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Bitcoins Are Digital Collectibles, Not Real Money

forbes.com

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Re: Bitcoins Are Digital Collectibles, Not Real Money

#41

Post by zeteo »

sageikosa wrote: post #35
zeteo wrote: post #23

Earlier quoted context omitted.

Each bitcoin has an attached chain of transactions. If it's a matter of public record that a certain address belonged to say, Stephen Colbert, then you can definitely brag that you own Colbert's bitcoin. (That he donated to the Libertarian Party or something.)

While it may be possible to value BitCoins that way, that's not the driving force behind current price tracking, any more than a 1933 double eagle or 1804 silver dollar affects the price of gold or silver.

I'm not saying BitCoins are currently used this way. It was just a thought experiment to prove they can acquire extra value from association with particular people or events. Just like other collectibles.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#42

Post by Houshalter »

mpyne wrote: post #34
Houshalter wrote: post #27

Of course bitcoins value is volatile, it's relatively new and being adopted and accepted. I blame the people speculating on it like crazy without any idea what the fundamental value actually is (and to be fair it's impossible to know until it stabilizes and the bitcoin economy becomes established.) But this is only temporary, a necessary evil when a currency is starting out. However it is arguably a good thing though…

> Because if you had a choice what would you store your money in? That's actually noted as one of the problems with a deflationary economy. People tend to store their capital instead of spending it or investing it, which puts a hamper on economic growth (or even maintaining the economic status quo). If your job depends on receiving income then you can appreciate why it also depends on other people spending money. > I…

>If your job depends on receiving income then you can appreciate why it also depends on other people spending money.

Well the point is prices adjust. If people aren't spending money, then prices just fall until the people that are spending money can afford it. Sure you make less income, but everything is cheaper too so it's not a loss. Actually it's a gain. The same amount of goods are in the economy, but since some people aren't buying things, everyone else can afford more things. The pie is the same size but the people saving money haven't taken any slices of it, leaving more for us.

Besides when people save money, they generally invest it or put it in a bank which loans 90% of it back out.

>Countries have actually sometimes arranged to devalue their own currency to help with the local economy by boosting exports, so in that sense it is beneficial to have a central organization in your country's control to do that.

Exporting more things isn't necessarily a good thing. Ideally we could import everything we need and not have to actually work to produce things to export.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#43

Post by Ingaz »

zeteo wrote: post #2

Sorry to submit yet another Bitcoin article, but this one turned out to be somewhat of a revelation for me. Thinking of bitcoins as digital collectibles seems a much better metaphor than thinking of them as money. Collectibles have a fixed supply, and their value depends on some concept that people are interested in. Consider e.g. Nazi memorabilia from WW2: fewer and fewer are discovered each year, the total supply i…

Bitcoin was not money but a digital resource analogous to gold or oil by design.

I'm a little surprised that in 2013 somebody do not know this.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#44

Post by dragonwriter »

zeteo wrote: post #17
nate_martin wrote: post #11

How many articles have been posted to HN now saying this exact same thing? We get it. Bitcoin is being treated as a commodity instead of a currency. However, the problem is not with the currency system but rather the people buying and selling BTC. Bitcoin itself has everything it needs to become a legitimate currency. The author also may not have realized that the coins are divisible (to 10^-8) and that all Bitcoins…

>We get it. Bitcoin is being treated as a commodity instead of a currency. Collectibles are a very specific kind of commodity. The price of potatoes doesn't vary because there are potato enthusiasts out there extolling their virtues.

> The price of potatoes doesn't vary because there are potato enthusiasts out there extolling their virtues.

Sure it does. Which is why industry associations (whether for potato farmers or any other goods) send lots of money promoting the virtues of their products.

The only difference between potatoes and collectibles (and investment assets more generally) in this regard is that with potatoes (etc.) the promotion mostly centers around the use-value of the product, and with collectibles (and other investment assets) it centers around the future resale value.

Though lots of things in the real-world are hybrids, really, as commodity markets in potato (etc.) futures demonstrate them being both promoted and traded as investment assets, and real estate is often promoted directly for hybrid use-value/investment-value.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#45

Post by hazov »

weavejester wrote: post #31

Many comparisons have been made between fiat currency and Bitcoins, but to my mind that's wholly missing the point. The Bitcoin protocol represents a way of digitally transferring a scarce resource without the need for a central authority. I suspect this is going to be a big deal eventually, because when we created a protocol for digitally transferring information without the need for a central authority, we wound up…

I'm not a network engineer but I believe Tier 1 and Tier 2 networks are needed for the Internet to exist. They do not act as a central authority, but the Internet itself needs them to work like it do now.

I simply do not understood what you wanted to say by your last paragraph.

