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Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

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Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#41

Post by adrianN »

55555 wrote: post #37
mettamage wrote: post #6

I'm a bit weary. Say this cryptocurrency thing does take of and it's not a bubble. Then wouldn't this have similar effects that quantitative easing would have? I understand quantitative easing as 'printing money', because I'm not an economics person. But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot…

Quantitative Easing injects new money into the economy, devaluing money. But my bitcoin is only worth $10,000 USD if that's the amount you agree to pay me for it. And you will pay me using existing money. So there is no new money being injected and so it would seem there is no devaluation of old money. But it feels like maybe you're right. I think existing money is essentially being devalued every time someone decide…

Your newly printed stack of $100 bills is also only worth $10000 if someone is willing to exchange it for goods and services worth that much. I don't see how newly mined $10000 worth of Bitcoin is injecting any less artificially created value into the economy.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#42

Post by qplex »

mmjaa wrote: post #15
docdeek wrote: post #3

One key difference right now, though, is that I can use my Mastercard to pay for just about anythying just about anywhere I happen to be. In comparison to this worldwide acceptance as a means of payment, BTC seems just about worthless.

I've got two credit cards, a Visa and a MasterCard, both of them backed by my Bitcoin wallet. Where's the problem? I can pay with Bitcoin anywhere I could've paid with Visa/Mastercard .. this isn't about BtC vs. Visa/Mastercard. Its about BtC vs. US$, &etc.

What you are saying is that "I can pay with currency $x anywhere, I just need to exchange it first"

If you use Visa/MasterCard, you will not pay _in_ BTC but in dollars/euros/whatever.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#43

Post by gaius »

empath75 wrote: post #5

The price of bitcoin is totally fraudulent, driven by a couple of exchanges literally printing money, and gullible people doing arbitrage and exchanging bitcoin for tether.

The question is, say I had a million dollars worth of bitcoin. Or 10 million, or 100 million. How easily could I exchange them for a traditional hard currency, GBP, CHF, USD? What is the depth of the liquidity of this market? Without that, the valuation is meaningless.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#44

Post by irln »

mettamage wrote: post #6

I'm a bit weary. Say this cryptocurrency thing does take of and it's not a bubble. Then wouldn't this have similar effects that quantitative easing would have? I understand quantitative easing as 'printing money', because I'm not an economics person. But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot…

Think of currencies as placeholders of value. When you work you create value and unless you want to trade that value directly for an asset that isn't a currency (think barter) you exchange the value for a currency. The currency acts as a placeholder for the value you created. One of currency's attributes is it's easy to divide into equal units. These units then become the "price" of your work. The currency makes it easy to compare units are prices of any other asset. So you can compare how much you want to charge for your work by comparing the units of currency across other stuff (e.g. cars, rent, food, etc.). Not all assets make good potential currency. Think of comparing televisions priced in houses. The Sony is 1/10000 of Alice’s house, the Visio is 1/100000 of Bill’s house, etc.

Currencies are just another asset with some additional properties. The most important additional property is that people are willing to exchange it for any other asset. The point at which an asset crosses over to the currency or medium of exchange is elusive.

The paradox is, a modern society needs currency in order to function (barter doesn’t work because of the double coincidence of wants), however, determining when to add/subtract currency (i.e. the money supply) from the world is imperfect. So the question is, how do you do this where all participants are treated the same?

The US dollar’s money supply is managed via lending. That is, currency is lent into existence. This methodology is extremely flexible through the use of inflation and generally depends upon prices going up, however, it’s not a panacea. If loans are not collateralized “fairly” then a bank's special ability to create loans in this closed system can harm everyone that holds dollars.

Currently, the Bitcoin money supply is managed through mining up to a finite number of Bitcoins. This is considered deflationary and has the potential downside of everyone holding Bitcoins and prices going down.

Bitcoin, imho, is not a currency because it isn’t used as a medium of exchange, yet or maybe never. However, it is a store of value (not saying it’s a good or bad store of value) with a limited supply. In time, we’ll learn whether that in and of itself is useful and therefore justifies the price or just a speculative bubble.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#45

Post by xiphias »

mettamage wrote: post #6

I'm a bit weary. Say this cryptocurrency thing does take of and it's not a bubble. Then wouldn't this have similar effects that quantitative easing would have? I understand quantitative easing as 'printing money', because I'm not an economics person. But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot…

Quantitative easing (stealing value of money from others by priting it) is the main reason Bitcoin was created (just look at the message in the genesis block). Bitcoin has limited supply, which makes it a unique digital currency (as opposed to fiat currencies, that are also mostly digital, but centrally controlled/printed).

