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A Prediction: Bitcoin Is Doomed to Fail

dealbook.nytimes.com

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Re: A Prediction: Bitcoin Is Doomed to Fail

#291

Post by waps »

aryastark wrote: post #200
fat0wl wrote: post #84

Earlier quoted context omitted.

This intrinsic value can be mirrored by any cryptocurrency or even just a parallel network of Bitcoin. It is no justification for $1000/coin the way overzealous BTC investors claim.

$1000, for 1/12000000th the total current supply of bitcoins in existence? Sounds like a deal to me. The same fraction of USD is $100,000. There are 313 million people in the US. These are the majority of people using the dollar. There are 1.35 billion in China and another 1.2 billion in India. The former has already started using bitcoin. But only just barely . The market for bitcoin is enormous . Now let me ask you…

But the value floor for the USD is effectively the tax obligations denominated in USD, which is 5.5 trillion. Meaning a hell of a lot of powerfull people have a legal obligation to collect -at least- 5.5 trillion USD.

This provides a much higher value floor, no ?

Re: A Prediction: Bitcoin Is Doomed to Fail

#292

Post by rantanplan »

dwaltrip wrote: post #284
rantanplan wrote: post #278

Earlier quoted context omitted.

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

Haha ok glad we are on the same page now. I was originally responding to a comment about the intrinsic value of gold. How does one apply http://en.m.wikipedia.org/wiki/Intrinsic_value_(finance) to gold? It produces no cash flow or income. This is why I used a philosophical approach :p

Heh, approaching economics from a philosophical standpoint is the road to madness. I'd argue that sociology is a better approach to understanding economics, but then I would have fallen into your trap; because then we'd have a philosophical discussion :P

I'm far from an expert in economics, but if you're interested in the (very dirty)history of gold, the wikipedia page of the "Gold Standard" is a good start.

Time to sleep :)

Re: A Prediction: Bitcoin Is Doomed to Fail

#293

Post by dwaltrip »

djur wrote: post #255
dwaltrip wrote: post #215

Earlier quoted context omitted.

The buyers and sellers have come to an agreement already. They prefer the price of $1000. Any large retailer attempting to manufacture an artificial peg would only create a good amount of temporary humor.

Retailers aren't going to set prices for their goods that might fluctuate from $1 to $10 to $50 back to $1 within a week or so. It'd make it impossible to run a business. What they ultimately want is to guarantee they're going to receive the equivalent of $X for every widget they sell, so they'll either have to declare that Y BTC = X USD regardless of market prices, or they'll have to accept whatever Y in BTC is equi…

Payment processors such as bitpay offer same-day bitcoin-to-fiat conversion and bank deposit with extremely low fees (0.1% - 1%), and are becoming the defacto standard. This is expected during the bootstrapping phase. Later, if bitcoin firmly establishes itself, merchants could choose to not convert directly to fiat.

Re: A Prediction: Bitcoin Is Doomed to Fail

#294

Post by reginaldjcooper »

andyidsinga wrote: post #68
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 love your point about pricing - was just thinking the other day about how I might accept bitcoin for an item. Presumably there could be a mechanism for determining the right price on the fly (similar to share pricing) but volatility would still be killer - hence there would be desire for a bartered item or non-volatile currency.

I have been thinking about this also and I concluded I would either account for the bitcoin volatility risk in my BTC price or by raising the dollar price.

Re: A Prediction: Bitcoin Is Doomed to Fail

#295

Post by reginaldjcooper »

vectorpush wrote: post #206
fat0wl wrote: post #61

Earlier quoted context omitted.

this is the root of my belief as well -- that it is a speculative farce, but so long as it is above 0 it will continue to be in use. Another poster made me aware of this joke that I think summarizes Bitcoin pretty accurately. http://www.getamused.com/jokes/pennystock.html Only in this case it's not a single buyer.

Only in this case it's not a single buyer. i.e. completely invalidating the comparison.

That's not true, there could be multiple buyers and the punchline would just be, "to whom? there's only the three of you."

Re: A Prediction: Bitcoin Is Doomed to Fail

#296

Post by reginaldjcooper »

dmix wrote: post #21
TylerE wrote: post #20

Earlier quoted context omitted.

