't collect it, but how many people actually report on their taxes everything they ever bought online. "Online commerce is doomed! Doooooooomed I tell you!" is the kind of thing people were saying years ago because of these onerous IRS reporting requirements, but it had almost no effect on people's actual buying habits and online commerce has skyrocketed.

              The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

              by Eric Stetson on Mon Apr 14, 2014 at 09:18:35 AM PDT

              [ Parent ]

    •  One of the primary jobs of the Federal Reserve (0+ / 0-)

      Bank is to monitor the growth rate of the economy, as measured by GDP, and then make sure the money supply, as measured many different ways, M1, M2, M3 etc, is grown in balance to it. Excess growth of the money supply is expected to cause inflation.

      The honest truth is that we've been cheating a bit, which I think we should. Its he central controversy of every meeting. If we can not have a reasonable fiscal and tax policy, the alternative is a slow controlled 2% or so inflation. Sadly, working people on fixed pension are getting screwed.

      And, as you point out, its actually banks that issue the loans that create the money supply. Federal Reserve controls the interest rate, and margin rates through a complicated procedure.

      Without something similar controlled by a party we can trust how could any system work? Since people really do not even trust the government, it seems optimistic that anonymous rebels like the folks from bitcoin operating from secret internet cafe's are going to be more stable and more trusted. What am I missing?

      I like the parts about people being able to bypass banks, and governments, and surveillance and all of that, "wild west" counter-culture stuff, but I don't see how it becomes mainstream and big time yet. That's why I said I didn't understand it. It's not because I don't know what a currency is. LOL :-)  

      "Seriously, Folks, WTH?" - ("What the Heck? "h/t Joan McCarter, Seriously, Florida. WTF?)

      by HoundDog on Sun Apr 13, 2014 at 07:32:31 PM PDT

      [ Parent ]

    •  You'll have to forgive me for waiting (0+ / 0-)

      for more compelling reasons to get into these coins.

      * The IRS rulilng says, so far, they are commodities.  That sets up legal requirements to track them for capital gains.

      * Some of these coins appear to have potentially huge payoffs for early adopters, speculators and the "middlemen" engaged in frequent trading and mining.  The "currency" has regulation, stability and liquidity risks.

      * The many businesses that accept payment in these coins appear to be primarily from a narrow set of sectors and lean particularly toward tech and internet.

      * For most consumers, particularly those who like to buy locally and/or face-to-face, these are not yet options.

      I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

      by Satya1 on Mon Apr 14, 2014 at 07:51:49 AM PDT

      [ Parent ]

      •  tax issues (0+ / 0-)
        The IRS rulilng says, so far, they are commodities.  That sets up legal requirements to track them for capital gains.
        People are also legally required by the IRS to report on their taxes everything they ever buy online and pay sales tax on it, since online merchants mostly don't collect sales tax. But how many people do this?

        Theoretically, the new tax guidelines about reporting all bitcoin transactions and calculating capital gains on each one could cause some people to decide not to use bitcoin. What's more likely, however, is that it will simply encourage people to never exchange their bitcoins for dollars, and spend them directly for goods and services instead -- essentially a new type of "cash economy" which largely exists outside of the knowledge of the IRS, kind of like how most online purchases in dollars are never reported to the IRS.

        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

        by Eric Stetson on Mon Apr 14, 2014 at 09:26:09 AM PDT

        [ Parent ]

        •  the instabilitity and liquidity issues (0+ / 0-)

          of bitcoin are my main concern.  The last year of prices for the bitcoin have been anywhere from around $70 to over $1,000.  I don't gamble in that kind of environment.

          BTW:

          People are also legally required by the IRS to report on their taxes everything they ever buy online and pay sales tax on it, since online merchants mostly don't collect sales tax. But how many people do this?
          This is not correct as it is states that impose sales tax - not the feds. You may be confusing use taxes that you report on your state tax return. Or you may be misinterpreting the sales tax reporting option on Schedule A.