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#46

Post by sp4ke »

foepys wrote: post #27
sp4ke wrote: post #17

Earlier quoted context omitted.

> But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot more money than there is? Over the course of history, people crated money out of many physical objects that had the "money" properties. Money is a tool to represent value of exchange. As long as we all agree on it's value. In the fiat world, the val…

> replaced with a better one. I'm curious how you define "better"? If you go by wealth equality, Bitcoin is worse than USD because Satoshi Nakamoto, the inventor of Bitcoin, owns more than 1/21 of all ever available Bitcoin. Several other early adopters claim to own a few hundred thousand Bitcoin.

Better as in better money[1], nothing else.

If you are talking about income inequality, it cannot be fixed with money as it is just a tool. If our economic system is based on hoarding capital, then you end up hoarding it. If the best and safest way to hoard is Bitcoin, they you will use it.

However, you cannot go further than hoarding or using it. What the central banks do is much worse, they print it out of nothing and it ends up in the hands a few individuals, with impunity. So on scale of bad to worse, I would argue bitcoin is the lesser evil since at least it would allow for true free markets to exist.

Regarding Satoshi and the early adopters, why do you care ? When using fiat money, do you care about the fact the US dollar got an unfair advantage when it forced the Bretton Woods system on all of us ? As a matter of fact, the US dollar has been the strongest currency and international settlement one exactly because of that unfair advantage.

And if you do care, the problem is not within the money but the economic system. It's an other topic for a bigger problem ...

[1] Bitcoin is not there yet, still a lot of progress to be done on the fungibility side of it.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#47

Post by chesimov »

mettamage wrote: post #6

I'm a bit weary. Say this cryptocurrency thing does take of and it's not a bubble. Then wouldn't this have similar effects that quantitative easing would have? I understand quantitative easing as 'printing money', because I'm not an economics person. But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot…

*wary

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#48

Post by mattrices »

55555 wrote: post #37
mettamage wrote: post #6

I'm a bit weary. Say this cryptocurrency thing does take of and it's not a bubble. Then wouldn't this have similar effects that quantitative easing would have? I understand quantitative easing as 'printing money', because I'm not an economics person. But if this would take off and get a strong foothold at the prices that we're seeing now (bitcoin almost 10K in dollars), then didn't some subset of techies print a lot…

Quantitative Easing injects new money into the economy, devaluing money. But my bitcoin is only worth $10,000 USD if that's the amount you agree to pay me for it. And you will pay me using existing money. So there is no new money being injected and so it would seem there is no devaluation of old money. But it feels like maybe you're right. I think existing money is essentially being devalued every time someone decide…

This is not QE. BTC is treated like a physical asset with a fixed quantity, if x reserves of y mineral were found that would not be QE. Discoveries that increase net global value are completely different from altering the amount of a circulating currency.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#49

Post by kss238 »

gaius wrote: post #43
empath75 wrote: post #5

The price of bitcoin is totally fraudulent, driven by a couple of exchanges literally printing money, and gullible people doing arbitrage and exchanging bitcoin for tether.

The question is, say I had a million dollars worth of bitcoin. Or 10 million, or 100 million. How easily could I exchange them for a traditional hard currency, GBP, CHF, USD? What is the depth of the liquidity of this market? Without that, the valuation is meaningless.

The 24hr volume for bitcoin is currently at 6.2 B.

Selling 10 MM of bitcoin in a day would not affect price very much. Looking at the largest American exchange (6% of daily btc volume), GDAX, a 10 MM market sell order would drop the price to around 9400 USD from 9750 USD currently.

Selling 100 MM of bitcoin in a day would affect the price significantly. Looking at GDAX, a 100 MM market sell order would drop the price to around 7000 USD from 9750 USD currently. Although this would be arbed pretty quickly and I would think that it would recover to maybe 8500 USD.

Re: Bitcoin World’s 30th Largest Currency, Market Cap Closes on Mastercard

#50

Post by mmjaa »

qplex wrote: post #42
mmjaa wrote: post #15

Earlier quoted context omitted.

I've got two credit cards, a Visa and a MasterCard, both of them backed by my Bitcoin wallet. Where's the problem? I can pay with Bitcoin anywhere I could've paid with Visa/Mastercard .. this isn't about BtC vs. Visa/Mastercard. Its about BtC vs. US$, &etc.

What you are saying is that "I can pay with currency $x anywhere, I just need to exchange it first" If you use Visa/MasterCard, you will not pay _in_ BTC but in dollars/euros/whatever.

I pay in BtC. The card provider does the conversion automatically - but I, personally, pay in BtC. I have nothing to do with US$.
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