[EM] Fwd: A secure distributed election scheme based on Bitcoin's Proof-of-Work protocol

[Kristofer Munsterhjelm]

Mike Frank wrote:

> 3) Similarly, national governments might lose in terms of not 
> controlling their own currency, but gain in terms of reducing barriers 
> to trade and having the world economy grow.

Not being able to run a countercyclical policy would, I think, lead to a 
much greater volatility of the economy, which wouldn't be very good. The 
states might be able to have control of their economy to some lesser 
degree (since they could say they'll only get involved in loan disputes 
involving their own currency, and that only their own currency can be 
used for paying taxes), but still...

(The monetarists disagree. But then they think countercyclical policy in 
general is futile.)

Furthermore, since bitcoin has a ceiling on the number of coins in the 
economy, it is inherently deflatory. This means that as the economy 
expands, it makes sense to hold onto the money to wait for it to 
appreciate; but if everybody does that, there won't be much activity in 
the first place.

So the desirability of having a bitcoin-run economy depends on what kind 
of economic policy you think works best. The standard Keynesian 
inflation/managed sort seems to have worked quite well over here, but a 
bitcoin economy would make that much harder to execute.

Of course, this doesn't really change whether bitcoin will succeed. It 
can be perfectly rational for individuals to engage in the economy, yet 
the outcome be worse than if they had all stayed away.

(And this is really offtopic.)