The Quora post that killed Bitcoins. Please discuss if his arguments are valid. • Hacker News Board

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#181

Post by vessenes » Thu, Jun 02, 2011, 4:01 PM UTC

Kadin wrote: post #157

anonymoushn wrote: post #36

Earlier quoted context omitted.

It is worrying to me that the public exchanges have so few bids and offers most of the time, and that it is extremely common for people to deal in these things privately to avoid moving the price.

This is an issue right now because it's much easier to go long on BTC than it is to go short. Since virtually everyone in the market is long BTC, they desperately want the price to go up, rather than down. This creates an incentive to do OTC (some might say "under" the counter) trades rather than go through MtGox, particularly if the true market rate is less than what MtGox is showing. However, if it was easier to go…

Bitcoin Options market API just launched: https://bitoption.org

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#182

Post by achompas » Thu, Jun 02, 2011, 4:01 PM UTC

johno215 wrote: post #166

achompas wrote: post #129

Earlier quoted context omitted.

Looked at in another way, think of Bitcoin as something more like MMORPG loot. If people are willing to spend vast amounts of "real money" on items for their WoW character, spending that money on Bitcoins instead makes it seem like a sane investment rather than just flushing it away. What is the intrinsic value of Bitcoins, then? That people are willing to spend money on Bitcoins? As an investment vehicle these are t…

Modern (post gold standard) currencies have no intrinsic value either. Their only value is that people think they have value.

Well it's more than people--my government believes the US dollar has value too, and it's willing to insure my bank accounts as a result. That's a hell of a vote of confidence.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#183

Post by tptacek » Thu, Jun 02, 2011, 4:02 PM UTC

johno215 wrote: post #166

achompas wrote: post #129

Earlier quoted context omitted.

Looked at in another way, think of Bitcoin as something more like MMORPG loot. If people are willing to spend vast amounts of "real money" on items for their WoW character, spending that money on Bitcoins instead makes it seem like a sane investment rather than just flushing it away. What is the intrinsic value of Bitcoins, then? That people are willing to spend money on Bitcoins? As an investment vehicle these are t…

Modern (post gold standard) currencies have no intrinsic value either. Their only value is that people think they have value.

No, modern currencies are backed by the full faith and credit of nations, and while reasonable people can disagree about the value of the US credit rating, no reasonable person thinks it is zero.

People need to start naming the dubious syllogisms bitbugs deploy in discussions like this.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#184

Post by cube13 » Thu, Jun 02, 2011, 4:07 PM UTC

anamax wrote: post #177

mcantelon wrote: post #136

Earlier quoted context omitted.

>Bitcoins have no intrinsic value. Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Another part is the integrity of the currency: the currency is backed by math, rather than men, and not subject to hyperinflation resulting from corruption (i.e. the US Fed can create money out of thin air, but there is no authority that can create Bitcoins out of thin air: th…

> Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Easy - I collect taxes at the point where physical goods are exchanged for bitcoins or are used to deliver products. If you can't use bitcoins for food, housing, netaccess, or energy....

>Easy - I collect taxes at the point where physical goods are exchanged for bitcoins or are used to deliver products.

Or just collect the taxes at the point where it's converted from BTC to a real, government-backed currency. It's simpler, because there needs to be a paper trail there.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#185

Post by rudiger » Thu, Jun 02, 2011, 4:09 PM UTC

achompas wrote: post #160

acslater00 wrote: post #148

Hi, I'm Adam, I wrote this answer on Quora. Against my better judgement, I'm going to wade in here and make a couple of clarifying points. 1 - Scam. I regret using the word "scam" in my answer, because I think it overshadows the broader point I was making about Bitcoin's severe structural design flaws. After watching the community react to this debate, I'm pretty confident that the average bitcoin supporter is not in…

Thanks for posting here and on Quora. As someone with an economics background, it's nice to hear a sane explanation based on fundamental theory. I'm just surprised people aren't considering Bitcoins from a supply-demand standpoint. Why purchase Bitcoins in the long run unless you're laundering money or hiding from the government?

To answer your question, it would be nice to be able to buy and sell things online without a central authority like PayPal.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#186

Post by weavejester » Thu, Jun 02, 2011, 4:09 PM UTC

achompas wrote: post #176

weavejester wrote: post #169

Earlier quoted context omitted.

What do Bitcoins do? Nothing. That's not true. Bitcoins can be securely transferred between accounts without the need for a centralized broker. That's not "nothing".

