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A Prediction: Bitcoin Is Doomed to Fail

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Re: A Prediction: Bitcoin Is Doomed to Fail

#271

Post by jnbiche »

crististm wrote: post #188
gjm11 wrote: post #181

Earlier quoted context omitted.

I'm not convinced. It's only easy to buy a house for $100M if you have $100M you can spare for house-buying. And then you only get to choose from the rather limited range of $100M houses that are available for sale. Similarly, you only get to sell a house for $100M if you have a house that nice to sell. And then you only get to sell to the rather limited range of people willing to buy a house for $100M. But perhaps I…

The point is the liquidity of houses is less than liquidity of cash. Likewise, the liquidity of bitcoins is less than liquidity of dollars. You can easily buy bitcoins(houses) if you have the money, but the reverse is not true.

>You can easily buy bitcoins(houses) if you have the money, but the reverse is not true.

With the exception of Mt. Gox, this is simply not true. It's hard to both buy and sell Bitcoins if you've not been verified at an exchange, but once you do that (not very hard), it's equally easy to both buy and sell. The only delay is the time needed for the wire or ACH to arrive.

I get the feeling that many of you are talking confidently about something you have no experience with. Where are you getting the idea that it's hard to sell Bitcoins?

Re: A Prediction: Bitcoin Is Doomed to Fail

#272

Post by SeanLuke »

jljljl wrote: post #264

Just out of curiosity: Has anyone throughly debunked the deflation argument against Bitcoin? Even the Bitcoin wiki seems fairly uncertain that deflation will not be a problem with Bitcoin. I still struggle with how a fixed money supply vs. a steadily growing economy does not lead to deflation, and (eventually) hoarding.

Quite to the contrary: I am fairly convinced deflation and currency speculation will be the end of Bitcoin, because there is no central authority which can stop it from happening.

Re: A Prediction: Bitcoin Is Doomed to Fail

#273

Post by dwaltrip »

rantanplan wrote: post #232
dwaltrip wrote: post #190

Earlier quoted context omitted.

There is no such thing as intrinsic value, all value is subjective, only existing if there is a conscious being that can provide a valuation. These beings have shifting, impermanent, prefecerences, and non-uniform preferences. The many factors which affect their considerations also change quite frequently: a glass of water is worth very little when I'm boating across a large pristine lake, yet it is worth an enormous…

Uhh, yes there is such a thing as intrinsic value and... you just proved it! "a glass of water is worth very little when I'm boating across a large pristine lake" So you're saying that when someone is offering you 1 dollar, doesn't matter much to you, if you sleep in a bed made of dollars. No way!!! I hope you understood that water didn't lose its intrinsic value. Because you can(and want to) still drink it and it wi…

This only because humans need water to live, and they are the ones performing the valuation. There is nothing "intrinsic" about it. Water has very large demand that is extremely entrenched due to its biological importance. This is unlikely to change, and this confusingly may seem like some sort of intrinsic value. But it isn't.

Value is an extrinsic property, meaning it stems purely from entities outside of the object itself. If humans evolved to not need any water, then perhaps they wouldn't value it at all. How can the intrinsic value of object A depend on the nature of some external object B?

Re: A Prediction: Bitcoin Is Doomed to Fail

#274

Post by brainburn »

genofon wrote: post #51
cs702 wrote: post #29

Bitcoin befuddles experts who analyze it from a narrow perspective, because it is not just a new medium of exchange or a new store of value: it is also a new kind of point-of-sale payment system (one that doesn't require payment processors), a new kind of global financial transfer system (one that doesn't require financial institutions), a new kind of time-stamping certification system (one that doesn't require notar…

"Experts are clueless" -Steve Jobs

"Steve Jobs is dead" -God

Re: A Prediction: Bitcoin Is Doomed to Fail

#275

Post by tlrobinson »

nostrademons wrote: post #14

I think Bitcoin's doomed to fail, but not for the reasons the article suggest. There're ample historical counterexamples of currencies that are not tied to a government. Gold is the most obvious example; if currency was inextricably tied to governments, there would not have been a mad rush to colonize the New World (and extract its gold reserves). In prisons cigarettes frequently serve as currency, as a medium of exc…

I agree with everything you said, but why couldn't/wouldn't the currency emerging from the ashes be Bitcoin itself?

Re: A Prediction: Bitcoin Is Doomed to Fail

#276

Post by praxeologist »

enraged_camel wrote: post #196
sergiosgc wrote: post #81

Earlier quoted context omitted.

