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A Prediction: Bitcoin Is Doomed to Fail

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Re: A Prediction: Bitcoin Is Doomed to Fail

#401

Post by Aqueous »

reginaldjcooper wrote: post #247
interstitial wrote: post #71

Earlier quoted context omitted.

You can also pay in tulips.

Nice observation. Yes bitcoins are exactly like tulips but moreso. In fact, in the future, bitcoin prices will drop below zero and these idiots will have to pay others to get rid of them. I'm looking forward to the expressions on their dumb faces when they realize they are in a pyramid scheme balanced on top of a bubble resting on top of a bridge over some swampland in Florida.

That would probably be the case if any of us were stupid enough to put our retirement savings or anything that we critically need into BitCoin. The smart money is on putting an early investment in, waiting till it doubles or triples then pulling the initial investment out. That way you literally can't lose - at the very worst you break even. Most people have put a quite expendable amount of money into BitCoin. Even without pulling it out, I could stand to lose my initial investment completely right now and not break a drop of sweat.

Re: A Prediction: Bitcoin Is Doomed to Fail

#403

Post by JoeAltmaier »

novalis78 wrote: post #158
JoeAltmaier wrote: post #133

Earlier quoted context omitted.

I don't get that; runs and crashes means your confidence is improved; that bitcoins have 'proved themselves'? I would argue just the opposite. No responsible financial counselor would recommend something as volatile as bitcoins; no business can survive the busts ("Just wait a few months Mr Vendor; my money will be worth something again then I promise!") So its used by - who? Speculators and suckers?

I agree with you. Let me explain - I think you have to separate bitcoin, the protocol and bitcoins, the currency. Secondly, if you separate the two functions of bitcoins as a storage of value and bitcoins as a currency, it might make more sense. After each of the last three big crashes, the price built a new base at twice the initial level before the bust and then beat the original high in a relatively short amount o…

Confidence is a funny word for gambling. Secure an odd choice for something defined as volatile. If you need money and your bitcoin savings is worthless, you lose.

Volume of participants has had no stabilizing effect on bitcoins. They suffer in spades the destabilizing properties of real currency, with no corresponding 'federal reserve' able to (try to) control fluctuations.

Re: A Prediction: Bitcoin Is Doomed to Fail

#404

Post by gress »

ulvund wrote: post #369
gress wrote: post #280

Earlier quoted context omitted.

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

They are infinitely divisible

That isn't what the documents on the web say: https://bitcointalk.org/index.php?topic=4816.0

What are you basing your statement on?

Re: A Prediction: Bitcoin Is Doomed to Fail

#405

Post by jljljl »

UK-AL wrote: post #381
SeanLuke wrote: post #272

Earlier quoted context omitted.

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.

There needs to be a feedback loop in cyptocurrencies. They look at the value of the coins on a exchange, the adjusts the amount of money generated to keep inflation at a constant 1% or 2% or whatever.

This would actually make sense, and it's what some economists have proposed instead of the Federal Reserve: an algorithm that targets a set inflation rate or NGDP growth level.

Re: A Prediction: Bitcoin Is Doomed to Fail

#406

Post by enraged_camel »

praxeologist wrote: post #276
enraged_camel wrote: post #196

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. 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.

No, the government came and said you can't use gold or silver to trade Skittles, because neither material is a convenient medium of exchange (which is unarguably correct).

Re: A Prediction: Bitcoin Is Doomed to Fail

#407

Post by fat0wl »

phaemon wrote: post #384
fat0wl wrote: post #309

Earlier quoted context omitted.

Also if you want to be more interactive than your peers, will you answer a scenario for me? Now, I am actually asking for your opinion on this, not being a smart-ass. Ready? Let's go. If we had a bunch of "units" of something we have 1 each and there are 10 total. We use them to buy melons and each 1 is roughly valued as 1 melon. Then people see the success our new system is having and want to use our units to buy me…

> Is every unit now worth 4 melons now just because someone sold one for 4 melons to an outside trader? Well, yes. That's why currencies increase in value, because they're in demand. That's why the value of the pound or dollar or whatever goes up and down. > If I go to the store where I used to buy a melon for 1 unit and tell them now that I think I deserve 4 melons for a unit, what will they say? Who knows? They mig…

My intuition says that the storeowner has no reason to accept. I think what a lot of the merchants are doing is using 3rd party processors, basically just saying "Fine yeah I'll take it" as long as a Bitcoin buyer is already lined up (which is essentially what a 3rd party exchange functions as). That way they get cash less transaction fee.