EDIT: To clarify my point is that I believe the internet is poorly decentralized, it simply means some guys has too much power to shutdown traffic from entire networks to even reach the Internet if they wish or when it's convenient to them, if we ever have another large scale global war I believe this will happen.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#46

Post by Ingaz »

weavejester wrote: post #31

Many comparisons have been made between fiat currency and Bitcoins, but to my mind that's wholly missing the point. The Bitcoin protocol represents a way of digitally transferring a scarce resource without the need for a central authority. I suspect this is going to be a big deal eventually, because when we created a protocol for digitally transferring information without the need for a central authority, we wound up…

>>Comparing Bitcoin to a fiat currency like the dollar is a little like comparing the English language to TCP/IP.

Bitcoin could not be compared to currency.

It's comparable to gold, oil, diamonds, etc.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#47

Post by dragonwriter »

kghose wrote: post #5
tallowen wrote: post #3

If Bitcoins are valued at around $100 dollars a piece is it possible for me to make a $10 dollar purchase using bitcoins?

Yes, you use fractions. In that respect it is different from pennies etc.

> Yes, you use fractions. In that respect it is different from pennies etc.

Well, its different in that pennies are the smallest physical subdivisions of the dollar, but then, bitcoin has no real equivalent (pennies aren't the smallest usable subdivision, there's plenty of places where smaller units are used when dollars are a unit of account but not physically changing hands.)

Re: Bitcoins Are Digital Collectibles, Not Real Money

#48

Post by tome »

Ingaz wrote: post #43
zeteo wrote: post #2

Sorry to submit yet another Bitcoin article, but this one turned out to be somewhat of a revelation for me. Thinking of bitcoins as digital collectibles seems a much better metaphor than thinking of them as money. Collectibles have a fixed supply, and their value depends on some concept that people are interested in. Consider e.g. Nazi memorabilia from WW2: fewer and fewer are discovered each year, the total supply i…

Bitcoin was not money but a digital resource analogous to gold or oil by design. I'm a little surprised that in 2013 somebody do not know this.

Gold and oil both have uses that are not based on them being scarce goods. Gold is arguably more similar to bitcoin than oil is, but neither is really analogous.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#49

Post by Jtsummers »

Houshalter wrote: post #42
mpyne wrote: post #34

Earlier quoted context omitted.

> Because if you had a choice what would you store your money in? That's actually noted as one of the problems with a deflationary economy. People tend to store their capital instead of spending it or investing it, which puts a hamper on economic growth (or even maintaining the economic status quo). If your job depends on receiving income then you can appreciate why it also depends on other people spending money. > I…

>If your job depends on receiving income then you can appreciate why it also depends on other people spending money. Well the point is prices adjust. If people aren't spending money, then prices just fall until the people that are spending money can afford it. Sure you make less income, but everything is cheaper too so it's not a loss. Actually it's a gain. The same amount of goods are in the economy, but since some…

> The pie is the same size but the people saving money haven't taken any slices of it, leaving more for us.

Until they do, and then the prices increase dramatically (at least in the short term) in response making it near impossible for the poor bitcoin users to afford anything. If you're only entering the economy after 10 years of deflation your salary will be a pittance compared to the savings of those who've been active in the BTC economy during that time.

> Ideally we could import everything we need and not have to actually work to produce things to export.

But who would trade with you and what would they trade for? If you aren't producing something (physical or intellectual) you'll eventually run out of funds to support your import only state.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#50

Post by dragonwriter »

Houshalter wrote: post #27

Of course bitcoins value is volatile, it's relatively new and being adopted and accepted. I blame the people speculating on it like crazy without any idea what the fundamental value actually is (and to be fair it's impossible to know until it stabilizes and the bitcoin economy becomes established.) But this is only temporary, a necessary evil when a currency is starting out. However it is arguably a good thing though…

> A currency that actually increases in value rather than decreases would have a huge advantage over everything else. Because if you had a choice what would you store your money in?

The large part of point of fiat currency is divorcing the "store of value" function from the "medium of exchange" and "unit of account" functions of money, retaining the latter two but largely abandoning the former, in favor of the investment role being taken by productive assets.

The purpose of this is to encourage people with wealth to invest that wealth in productive assets rather than holding on to money.

Its true that, if you are looking for something to use as a store of value, something that increases in value over time is better for that purpose. Its less than obvious why this should be a feature of "currency". As a medium of exchange, it is generally good to have protection against short-term volatility, and as a unit of account the same is true, though against somewhat longer-term volatility (though not really "long-term", necessarily.)

For a long-term investment, short- to medium-term volatility is less important, but long-term expected growth is more important. The features that make a good investment aren't the features that make a good currency (medium of exchange) or a good unit of account.

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