Did it? Or was it Bretton-Woods that failed? If I remember my History, Nixon decoupled the USD from gold to regain the ability to devalue the dollar, as a tool for dealing with the huge debt accrued during the Vietnam war. It wasn't a gold-currency world, it was a world of gold-backed US dollar. It makes a huge difference. While the advantages of being a reserve currency superceded the disadvantages of not having mon…

>>Did it? Or was it Bretton-Woods that failed? If I remember my History, Nixon decoupled the USD from gold to regain the ability to devalue the dollar, as a tool for dealing with the huge debt accrued during the Vietnam war. The point is that it failed as a currency as soon as it lost the government's backing.

The gov't has outlawed gold and silver as currency in favor of its fiatbux. If my friend and I like eating Skittles then some bully come slaps us around if we eat them, that isn't failure of us liking Skittles.

Re: A Prediction: Bitcoin Is Doomed to Fail

#277

Post by jljljl »

jljljl wrote: post #260
jnbiche wrote: post #243

Earlier quoted context omitted.

Wrong. Have you actually tried to buy a Bitcoin? If not, ask someone who has. At the moment, it's hard for Bitcoin novices to buy Bitcoins, and much less hard to sell them. Actually, once you've been verified by an exchange (required prior to buying Bitcoins unless you do a private party sale), selling Bitcoins is easy; it's getting your USD wired/ACHed to your bank account that can be time-consuming. This is due to…

I think he's making a liquidity point. It may be easy from a process standpoint to cash out, but the question is how much the value of your bitcoins may change whenever you cash out. http://www.investopedia.com/terms/l/liquidity.asp Part of the value of dollars as a medium of exchange is that the value does not fluctuate greatly from day to day or minute to minute. In the short term, you can rely on prices remaining…

jnbiche, it's not letting me reply to you so I'm doing it here.

You make a good point, and my above explanation was a bit confused.

I think BTC faces both problems:

There's high volatility, driven by the current level of speculation and the fixed quantity of Bitcoins that exist on the market. This makes Bitcoin a fairly poor medium of exchange since it is unlikely to hold a stable value from one day to the next.

There's also (I suspect) poor liquidity, driven by the low number of people involved in the exchanges (compared to other assets and currencies). While it may be easy to exchange Bitcoin from a process standpoint, you may not be able to get a price sufficiently close to the last quoted price when you go to exchange for dollars. It may be more liquid than a house, but it is much less liquid than USD, EUR, GBP, etc.

Is my liquidity assumption mistaken?

Re: A Prediction: Bitcoin Is Doomed to Fail

#278

Post by rantanplan »

dwaltrip wrote: post #273
rantanplan wrote: post #232

Earlier quoted context omitted.

Uhh, yes there is such a thing as intrinsic value and... you just proved it! "a glass of water is worth very little when I'm boating across a large pristine lake" So you're saying that when someone is offering you 1 dollar, doesn't matter much to you, if you sleep in a bed made of dollars. No way!!! I hope you understood that water didn't lose its intrinsic value. Because you can(and want to) still drink it and it wi…

This only because humans need water to live, and they are the ones performing the valuation. There is nothing "intrinsic" about it. Water has very large demand that is extremely entrenched due to its biological importance. This is unlikely to change, and this confusingly may seem like some sort of intrinsic value. But it isn't. Value is an extrinsic property, meaning it stems purely from entities outside of the objec…

You would have saved a lot of typing if you had just read the definition of "intrinsic value" as a finance term. Basically in your first paragraph you explained why it has intrinsic value.

You obviously brought a philosophical argument to an economics debate :P

This is EC-101

Re: A Prediction: Bitcoin Is Doomed to Fail

#279

Post by pbreit »

SeanLuke wrote: post #272
jljljl wrote: post #264

Just out of curiosity: Has anyone throughly debunked the deflation argument against Bitcoin? Even the Bitcoin wiki seems fairly uncertain that deflation will not be a problem with Bitcoin. I still struggle with how a fixed money supply vs. a steadily growing economy does not lead to deflation, and (eventually) hoarding.

Quite to the contrary: I am fairly convinced deflation and currency speculation will be the end of Bitcoin, because there is no central authority which can stop it from happening.

So you're both concerned about deflation and hoarding but for different reasons?

Re: A Prediction: Bitcoin Is Doomed to Fail

#280

Post by gress »

eliwjones wrote: post #183

Bitcoin is "doomed" to fail (as a currency) by the simple fact that the supply is capped at 21 million. This relegates it to the status as a "virtual collectible" (as someone so humorously put it). Maybe Bitcoin 2.0 will be smart and remove a cap (or build in the ability to allow itself to float).. but Bitcoin as it is isn't flexible enough.

Bitcoins are divisible to 8 decimal places. Why are more needed?
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