          I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

          by Satya1 on Mon Apr 14, 2014 at 10:16:09 AM PDT

          [ Parent ]

          •  It's all about market cap. (0+ / 0-)
            The last year of prices for the bitcoin have been anywhere from around $70 to over $1,000.
            That's because the total market cap of all bitcoins in circulation is still only a few billion dollars. It's a tiny drop in the bucket of the whole economy. If more people continue to adopt bitcoin (or other cryptocurrencies) then there would be more price stability in the future, since buys and sells don't move the price as much with a bigger market cap.
            it is states that impose sales tax - not the feds. You may be confusing use taxes that you report on your state tax return.
            Yeah, my mistake, I meant to say state tax return, not federal. For example, in New York:
            You may owe sales and use tax under certain scenarios

                Scenario 1
                You buy property delivered to you in New York State without paying sales tax to the seller. This can happen when you buy something through the Internet, by catalog, from television shopping channels, or on an Indian reservation.

            (Source: http://www.tax.ny.gov/...)

            My point is, probably only a small percentage of total internet commerce is ever actually reported on people's tax returns. I suspect a similar phenomenon will occur with bitcoin transations.

            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

            by Eric Stetson on Mon Apr 14, 2014 at 11:41:22 AM PDT

            [ Parent ]

            •  I get your points (1+ / 0-)
              Recommended by:
              Eric Stetson

              and I agree about the available bitcoins in circulation.  It's related to another concern of mine.

              The bitcoins actually circulating might more accurately be labeled as something akin to the float instead of outstanding shares.  They are the ones not held by majority holders and insiders.

              Because there are a number of "majority holders" who I guess we simply don't know.  As far as I know there is no regulation for them to identify and report their holdings.  The biggest "accounts" that are held are worth 10s of millions of dollars and multiple accounts are held by as few as one owner sometimes.

              So not only is the value highly volatile, the ones that control that volatility the most are anonymous and we have no way of trying to discern their intentions.  That only makes it even more dangerous for a person to speculate on bitcoins, IMHO.

              There are a couple of ironies here.  The anonymous presence of the "big money" is a marketed feature of bitcoin, not a bug.  Sometimes promoted as "currency for the people",  bitcoins even come with their  own 1%ers.

              The name of the founder is widely assumed to be a pseudonym.  And "Nakamoto is believed to be in possession of roughly one million bitcoins. At one point in December 2013, this was the equivalent of US$1.1 billion."

              Extreme price instability, lack of information about major holders, lack of regulation:  Those are not usually patterns for latecomers to an investment to succeed.

              I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

              by Satya1 on Mon Apr 14, 2014 at 12:51:42 PM PDT

              [ Parent ]

              •  Those are some good reasons not to support bitcoin (1+ / 0-)
                Recommended by:
                Satya1

                I'm not in favor of bitcoin itself, but the technology on which it is based makes it possible to create better currencies which don't fall prey to the same flaws. SolarCoin is one of the best ones, IMO. For example, only 0.1% of SolarCoins are reserved for the founders and staff of the organization that created it. That's a huge improvement over Bitcoin, since the SLR founders are interested in promoting widespread distribution rather than hoarding.

                People are rightly skeptical of Bitcoin. However, most people are uninformed about the fact that other currencies can be created using the same technology that powers Bitcoin, and they can be better or worse depending on the values and goals of their creators. Basically, I think we should not "throw out the baby with the bathwater" just because Bitcoin stinks.

                The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

                by Eric Stetson on Mon Apr 14, 2014 at 01:50:26 PM PDT

                [ Parent ]

                •  I for one am open to the technology (1+ / 0-)
                  Recommended by:
                  Eric Stetson

                  but what is needed and is still missing is the "elevator story" to tell the average Joe on a reliable, regulated, transparent, stable, fair version of this kind of currency.

                  I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                  by Satya1 on Mon Apr 14, 2014 at 02:36:29 PM PDT

                  [ Parent ]

                •  The concept that works for me when (0+ / 0-)

                  I think of the SolarCoin is that it is essentially a virtual "souvenir coin".  A person gets it when they generate the 1 MW-hour.  Is it worth anything now?

                  The steps a person must go through to apply for units of SolarCoin strikes me as time consuming, prone to fraudulent claims, and difficult to automate - especially since the goal is to do this worldwide.

                  I wonder how many people are using solar generated electricity to power computers to mine SLRs?

                  I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                  by Satya1 on Mon Apr 14, 2014 at 04:19:05 PM PDT

                  [ Parent ]

                  •  Replies: (0+ / 0-)

                    1 SLR is currently trading at about 1 cent, a little less.

                    You may be right that automating the claims process will be difficult. The specifics of this are currently under development.

