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What Is a Bitcoin, Really?

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Re: What Is a Bitcoin, Really?

#31

Post by nickpinkston »

berns wrote: post #24
nickpinkston wrote: post #21

Earlier quoted context omitted.

Intrinsic or not isn't really the question - it's not really a binary. I'd rather have bitcoin than Zimbabwe's fiat currency. Taxation definitely gives legitimacy, but so does the ability to pay for things anonymously. If enough people are willing to take a currency, than it gain value - period. The gov't wanting it in taxes is just a really big provider of liquidity providing those network effects.

It's not a question of legitimacy, isn't about demand. Currency is a token. You need tokens to play the game. The difference with taxes is that you don't choose to participate. You must play, so there is always demand for tokens.

Yea, but demand isn't all created equal right? I'm trying to capture more than raw demand - unless we're just defining terms differently (which I suspect)

Re: What Is a Bitcoin, Really?

#32

Post by gaelow »

A bitcoin is a commodity. A small piece of a complicated crypto system you can buy or decipher or even trade for goods (in very few and restricted cases) and has practically no use apart from storing it in the hope to get a benefit in the near future by selling it at a higher price. Have you got an old VCR? Well, a bitcoin is just like that, or it will be soon (Only you can't burn a bitcoin in the hope to get some heat when your bitcoin acquires absolutely no value whatsoever but, then again, you may not want to burn a VCR due to toxic fumes and such...)

Some talk about decentralized currency, anonymous payments, money laundry... Shenanigans. All shenanigans.

Re: What Is a Bitcoin, Really?

#33

Post by SilasX »

mbreese wrote: post #28
richardwhiuk wrote: post #17

Earlier quoted context omitted.

Fiat currencies have intrinsic value due to taxation.

It's not just the taxation (which is true), it's the fact that they are backed by a particular entity. In the case of USD, it's the United States government. Dollars may not be "backed" by anything tangible, but they are accepted because the US is (largely) a trusted entity. That's what makes USD useful to people internationally. Bitcoin doesn't have the advantages of having a government backing it, but some would pr…

Considering how many trillion definitions people may mean when they say a currency is "backed by" something, I don't think your explanation is an improvement.

For that reason, I recommend listing the specific things that make the USD valued: in this case, the need to pay USD in taxes, and a very wealthy entity (US government) prefers to trade in that currency, or whatever specific thing you mean with "backed by" in that statement.

Re: What Is a Bitcoin, Really?

#34

Post by rcxdude »

justinreeves wrote: post #19
sirsar wrote: post #12

Earlier quoted context omitted.

> But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. It's not common yet, but I have in fact saved money by buying with bitcoins, because the merchant passed on some of the savings. > Isn't it just easier to buy things with Dollars? Sure, if you're allowed to, and you have that preference, why not? Bitcoin can faci…

>> What happens when the value of a coin is less than the mining costs or ledger maintenance? > There are transaction fees that go to the block miner. The issue here is that they go to the person who mined the block originally, but they aren't passed on to those who are simply running the client to maintain the ledger. With the increased difficulty in mining, it's very unlikely for anyone without a large investment i…

The miners are the ones who are maintaining the ledger. People just running the client and downloading the full blockchain are basically just duplicating the data (or using it to verify the full history for themselves), and maybe providing some bandwidth to others who want to do the same thing, they don't contribute to the transactions in any way.

Re: What Is a Bitcoin, Really?

#35

Post by diminoten »

I became familiar with what Bitcoin actually was via an article posted here about 7 or 8 months ago. It was a very long article, but it started from zero assumptions and worked through designing a crypto currency, bringing up each problem and then explaining how Bitcoin solves that problem.

I wish I could supply a link to it - maybe someone else has the article?

Re: What Is a Bitcoin, Really?

#36

Post by fladells »

diminoten wrote: post #35

I became familiar with what Bitcoin actually was via an article posted here about 7 or 8 months ago. It was a very long article, but it started from zero assumptions and worked through designing a crypto currency, bringing up each problem and then explaining how Bitcoin solves that problem. I wish I could supply a link to it - maybe someone else has the article?

You probably mean this one:

https://www.igvita.com/2014/05/05/minimum-viable-block-chain...

If so, I agree it's a great intro to the topic.

Edit: Nvm that article is only from 3 months ago.

Re: What Is a Bitcoin, Really?

#37

Post by the_decider »

ap22213 wrote: post #7

I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I can maybe see where it'd be useful in minimizing electronic transaction costs. But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. And, I guess I…

According to the labor theory of value, the value of anything is derived from the amount of labor required to produce or obtain it. http://en.wikipedia.org/wiki/Labour_theory_of_value. Thus, the value of gold is derived from the amount of labor required to dig it from the ground. Analogously, the value of Bitcoin is derived from the amount of labor that's required to build, run, and sustain a crypto-mining apparatus (definitely not an easy task to do). There, Bitcoin has value! In fact, its source of value easier to comprehend than that of the dollar, which seems to appear out of nowhere.

Re: What Is a Bitcoin, Really?

#39

Post by autokad »

gnopgnip wrote: post #9
ap22213 wrote: post #7

I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I can maybe see where it'd be useful in minimizing electronic transaction costs. But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. And, I guess I…

The average transaction cost is around $40 right now. You have to consider that each block mines coins, and the miners are getting those at the cost of everyone else. A decentralized system will be more expensive than a centralized one. An bitcoin transaction fee is going to be about 40 cents, plus $40 per transaction for the block reward. The value of bitcoin is that you can trade resources for trust. With tradition…

You're bank just cant 0 out your account. and if your bank gets robbed or goes out of business, you still have your money. not the same for a bitcoin 'bank' as we have seen. they even resorted to telling clients to put their keys on paper, funny that

Re: What Is a Bitcoin, Really?

#40

Post by ericecook »

ap22213 wrote: post #7

I am kind of embarrassed to admit that after all these years, I still don't understand Bitcoin. Not the underlying software and algorithms - but the concept, the system. I can maybe see where it'd be useful in minimizing electronic transaction costs. But, most transaction costs (credit card fees) that I pay are already rolled into the price of things, so I don't benefit by purchasing them with Bitcoin. And, I guess I…

I would argue that most of the perceived value right now is speculative. The actual benefits over using USD in transactions is marginal, for most use cases.

IMO, the speculation comes from the enormous potential of the idea. What is something you can do with an electronic currency, not tied to a single government, which has a great deal of value to the average person?

I don't know the answer to that question, but I see most altcoins as people trying to crack this nut. It seems likely to me that someone will find a use, partly just because the cost of attempting it is quite low.

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