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

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

#231

Post by achompas »

beagle3 wrote: post #189
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…

> 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,…

Can you exchange your bitcoins for gold or beans? Because right now, bitcoin purchasing power amounts to a hill of beans.

Gold is a commodity, not a currency. It is a scarce commodity that is highly demanded as a part of luxury goods. Thus, it commands a high price on the open market.

Beans are also commodities, but they are plentiful. Bean demand is easily met, so they're not priced very highly.

Bitcoins are not production inputs, so their only value is (ostensibly) as an alternative fiat money or value store. Unlike country-backed fiat money, you cannot exchange bitcoins for goods, so the only demand for bitcoins comes from people "investing" in them. If you want to play the bitcoin market, that's fine--in that case, you're generating wealth for yourself. Not value.

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

#232

Post by socrates1024 »

The most important lesson to learn from the Bitcoin experiment is that 'money == speech' on a fundamental, cryptographic level.

Anonymous speech (i.e. using public keys) enables anonymous trades with other people.

Transactions are signed and can't be forged, just like publishing a blog post signed with your public key.

And a distributed network can be strong, just like bittorrent or Tor.

Regardless of whether the current implementation and economy surrounding Bitcoin succeeds (I think it will), this is without a doubt how our future information-enlightened society will develop

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

#233

Post by scott_s »

icarus_drowning wrote: post #211
tptacek wrote: post #206

Earlier quoted context omitted.

No, in fact, plenty of reasonable people do believe it is zero, and you cannot nerd your way out of that fact.

But that's not reasonable. Its just ignoring the privacy/anonymity value of BTC. Again, we can argue about the monetary value as compared to dollars, (especially given the tradeoffs-- i.e., convertibility to established currency, places to spend, etc) but that's real, practical value. You can't simply ignore it.

Sure it's reasonable. I think bitcoins have zero value. I recognize that there may be people out there who are willing to pay real dollars for it right now, but I think that in the long run, no such people will exist. Hence, I place its value at zero.

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

#234

Post by DennisP »

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?

Some people think wikileaks is a good idea. Paypal and other processors have blocked donations to wikileaks, even though it's legal to donate to them.

Some people like to play poker online. The same entities have been prohibited by the government from processing transfers to poker sites.

From a startup perspective, the "terms of service" for Paypal, Amazon payments, and others are full of applications you can't use them for, even though many of them are legal. On top of that, Paypal is notorious for locking accounts if they decide they don't like you.

Currency used to be neutral. Now it's not. So people have invented a new one that is.

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

#235

Post by achompas »

icarus_drowning wrote: post #211
tptacek wrote: post #206

Earlier quoted context omitted.

No, in fact, plenty of reasonable people do believe it is zero, and you cannot nerd your way out of that fact.

But that's not reasonable. Its just ignoring the privacy/anonymity value of BTC. Again, we can argue about the monetary value as compared to dollars, (especially given the tradeoffs-- i.e., convertibility to established currency, places to spend, etc) but that's real, practical value. You can't simply ignore it.

I couldn't care less about the privacy/anonymity of BTC if the market falls out and my BTC wallet ~ $0. At that point no government will come to my aid because, hey, I invested in something that has no value.

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

#236

Post by acslater00 »

beefman wrote: post #224
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…

Hi Adam, I'm Carl Lumma. I usually upvote your posts on Quora but I didn't upvote this one because of "scam" and also because you gave more reasons than necessary. "Built-in deflation" is alone the reason bitcoin cannot work as a currency (at least, not without a prevailing currency to act as a 'heat sink'). This can be remedied of course by the practice of holding bitcoins on deposit in exchange for demand receipts,…

Fair enough.

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

#237

Post by smokeyj »

barrkel wrote: post #208
smokeyj wrote: post #141

Earlier quoted context omitted.

>> Can't the same be said for people who bought Apple or Google stocks early on? > Ownership of a stock is a claim on the net value and future profit of the company. Ownership of currency is a claim on the net value and future profit of the currency. How does this address OP?

In principle, you're right, currency is just traded like anything else; but the fundamentals are different. A company is (presumably) engaged in profitable production (the future profit, i.e. it does something) and is composed of various capital assets (the net value, i.e. it has something). A currency has neither attributes; its claim on future production and assets is only valid in so far as people have confidence…

I understand currency and shares are not the same thing, I don't understand this addresses OP.

> A share, meanwhile, is a direct claim on things themselves. What if you buy a share of an ETF?

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

#238

Post by achompas »

Dove wrote: post #204
achompas wrote: post #109

Earlier quoted context omitted.

One fair non-structural criticism, a weak, temporary criticism and two things billed as criticisms that aren't. Actually, all of Adam's criticisms deal with the supply and demand of currencies, and they are pretty strong and damning as a result. In sum, the supply of Bitcoins is finite (despite a growing population) and the demand for Bitcoins depends on (a) confidence in Bitcoins as a currency and (b) consumers' abi…

They're a currency accepted by almost no one as payment Just a point of interest -- the list of sites that accept Bitcoin ( http://en.bitcoin.it/wiki/Trade ) is actually pretty long. I read it as a pretty good coverage of everyday commodities, actually. You can't pay for food, rent, or doctor bills with it, but you can buy a lot of other stuff. I guess you could characterize that as almost no one , but you'd have to…

No, I definitely meant "an insignificant fraction." Thanks for the link.

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

#239

Post by weavejester »

sorbus wrote: post #228
weavejester wrote: post #173

Earlier quoted context omitted.

You don't appear to understand how Bitcoin works. Money does not shift from new investors to the creators of Bitcoin. I'm not quite sure what confusion of ideas lead you to believe this.

> Money does not shift from new investors to the creators of Bitcoin. I'm not quite sure what confusion of ideas lead you to believe this. Please explain how new investors obtain bitcoins, if not from the original members of the system (some of the early users have 1% of the total bitcoins, I recall hearing). Yes, there's mining, but that's not an effective way to transform money into bitcoins - I mean, say that I wa…

People obtain bitcoins by buying them from other people, who are typically miners or people who bought a lot of bitcoins early and want to cash out a proportion of their worth.

However, the people responsible for creating the bitcoin protocol only benefit financially if they sell their own bitcoins, or if an increase in demand raises the price bitcoins are trading at.

The Bitcoin economy is a free market; people can buy and sell bitcoins and will, and any profits they might make are entirely governed by supply and demand.

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

#240

Post by richcollins »

But Bitcoin is not designed to be a functioning currency, it's designed to enrich early adopters. Again, that is why it is a scam. Period.

How is this different from our current currencies, which first go to banks that then use fractional reserve to lend out money that they don't have. At least with Bitcoin anyone can mine them.

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