                    Btw, the SolarCoin project was only launched about two or three months ago. It's in its infancy and many of the details are still being worked on.

                    The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

                    by Eric Stetson on Mon Apr 14, 2014 at 06:04:42 PM PDT

                    [ Parent ]

                •  Also... (1+ / 0-)
                  Recommended by:
                  nuketeacher

                  Sorry to sound so negative.  I hope I don't sound mean about it.  I truly appreciate the information.

                  I'm a self directed investor and manage my own meager retirement accounts on my own.  I learn to be analytical and critical (in the positive sense) about everything that comes at me suggesting I invest in something.

                  This technology nor this application of it appears to me to be mature enough to trust my financial future upon it.  Nor should most individuals.  The author is asking for a "Kierkegaardian leap of faith", but it seems to me that the expression applies in situations where strong evidence of either choice isn't present nor likely will be present.  In the case of SolarCoin there is still plenty of evidence to examine and analyze.

                  Some wise person once said a penny earned is a penny saved.  But he was wrong.  Based on the overhead of taxes, commuting and everything else, a penny saved is worth more like 1.7 to 2.0 pennies saved.

                  I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                  by Satya1 on Mon Apr 14, 2014 at 04:34:24 PM PDT

                  [ Parent ]

                  •  Some people need to take that leap (1+ / 0-)
                    Recommended by:
                    Satya1

                    Not everyone.  The people that are in a position to accept it are the ones that will eventually, I think/hope, take that leap.

                    Once 20% of the businesses in my area are accepting SolarCoin, then why wouldn't I be willing to BELIEVE that SLR has real value?

                    I think the "leap" thing is appropriate.  There is evidence that if might work (Bitcoin) and there are lots of other coins that tell us that they can't all succeed and that they might all (including Bitcoin) eventually fail.  The potential is what had me hooked.

                    I am taking that leap in a small way.  I am spending, by my standards, a modest amount of money, and buying SolarCoin.  Do I stand to get very wealthy from it? No!!  Even if it exceeded my wildest dreams it would not make it so that I could instantly retire.  Will I be broke if it fails: Absolutely not!  Most of my investments are elsewhere.

                    We are working on that elevator story.

                    Ted Cruz: The second coming of Christ, but not Reagan (yet).

                    by nuketeacher on Mon Apr 14, 2014 at 04:49:00 PM PDT

                    [ Parent ]

                    •  Oh, "leap" is OK (1+ / 0-)
                      Recommended by:
                      nuketeacher

                      but certainly not in the kierkegaardian sense.

                      99% of the language you're using is about believing in unspecified events all lining up somehow in the future.  I disagree with the assumptions upon which you appear to be basing your advocacy of this.  A rhetorical question like this:

                      Once 20% of the businesses in my area are accepting SolarCoin, then why wouldn't I be willing to BELIEVE that SLR has real value?
                      doesn't mean anything.  It shows that you're a "believer" but it doesn't convey anything meaningful to an independent minded unbeliever.

                      What would mean something are current numbers of businesses accepting the currency as payment for goods, how those numbers are growing over time, what future plans for growing those numbers will include and what projections for multiple years forward will be.

                      As it happens, I am also a veteran IT dude and have had a good deal of my career (9+) working in some very forward looking, advanced software companies.  I took a look at what is readily available for SolarCoin, and I think there are insurmountable hurdles that inevitably will cause failure.  I'm not saying that to be mean.  It's just my working opinion based on what I've seen so far.

                      I truly hope no one is hurt badly if this goes awry.

                      I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                      by Satya1 on Mon Apr 14, 2014 at 05:33:16 PM PDT

                      [ Parent ]

                      •  Please share your thoughts on the major hurdles. (1+ / 0-)
                        Recommended by:
                        nuketeacher

                        I would be very interested to know what you think the insurmountable hurdles are that will inevitably cause failure, especially from the tech perspective. I would be very appreciative if you could share your perspective on that. Thanks!