But really even if they accept Bitcoin for 4 melons that doesn't mean they have embraced Bitcoin. It is just a credit to the power of Bitcoin's infrastructure that the trading network is there to accept the coins, no?

That's my biggest worry. Bitcoin culture seems to believe that at a certain point all individuals will give up resistance and embrace/adopt Bitcoin, whereas there are many many barriers standing before that and I believe it is only the trading network that is strong. However, I do not believe Bitcoin is a stock, so I'm not sure what it is.

What do you think, sir/madam phaemon?

Re: A Prediction: Bitcoin Is Doomed to Fail

#408

Post by phaemon »

fat0wl wrote: post #407
phaemon wrote: post #384

Earlier quoted context omitted.

> Is every unit now worth 4 melons now just because someone sold one for 4 melons to an outside trader? Well, yes. That's why currencies increase in value, because they're in demand. That's why the value of the pound or dollar or whatever goes up and down. > If I go to the store where I used to buy a melon for 1 unit and tell them now that I think I deserve 4 melons for a unit, what will they say? Who knows? They mig…

My intuition says that the storeowner has no reason to accept. I think what a lot of the merchants are doing is using 3rd party processors, basically just saying "Fine yeah I'll take it" as long as a Bitcoin buyer is already lined up (which is essentially what a 3rd party exchange functions as). That way they get cash less transaction fee. But really even if they accept Bitcoin for 4 melons that doesn't mean they hav…

> My intuition says that the storeowner has no reason to accept.

Well, of course they don't. Things have just got worse for them. But that's exactly what happened to many local retailers when their customers realised they could get stuff cheaper by ordering over the Internet than they could buying locally. It's just how things go.

> However, I do not believe Bitcoin is a stock, so I'm not sure what it is.

It's an infrastructure. It happens to have a currency built in on top of it, but at heart it's an infrastructure. Its worth depends entirely on what people do with it, like the Internet itself.

So, it's a little meta to consider what a currency that's an infrastructure is worth in it's own terms, but no-one has to decide that....just let people pay what they want for their share.

Re: A Prediction: Bitcoin Is Doomed to Fail

#409

Post by jnbiche »

jljljl wrote: post #277
jljljl wrote: post #260

Earlier quoted context omitted.

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. Ther…

>Is my liquidity assumption mistaken?

You're absolute (and obviously) correct about Bitcoin's volatility, but you're mistaken about its liquidity.

Bitcoin is quite liquid if you're in the U.S. and many other countries around the world. The only delay is the time required by the legacy banking system to wire or ACH funds in/out of your exchange account.

Re: A Prediction: Bitcoin Is Doomed to Fail

#410

Post by andrewla »

djur wrote: post #261
andrewla wrote: post #148

Earlier quoted context omitted.

I should probably read Graeber's book, though based on what I see here I might find it a bit exhausting. I hear this argument a lot in discussions about bitcoins, and I ask, but have not yet received, a good explanation. Let me ask you if you can summarize the reasoning for why paying taxes in a currency helps a currency? It seems very obvious that the opposite is true -- if you don't have to pay taxes by working in…

> if you don't have to pay taxes by working in an alternate currency, then you would obviously want to use that Unless you want to legally live and do business in a country, in which case you're going to have to pay the taxes that country levies in the legal tender currency. The value of the US dollar, in essence, is the value of being able to live and do business in the US plus the avoided cost and risk of doing so…

You may have misunderstood me. Barter transactions and foreign currency transactions are perfectly legal. At that point you have no dollar income, so you wouldn't have to pay taxes _except_ for the fact that you do have to pay taxes on the dollar equivalent for those transactions.

Provisions like those (together with legal tender laws) are necessary to prevent people from abandoning the "official" currency wholesale. Thus it seems that denominating taxes in a currency is a huge negative for a currency _in and of itself_.

Edit: after reading further, I think I see the disconnect. I was thinking purely in terms of income taxes and sales taxes/import duties. For taxes in absolute terms, like property taxes or luxury taxes, then the government demands a certain number of dollars, which does mean I need to get that money, even if in my day-to-day life I don't use it, which creates a demand for the finite resource of US dollars. Still, the federal government in the US, anyway, does not demand any taxes of this nature, so it doesn't seem to follow logically that the taxes relate to the value.

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