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Bitcoin is a Startup

blog.tlrobinson.net

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Re: Bitcoin is a Startup

#61

Post by lectrick »

fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

Why would you spend that much money to crash the network... only to lose the entire amount of your money?

Also, knowledge about short-sells would help to stabilize the currency's value, NOT crash it. Just like it has for all other assets out there.

A 51% attack would cost far more than 150 million at this point.

Re: Bitcoin is a Startup

#62

Post by pixie_ »

volaski wrote: post #33
TDL wrote: post #27

Earlier quoted context omitted.

How is it a ponzi scheme?

Bitcoin ecosystem by design rewards the early adopters, since the more people use Bitcoin, the higher the value will go up. I also got the feeling that if Bitcoin does fail, it will go down in history as another Ponzi scheme. Which made me rethink about Ponzi scheme. Everyone in Bitcoin community genuinely believes that Bitcoin will succeed. I am sure it was like that with Ponzi scheme too. Theoretically Bitcoin can…

You think it's a ponzi scheme because you think early adopters have all the bitcoins. I would argue Bitcoins are much more spread out than you realize. Mining pools started in 2010 - that's when a large number of people work together to mine coins - each person only earns a fraction of a coin as a result. In 2010 when this started there were only 2 million coins - and not just in one guys wallet, but many - and many many people lost their wallets in the old days as well. Today there are almost 12 million coins - and I assure you those 10 million new coins are even more evenly distributed.

Re: Bitcoin is a Startup

#63

Post by mahranch »

naradaellis wrote: post #50
Ologn wrote: post #46

Bitcoins are worthless. They never had any value, and never will. Valueless meaning they are as worthless as Bernie Madoff fund shares, Dutch tulip bulbs, Pets.com stock and Flooz and Beanz, Reichsmarks and confederate dollars and so forth. People might have been temporarily fooled into paying money for these things, but ultimately people realized they were worthless. Like a forged painting or counterfeit dollar. Tod…

BTC can be used in electronic black markets - not many currencies can be used for that, and that fact gives BTC huge value to many people. It is analogous to how USD is the only currency the USG will accept taxes in, which you have mentioned. Not to say that this black market might become unviable whatever reason down the track, but right now it's a big driver of value.

> BTC can be used in electronic black markets - not many currencies can be used for that, and that fact gives BTC huge value to many people.

I think it should be noted that if the silk road were to get shut down or disappear, bitcoin's value will completely tank. It's basically the backbone propping bitcoin up. Those people using it for black market purposes will try to unload their coins, which will trigger others to unload their's as well. It will spiral out and the result is the bubble popping.

Unless bitcoin has a much stronger infrastructure than it does today, I highly doubt it would survive something like that. Which if you think about it, says something about bitcoin's fortitude.

Re: Bitcoin is a Startup

#64

Post by Ologn »

kylebrown wrote: post #58
Ologn wrote: post #46

Bitcoins are worthless. They never had any value, and never will. Valueless meaning they are as worthless as Bernie Madoff fund shares, Dutch tulip bulbs, Pets.com stock and Flooz and Beanz, Reichsmarks and confederate dollars and so forth. People might have been temporarily fooled into paying money for these things, but ultimately people realized they were worthless. Like a forged painting or counterfeit dollar. Tod…

> The argument is whether the value of commodities or currencies are subjective, or whether they are ultimately derived from labor. Bitcoin partisans believe the former, I believe the latter. And what about the labor which went into designing and coding the bitcoin software, the exchanges, and so forth? Do you think all that labor was worthless (we don't even have to include the "mining" capital and labor in this jud…

Labor goes into mining gold, extracting gold etc. But it can then be used for capping teeth, heat shields, photographic equipment etc., as well as for a currency.

Labor does go into "mining" bitcoins. People build Bitcoin ASICs, people pay people to drill oil to make the electricity that powers those ASICs etc.

But gold has a number of real use values. Bitcoin has no real use value. It is inherently worthless.

People have used all kinds of commodities through history as currency. Cows, rice etc. As precious metals like gold are portable, storable, easily divisible, standardized etc. they make good currencies. An ounce of gold is the same as another ounce of gold, while rice goes bad, cows die, and one cow may give more milk than another. But the value still comes from its underlying usefulness as an industrial metal etc. Bitcoins have no underlying value such as this.