                        The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

                        by Eric Stetson on Mon Apr 14, 2014 at 06:06:39 PM PDT

                        [ Parent ]

                        •  I would love to continue this conversation (1+ / 0-)
                          Recommended by:
                          Eric Stetson

                          but I need a breather later today and a bit of tomorrow for my "day jobs" and getting my tax returns in.  But it's the claims process that looks fraught with difficulties to me.  I'll throw in some more detail later, but meanwhile...

                          For SolarCoin to be a legitimate currency the claims process is every bit as important to it as the Bureau of Engraving and Printing is to US currency.  The Bureau takes extraordinary measures to protect against the fraud of counterfeiters.  Multiple inks, paper, ribbons, microprinting, etc.  What does SolarCoin do?

                          I'm not saying SolarCoin has to be as safe as the dollar, but the dollar is the standard.  I'm just saying that the claims process is the key to its legitimacy against fraud.  The pilot process is time consuming and messy and the "future process" is undefined.

                          Comparing the BEP to SolarCoin is actually kind of instructive since similar functions need to be performed.  The BEP has to devise protections and periodically change them.  But once they do, in order to "verify" each X units of currency, they just repeat their chosen protections.

                          The SolarCoin on the other hand has at least 3 pieces that need to be verified:  the claimant, generator and the usage.  That verification has to happen for multiple claims in multiple countries.  In other words there is a "custom solution" for many different contexts.

                          The expense and time of verification per unit of currency is going to be prohibitive, IMO.  And it may still not be effective enough against fraud.

                          Auditing needs to be done on previously granted SolarCoins to check for potential patterns of fraud.  That too costs time and money.

                          So that is the general scope of the first hurdle that comes to mind and I can add more later...

                          I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                          by Satya1 on Tue Apr 15, 2014 at 12:49:39 PM PDT

                          [ Parent ]

                          •  Thank you. (0+ / 0-)

                            I agree that the claims process is the most difficult aspect. The SolarCoin Foundation's goal is to develop methods for it to be fully automated. Admittedly, that will be a challenge -- a major challenge.

                            I don't know enough about the technical aspects of solar energy generator verification to have an informed opinion about how likely it is that it can be fully automated.

                            Apparently the founders/leaders of SolarCoin think it can be. One of them is David Khasidy, CEO of SunRay Power.

                            I hope they are right. If not, then you're probably right that SolarCoin wouldn't succeed in the long term. We'll see.

                            If you have a chance to share any further thoughts on why you're skeptical that SolarCoin can succeed, I'd be interested to hear more whenever you can. Thanks again.

                            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

                            by Eric Stetson on Tue Apr 15, 2014 at 03:32:44 PM PDT

                            [ Parent ]

                          •  I am actually quite ignorant (1+ / 0-)
                            Recommended by:
                            Eric Stetson

                            about the existing standards and technologies related to solar generation and metered grid connections.  However, it's not hard to see that there are many possible points of failure.  And this is just on the topic of how you implement it.

                            An aside:  In my IT experience, I've seen some really challenging technical problems.  But none of them came close to the challenges required to simply understand messy human business behavior and find a profitable way of emulating it via software.  It's the human side where the real challenges are.

                            If you've seen some comments by techies about their appraisal of the ACA rollout failure, you've seen a lot of people who mostly weren't focused on the root causes.  I guarantee the failure of the rollout was way in the beginning and the lack of solid hiring  of managers knowledgeable about insurance, healthcare, project planning and how to manage consultants.  Technical problems are trivial by comparison.

                            A bigger challenge is how does SolarCoin convince the world that the many methods for verifying claims in each context all work?  How do they demonstrate that fraud is 99,999% eliminated?  In the end it isn't the technical distinctions of the many inks used in the printing process of 100s that counts at the BEM.  In the end it won't be whatever processes are used at BitCoin to verify claims.  What counts is confidence.  

                            As we saw in 2008 when questionable bundling of high risk assets with safer assets occurred, and the ratings agencies gave that their blessing, all it took was for a couple of major organizations to bungle their job and pretty soon even the dollar starts to look a lot more like "funny money".

                            So there has to be a number of regulators involved, auditors, disinterested and credible third parties to overlook and approve portions of the process.  There have to be watchdogs watching the regulators.  All that is cumbersome and expensive and as far as I can tell, it isn't even on the map at SolarCoin yet.

                            So those are my first two categories of concern:

                            1) implementing tight verification solutions for multiple contexts that don't cost more than the currency is worth.

