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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#221

Post by brc »

timr wrote: post #146
ye wrote: post #106

Earlier quoted context omitted.

But transfer fees and payment fees won't go away with fiat. Credit card fees eat into many businesses' profit margins, especially the ones with low margins. And that's not the only Bitcoin's advantage.

You should stop saying "with fiat", unless you mean it to include Bitcoin, which is very much a fiat currency. It has value only to the extent that you say it has value. Fiat currencies are to be contrasted with currencies that have intrinsic commodity value -- like gold, or livestock. Bitcoin has no intrinsic value. The only difference between a governmental fiat currency and a distributed fiat currency (like gold)…

A 'Fiat' currency is one which the government of a country has declared to be the official currency...by government fiat.

That does not include Bitcoin.

Gold is not a distributed fiat currency. It is just Gold. You can exchange gold for currency, or you can make payments directly with it, if the person is willing to receive them.

Re: Why Bitcoin Matters

#222

Post by School-Cotton »

maaku wrote: post #110
varjag wrote: post #87

Earlier quoted context omitted.

Proof of useless work based, to be precise: the only reason work tokens are hash computations instead of say push-ups or soap bubbles is the ease of bookkeeping. So it always puzzled me why that aspect matters.

The fact that the work is useless is essential to the security of the system. It's a proof of sacrificed opportunity. If the proof of work was actually useful and monetizable, you might be able to pay for your mining via its utility, and that would completely destroy the security assumptions underlying bitcoin.

How so?

Re: Why Bitcoin Matters

#223

Post by zik »

pyvpx wrote: post #46
ye wrote: post #36

Earlier quoted context omitted.

Yeah, you described pretty much the worst case scenario where everything goes through fiat. But once Bitcoin penetration is significant and people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away. With fiat you're stuck with the fees forever. Also your 0.5% assumption is wrong. You can place a buy ad on LocalBitcoins and actually buy…

does bitcoin have an intrinsic value? if so, what?

ITT: people who haven't looked up the definition of "intrinsic value".

https://en.wikipedia.org/wiki/Intrinsic_value_%28finance%29

Re: Why Bitcoin Matters

#224

Post by Spooky23 »

Nashhhh wrote: post #216
Spooky23 wrote: post #90

Earlier quoted context omitted.

No and no. One of the big reasons that the US moved towards central banking and eventually paper currency is stability. Any finite commodity is subject to rapid swings when supplies are constrained. In recent memory, copper, silver and electricity are all commodities whose price went crazy when either demand got wacky high, or supplies got very limited. In history, the economy was traditionally very vulnerable to eco…

This is true, but the end of your post implies that recessions have become rarer and less pronounced in a fiat system. They haven't. In other words, sure, central banks "flooded the markets with capital and blunted the impact of the crisis and avoided panic", but what system was in place that allowed the manic colossal 1995-2008 housing bubble to take place? Did it not have anything to do with central banking policie…

I think bitcoin is like any other commodity. People may indeed flock to it, but the relative stability of the current system is what makes it great -- can can predict with some level of certainty what $1 will be worth in say 10 years.

That's important because it makes longer term capitalization of things like homes possible. If the world was still using gold or BTC as currency, lending would be like it was in the gold era as well -- things like 30 year mortgages that make homes affordable would not exist.

As far as crises go, 2008 was a painful market contraction, but not a panic. Contrast an event like the Panic of 1907, when banks collapsed and many people lost life savings, mostly due to a shortage of short term cash. The nation averted disaster becuase JP Morgan happened to be in town and had enough money and clout to intervene.

In 2008, the Fed pumped money into the markets to allow banks to stay solvent. FDIC made depositors at the few failed banks whole. Thanks to the corrupt perversion of the banking regulations, the "too big to fail" banks required even more extraordinary aid. People were hurt and lost money -- but they did so because their assets lost value, not because their bank went out of business.

Our monetary system isn't perfect by far. But it's much better than the old style gold standards that BTC is reminiscent of.

Re: Why Bitcoin Matters

#225

Post by XorNot »

atmosx wrote: post #164
smtddr wrote: post #117

Earlier quoted context omitted.

This might be me being hyper-pedantic, but I'd argue that not even USD is a particularly good store of value. If you have a significant amount of money it should probably be in at least low-risk stocks or re-estate. Not just sitting in a regular savings account in a regular bank. But, I do get the point that at least the USD dollar doesn't lose/gain 50% value in a few hours by wild speculation every month.

I wasn't thinking of USD, I was thinking more about something used for a couple of millenia as a value storage, but yes sure... Compared to today's BTC even the USD seems okay.

People do not live for millennia.

