They forgot the other, key attribute of a dollar that makes it useful for 'distributing wealth': it has a relatively stable value. Economies rise and fall because of the struggle to control the price of their currencies. The notion that a medium of exchange with no such stability should replace the dollar is bonkers.
What Is a Bitcoin, Really?
11–20 of 54 posts
Re: What Is a Bitcoin, Really?
#12I 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…
> 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 facilitate the circumvention of censorship (a la Wikileaks). And once you have bitcoins, sending them is faster than paying with a credit card online.
>Doesn't it require increasingly more capital to mine coins and to maintain the ledger?
Yes, if you ignore hardware advances. It might even be true if you don't ignore that.
>What happens when the value of a coin is less than the mining costs or ledger maintenance?
There are transaction fees that go to the block miner.
>Or, does the coin just keep continuing to increase in value?
Hopefully not too quickly!
>what's to stop people from just using another crypto-currency?
Network effects. People do use other crypto-currencies. Just not as much. For now.
>And, what is the 'value' of a coin? The article implies that the value is created by the users' trust in the value. But, is that how currencies generally work? I had assumed that currencies either have tangible value, like precious metals, or that they are abstract derivatives of another's debt (government or people).
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.
There are historical examples of currency which was neither a debt derivative nor an intrinsically useful object being used as currency.
Ultimately, anything sellable is "worth" what other people will pay for it. Bitcoin provides a means of transferring information in a cryptographically signed manner. We happen to use that fact to transfer information about value. Other people are willing to buy bitcoins. The price is capped by the fact that there is a finite number of bitcoins and a finite number of people. Beyond that, it's pretty much new ground we're breaking here.
Bitcoin is not perfect. I don't know the future. But if you have other questions, I'm happy to answer them from the perspective of a bitcoin holder.
Re: What Is a Bitcoin, Really?
#13They forgot the other, key attribute of a dollar that makes it useful for 'distributing wealth': it has a relatively stable value. Economies rise and fall because of the struggle to control the price of their currencies. The notion that a medium of exchange with no such stability should replace the dollar is bonkers.
If by stable, you mean "decreasing steadily," then sure.
Re: What Is a Bitcoin, Really?
#14They forgot the other, key attribute of a dollar that makes it useful for 'distributing wealth': it has a relatively stable value. Economies rise and fall because of the struggle to control the price of their currencies. The notion that a medium of exchange with no such stability should replace the dollar is bonkers.
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?
Re: What Is a Bitcoin, Really?
#15They forgot the other, key attribute of a dollar that makes it useful for 'distributing wealth': it has a relatively stable value. Economies rise and fall because of the struggle to control the price of their currencies. The notion that a medium of exchange with no such stability should replace the dollar is bonkers.
>Economies rise and fall because of the struggle to control the price of their currencies
Economies that fall have struggles to control the price of their currency. The correlation is there, the causation is not so clear.
Re: What Is a Bitcoin, Really?
#16I 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…
> 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 value" is nonsense. If you can make a Bitcoin transaction faster, cheaper, and with fewer people knowing about it (if you value anonymity), then BTC has value. You can send Bitcoin to someone overseas without anyone else knowing. How powerful is that?
> Ultimately, anything sellable is "worth" what other people will pay for it.
Precisely. I wish we could teach people this before they dismiss Bitcoin for unfounded reasons.
Re: What Is a Bitcoin, Really?
#17Earlier 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…
Fiat currencies have intrinsic value due to taxation.
Re: What Is a Bitcoin, Really?
#18For me, this was the best intro to BitCoin - http://gendal.wordpress.com/2014/03/27/how-i-explain-bitcoin...
It doesn't focus on tech - it explains why BitCoin as a platform is so important and what are the killer apps that can be build with that platform.
Re: What Is a Bitcoin, Really?
#19I 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…
> 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…
>> What happens when the value of a coin is less than the mining costs or ledger maintenance?
> There are transaction fees that go to the block miner.
The issue here is that they go to the person who mined the block originally, but they aren't passed on to those who are simply running the client to maintain the ledger. With the increased difficulty in mining, it's very unlikely for anyone without a large investment in hardware, that you're ever going to make money on the fees. It provides no incentive to run the full client to help the network confirm transactions.
Re: What Is a Bitcoin, Really?
#20Earlier 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.
The issuer of a fiat currency collects taxes in that same currency.
The issuer^H^H^H^H^H^H ledger algorithm of bitcoin collects taxes^H^H^H^H^H transaction fees in that same currency.