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Bitcoin exchange rate reached $100 USD per BTC

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Re: Bitcoin exchange rate reached $100 USD per BTC

#481

Earlier quoted context omitted.

There are a few replies here that seem to be reacting negatively to the OP due to the tone of the submission instead of the content. To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. The reason it's bad is that deflation makes it more profitable to do nothing than to invest. When this happens, people react by not spending money. The market dies. While inflation…

> To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. I hear this argument a lot, but no nation that we know of has ever collapsed because of deflation, right? We've never (recently) been in a period of significant deflation, so how can we be so certain of its effects? > deflation makes it more profitable to do nothing than to invest. Investment won't ever stop,…

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Re: Bitcoin exchange rate reached $100 USD per BTC

#483
Proof that Bitcoin is worthless:

I set up camp over the Golden Gate Bridge. I ask people if they'd be willing to throw their lunch into the water (use their computer's time/energy/money to mine Bitcoin), with no possibility of retrieving it, and in return I offer to give them a certificate stating that they've thrown their lunch away (a Bitcoin).

Now, I see no reason why anyone would expect why these certificates would have any value. But let's suppose they do have value, and people can trade their certificates, say, for a lunch (or perhaps half a lunch). NOW, suppose I have been secretly stashing away those lunches (really it doesn't need to be in secret - you don't care what happens to your lunch after you throw it away). Then there is now objectively more value in the world than there was before I set up shop - there are the same amount of lunches in the world, but there are also now certificates that have some positive value. We've made a free lunch!

This is a contradiction. If we could create value by this silly game, we could easily make as much value as we want, and we would have solved all the world's problem.

But this should be obvious in the first place! Why on earth would you expect to be rewarded with something of value (a Bitcoin) for doing something fundamentally useless to society (mining Bitcoin). Even though mining Bitcoin comes at a cost to you, this doesn't matter - it just means you're throwing your lunch away.

Now why does the US Dollar have value? Instead of throwing away our lunches for a certificate, we basically asked the government to store our lunches in Fort Knox. Today, lots of gold and other items of value are held there. Why are they held there? There is an implicit assumption that these items of value support the US Dollar. The government knows it could not start "eating those lunches" that it's got in its reserve! It would not yield society a free lunch - it would crash the US Dollar.

Re: Bitcoin exchange rate reached $100 USD per BTC

#484
post #473

Earlier quoted context omitted.

> To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. I hear this argument a lot, but no nation that we know of has ever collapsed because of deflation, right? We've never (recently) been in a period of significant deflation, so how can we be so certain of its effects? > deflation makes it more profitable to do nothing than to invest. Investment won't ever stop,…

Good luck. You're swimming against a tide of people minted from education with the mindset of deflation bad, inflation good. Of course, everyone likes deflation when it means they can buy more for less. Of course, if prices of things get so low that people start to purchase, then deflation will eventually reverse, unless you assume that deflation will continue forever until prices reach zero and everything is free. O…

>"In fact we see deflation in specific markets like housing which helps to clear out the bad decisions and mistakes and set the base for future expansion."

Periods of asset deflation after over-investment/economic distortions may act as a balance, but it isn't "good". Having your net worth halved is crippling.

>"The simple fact is that no economy and social order has ever imploded due to deflation"

No economy implodes due to deflation or inflation alone. Countries like Germany or Zimbabwe had production capacity collapse. That led to printing money (to stave off deflation), which in turn led to hyperinflation. Too much money chasing too few goods, remember? In order to have too few goods, the country's production has to go into the toilet.

Saying deflation isn't bad flies in the face of many of the greatest economic minds we know, with tons of research and theory to back it up.

Re: Bitcoin exchange rate reached $100 USD per BTC

#485
post #290

Earlier quoted context omitted.

Gold is a piss poor investment. Owning Real Estate (and making money off of it) entails taking care of it. People taking care of their land (so that it can appreciate in value) is a good thing. The typical Real Estate "investor" adds a ton of value to their home, not just through maintenance, but also additions (ie: a new deck). This maintenance is true value added to the economy. True value that wouldn't have been a…

> Gold is a piss poor investment. Relative to what? The USD? http://pricedingold.com/us-dollar/ Real estate? http://pragcap.com/real-estate-gold-ratio-falls-to-30-year-l... Gold is an asset that holds its purchasing power pretty well. It is what it is. It is not however a "piss poor" investment.

Why would you compare gold to one mediocre and one bad investment? It seems that few people here understand opportunity costs.

Re: Bitcoin exchange rate reached $100 USD per BTC

#486
post #397
post #341

Earlier quoted context omitted.

