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What Is a Bitcoin, Really?

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Re: What Is a Bitcoin, Really?

#21

Post by nickpinkston »

richardwhiuk wrote: post #17
jdreaver wrote: post #16

Earlier quoted context omitted.

> Ah, yes. This is classic. The orthodox economists might tell you that Bitcoin shouldn't have any value at all. Yet, I can sell 1 BTC and pay for months of gas. I'd rather have a running car than an economist's opinion. I still don't understand how economists can say that BTC has no "intrinsic value," so should be worthless, but the fiat currencies around the world are just dandy. The whole concept of "intrinsic val…

Fiat currencies have intrinsic value due to taxation.

Intrinsic or not isn't really the question - it's not really a binary.

I'd rather have bitcoin than Zimbabwe's fiat currency.

Taxation definitely gives legitimacy, but so does the ability to pay for things anonymously. If enough people are willing to take a currency, than it gain value - period. The gov't wanting it in taxes is just a really big provider of liquidity providing those network effects.

Re: What Is a Bitcoin, Really?

#23

Post by meh_master »

ap22213 wrote: post #7

I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I can maybe see where it'd be useful in minimizing electronic transaction costs. But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. And, I guess I…

> I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system.

I don't either. Which brings me to a point, is it even intended for a mass audience and wide-spread adoption?

How could I explain Bitcoin to my mother for instance?

I'd end up down the rabbit hole just to explain the words and concepts used in the definition of Bitcoin...cryptography, private keys, wallets, addresses, miners, the block-chain, and on and on

Re: What Is a Bitcoin, Really?

#24

Post by berns »

nickpinkston wrote: post #21
richardwhiuk wrote: post #17

Earlier quoted context omitted.

Fiat currencies have intrinsic value due to taxation.

Intrinsic or not isn't really the question - it's not really a binary. I'd rather have bitcoin than Zimbabwe's fiat currency. Taxation definitely gives legitimacy, but so does the ability to pay for things anonymously. If enough people are willing to take a currency, than it gain value - period. The gov't wanting it in taxes is just a really big provider of liquidity providing those network effects.

It's not a question of legitimacy, isn't about demand. Currency is a token. You need tokens to play the game. The difference with taxes is that you don't choose to participate. You must play, so there is always demand for tokens.

Re: What Is a Bitcoin, Really?

#26

Post by joeyspn »

ap22213 wrote: post #7

I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I can maybe see where it'd be useful in minimizing electronic transaction costs. But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. And, I guess I…

> I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system.

You don't have to be embarrassed. Surprisingly 99.9% of the people doesn't know how our monetary/banking system works (creating money out of thin air) but that doesn't prevent them from using $ or €...

Henry Ford once said: "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning"

Re: What Is a Bitcoin, Really?

#27

Post by jontas »

meh_master wrote: post #23
ap22213 wrote: post #7

I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I can maybe see where it'd be useful in minimizing electronic transaction costs. But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. And, I guess I…

> I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I don't either. Which brings me to a point, is it even intended for a mass audience and wide-spread adoption? How could I explain Bitcoin to my mother for instance? I'd end up down the rabbit hole just to explain the words and concepts used in the…

The time I attempted to explain bitcoin to my parents I ended up starting with explaining how public key crypto works (to the best of my ability) and wound up dealing with so many tangential questions we barely managed to touch on bitcoin. I'm sure they took away almost nothing from an hour long conversation.

I think it is possible to understand bitcoin as a financial system if you have some background in financial concepts (my dad was able to pick up the open ledger concept pretty easily). But to understand the technical details you really need an implicit understanding of a lot of different technologies.

Re: What Is a Bitcoin, Really?

#28

Post by mbreese »

richardwhiuk wrote: post #17
jdreaver wrote: post #16

Earlier quoted context omitted.

> Ah, yes. This is classic. The orthodox economists might tell you that Bitcoin shouldn't have any value at all. Yet, I can sell 1 BTC and pay for months of gas. I'd rather have a running car than an economist's opinion. I still don't understand how economists can say that BTC has no "intrinsic value," so should be worthless, but the fiat currencies around the world are just dandy. The whole concept of "intrinsic val…

Fiat currencies have intrinsic value due to taxation.

It's not just the taxation (which is true), it's the fact that they are backed by a particular entity. In the case of USD, it's the United States government. Dollars may not be "backed" by anything tangible, but they are accepted because the US is (largely) a trusted entity. That's what makes USD useful to people internationally.

Bitcoin doesn't have the advantages of having a government backing it, but some would probably argue that that is an advantage.

Re: What Is a Bitcoin, Really?

#29

Post by aggronn »

jdreaver wrote: post #16
sirsar wrote: post #12

Earlier quoted context omitted.

> But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. It's not common yet, but I have in fact saved money by buying with bitcoins, because the merchant passed on some of the savings. > Isn't it just easier to buy things with Dollars? Sure, if you're allowed to, and you have that preference, why not? Bitcoin can faci…

> Ah, yes. This is classic. The orthodox economists might tell you that Bitcoin shouldn't have any value at all. Yet, I can sell 1 BTC and pay for months of gas. I'd rather have a running car than an economist's opinion. I still don't understand how economists can say that BTC has no "intrinsic value," so should be worthless, but the fiat currencies around the world are just dandy. The whole concept of "intrinsic val…

> I still don't understand how economists can say that BTC has no "intrinsic value,"

It really annoying to me that people keep putting up this straw man. What economist is saying that BTC has no intrinsic value and is thus worthless? Really? You learn in ECO101 that currency only has value because of what you can exchange it for. Money demand is not a fringe concept in economics--its a core concept that anyone in any branch of economics that deals with currency and money thinks about several times a day.

The fact that you can only do business with the vast majority of american society in USD is what gives the USD value. We got to that point because the US government said that US currency should be acceptable to pay off any debts in the US, including taxes. The fact that dollar exists and is the common currency in the US is tied to the law, but its exchange rate and purchasing power is (aka its 'value') is tied to other factors completely.

You can make the argument that the long term value of BTC is zero because there's nothing that guarantees it continued existence, like US law guarantees the existence of the dollar. But thats totally separate from the value and exchangability of BTC to US.

Re: What Is a Bitcoin, Really?

#30

Post by oafitupa »

astazangasta wrote: post #14
sirsar wrote: post #13

Earlier quoted context omitted.

If by stable, you mean "decreasing steadily," then sure.

Yeah, I'll take a fairly predictable rate of inflation over an inherently deflationary currency with absolutely no controls on its motion. I guess we're supposed to be excited about currency being able to flit around like a panicking moth?

I'll take the deflationary one, ty.
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