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Bitcoin is none of the things it was supposed to be

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Re: Bitcoin is none of the things it was supposed to be

#121

Post by jenoer »

cdancette wrote: post #119
jcranmer wrote: post #85

Earlier quoted context omitted.

The bank isn't creating that money. When you deposit $1000 in a bank account, you lose that $1000 and gain 1000 FunnyMonies instead. The bank can then turn around and give that $1000 to someone else. At the end of the day, there's only $1000 running around. What makes it look different is that we treat 1000 FunnyMonies as if it were $1000. So instead of saying "there's $1000 and 1000 FunnyMonies" we say "there's $200…

Absolutely not. The bank can lend those 1000$ to several people. I think it can lend it up to 10 times the money it has in its vault (not sure about the exact amount)

You are correct, it's called "fractional reserve banking". It's not a standard 'x10' though, since it's based on rules from federal banks etc.

Re: Bitcoin is none of the things it was supposed to be

#122

Post by Dylan16807 »

cdancette wrote: post #119
jcranmer wrote: post #85

Earlier quoted context omitted.

The bank isn't creating that money. When you deposit $1000 in a bank account, you lose that $1000 and gain 1000 FunnyMonies instead. The bank can then turn around and give that $1000 to someone else. At the end of the day, there's only $1000 running around. What makes it look different is that we treat 1000 FunnyMonies as if it were $1000. So instead of saying "there's $1000 and 1000 FunnyMonies" we say "there's $200…

Absolutely not. The bank can lend those 1000$ to several people. I think it can lend it up to 10 times the money it has in its vault (not sure about the exact amount)

Let's be careful about what scenario we're talking about.

> You can't make 1000$ appear on my bank account and say " you now have a debt of 1000$ to me". You need to give me physical money. But bank can create this money they don't have.

This scenario doesn't involve real money at all. It's just two IOUs in opposite directions. You and I could make such an agreement trivially.

> I think it can lend it up to 10 times the money it has in its vault (not sure about the exact amount)

So this involves real money. But it's not a special bank power. You can loan a friend some cash, which they give to you for safekeeping. Then you can loan another friend the same physical dollars, which they also give to you for safekeeping. Then another, and another...

Now you have $10k in cash deposits even though there's only $1k in physical cash.

The only reason you can't do it in practice is that nobody wants to give you their money for safekeeping. You don't lack the ability to multiply money. You lack anyone handing over money to do it on.

Re: Bitcoin is none of the things it was supposed to be

#123

Post by mirimir »

Retra wrote: post #118
mirimir wrote: post #74

Earlier quoted context omitted.

I don't get how there's much anonymity with gold. I mean, you need to ship it.

The person shipping it doesn't need to know who the sending or receiving parties are, just where the pickup and drop-off are.

So you would ship $10 million gold with such a scheme?

Re: Bitcoin is none of the things it was supposed to be

#124

Post by acchow »

Rebelgecko wrote: post #115
acchow wrote: post #114

Earlier quoted context omitted.

Why not? The cost you pay is proportional with your transaction size in bytes, not the amount of bitcoins you're sending. So it depends on how many inputs and outputs you're using, not the quantity you're moving.

The cost you pay isn't just dependent on how many bytes you want to send. Each block maxes out at 1MB and there's only 144 blocks a day. If you want your transaction to be confirmed, you have to outbid everyone else who wants their transaction to happen (as long as there's more than 7 transactions / sec). I don't think it is doable to try to do a transaction with a $3 fee, you need something like $20 worth of BTC to…

It only started skyrocketing this week. Last week average tx fee was about $6-7. You can see the historical averages at

https://bitinfocharts.com/comparison/bitcoin-transactionfees...

Re: Bitcoin is none of the things it was supposed to be

#125

Post by max_ »

the_gastropod wrote: post #104
lend000 wrote: post #89

Earlier quoted context omitted.

For a celebrated economist, Krugman has a poor grasp of certain facets of economics. It's probably a subconscious way of rectifying his political views, which many of us are guilty of. In this case, he does not understand how Bitcoin can be a store of value, because it is not backed by a government. How come gold or any other commodity has value? Value it what the market decides, not the government. He obviously did…

How are immutability and “full control of funds” intrinsically valuable?

That's like asking why laws firms & and security agencies exist.

Re: Bitcoin is none of the things it was supposed to be

#126

Post by the_gastropod »

max_ wrote: post #125
the_gastropod wrote: post #104

Earlier quoted context omitted.

How are immutability and “full control of funds” intrinsically valuable?

That's like asking why laws firms & and security agencies exist.

Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value, regardless of these neat features.

Re: Bitcoin is none of the things it was supposed to be

#127

Post by lend000 »

the_gastropod wrote: post #126
max_ wrote: post #125

Earlier quoted context omitted.

That's like asking why laws firms & and security agencies exist.

Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value , regardless of these neat features.

> Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value, regardless of these neat features.

I don't think you understand the definition of intrinsic value -- it has nothing to do with being physical:

https://www.investopedia.com/terms/i/intrinsicvalue.asp

Key quote: "The intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

Re: Bitcoin is none of the things it was supposed to be

#128

Post by the_gastropod »

lend000 wrote: post #127
the_gastropod wrote: post #126

Earlier quoted context omitted.

Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value , regardless of these neat features.

> Intrinsic value has a well-understood meaning in economics. Bitcoin, like any currency, has no intrinsic value, regardless of these neat features. I don't think you understand the definition of intrinsic value -- it has nothing to do with being physical: https://www.investopedia.com/terms/i/intrinsicvalue.asp Key quote: "The intrinsic value is the actual value of a company or an asset based on an underlying percept…

Where did I imply intrinsic value requires physical presence? Businesses produce cash flow, and therefore ownership stakes (stocks) have intrinsic value. Gold is used in manufacturing and has an intrinsic value (lower than its traded value). Bitcoin has 0 intrinsic value. This is not a slight against Bitcoin, it's just a property of most currencies. Bitcoin is no exception.

A good thought experiment for whether something has intrinsic value is: would still be useful if nobody else on the planet wanted it? A share in a business would continue paying out dividends, and would absolutely be useful. A dollar bill would be useless (especially if it's an electronic dollar). A bitcoin would also be absolutely useless.

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