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Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

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Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#51

Post by kruhft »

tptacek wrote: post #50
kruhft wrote: post #48

Earlier quoted context omitted.

The value of bitcoins goes up because the entire system is a store of value. When bitcions are bought, people are transfering "real" value (USD or any other government backed currency) into the Bitcoin system where the value is being held. When they sell Bitcoins they are removing value from the system. Due to supply (limited) and demand (increasing), the amount real currency needed to purchase a unit of Bitcoin is g…

Yes. Bitcoin is the first fiat monetary system that has no ruler. Also, it has repealed the law of parsimony (haven't you heard, on the Internet, there are no laws). So it's totally not the case that Bitcoin is going up because Bitcoin is going up , and people are bidding up its price on the expectation that the peak is nowhere in sight, and they'll make a tidy profit off later speculators. Because the Internet has u…

    The original bailout plan, announced last Saturday, would
    have raised €5.8bn by skimming nearly 7% off all bank 
    deposits of less than €100,000, and 9.9% of bigger bank 
    accounts.
Source: http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-t...

Tell that to those in Cyprus how well the official system is doing at storing their value.

Edit: I'm sure you would call those people 'currency hoarders' since storing money in the bank means it's not flowing in the economy.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#52

Post by danielweber »

kruhft wrote: post #51
tptacek wrote: post #50

Earlier quoted context omitted.

Yes. Bitcoin is the first fiat monetary system that has no ruler. Also, it has repealed the law of parsimony (haven't you heard, on the Internet, there are no laws). So it's totally not the case that Bitcoin is going up because Bitcoin is going up , and people are bidding up its price on the expectation that the peak is nowhere in sight, and they'll make a tidy profit off later speculators. Because the Internet has u…

The original bailout plan, announced last Saturday, would have raised €5.8bn by skimming nearly 7% off all bank deposits of less than €100,000, and 9.9% of bigger bank accounts. Source: http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-t... Tell that to those in Cyprus how well the official system is doing at storing their value. Edit: I'm sure you would call those people 'currency hoarders' since storing mo…

storing money in the bank means it's not flowing in the economy

Money in the bank is flowing through the economy, since the bank has lent it out to others.

You can have issues with partial-reserve banking, or not. But keeping a bunch of dollars or Euros in the bank is not hoarding them. They are active in the economy.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#53

Post by kruhft »

danielweber wrote: post #52
kruhft wrote: post #51

Earlier quoted context omitted.

The original bailout plan, announced last Saturday, would have raised €5.8bn by skimming nearly 7% off all bank deposits of less than €100,000, and 9.9% of bigger bank accounts. Source: http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-t... Tell that to those in Cyprus how well the official system is doing at storing their value. Edit: I'm sure you would call those people 'currency hoarders' since storing mo…

storing money in the bank means it's not flowing in the economy Money in the bank is flowing through the economy, since the bank has lent it out to others. You can have issues with partial-reserve banking, or not. But keeping a bunch of dollars or Euros in the bank is not hoarding them. They are active in the economy.

That edit was meant to be a joke based on the type of typical, echo chamber, limited knowledge response the s/he gave.

And since the repeal of Glass-Steagall who knows where the money in bank deposits goes.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#54

Post by myspace »

I'm surprised so many people in the tech community have fallen for this Ponzi Scheme. For example, many heard about "some guy bought a $25 pizza with 10,000 bitcoins", but no one has thought about what this means. It means someone now has that 10,000 "coins" (which is close to 2'000,000). This also means someone had this amount (and possibly much more). And, finally, no one questions who posseses the first "coins". That's why the creator is anonymous. Just my 2 cents.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#55

Post by danielweber »

kruhft wrote: post #48
AndrewDucker wrote: post #7

I'd love to get an economist studying why the value of bitcoins goes up. After all, they're infinitely reusable, totally fungible, and incredibly low friction. The only reason for their value to rise (rather than them just being passed around at the same price indefinitely) is if people expect them to rise, or if there's a shortage (forcing people to use fractions of a bitcoin to represent the same number of dollars…

The value of bitcoins goes up because the entire system is a store of value. When bitcions are bought, people are transfering "real" value (USD or any other government backed currency) into the Bitcoin system where the value is being held. When they sell Bitcoins they are removing value from the system. Due to supply (limited) and demand (increasing), the amount real currency needed to purchase a unit of Bitcoin is g…

When bitcions are bought, people are transfering "real" value (USD or any other government backed currency) into the Bitcoin system where the value is being held. When they sell Bitcoins they are removing value from the system.

These two sentences may be the perfect summary of how misguided the Bitcoin community is.

