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Bitcoin is a Startup

blog.tlrobinson.net

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Re: Bitcoin is a Startup

#71

Post by oleganza »

snitko wrote: post #59
Ologn wrote: post #54

Earlier quoted context omitted.

Gold's use as a currency is apart from its use as a commodity. It makes a good currency for several reasons - it is durable, storable, standardized, portable, easily divisible. Beyond its use as a currency or as jewelery, I don't have much to say beyond what you could find at http://en.wikipedia.org/wiki/Gold#Applications . Dentists used to use it for crowns. It is used in photographic equipment. It is used in satell…

You forgot that the supply of gold is limited. So if gold is durable, storable, standardized, portable, easily divisible and the supply is limited, then it's exactly like Bitcoin. Only gold is actually less portable, less durable, much less divisible and its supply is less limited than the supply of Bitcoin. Now tell me, what Bitcoin doesn't have that Gold has (except for the industrial use, which you admitted didn't…

Bitcoin can be used for secure timestamping and mutual funds locking without third parties. These are non-monetary features that Bitcoin provides. So it has some of them, just like gold.

Re: Bitcoin is a Startup

#72

Post by oleganza »

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…

"As the subjective theory of value (STV) is false"

Here's simple counter-argument.

Gold was chemically always the same all these years. But it was valued differently in different places on earth and in different times. When you are in a post-war destruction, your gold may be worth less than a loaf of bread. Or not, depending on how you see your future.

Apart from moving units, Bitcoin is good for things like secure timestamping and mutual fund locking without counter-party risk. No other technology or commodity can do that.

http://blog.oleganza.com/post/52237596486/today-ive-timestam...

http://blog.oleganza.com/post/58240549599/contracts-without-...

Re: Bitcoin is a Startup

#73

Post by oleganza »

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…

If you believe in "labor theory of value", Bitcoins require investment and labour to be created. All these computers from home CPUs to ASICs require some noticeable amount of work to be done to get assembled and then mine blocks.

Same thing with gold or anything.

Except, of course, labor theory was always wrong for a simple reason: the labor is expended because of expectation to satisfy a demand. So the value must already exist (or be anticipated) in a form of demand. Just because I waste my day and money doing some software won't create any value. There should be other people out there who could do something useful to them with my software, regardless of how much time I spent on it.

Costs and rewards are highly correlated on the market because of competition. If you make big profits, more people will go in and compete on the price with you. So it may seem that costs determine price, but it's the other way around. You expend work only in expectation of being paid for it afterwards (with some profit).

Re: Bitcoin is a Startup

#74

Post by oleganza »

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…

As I mentioned in other replies already, Bitcoin allows certain non-monetary uses that are not possible with any other technology. E.g. registering your document with a timestamp with no counter-party risk. Or mutually-locking funds without a 3rd party. Or using a third party arbitrator without giving it full access to the funds (only a fee and a right to decide where the funds go: to party A or party B).

Bitcoin is not just a payment protocol. It's a global unbreakable consensus mechanism allowing enforcement of complex contracts without any guns or policemen.

Re: Bitcoin is a Startup

#75

Post by volaski »

pixie_ wrote: post #62
volaski wrote: post #33

Earlier quoted context omitted.

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…

I was talking more in terms of unit value of Bitcoins. I think a lot of people invest in Bitcoins like they invest in stocks. As of today Bitcoin price is $122.10 but it used to be much lower. The more people start using Bitcoins the more valuable it will be, and the early adopters will benefit from it, which incentivizes them to hold onto their Bitcoins instead of letting them go once they have benefited short-term. It's important that the early adopters see the long term value otherwise it will be like a draining bucket.

Re: Bitcoin is a Startup

#76

Post by volaski »

lectrick wrote: post #57
volaski wrote: post #33

Earlier quoted context omitted.

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…

So basically, every currency ever invented was a Ponzi scheme? When the government of a country prints money for itself, is it engaging in Ponzi? Gold mining (which is quite analogous to Bitcoin mining) is also a ponzi scheme, then?

I am using the term "Ponzi scheme" with no judgment attached. I've met many entrepreneurs and people who are working on Bitcoin related businesses and that was the impression I had, which made me rethink this whole "Everyone who was tricked into Ponzi scheme was a gullible idiot" idea that the society has--when something is uncertain and looks like a great opportunity, the ones who jump in are the people who believe in their intellect. The real dumb ones don't do that. Secondly, you and I both know government issued currency and Bitcoins are very different things. Government issued currency is centralized and is driven by very different factors than a completely decentralized currency such as Bitcoin. Lastly, gold mining has nothing to do with the point I was trying to make.

Re: Bitcoin is a Startup

#77

Post by TDL »

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…

Early adopters being rewarded is not sufficient to make something a ponzi scheme. In fact early adopters of many trends and technologies are often rewarded. There is nothing about Bitcoin that is similar to a ponzi scheme. I recommend you take the time to read up on what ponzi schemes are:

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

Re: Bitcoin is a Startup

#78

Post by TDL »

gwern wrote: post #48
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…

> In the seventeenth century, during the Tulip bubble in Holland, 40 tulip bulbs sold for 100,000 florins, or what would be equivalent to about one million euros today. It can go up, but ultimately it must crash. Dutch tulip bulbs aren't even close to worthless right now, and they weren't worthless after Tulipomania either; for example: > Even the magnitudes of prices for valuable bulbs and their patterns of decline…

Although I wouldn't put as much stock in Garber's thesis (although I did enjoy the monograph) as you do, there definitely is value to his argument. I think it is also important to stress that the problem with the tulip bulb markets at the time was that there were people who were aggressively using leverage and they did not understand the ramifications of it's use.

Re: Bitcoin is a Startup

#80

Post by gnaritas »

volaski wrote: post #75
pixie_ wrote: post #62

Earlier quoted context omitted.

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…

I was talking more in terms of unit value of Bitcoins. I think a lot of people invest in Bitcoins like they invest in stocks. As of today Bitcoin price is $122.10 but it used to be much lower. The more people start using Bitcoins the more valuable it will be, and the early adopters will benefit from it, which incentivizes them to hold onto their Bitcoins instead of letting them go once they have benefited short-term.…

That's not a description of a Ponzi scheme.
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