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Why Bitcoin Matters

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Re: Why Bitcoin Matters

#231

Post by nroose »

minimax wrote: post #16

Bitcoin is the first Internet-wide payment system where transactions either happen with no fees or very low fees (down to fractions of pennies). Existing payment systems charge fees of around 2 percent to three percent As long as consumers are paid in their local currency and vendors pay their employees, their taxes, and their other costs in local currency, then bitcoin as a payment technology has similar costs as cr…

I guess I am missing something. How do you get your money to the exchange and how do you get it back? If you are buying 1 bitcoin for $830, how do you get your $830 to the exchange? Do you give them your credit card number? Your paypal account? Don't they then have to pay the 2-3% to the credit card processor? And then I guess if you sell one bitcoin, how do they get your $825 to you? Do they send you a check? Do they wire it to you? Do they pay the costs for that transfer back to you? Or do you just assume you will keep the bitcoin and use it to buy something? And then how are we calculating the value of it vs. $? Do merchants use the same exchange rate or do they get to decide on the fly what exchange rate they are going to use? How do we know we are not losing at least 2% on that?

Re: Why Bitcoin Matters

#232

Post by timr »

brc wrote: post #221
timr wrote: post #146

Earlier quoted context omitted.

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.

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

No, it is not. You are falling prey to a rather politicized definition of the term. All non-commodity currencies are fiat money, but not all fiat currencies are backed by a government.

The word "fiat" is Latin for "let it be done" or "it shall be". It implies only that something happens by decree. The party making the decree does not have to be a government, or even a person of authority.

Re: Why Bitcoin Matters

#233

Post by timr »

argumentum wrote: post #197
timr wrote: post #146

Earlier quoted context omitted.

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)…

Did you mean "bitcoin" instead of gold here?: .. and a distributed fiat currency (like gold) > It has value only to the extent that you say it has value. I think there are a few definition of "fiat"* (one of which, as you mentioned, is lacking "intrinsic value"). I agree though that the word "fiat" adds only ambiguity to this discussion. * http://en.wikipedia.org/wiki/Fiat_money

Yes, that's what I meant. Bah.

Re: Why Bitcoin Matters

#234

Post by [deleted] »

mitochondrion wrote: post #184
timr wrote: post #146

Earlier quoted context omitted.

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)…

Well...actually, a fiat currency is one declared and issued by the state as legal tender. It's typically not redeemable for anything else, as a gold-backed one (USD from 1944 to Nixon) is. And really, a currency like gold is valuable because it has a fixed supply and is universally accepted. Bitcoin has a fixed supply and is rapidly moving towards universal acceptance. It's totally different when a government chooses…

[deleted]

Re: Why Bitcoin Matters

#235

Post by drinkzima »

vasilipupkin wrote: post #43
sskates wrote: post #35

Earlier quoted context omitted.

On any payment network the fees are a result of the risks of credit card fraud. Card processors can't cut fees without losing money. It's an efficient market as it is.

Wouldn't then all the fraud risks move to those businesses which take consumer credit cards and exchange them for bitcoins. So why would the aggregate fraud cost in the system be any lower ? Also, I seriously doubt that 2.5% fee is all cost. Visa/Mastercard, etc. are massively profitable - they have plenty of room to cut those fees

Visa processed ~4.2T of payments last year (page 32) and earned ~5B of net income on ~11.7B of revenue (page 29). By my calculations that is ~0.1% off the top of the transaction net of costs to do business. Not much.

All from the most recent 10K: http://investor.visa.com/phoenix.zhtml?c=215693&p=irol-SECTe...

Re: Why Bitcoin Matters

#236

Post by jude- »

lectrick wrote: post #203

The best lesson Bitcoin taught me is that the currencies we grew up with are just a shared illusion.

How so? Currencies are only an abstraction layer on top of goods and services. Instead of directly trading my goods and services for yours, we use a currency--a common "interface" for doing so. The currency doesn't have intrinsic value; the reason it has value at all is because you can exchange it for a wide variety of goods and services. That's why people want dollars, but not Monopoly money.