Like, you do realize that no one in the history of mankind has a use for something which "stores value" for millennia right?

And that timescale is so ridiculously huge that gold, silver and everything else does inflate away. We might be a type II Kardashev civilization in 1000 years. The volume of gold available will be absurdly large by then either way.

Re: Why Bitcoin Matters

#226

Post by XorNot »

lectrick wrote: post #199
plock wrote: post #170

Earlier quoted context omitted.

>All that barrel does is stop counterfeiters and tax evaders. Neither of those things are "intrinsic value". If anything can be said to have 'intrinsic value', being free from prosecution is surely one of those things. Dollars can buy you freedom from prosecution for non-payment of taxes. That's a lot closer to 'intrinsic value' than anything bitcoin can put up.

If your argument is that I'd have to convert bitcoin to dollars in order to pay taxes, that's a nonargument. I am sure they would take Bitcoin directly if pressed. Just ask the FBI, who is now in possession of the largest bitcoin cache on the planet... I suppose you think they're just going to erase all of them because, you know, they're not "backed" by anything?

The FBI is doing what it always does - it's auctioning them off. They might sell for a $1, they might sell for $1000. But they're not being given any special status beyond "appears to be a product people buy".

If they'd seized a bunch of legal movies or video game licenses they'd also do that.

Re: Why Bitcoin Matters

#227

Post by ftwinnovations »

atmosx wrote: post #98
ye wrote: post #36

Earlier quoted context omitted.

Yeah, you described pretty much the worst case scenario where everything goes through fiat. But once Bitcoin penetration is significant and people start getting paid in Bitcoin (already happening) and accept it as payment (also already happening), all these exchange fees go away. With fiat you're stuck with the fees forever. Also your 0.5% assumption is wrong. You can place a buy ad on LocalBitcoins and actually buy…

> [...] But once Bitcoin penetration is significant [...] I think we passed that point, there is an adoption of bitcoin, but it will NEVER be used as a currency IMHO. I really hope the price stops fluctuating so we can use it as a value storage medium, but even that can be disputed.

There is no reason anyone would want a computer in their home. - Ken Olsen, 1977

I have traveled the length and breadth of this country and talked with the best people, and I can assure you that data processing is a fad that won’t last out the year. - Editor of Prentice Hall business books, 1957

There's no chance that the iPhone is going to get any significant market share. - Steve Ballmer, USA Today, April 30, 2007

I think there is a world market for maybe five computers. -- Thomas Watson, chairman of IBM, 1943

Re: Why Bitcoin Matters

#228

Post by lectrick »

brc wrote: post #219
lectrick wrote: post #200

Earlier quoted context omitted.

This is the best article/explanation I've found to explain how currencies, which have no value in themselves (like paper dollar bills), have a "fundamental value" based on the trade volume and the rarity (read: lack of counterfeitability): http://bitcoinsurvey.wordpress.com/2013/04/08/what-is-the-re... The shocking truth is that almost nothing has an "intrinsic value". But things DO have "subjective values." The cons…

The historical reasons for Gold and Silver being used as a store of value (and as a currency) are: 1) Divisibility : it is easy to divide a large amount of the metals into smaller amounts (ingots->coins) 2) Durable : as noted, it doesn't corrode. You can bury it in the ground for a thousand years, and it comes up shiny and new 3) Rarity : There isn't that much around. All the gold mined since the beginning of history…

OK, 1.48BTC/oz ;)

> but countless societies have valued it highly

I was not commenting on its value history. I was trying to convey that this value is almost entirely subjective, which goes against what one would think "intrinsic value" means. "Expected value" might be better, but that would weaken the argument against Bitcoin.

Re: Why Bitcoin Matters

#229

Post by willholloway »

untilHellbanned wrote: post #2

"Finally, I’d like to address the claim made by some critics that Bitcoin is a haven for bad behavior..." Just need more examples like Dogecoin funding the Jamaican Bobsled team[1] to keep the narrative going in the right direction. [1] http://www.theguardian.com/technology/2014/jan/20/jamaican-b...

I've become a big Dogecoin proponent. I believe that Dogecoin will add another dimension to our online experience, and open up avenues for content creators to be rewarded that did not exist before.

I'm all in.

Re: Why Bitcoin Matters

#230

Post by maaku »

School-Cotton wrote: post #222
maaku wrote: post #110

Earlier quoted context omitted.

The fact that the work is useless is essential to the security of the system. It's a proof of sacrificed opportunity. If the proof of work was actually useful and monetizable, you might be able to pay for your mining via its utility, and that would completely destroy the security assumptions underlying bitcoin.

How so?

It would cost "nothing" to mount an attack because the attack mining is profitable for other reasons.
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