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Bitcoin's Golden Future

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Re: Bitcoin's Golden Future

#31

Post by sbenitoj »

"There are two main reasons to doubt bitcoin's viability as an investment....Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio."

There is no such thing as an objective theory of value. ALL value is subjective (meaning each person values the same thing differently). The more you learn about what money is, the more you realize that there are qualities of money that make it valuable/appealing to be used AS money (e.g. fungibility, low to no inflation, difficult to counterfeit, scarce, easy to verify authenticity). This is why things like sand and hair make for poor money, and this is why the free market essentially chose gold as money before governments co-opted, confiscated, and controlled it. Gold would most likely be the primary money today if people had been free to transact using gold as money [0].

Governments stopped the use of gold as money because they can use fiat currencies to fund the operation of the government (by increasing the supply of fiat and buying their own debt with it), reducing the purchasing power of their own currency and acting as a tax on savers. Bitcoin is a serious threat to that because unlike gold, it is orders of magnitude more difficult for governments to confiscate and control.

[0] https://en.m.wikipedia.org/wiki/Liberty_dollar_(private_curr...

EDIT: Spelling

Re: Bitcoin's Golden Future

#32

Post by imaginenore »

kpommerenke wrote: post #23
imaginenore wrote: post #5

"Digital currencies have no fundamental value" That argument never made any sense to me. What's the fundamental value of $1? People assign value to all things based on how desirable they are (the demand). There are rare exceptions, like when a government ties their national currency to something like the dollar, but that immediately creates a black market, where it trades for its real value, and because of that, the…

The fundamental value of $1 is $1, since it allows you to pay off $1 of your tax liability to the U.S. government.

Ok, then the fundamental value of 1BTC is 1BTC, since it allows you to pay of 1BTC of any liability to whoever accepts Bitcoin.

Re: Bitcoin's Golden Future

#33

Post by nullc »

delegate wrote: post #6

Bitcoin and other crypto require a well functioning internet infrastructure, otherwise it's just data on a hard-drive. Disconnect a country from the Internet (or filter the traffic) and you're forking the chain. Spend on both networks by buying other (unfiltered) crypto. There are states (even large ISPs) that can do that. Also, the first thing to go in case of global conflict is the global Internet. Countries will t…

> Bitcoin and other crypto require a well functioning internet infrastructure, otherwise it's just data on a hard-drive. Disconnect a country from the Internet (or filter the traffic) and you're forking the chain.

Less so than in the past: https://blockstream.com/satellite/menu/

> I guess my point is: be careful, this is still very much experimental, don't invest everything you have in them.

Well, that much is obvious.

Re: Bitcoin's Golden Future

#34

Post by ballenf »

criddell wrote: post #15
_lbaq wrote: post #3

Earlier quoted context omitted.

Just like Facebook, the usurper have to do something allot better to drag people away.

I think it's easier to unseat Bitcoin than Facebook. With a cyrpto currency, it seems like all you would have to do is make mining more profitable on your currency than on Bitcoins.

It's the same problem as with FB. To get a mass exodus from BTC you need to have a mass exodus in advance in order to get value in the new currency. Everyone uses FB/BTC because everyone uses FB/BTC.

The advice that the usurper needs to be 10x better to win is applicable here, imo. It might even be 100x given the bigger stakes and greater risk aversion of the parties.

Re: Bitcoin's Golden Future

#35

Post by imaginenore »

rm_-rf_slash wrote: post #12
imaginenore wrote: post #5

"Digital currencies have no fundamental value" That argument never made any sense to me. What's the fundamental value of $1? People assign value to all things based on how desirable they are (the demand). There are rare exceptions, like when a government ties their national currency to something like the dollar, but that immediately creates a black market, where it trades for its real value, and because of that, the…

The fundamental value of $1 is the full faith and credit of the United States Government and the economy of America. The fundamental value of cryptocurrencies is a shared agreement of value amongst investors. I imagine some snotty 14-year old would argue that there is no fundamental distinction between the two but that's not being economically serious.

I'd argue more, according to your definitions, the "fundamental value" of the dollar (which you conveniently didn't specify) relies on violence (as in, pay up of guys with guns will put you in prison). Whereas the fundamental value of Bitcoin is determined by the free market.