Re: Why Bitcoin Matters

#237

Post by lostsock »

deegles wrote: post #192

Aren't transaction costs being "paid for" by all those people running mining rigs? All that processing power used to confirm your transaction cost someone real money. Transaction fees ostensibly pay for this, but I haven't seen anyone do the math on how much to charge to make transactions break even. As the difficulty gets higher and higher, miners will have to rely on these fees to make any profit. As a side note, i…

It's the same job. The way that transactions are processed is that they are included in the block that is mined. At the moment there is an extra 25 BTC reward for mining a block in addition to the transaction fees of those transactions you have included but over time this extra reward will diminish to 0.

Re: Why Bitcoin Matters

#238

Post by timr »

gojomo wrote: post #76
tptacek wrote: post #7

Earlier quoted context omitted.

"Fiat money" is as I've seen it used a political message, used most often to assumptively introduce the idea that government-backed currency is suspect. But fiat currencies are simply currencies that aren't backed by collateral. To the extent that you believe it's a currency and not a tradable instrument that happens to have interesting barter and liquidity characteristics (right now), Bitcoin is a fiat currency as w…

'Fiat money' in derivation and use means something more and somewhat different than simply 'unbacked by other collateral'. For example, the word 'fiat' alludes to a decree – as in a legislative or military 'fiat' – that the money is valuable and should (or must) be used. It so happens that the biggest implementation change between plain 'money' (which for a while implied collateral backing) to modern 'fiat money' was…

"'Fiat money' in derivation and use means something more and somewhat different than simply 'unbacked by other collateral'."

No, it really doesn't. The "non-governmental money" meaning is the colloquial use that has evolved in the various goldbug/btc nutter forums (I cringe every time I see people flinging around the phrase "convert to fiat" as if it meant something), but "fiat money" means exactly what tpatcek says it does: a money that is not backed by a commodity.

"For example, the word 'fiat' alludes to a decree – as in a legislative or military 'fiat' – that the money is valuable and should (or must) be used."

The word "fiat" is not a military allusion. It is Latin. It means "let it be done", or "it shall be". It is widely used in academic literature (not just economics) to denote any situation that arises by decree. The use is quite old, and it is understood that the entity making the decree does not have to be special or powerful.

This is a case where some people read some economics literature and misunderstood the academic jargon, then started to abuse it.

Re: Why Bitcoin Matters

#239

Post by CamperBob2 »

kolev wrote: post #111
drcode wrote: post #96

Earlier quoted context omitted.

Please let me know when web programming finally gets solved more elegantly, without the anachronistic ugliness of js/css/html.

Many have tried, but people keep using what they are used to. Same with Bitcoin. People will keep using their convenient credit cards regardless if they are a superior or a subpar technology. Until Bitcoin diehards get this simple fact and quit spreading delusions that Bitcoin is replacing cash, credit cards, and Western Union, people will not take them seriously.

Cash and credit cards, no, probably not.

But if I were Western Union I'd be shitting bricks.

Re: Why Bitcoin Matters

#240

Post by haberman »

ftwinnovations wrote: post #227
atmosx wrote: post #98

Earlier quoted context omitted.

> [...] 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 do not hesitate to forecast that atomic batteries will be commonplace long before 1980. - David Sarnoff, chairman of the Radio Corporation of America, 1955

Machines will be capable, within twenty years, of doing any work a man can do. - Nobel Prize winner Herbert Simon, 1956

By the turn of this century, we will live in a paperless society. - Roger Smith, chairman of General Motors, 1986

I believe OS/2 is destined to be the most important operating system, and possibly program, of all time. - Bill Gates, Foreword to the OS/2 Programmer's Guide, 1987

Segway will be to the car what the car was to the horse and buggy. - Dean Kamen, December 2, 2001

Also see: http://rationalwiki.org/wiki/Galileo_gambit

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