Re: Bitcoin is a Startup

#65

Post by Ologn »

pixie_ wrote: post #56
Ologn wrote: post #46

Bitcoins are worthless. They never had any value, and never will. Valueless meaning they are as worthless as Bernie Madoff fund shares, Dutch tulip bulbs, Pets.com stock and Flooz and Beanz, Reichsmarks and confederate dollars and so forth. People might have been temporarily fooled into paying money for these things, but ultimately people realized they were worthless. Like a forged painting or counterfeit dollar. Tod…

I would argue Bitcoin has more intrinsic value than gold - it is easier to move, faster to move, more secure in its transit, harder to counterfit, and impossible to create more (than is already planned.) It's intrinsic value comes from these very properties - similar to how gold's intrinsic value is that it's shiny, has been around for 2000 years, makes great jewelry, and some other things as well. In this century th…

Cow's milk is a commodity. It does not make a good currency. It must be kept refrigerated, and even with this becomes useless in a short amount of time. Nonetheless, it is a commodity and is useful.

Gold is a commodity. It makes a good currency - compared to many commodities it is easy and fast to move, can be moved securely, is hard to counterfeit and has a limited supply. It was used millennia ago to make goblets and the like, and has industrial uses today.

Bitcoin is not a commodity. It has no underlying use. So it is not a currency either. Because currencies are based on commodities.

I have written about government fiat money in other posts in this thread so I won't go into that tangent in this reply.

Re: Bitcoin is a Startup

#66

Post by Ologn »

lectrick wrote: post #55
Ologn wrote: post #46

Bitcoins are worthless. They never had any value, and never will. Valueless meaning they are as worthless as Bernie Madoff fund shares, Dutch tulip bulbs, Pets.com stock and Flooz and Beanz, Reichsmarks and confederate dollars and so forth. People might have been temporarily fooled into paying money for these things, but ultimately people realized they were worthless. Like a forged painting or counterfeit dollar. Tod…

According to some very sound economic currency theory, you're 100% wrong. http://bitcoinsurvey.wordpress.com/ tl;dr About half the current value of a bitcoin is speculation. The rest is fundamentally supported by its trade volume . There is no way a bitcoin can crash unless its use in trade crashes. The paper money I use every day, which can burn instantly in a flame, has no intrinsic value either.

> According to some very sound economic currency theory, you're 100% wrong.

I should first say that what that web site talks about is not a crank theory. They base their arguments on what many consider a very sound economic currency theory. I happen to disagree with the theory. But you're right in that the perceived value of Bitcoin is based on serious economic currency theory, which many prominent people consider very sound.

> About half the current value of a bitcoin is speculation. The rest is fundamentally supported by its trade volume

How much of the value of Pets.com, Webvan, eToys, Kozmo etc. was supported by trade volume in 1999?

> There is no way a bitcoin can crash unless its use in trade crashes.

I guess I agree - if people realize Bitcoin is worthless, they'll stop trading with it. The crash in price will be eventually followed by a slowdown in trading.

> The paper money I use every day, which can burn instantly in a flame, has no intrinsic value either.

I've talked about this in other places in this thread. As five current US dollars could not buy one 1972 US dollar, as throughout history every government fiat currency in history has eventually collapsed in value (while gold has kept its value), as the current fiat experiment in the US is only 42 years old, in essence I agree over the long term. US currency is completely based on the power of the US government and its willingness to support its currency. Translated into what I have been saying, it means you can go to places like http://www.usps.com and send the government dollars, and it will send you valuable items in return. You are right though that over the long term, US paper money has no intrinsic value.

Re: Bitcoin is a Startup

#67

Post by kylebrown »

Ologn wrote: post #64
kylebrown wrote: post #58

Earlier quoted context omitted.

> The argument is whether the value of commodities or currencies are subjective, or whether they are ultimately derived from labor. Bitcoin partisans believe the former, I believe the latter. And what about the labor which went into designing and coding the bitcoin software, the exchanges, and so forth? Do you think all that labor was worthless (we don't even have to include the "mining" capital and labor in this jud…

Labor goes into mining gold, extracting gold etc. But it can then be used for capping teeth, heat shields, photographic equipment etc., as well as for a currency. Labor does go into "mining" bitcoins. People build Bitcoin ASICs, people pay people to drill oil to make the electricity that powers those ASICs etc. But gold has a number of real use values. Bitcoin has no real use value. It is inherently worthless. People…

But the industrial value of gold only accounts for a fraction of its price. The recent gold bubble/run-up shows that pretty clearly (the price changed much quicker and independent of its potential industrial uses). So the fact that gold has traditional and industrial uses doesn't really help to justify its "value" or its current price (especially when price is far above industrial demand).

Its true that bitcoin doesn't have an underlying value as an industrial metal (obviously). But it does have an underlying value, primarily that it is distributed/un-seizable e-cash. This differentiates it from previous e-currency systems maintained by a central authority: paypal.com, libertyreserve.com, e-gold.com, notice these are all tied to an authoritative domain name, whereas bitcoin is not.