It's quite clear to me which one is a more moral system.

Again, based on your own definitions.

Re: Bitcoin's Golden Future

#36

Post by gldalmaso »

delegate wrote: post #6

Bitcoin and other crypto require a well functioning internet infrastructure, otherwise it's just data on a hard-drive. Disconnect a country from the Internet (or filter the traffic) and you're forking the chain. Spend on both networks by buying other (unfiltered) crypto. There are states (even large ISPs) that can do that. Also, the first thing to go in case of global conflict is the global Internet. Countries will t…

I think you have a valid point, but, ultimately aren't all or most trades digital today?

Are countries exchanging actual loads of gold and/or cash around? If the answer is no, then isn't it all just data on a hard-drive?

In that case damaging internet links will have the same effect all around, though information can probably still go in/out in different ways with some effort. Is there some aspect of crypto currency that makes it different (honest question)?

Re: Bitcoin's Golden Future

#37

Post by ballenf »

sbenitoj wrote: post #31

"There are two main reasons to doubt bitcoin's viability as an investment....Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio." There is no such thing as an objective theory of value. ALL value is subjective (meaning each person values the same thing differently). The more you learn about what money is, the more you realize that there are qualities of money…

The article does a surprisingly good job of addressing this issue as well:

> What, though, is the value of a digital currency?

> It's a fair question, but one that could equally be leveled at gold. Since Richard Nixon ended the fixed $35 an ounce convertibility of gold in 1971, its value has risen at times (the 1970s, the 2000s) and fallen at others. The best argument to justify investing in gold these days is not that it's an eternal "store of value" but that its very weirdness makes it special: According to modern portfolio theory, you should buy the shiny stuff not for its superior investment returns, but because it doesn't correlate much to other asset classes such as stocks, bonds and commodities.

One can argue about the validity of the "gold is equally worthless" argument, but I was just impressed that the article didn't shy away from these hard questions.

Re: Bitcoin's Golden Future

#38

Post by smokeyj »

delegate wrote: post #6

Bitcoin and other crypto require a well functioning internet infrastructure, otherwise it's just data on a hard-drive. Disconnect a country from the Internet (or filter the traffic) and you're forking the chain. Spend on both networks by buying other (unfiltered) crypto. There are states (even large ISPs) that can do that. Also, the first thing to go in case of global conflict is the global Internet. Countries will t…

Bitcoin is global. If you want to be sure your transaction is on the longest chain you can just wait for more confirmations. You could even receive confirmations over satellite now.

> I guess my point is: be careful, this is still very much experimental, don't invest everything you have in them.

Also experimental: Central banking and fiat currency. The lifetime of these non-crypto backed coins isn't that great either. Also they tend to be devalued in times of war. Not sure I'd want to be holding onto paper money.

Re: Bitcoin's Golden Future

#39

Post by kuprel »

iainmerrick wrote: post #29
1ba9115454 wrote: post #17

Earlier quoted context omitted.

There are plenty of coins already that are technically better than Bitcoin. It's just that Bitcoin has the network effect. So perhaps one day a new coin will overtake Bitcoin, but my guess is that the coin will need a very distinct advanatge to gain traction.

There are plenty of coins already that are technically better than Bitcoin. Is there anything that fixes the wasteful mining process? To me that seems like a serious flaw in Bitcoin.

Iota uses a "tangle" instead of a block chain

Re: Bitcoin's Golden Future

#40

Post by _xnmw »

sbenitoj wrote: post #31

"There are two main reasons to doubt bitcoin's viability as an investment....Another is more philosophical: Digital currencies have no fundamental value, so have no place in a portfolio." There is no such thing as an objective theory of value. ALL value is subjective (meaning each person values the same thing differently). The more you learn about what money is, the more you realize that there are qualities of money…

>Bitcoin is a serious threat to that because unlike gold, it is orders of magnitude more difficult for governments to confiscate and control.

Nonsense. Nothing stops China from seizing all of the largest bitcoin mining operations tomorrow, and building some additional miners to conduct a 51% attack. They would then effectively control the network. Bitcoin is actually easier to control than fiat currency or gold because it requires network access.

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