Also, with gold, there is intrinsic value beyond the monetary - jewelry use, or in these moderns days in electronics. That provides a value floor. Bitcoin doesn't have that.

Every bitcoin thread = groundhog day.

Seriously, in these threads there's hardly any middle ground between, "eventually these young fools will see they are standing at the foot of a pyramid of tulips," and, "fuck the police fuck fiat currency eventually dollars will be obsolete." Both sides are ignorant IMO.

Re: A Prediction: Bitcoin Is Doomed to Fail

#297

Post by michaelochurch »

BitCoin has one egregious and obvious flaw. There is absolutely no defense against the creation of a competing but otherwise identical cryptocurrency-- say, ZitCoin.

If I create my own dollar and claim it is backed by the U.S. Government, I am breaking the law. Until a few decades ago, it was physically impossible to create new gold (and now it is still prohibitively expensive-- and radioactive).

There is nothing that stops someone from generating a new currency (ZitCoin) with the same desirable properties, but without the obvious favoritism toward early adopters. If one more can do it, then many can do it. I don't see why this won't eventually drive the value of fixed-pool cryptocurrencies to (or near) zero.

Re: A Prediction: Bitcoin Is Doomed to Fail

#298

Post by yetanotherphd »

That was a horrible article. The culmination of the author's intellectual laziness is the paragraph

"Of course, the global monetary system has suffered from appalling management in recent years. The authorities, especially in the United States, first allowed banks to act almost as if they were in a right-money world, lending and speculating wildly. That led to a typical right-money disaster — a sudden loss of trust and the failure of leading institutions."

The Federal Reserve has the ability to set interest rates in the way it deems best for the economy. There is nothing "right wing" about the way they set very low interest rates before the financial crisis. There is no way that private money could ever replicate the kind of economic stimulus that the Federal Reserve was able to engage in.

Anyway I don't believe that bitcoin will become much larger (or smaller) than it is now. Not for any deep reason, but because it is inconvenient, and commercial banks are already very good at what they do. Hopefully it will provide enough of a shock to the system to cause a reform in the current system of merchant fees for credit cards, which are an aberration that should have never existed in the first place.

Re: A Prediction: Bitcoin Is Doomed to Fail

#299

Post by reginaldjcooper »

redthrowaway wrote: post #80

The author may or may not know what he's talking about when it comes to money; that's not something I have more than a layman's understanding of and so I can't judge his competence. He doesn't know how Bitcoin works, though. Claiming it's an attempt to "privatize money" (huh?), or that governments will "take it over" (how? Building mining farms forever so as to maintain >50% of the network hashrate?) suggests he thin…

A government with resources like the US or China could easily to a 51% attack on bitcoin and reject any transactions they didn't like. They could "take it over" and the cost to do so would be little more than a rounding error for them. How would you make a new standard if, say, Russia keeps jumping in and 51%ing your transactions? You would have to centralize the mining to be safe from them. This kills the bitcoin.

Re: A Prediction: Bitcoin Is Doomed to Fail

#300

Post by stuhood »

trekky1700 wrote: post #131
Aqueous wrote: post #30

Earlier quoted context omitted.

If you use a service like BitPay, which most BitCoin merchants too, you declare your price in dollars and the API uses the current exchange rate to convert it to BitCoin, minute-by-minute. The prices float up and down with the currency, so pricing is largely a non-problem. It makes rational sense for merchants to accept BitCoin and to keep some holdings in BitCoin because the price is increasing at such a rapid pace.…

If you're valuing everything in dollars, setting your price in dollars, and converting to and from dollars, why not just use dollars. I think this is the leap BitCoin is yet to make. When we no longer have to convert it and compare it to dollars. It has loads of benefits over using the dollar, but a lot of those benefits are lost the second you're having it exchanged. For instance, if I wanted to use bitcoin for cont…

Because bitcoin acts as a proxy between the buyer's local currency and the seller's local currency, regardless of what those are. Particularly in the case of digital goods, this opens a buyer up to accepting business from anywhere in the world.
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