So their unique value comes from private transactions...but there's only a finite supply of bitcoins? How many of these transactions can actually occur in 2013-2014, when every bitcoin has been mined and their value is skyrocketing?

The amount of transactions that can take place is unlimited, and even though there is a maximum of 2.1 million coins, each coin is divisible to 8 decimal places, giving 2.1 quadrillion units of currency.

Also, mining won't be completed this century, although the rate at which coins are generated decreases over time.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#187

Post by richcollins » Thu, Jun 02, 2011, 4:17 PM UTC

Question: if your money is getting predictably more valuable, why would you want to spend it? Answer: marginally speaking, you wouldn't.

This argument never made any sense to me. You can't eat money, watch it for entertainment ... etc. You might be more inclined to save money that you would otherwise have spent carelessly to avoid its loss of value, but how is this a bad thing? Wouldn't our economy be stronger if the effort we spent was on making things people actually want / need instead of making things people kinda want because their money is burning a hole in their pocket?

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#188

Post by hazlitt » Thu, Jun 02, 2011, 4:17 PM UTC

achompas wrote: post #180

thorax wrote: post #164

Earlier quoted context omitted.

> Why purchase Bitcoins in the long run unless you're laundering money or hiding from the government? That's kind of odd to say-- couldn't you say the same thing about doing cash-only transactions? There's also the hope that you can "hide" from corporations/bad-people and make transactions that don't require you to provide information that can be used for identity theft, marketing, etc. Just typing in a unique 1-time…

That's kind of odd to say-- couldn't you say the same thing about doing cash-only transactions? Yeah, I added that modifier after thinking some more. People are really interested in bitcoins as a "private" currency, and cash would accomplish the same thing. Large cash transactions raise flags, though. Still, bitcoins are a bad alternative to popular currency for a number of reasons Adam mentions. An e-currency withou…

Money supply need not be infinite. Prices will adjust as demand for the unit arises. Essentially, you are doing the same as "creating" more units, without eroding peoples real savings.

The entire system could thrive on one bitcoin.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#189

Post by beagle3 » Thu, Jun 02, 2011, 4:19 PM UTC

achompas wrote: post #129

mycroftiv wrote: post #13

The current design of Bitcoin is obviously not correct for the long term, and I am sure it will be supplanted by more evolved crypto-currency systems. There is absolutely nothing preventing people from taking the open-source code and creating an alternative "Bittoken" currency which changes problematic design elements such as the minting/issuance model. Given the rewards that have already accrued to Bitcoin early ado…

Looked at in another way, think of Bitcoin as something more like MMORPG loot. If people are willing to spend vast amounts of "real money" on items for their WoW character, spending that money on Bitcoins instead makes it seem like a sane investment rather than just flushing it away. What is the intrinsic value of Bitcoins, then? That people are willing to spend money on Bitcoins? As an investment vehicle these are t…

> Bitcoins have no intrinsic value.

Gold has very little - it is used in jewelery, CDR coating, teeth and a few other industries -- but you can't live in it, nor can you eat it. Beans have more intrinsic value than gold of the same weight....

Yet, no one doubts gold as a currency.

The main, strike that, ONLY, relevant feature of a currency is the willingness of others to exchange stuff for it. At this point in time, bitcoin possesses this feature.

Re: The Quora post that killed Bitcoins. Please discuss if his arguments are valid.

#190

Post by beagle3 » Thu, Jun 02, 2011, 4:23 PM UTC

achompas wrote: post #142

mcantelon wrote: post #136

Earlier quoted context omitted.

>Bitcoins have no intrinsic value. Part of the value is in their utility as an anonymous currency: try taxing the guy that's paid in Bitcoins. Another part is the integrity of the currency: the currency is backed by math, rather than men, and not subject to hyperinflation resulting from corruption (i.e. the US Fed can create money out of thin air, but there is no authority that can create Bitcoins out of thin air: th…

I didn't downvote you, (I don't think I'm allowed to!) but the "US Fed" (the Federal Reserve) does not simply add $X million to the money supply--it actually purchases Treasury bills on the open market. The net transaction is $0 (an exchange of currency for T-bills of equal value), but the market now contains more paper money. Meanwhile, I've already discussed Bitcoin's potential as an alternative currency (or lack t…

> The net transaction is $0 (an exchange of currency for T-bills of equal value)

That is only true if T-bills are generated slower than the rise of other money instruments. In the last few years, that has not been the case (and evidence for that is seen in the tanking dollar value compared to any other currency, including gold).