                            2) obtaining the necessary confidence from the world at large with regulation showing that #1 is sufficiently able to contain fraud.

                            And my third hurdle in mind is the challenge of getting from under that "bitcoin curse".  I've already listed a few observations about bitcoin and was pleased to read from you and nuketeacher an honest acknowledgement about the scams that many of these crypto-currencies (and possibly bitcoin) are turning out to be.

                            It will be an uphill battle for SolarCoin to escape this taint.  For anyone with basic investing knowledge what comes to mind with this "class of investment" is not currency trading but tulips or the greater fool theory.

                            Another piece of bad news for SolarCoin is that time is running out for them on this.  Thanks to all the scammers, at some point crypto-currency has the potential to develop a bad name from which it cannot soon recover.

                            I should probably stop there.  I think there are going to be some unanticipated costs to keep SolarCoin going related to all these three areas

                            I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                            by Satya1 on Wed Apr 16, 2014 at 09:34:03 AM PDT

                            [ Parent ]

                          •  Thanks again. One quick reply: (0+ / 0-)

                            Regarding the "bitcoin taint," yes, this is a problem, but I've noticed that it's mostly an issue among liberals. I've seen quite a bit of outright prejudice by liberals against cryptocurrencies because of the fact that they are mostly supported by libertarians so far -- a hostility towards bitcoin/altcoins that I haven't much seen among people of other political persuasions.

                            As I've said before, bitcoin definitely has some major flaws and there are good reasons to oppose it. But I honestly think that much of the liberal reactions to bitcoin seem fueled more by anger, even jealousy at the wild success of a libertarian moneymaking venture, rather than by an objective assessment of bitcoin's strengths and weaknesses and an interest in how the technology could be used in ways that would support progressive values.

                            I think the liberal opposition will gradually change as alternative currencies gradually become more mainstream and less of a libertarian thing. Plenty of mainstream technology-oriented VCs and angel investors are getting into the cryptocurrency space and they don't care about libertarian ideology, they just care about supporting technologies with a high potential to succeed and make money. These multimillionaire and billionaire investors don't see the cryptocurrency space as a "dutch tulip" phenomenon; they have moved way beyond that kind of characterization, and instead they tend to see it as "the web 2.0," the next big thing in the IT sector. Clearly, though, as the diarist points out, MOST cryptocurrencies will fail, and should fail, because they are pump and dumps. But the smart investors are trying to separate the wheat from the chaff and picking out the ones that offer something of real long-term value.

                            You may be right about the specific technological and fraud-prevention challenges associated with SolarCoin. And I very much appreciate your input on that. Thank you for your lengthy replies. I will be passing along some of your comments to the SLR founders because I'd like to hear their reaction to these concerns.

                            The most serious problem in American politics today is that people with wrong ideas are uncompromising, and people with good ideas are submissive and unwilling to fight. Change that, and we might have a real democracy again.

                            by Eric Stetson on Wed Apr 16, 2014 at 10:59:36 AM PDT

                            [ Parent ]

                          •  Uff Da (0+ / 0-)

                            This is actually a little disturbing, lol:

                            I will be passing along some of your comments to the SLR founders because I'd like to hear their reaction to these concerns.
                            About the "bitcoin curse" there are also other dimensions I had in mind but didn't have time to elaborate.  Bitcoin not only sucks up the attention in this space, thus quite possibly, eventually crowding out interest in newer cryptocurrencies, but as you said earlier, one can't buy a Solarcoin without buying bitcoin first.  That can't be good for a group that is trying to take hold of their own future with their own cryptocurrency.  Whatever gyrations hit solarcoin prices, another level of price instability will also be added by bitcoin.

                            But in the end, I think the main problem is that the implementation, regulation and marketing of SolarCoin will be so expensive due to some of the reasons I indicated, that it will no longer be able to meet its intended purpose of rewarding solar generation.  There are other, more efficient ways of encouraging solar power generation.  

                            There is one way out and that would be if SolarCoins could only be claimed in very large blocks so that the cost of verifying each claim is a smaller percentage of the reward.  But then SolarCoin will be a B2B currency and not one for average people.

                            good luck.

                            I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

                            by Satya1 on Thu Apr 17, 2014 at 09:07:45 AM PDT

                            [ Parent ]

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