There is no value transferred into or out of the Bitcoin system when people buy or sell Bitcoins from each other. AAPL doesn't get money when I buy 1 share of AAPL from someone and they don't lose money when I sell 1 share of APPL to somebody. Because every purchase of AAPL is also a sale and every sale is also a purchase.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#56

Post by danielweber »

skylan_q wrote: post #34
AndrewDucker wrote: post #7

I'd love to get an economist studying why the value of bitcoins goes up. After all, they're infinitely reusable, totally fungible, and incredibly low friction. The only reason for their value to rise (rather than them just being passed around at the same price indefinitely) is if people expect them to rise, or if there's a shortage (forcing people to use fractions of a bitcoin to represent the same number of dollars…

People value units of money because of their expected purchasing power; money will allow people to receive real goods and services in the future, and hence people are willing to give up real goods and services now in order to attain cash balances. Thus the expected future purchasing power of money explains its current purchasing power. http://mises.org/daily/1333 From a theoretical perspective, this is been the clear…

The reason the value of bitcoins is going up is because people who buy bitcoins expect that others will pay a higher price for it in the future.

That has a much shorter name: http://en.wikipedia.org/wiki/Greater_fool_theory

The price of the Mona Lisa won't go down because the art community won't let it. It can do that because there is only 1 Mona Lisa. Such a force doesn't exist with Bitcoins.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#57

Post by vrotaru »

davidjohnstone wrote: post #37
vrotaru wrote: post #33

Earlier quoted context omitted.

You do not "make" money, when you hide them under a mattress. Assuming a stable money supply, when all is said and done, you own the same fraction of total purchasing power at the end that period as you had when it started. You do not get richer, if that's what you mean by making money. You just keep what you had. I know, how unfair!

But you do make money! When the value of Bitcoin goes up, your wealth increases because the entire Bitcoin economy is worth more, even though your fraction of it remains constant. Or, to look at it another way, imagine that Bitcoin was the only currency in the world and there were only one million people who each owned 20 Bitcoins (maybe they're communists who have just started using money). Now, give it a few years…

You're confusing money and wealth. And you saying it yourself, to quote "your wealth increases"

Yes, but this is not the same as making money. You're are not richer in relative terms, than you were. It's only stuff who has get cheaper around.. because people have learned how to produce stuff more efficiently, i.e. cheaper.

And you example with doubling population (in a few years no less) is cheating because.. because you have just added a lot poor people into example.. But, OK. Suppose those of two extra people a person A kids.. But what exactly logic are they not entitled to the whole value of their parent savings?

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#58

Post by vrotaru »

danielweber wrote: post #56
skylan_q wrote: post #34

Earlier quoted context omitted.

People value units of money because of their expected purchasing power; money will allow people to receive real goods and services in the future, and hence people are willing to give up real goods and services now in order to attain cash balances. Thus the expected future purchasing power of money explains its current purchasing power. http://mises.org/daily/1333 From a theoretical perspective, this is been the clear…

The reason the value of bitcoins is going up is because people who buy bitcoins expect that others will pay a higher price for it in the future. That has a much shorter name: http://en.wikipedia.org/wiki/Greater_fool_theory The price of the Mona Lisa won't go down because the art community won't let it. It can do that because there is only 1 Mona Lisa . Such a force doesn't exist with Bitcoins.

There will be only 21 million bitcoins. Ever.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#59

Post by skylan_q »

danielweber wrote: post #56
skylan_q wrote: post #34

Earlier quoted context omitted.

People value units of money because of their expected purchasing power; money will allow people to receive real goods and services in the future, and hence people are willing to give up real goods and services now in order to attain cash balances. Thus the expected future purchasing power of money explains its current purchasing power. http://mises.org/daily/1333 From a theoretical perspective, this is been the clear…

The reason the value of bitcoins is going up is because people who buy bitcoins expect that others will pay a higher price for it in the future. That has a much shorter name: http://en.wikipedia.org/wiki/Greater_fool_theory The price of the Mona Lisa won't go down because the art community won't let it. It can do that because there is only 1 Mona Lisa . Such a force doesn't exist with Bitcoins.

Actually, one of my favorite blogs is http://www.greaterfool.ca ;)

I'm familiar with the greater fool theory. But people buy commodities, currencies and financial instruments on this expectation of increased future valuation. There could be a case made that the greater fool theory is in effect for bitcoins, but it can't be said that it is the case simply because people expect higher valuation in the future.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#60

Post by danielweber »

davidjohnstone wrote: post #37
vrotaru wrote: post #33

Earlier quoted context omitted.

You do not "make" money, when you hide them under a mattress. Assuming a stable money supply, when all is said and done, you own the same fraction of total purchasing power at the end that period as you had when it started. You do not get richer, if that's what you mean by making money. You just keep what you had. I know, how unfair!

But you do make money! When the value of Bitcoin goes up, your wealth increases because the entire Bitcoin economy is worth more, even though your fraction of it remains constant. Or, to look at it another way, imagine that Bitcoin was the only currency in the world and there were only one million people who each owned 20 Bitcoins (maybe they're communists who have just started using money). Now, give it a few years…

I think the first-movers want that effect.

Say there are 1000 people in the country, and WLOG each of them owns 1/1000th of the wealth.

One of them goes away for 100 years and comes back. The entire country is richer: there are more resources, more people, more goods, more IP, more of everything. And this guy still expects to have claim to 1/1000th of everything in the country.

It's extremely obvious why that first-mover would love that system, and try to convince everyone else to go along with it. It's very dubious what the others would get out of it or why they would ever buy in, besides imagining they could some day be the one who gets to exploit the system at the expense of everyone else.

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