The intrinsic property of being decentralized/p2p, enables the notable use-value of purchasing controlled substances from the tor hidden node Silk Road. There is no other way to purchase items from that market. This sort of use-value is comparable to the use-value we could assign to something like Facebook: that there is no other way to view the original content which others have posted there. Or to USD since there is no other way to pay taxes.

I think it'd help your argument if you compared bitcoin to other virtual economies/currencies (facebook or facebook credits, paypal, eBay etc). Its obvious that bitcoin is not like gold and won't be valued for the exact same reasons. But see if you can come up with unique reasons why facebook and paypal (note that shares in neither company pay dividends) should have value whereas bitcoin should not.

Re: Bitcoin is a Startup

#68

Post by pixie_ »

Ologn wrote: post #65
pixie_ wrote: post #56

Earlier quoted context omitted.

I would argue Bitcoin has more intrinsic value than gold - it is easier to move, faster to move, more secure in its transit, harder to counterfit, and impossible to create more (than is already planned.) It's intrinsic value comes from these very properties - similar to how gold's intrinsic value is that it's shiny, has been around for 2000 years, makes great jewelry, and some other things as well. In this century th…

Cow's milk is a commodity. It does not make a good currency. It must be kept refrigerated, and even with this becomes useless in a short amount of time. Nonetheless, it is a commodity and is useful. Gold is a commodity. It makes a good currency - compared to many commodities it is easy and fast to move, can be moved securely, is hard to counterfeit and has a limited supply. It was used millennia ago to make goblets a…

You went from the 'bitcoin has no intrinsic value fallacy' right to the 'bitcoin is not a currency fallacy' - seriously read the Bitcoin FAQ or something. All your points have been discussed to death for the last 4 years. You think after 4 years, hundreds of startups, and millions of dollars invested in Bitcoin that you are the only one who 'realizes' Bitcoin is a scam? Wake up, bitcoin is legit now. It's been vetted by larger forces than your 'blog.'

Re: Bitcoin is a Startup

#69

Post by lectrick »

Ologn wrote: post #66
lectrick wrote: post #55

Earlier quoted context omitted.

According to some very sound economic currency theory, you're 100% wrong. http://bitcoinsurvey.wordpress.com/ tl;dr About half the current value of a bitcoin is speculation. The rest is fundamentally supported by its trade volume . There is no way a bitcoin can crash unless its use in trade crashes. The paper money I use every day, which can burn instantly in a flame, has no intrinsic value either.

> According to some very sound economic currency theory, you're 100% wrong. I should first say that what that web site talks about is not a crank theory. They base their arguments on what many consider a very sound economic currency theory. I happen to disagree with the theory. But you're right in that the perceived value of Bitcoin is based on serious economic currency theory, which many prominent people consider ve…

> I happen to disagree with the theory.

That's great. You disagree with it... without any counterarguments. What's the sand smell like that your head is buried in? :)

> How much of the value of ... webvan

Webvan? Dude... Webvan?

http://en.wikipedia.org/wiki/Webvan

Webvan died because its expenses VASTLY outstripped its earnings at the time.

But oddly, you didn't mention Flooz at all, which would have been a better (though still failing) argument than all of the dotcom bust stocks you mentioned.

http://en.wikipedia.org/wiki/Flooz.com

Flooz was killed first by a lack of adoption, and second by an FBI case due to a Russian crime syndicate using them for money laundering. And of course, it was centralized, which means it could be shut down.

Bitcoin is growing in adoption, suffers from no central authority, cannot ever be shut down, may facilitate money laundering although the US government seems to only be prosecuting obviously nefarious cases such as the Liberty Reserve case and the Ponzi scheme guy and leaving bitcoin itself alone due to its potential economic value. Cash also facilitates money laundering, and I don't see that getting shut down anytime soon.

> if people realize Bitcoin is worthless, they'll stop trading with it

And if people realize the US Dollar is worthless, they'll stop trading in it too. If you're saying that the value of something is what people believe it is, then this argument holds for anything of any value, which is always subjective.

Re: Bitcoin is a Startup

#70

Post by ewillbefull »

dragonwriter wrote: post #25
ewillbefull wrote: post #16

Earlier quoted context omitted.

It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.

> It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position If true, that means it wouldn't be an action of a rational attacker bent on financial gain, but not all attackers are rational, and financial gain isn't the only conceivable motive for an attack on bitcoin. > Even the NSA doesn't have enough computing power to achieve 51%. How, exactly, are you assessing the qu…

NSA builds general purpose computing in massive scales. The bitcoin network is beyond the scope of all of the world's supercomputers combined. I don't have some irrational belief that the NSA has a bunch of ASIC SHA256 devices laying around. They're too late.
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