There's nothing that happened with BTC between when it cost $14 and now. Comparing it to the shares of Apple that created a whole new consumer industry and substantially changed the information interactions of the whole humankind betrays deep misunderstanding of the question at hand. Bitcoins did not suddenly turned into new way of living, did not produce hundreds of amazingly useful things and did not change how man…

Bitcoin technology allows something that has never before been possible in human history: Two individuals, that never meet in person, can trade with each other without placing any trust in a third party. The implications of this are far-reaching, and will fundamentally shape how governments and businesses operate.

That's a fascinating point. It has me wondering if this is a solution in search of a problem though. When I do business with someone online, typically I trust the third party more than I trust the counterparty. That's definitely the case when I use my American Express card to buy something from a merchant I've never used before. It's why Ebay and Amazon Marketplace succeeded. They broker the transactions and ensure you don't get screwed in exchange for a cut of the value.

Re: Bitcoin exchange rate reached $100 USD per BTC

#487

Earlier quoted context omitted.

There are a few replies here that seem to be reacting negatively to the OP due to the tone of the submission instead of the content. To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. The reason it's bad is that deflation makes it more profitable to do nothing than to invest. When this happens, people react by not spending money. The market dies. While inflation…

> To be clear, deflation is categorically bad for a currency. It's terrible, like great depression terrible. I hear this argument a lot, but no nation that we know of has ever collapsed because of deflation, right? We've never (recently) been in a period of significant deflation, so how can we be so certain of its effects? > deflation makes it more profitable to do nothing than to invest. Investment won't ever stop,…

>"I hear this argument a lot, but no nation that we know of has ever collapsed because of deflation, right?"

And which have collapsed from inflation? None, directly. Hyperinflation (and deflation) is an effect of an economy collapsing. Not a cause.

From Wiki: "Hyperinflation is often associated with wars, their aftermath, sociopolitical upheavals, or other crises that make it difficult for the government to tax the population, as a sudden and sharp decrease in tax revenue coupled with a strong effort to maintain the status quo can be a direct trigger of hyperinflation."

Note "decrease in tax revenue". Economic crisis > deflation > country can't pay the bills > hyper-inflates currency.

Re: Bitcoin exchange rate reached $100 USD per BTC

#488
post #188

Earlier quoted context omitted.

> shameless hoarding Hoarding is a derogatory term, intended to evoke an emotional response from the reader. I prefer the term "saving". > Why lend, why build new companies, when simply storing it is more than enough? Take shocks such as bubbles and demand-side crises. Most bitcoin proponents to indeed reject Keyensian, demand-side economics. I, for one, think entrepreneurs would typically benefit from not relying on…

Increasing the money supply helps one class of people: the bankers. It doesn't help the middle class, it doesn't help entrepreneurs, and it definitely doesn't help the common person. It's an insidious hidden tax. I don't understand how something completely unsupported by the data is repeated as truth. Historically, deflation is disastrous for everyone, and high inflation also disastrous for everyone. Moderate inflati…

I don't understand how something completely unsupported by the data is repeated as truth.

Simple; it has never been conclusively and irrefutably disproven. Ergo, it must be true, or else it would have been disproven.

Religion isn't the only one with nutjobs ;)

Re: Bitcoin exchange rate reached $100 USD per BTC

#489

Earlier quoted context omitted.

Unfortunately not, I have been watching GPU mining returns vs the BTC price for a while, all the time the hash rate of the network is always increasing a little quicker than the income from mining. The ASIC's will continue to dominate. Per watt of electricity they are far more efficient and we will see thousands of ASIC coming into existence this year. GPU mining Litecoin and converting over the USD or Bitcoin is act…

I fired up a miner again recently just for fun. Took 5 days to dig out $15. That's comparable to the $3/day the same GPU could mine back when the exchange rate was $5/coin. But yes, the ASICs are coming. There are only a few in the wild right now. Pretty soon there won't be much point to GPU mining.

Nice, that's not a bad return! I can't even get $2 a day out of mine.

I wonder how difficult it would be to build a ASIC yourself?

Re: Bitcoin exchange rate reached $100 USD per BTC

#490

I think a lot of people here would benefit from reading some William Gibson novels. I don't think the BTC will ever be a 'currency' as the USD or the GBP. It is also not necessary for the BTC to be at a 'fixed value' at any time. As a virtual currency it's ok for the BTC to fluctuate heavily as the only thing needed for it to still succeed is that payment systems are 'always on' and can determine a spot price for goo…

Why would I want to maintain a bitcoin wallet if its value fluctuates heavily every day? Would you want your checking account to do the same?

This is why I wonder whether a company will come along and offer point-of-sale BTC to USD (or other). They could perhaps issue plastic cards to their users for making payments, and charge businesses 2.5% of the transaction for their services.
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