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1 bitcoin worth more than dollar

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Re: 1 bitcoin worth more than dollar

#31

Post by jerf »

Charuru wrote: post #12
sgornick wrote: post #2

For those who are new to Bitcoin and would like to learn more: Bitcoin FAQ - https://en.bitcoin.it/wiki/FAQ Bitcoin Wiki - https://en.bitcoin.it/wiki/Main_Page How Bitcoin Works - https://en.bitcoin.it/wiki/How_bitcoin_works Installing Bitcoin - https://en.bitcoin.it/wiki/Getting_started HowTo Mining Bitcoin: Fedora 14: http://bit.ly/fb54ye and Ubuntu: http://bit.ly/ewVzhu The Bitcoin Faucet (free bitcoins) - https:/…

OK, I understand how they're created and how many there are. But why?

Bitcoins are a creation by some who don't understand what a currency is. Bitcoins back to nothing and are only useful to the extent that you can fool another ideologue into taking them; for as long as they've been around, it is far, far easier to obtain goods or services with Warcraft gold or Microsoft Points, which aren't even trying to be universal currencies. (Just yesterday I was on a blog that cataloged the reasons Microsoft gave for various bannings, and selling services for Microsoft Points was a very common one. It's so easy Microsoft considers it a pestilence.)

Last time this came up on HN BitCoin's FAQ had a question directly asking what useful thing it backs to. I say "asking" because the answer was basically no answer at all. I see it is no longer there. This is because if they can't answer it, it is better for them not to bring the question up at all, so I guess it's a good move for them.

Currencies have to back to something. Dollars back to being able to pay the various governments of the US not to throw you in jail for breaking various laws (tax, fines, etc); a dollar is useful even in Africa to someone not subject to those laws, because you can trade it to somebody else who has that use. The way an economy works allows the value of a dollar to appear to become severed from its backing and just float in space, propped up only by mutual consensus, but this is an illusion. When the backing goes, so does the currency. History's full of examples, just look up "hyperinflation".

(Also note the difference between backing and rarity. Anybody can make something rare, backing means it's actually worth something even on its own.)

Bitcoins provide an interesting technology platform around which to build a currency, but trying to use them directly as currency is only slightly different than using Monopoly money, and the differences aren't relevant.

Re: 1 bitcoin worth more than dollar

#32

Post by hippich »

arohner wrote: post #28

Most of the comments here are "why bitcoin?" I'll ask again, but in a form that I hope is slightly more detailed: Gold was valuable before it started being used as money. It started being used as money because it has several valuable properties: it's rare, it's portable, it's fungible. Why would someone start using bitcoin? Who will accept a bitcoin in trade, and why is that bitcoin more valuable to them than $1?

'cos "it's rare, it's portable, it's fungible."

Re: 1 bitcoin worth more than dollar

#33

Post by [deleted] »

hippich wrote: post #7
iheartmemcache wrote: post #3

I read the wiki on BitCoin and I still don't understand how the BitCoin forex market is made. Usually currencies are based on national GDP and that sort of thing, but I haven't the faintest as to what controls the strength of this currency. Can someone enlighten me?

price of bitcoins depends on amount of bitcoins in circulation and number of people using it.

[deleted]

Re: 1 bitcoin worth more than dollar

#34

Post by hristov »

Wow, I just learned about bitcoins and I have to say they are very clever. Their brilliance is in that they play to the urge to collect in humans.

You run the software and makes bitcoins for you. Almost like earning money in your sleep. And of course once you have "earned" these bitcoins by installing the software you have a psychological inclination to assign actual value to them.

Of course like most things academic it falls flat on its face on execution. My software did not work. I had to spend half an hour diving through forums and wikis to find some obscure command line argument that may make it work, although I am still not sure it is working properly. Of course 99% of ordinary people would have just given up.

So the folks at bitcoin have ensured that only persistent nerds like me use their service.

Re: 1 bitcoin worth more than dollar

#35

Post by hippich »

jackowayed wrote: post #27
s0urceror wrote: post #25

Earlier quoted context omitted.

All I wonder is, what happens if you delete a portion of the wallets in existence. Given that the supply of bitcoins is limited, does that mean you've essentially permanently destroyed part of the bitcoin economy?

You haven't destroyed part of the economy. You've just made everyone else's bitcoins worth a little bit more.

plus - there is slight chance someone will generate same private/public key combo and suddenly "find" "lost" coins =)

Re: 1 bitcoin worth more than dollar

#36

Post by johnny22 »

sgornick wrote: post #22
sabj wrote: post #11

Earlier quoted context omitted.

I'm more confused than when I started. I understand the concept, but not the ecosystem or money supply... or exchange rate.

Ecosystem? How about the Payment portion of the ecosystem ... let's take a "competitor", PayPal, for example. When you send $100 to a business using your Paypal, the recipient gets $97, or less. With bitcoin, when you send $100, the recipient gets $100 (at least until fees are necessary ... but even when that starts being necessary the fees should be just a FRACTION of what Visa / MC / PayPal / etc. take.)

so, you're saying if paypal/mastercard/visa charged no money for transfer, you would continue using them?

that example isn't reason enough for me to use bitcoin.

Re: 1 bitcoin worth more than dollar

#37

Post by akkartik »

jackowayed wrote: post #14
Charuru wrote: post #12

Earlier quoted context omitted.

OK, I understand how they're created and how many there are. But why?

The idea is that it's not under any entity's control, and the amount of currency grows in a predictable (and decreasing) way. This should prevent the crazy inflation we've seen occur with normal currency where the government can always just print more.

Why does the number of bitcoins in circulation converge to an asymptote?

Re: 1 bitcoin worth more than dollar

#38

Post by johnny22 »

jackowayed wrote: post #27
s0urceror wrote: post #25

Earlier quoted context omitted.

All I wonder is, what happens if you delete a portion of the wallets in existence. Given that the supply of bitcoins is limited, does that mean you've essentially permanently destroyed part of the bitcoin economy?

You haven't destroyed part of the economy. You've just made everyone else's bitcoins worth a little bit more.

until you destroy 99% of all the wallets and then you can't exchange them for anything useful.

I'll wait for bitcoin 2.0 :)

Re: 1 bitcoin worth more than dollar

#40

Post by vinyl »

"No central authority" ? Well, I think the guys who decide there will only be 21 million bitcoins can be considered a central authority. Currency, in any form, is deemed to have a central authority -- national currencies, for example, have real-life value because states limit the available quantity. In this case, the Bitcoins people are acting as the central bank. Especially when I see that the total produced bitcoins will be halved each year by decision.
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