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1 bitcoin worth more than dollar

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Re: 1 bitcoin worth more than dollar

#41

Post by jackowayed »

akkartik wrote: post #37
jackowayed wrote: post #14

Earlier quoted context omitted.

The idea is that it's not under any entity's control, and the amount of currency grows in a predictable (and decreasing) way. This should prevent the crazy inflation we've seen occur with normal currency where the government can always just print more.

Why does the number of bitcoins in circulation converge to an asymptote?

Because every few years (4, I think), the number of bitcoins in each "block" (what you generate) is halved. So right now you get 50 BTC when you generate a block. In a few years it'll be 25. Then 12.5. Etc. In a very long time, they'll round from 10^-8 down to 0, but generating a block will still get you transaction fees from the transactions that occurred since the last block generated.

Re: 1 bitcoin worth more than dollar

#42

Post by 0x6763 »

hristov wrote: post #34

Wow, I just learned about bitcoins and I have to say they are very clever. Their brilliance is in that they play to the urge to collect in humans. You run the software and makes bitcoins for you. Almost like earning money in your sleep. And of course once you have "earned" these bitcoins by installing the software you have a psychological inclination to assign actual value to them. Of course like most things academic…

All I did was download the client and run it. It "just worked" for me without doing any special on either Linux or Windows (XP). This was with the current version 0.3.19.

Re: 1 bitcoin worth more than dollar

#43

Post by po »

hippich wrote: post #35
jackowayed wrote: post #27

Earlier quoted context omitted.

You haven't destroyed part of the economy. You've just made everyone else's bitcoins worth a little bit more.

plus - there is slight chance someone will generate same private/public key combo and suddenly "find" "lost" coins =)

Except bitcoin has no way of marking a coin as "lost" so if you did generate that combo, everyone would be in agreement that it already belongs to a lost wallet.

Re: 1 bitcoin worth more than dollar

#44

Post by po »

jerf wrote: post #31
Charuru wrote: post #12

Earlier quoted context omitted.

OK, I understand how they're created and how many there are. But why?

Bitcoins are a creation by some who don't understand what a currency is. Bitcoins back to nothing and are only useful to the extent that you can fool another ideologue into taking them; for as long as they've been around, it is far, far easier to obtain goods or services with Warcraft gold or Microsoft Points, which aren't even trying to be universal currencies. (Just yesterday I was on a blog that cataloged the reas…

Bitcoins provide an interesting technology platform around which to build a currency, but trying to use them directly as currency is only slightly different than using Monopoly money, and the differences aren't relevant.

The differences are relevant. Monopoly money makes a perfectly acceptable currency for the game of monopoly. It would make for a currency between neighboring households as well except for the fact that it is easy to copy and therefore impossible to trust.

In this way you can say bitcoin is backed by the mathematical certainty that hashing functions are hard to reverse.

Re: 1 bitcoin worth more than dollar

#45

Post by svrocks »

I really like the idea, but I have a question about how transaction growth can be sustained once all 21MM bitcoins have been generated. In order to support borrowing/lending IMO you need an increasing supply of currency. Otherwise where will the interest on debt come from?

The only other type of non-inflating "currency system" I can think of is the market for collectibles (baseball cards, limited edition artwork, etc.). But collectibles have intrinsic value while bitcoins only have value inasmuch as they are useful for transactions.

So, TLDR I am concerned about the long-term viability of bitcoins

Re: 1 bitcoin worth more than dollar

#46

Post by kiba »

hristov wrote: post #34

Wow, I just learned about bitcoins and I have to say they are very clever. Their brilliance is in that they play to the urge to collect in humans. You run the software and makes bitcoins for you. Almost like earning money in your sleep. And of course once you have "earned" these bitcoins by installing the software you have a psychological inclination to assign actual value to them. Of course like most things academic…

I don't mine bitcoin. I just earn them as a freelancer.

Re: 1 bitcoin worth more than dollar

#47

Post by 0x6763 »

arohner wrote: post #28

Most of the comments here are "why bitcoin?" I'll ask again, but in a form that I hope is slightly more detailed: Gold was valuable before it started being used as money. It started being used as money because it has several valuable properties: it's rare, it's portable, it's fungible. Why would someone start using bitcoin? Who will accept a bitcoin in trade, and why is that bitcoin more valuable to them than $1?

It has almost all of the same characteristics of gold, though in some ways more convenient. Bitcoins are rare, portable, fungible, divisible, durable, etc. The system is fairly anonymous, completely decentralized, completely free market. And for many, it's more accessible than gold/silver. Bitcoins have increased in value and are expected to continue increasing in value for some time, unlike government fiat currencies.

If you look at some of the charts from the trading websites, you can see they weren't all that valuable right away. But as more people learned of bitcoin and the way the system is designed with it's anonymity and security, as well as it's hard money qualities, it started to catch on.

A single U.S. penny used to be able to buy lots of bitcoins. At this moment, not even $1 USD can buy a whole bitcoin. It's generally expected that it will take many USDs to buy a single bitcoin before too long.

Re: 1 bitcoin worth more than dollar

#48

Post by 0x6763 »

s0urceror wrote: post #25
sgornick wrote: post #2

For those who are new to Bitcoin and would like to learn more: Bitcoin FAQ - https://en.bitcoin.it/wiki/FAQ Bitcoin Wiki - https://en.bitcoin.it/wiki/Main_Page How Bitcoin Works - https://en.bitcoin.it/wiki/How_bitcoin_works Installing Bitcoin - https://en.bitcoin.it/wiki/Getting_started HowTo Mining Bitcoin: Fedora 14: http://bit.ly/fb54ye and Ubuntu: http://bit.ly/ewVzhu The Bitcoin Faucet (free bitcoins) - https:/…

All I wonder is, what happens if you delete a portion of the wallets in existence. Given that the supply of bitcoins is limited, does that mean you've essentially permanently destroyed part of the bitcoin economy?

The only part of the economy that's "destroyed" is access to some of the bitcoins. All the goods and services that were there before the wallet is destroyed are still there after the wallet is destroyed. The effects of a destroyed wallet are limited to the owner of the wallet and their plans for the money...A good reason to learn how to backup your wallet!!

Re: 1 bitcoin worth more than dollar

#49

Post by svrocks »

svrocks wrote: post #45

I really like the idea, but I have a question about how transaction growth can be sustained once all 21MM bitcoins have been generated. In order to support borrowing/lending IMO you need an increasing supply of currency. Otherwise where will the interest on debt come from? The only other type of non-inflating "currency system" I can think of is the market for collectibles (baseball cards, limited edition artwork, etc…

To try to answer my own question, I believe the asymptotically decreasing inflation in bitcoins is compensated by its increase in value against traditional inflationary currencies.

For example, on the surface it looks like a bad deal to lend someone bitcoins when almost all bitcoins have been generated. You will most likely receive a very low interest rate. Why wouldn't you just convert to some other currency (say USD), lend money out in that currency, and capture a higher interest rate? The answer is that because since bitcoin inflation will be nonexistent by that time, its exchange value against USD would increase by precisely the amount of US inflation.

Re: 1 bitcoin worth more than dollar

#50

Post by noagendamarket »

johnny22 wrote: post #38
jackowayed wrote: post #27

Earlier quoted context omitted.

You haven't destroyed part of the economy. You've just made everyone else's bitcoins worth a little bit more.

until you destroy 99% of all the wallets and then you can't exchange them for anything useful. I'll wait for bitcoin 2.0 :)

There already is bitcoin 2.0 tl;dr testnet
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