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Bitcoins Are Digital Collectibles, Not Real Money

forbes.com

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Re: Bitcoins Are Digital Collectibles, Not Real Money

#31

Post by weavejester »

Many comparisons have been made between fiat currency and Bitcoins, but to my mind that's wholly missing the point.

The Bitcoin protocol represents a way of digitally transferring a scarce resource without the need for a central authority. I suspect this is going to be a big deal eventually, because when we created a protocol for digitally transferring information without the need for a central authority, we wound up with the Internet.

Comparing Bitcoin to a fiat currency like the dollar is a little like comparing TCP/IP to the English language.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#32

Post by moheeb »

Houshalter wrote: post #27

Of course bitcoins value is volatile, it's relatively new and being adopted and accepted. I blame the people speculating on it like crazy without any idea what the fundamental value actually is (and to be fair it's impossible to know until it stabilizes and the bitcoin economy becomes established.) But this is only temporary, a necessary evil when a currency is starting out. However it is arguably a good thing though…

...all the attention and people buying it hoping it will increase in value is exposing a lot of people to it that otherwise wouldn't have been. It's helping it grow much faster.

I feel like the same thing happened with Beanie Babies. Look where they are now. Is that a good thing?

Re: Bitcoins Are Digital Collectibles, Not Real Money

#33

Post by Jtsummers »

hencq wrote: post #26
Jtsummers wrote: post #24

Earlier quoted context omitted.

"Mining" is really accounting. Miners add new blocks to the blockchain which provides for verification of transactions and the value of individual addresses. So providing a reward to mining (initially) was a means of providing a reward for performing an essential function for the bitcoin economy. Now that more bitcoins are in the wild it's possible to collect transaction fees, the second method by which miners can pr…

Ah interesting, that makes sense. Can miners set their own transaction fees? And related if I want to make a bitcoin transaction can I (or my software) choose which miners to use to verify those transactions? Or are those fees determined by the protocol itself?

My understanding is that when conducting bitcoin transactions you can establish the fee you're willing to pay, the miners can optionally prioritize based on those fees. Theoretically it's possible that you'd have a transaction never verified or verified after a great period of time in the blockchain because your fee was set too low.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#34

Post by mpyne »

Houshalter wrote: post #27

Of course bitcoins value is volatile, it's relatively new and being adopted and accepted. I blame the people speculating on it like crazy without any idea what the fundamental value actually is (and to be fair it's impossible to know until it stabilizes and the bitcoin economy becomes established.) But this is only temporary, a necessary evil when a currency is starting out. However it is arguably a good thing though…

> Because if you had a choice what would you store your money in?

That's actually noted as one of the problems with a deflationary economy. People tend to store their capital instead of spending it or investing it, which puts a hamper on economic growth (or even maintaining the economic status quo). If your job depends on receiving income then you can appreciate why it also depends on other people spending money.

> It also insures that bitcoins can never artificially be devalued by any central organization.

Countries have actually sometimes arranged to devalue their own currency to help with the local economy by boosting exports, so in that sense it is beneficial to have a central organization in your country's control to do that. Given the ongoing economic crises in Europe I'm just not sure how good an idea it is to have economic policy so completely decoupled from currency policy.

But on the other hand that feature of Bitcoin does make it very useful as a collectible or commodity. You can "invest" in it without worrying that the Central Bank of Satoshi will make your dilute your investment tenfold or worse.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#35

Post by sageikosa »

zeteo wrote: post #23
TylerE wrote: post #14

Earlier quoted context omitted.

Bitcoin doesn't work like that. There isn't some sort of serial number assigned, or anything.

Each bitcoin has an attached chain of transactions. If it's a matter of public record that a certain address belonged to say, Stephen Colbert, then you can definitely brag that you own Colbert's bitcoin. (That he donated to the Libertarian Party or something.)

While it may be possible to value BitCoins that way, that's not the driving force behind current price tracking, any more than a 1933 double eagle or 1804 silver dollar affects the price of gold or silver.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#36

Post by mpyne »

weavejester wrote: post #31

Many comparisons have been made between fiat currency and Bitcoins, but to my mind that's wholly missing the point. The Bitcoin protocol represents a way of digitally transferring a scarce resource without the need for a central authority. I suspect this is going to be a big deal eventually, because when we created a protocol for digitally transferring information without the need for a central authority, we wound up…

I think this is actually a great way of looking at it.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#37

Post by zeteo »

weavejester wrote: post #31

Many comparisons have been made between fiat currency and Bitcoins, but to my mind that's wholly missing the point. The Bitcoin protocol represents a way of digitally transferring a scarce resource without the need for a central authority. I suspect this is going to be a big deal eventually, because when we created a protocol for digitally transferring information without the need for a central authority, we wound up…

>The Bitcoin protocol represents a way of digitally transferring a scarce resource without the need for a central authority.

Sure, but what you need is a way to exchange things without recourse to central authority. You can transfer bitcoins to the local bar, there's no way to ensure they transfer you back a drink. This is precisely why exchanges like Mt. Gox have become prominent - how else can you make sure the buyer transfers dollars to your bank account? So all you have are donations without recourse to central authority - which sounds a lot less revolutionary.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#38

Post by jondtaylor »

zeteo wrote: post #13
sageikosa wrote: post #6

Earlier quoted context omitted.

Memorabilia market prices vary by the quality and history of the piece; pieces with "richer" history fetch higher prices. BitCoin behaves more like a commodity. I expect derivative instruments based on BitCoin mining rates any day now.

The comparison is obviously to a single type of item. Say "Mauser HSc, excellent condition, provenience unknown". But there's no reason why individual bitcoins can't acquire additional value once history accrues to them. Let's say celebrity X publicly buys a bitcoin and spends it in a well-publicized event. People will probably bid extra to acquire this "famous" bitcoin afterwards.

I may be mistaken but I don't think Bitcoins (the units themselves) have an identity like that only wallets are entities. It's similar to how a celebrity would drink water and water would be worth more than the rest. Once the debit and credit occurs who is to say which coins are from what source...

Re: Bitcoins Are Digital Collectibles, Not Real Money

#39

Post by Houshalter »

moheeb wrote: post #32
Houshalter wrote: post #27

Of course bitcoins value is volatile, it's relatively new and being adopted and accepted. I blame the people speculating on it like crazy without any idea what the fundamental value actually is (and to be fair it's impossible to know until it stabilizes and the bitcoin economy becomes established.) But this is only temporary, a necessary evil when a currency is starting out. However it is arguably a good thing though…

...all the attention and people buying it hoping it will increase in value is exposing a lot of people to it that otherwise wouldn't have been. It's helping it grow much faster. I feel like the same thing happened with Beanie Babies. Look where they are now. Is that a good thing?

Bitcoins actually have a use though, as a currency. Beanie babies are only valuable because a few people want them for... well however they find value in just owning beanie babies.

Bitcoin has a networking effect. When more people use it, it becomes more valuable simply because there are more places to use it or get it. And that creates more users of it still.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#40

Post by jondtaylor »

zeteo wrote: post #23
TylerE wrote: post #14

Earlier quoted context omitted.

Bitcoin doesn't work like that. There isn't some sort of serial number assigned, or anything.

Each bitcoin has an attached chain of transactions. If it's a matter of public record that a certain address belonged to say, Stephen Colbert, then you can definitely brag that you own Colbert's bitcoin. (That he donated to the Libertarian Party or something.)

I don't think this is the case. My understanding is that wallets have transactions attached.
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