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Bitcoin exchange rate reached $100 USD per BTC

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Re: Bitcoin exchange rate reached $100 USD per BTC

#441

Post by sturmeh »

spartango wrote: post #28

I worry that as Bitcoin's value rises, people are buying in not to use it as payment for services or goods, but simply as an investment vehicle. In principle, there's nothing wrong with this; currency trading is common and well-explored. The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may r…

Why not both?

I invested in a payment system of the future.

If it ends up being used, I'll have (however many I invested in) BTC to spend, which could be worth significantly more or less than I paid for them.

If it ends up being useless, I'll lose my principal.

Re: Bitcoin exchange rate reached $100 USD per BTC

#442

Post by al1x »

sturmeh wrote: post #437
wmf wrote: post #269

Earlier quoted context omitted.

There are a bunch of forks of Bitcoin that have received approximately zero attention (relatively speaking). Standards tend to be natural monopolies.

LTC has seen 200% growth over the last week, people are adopting it hoping it will be an equal competitor. Other people are adopting it just in-case they're right.

This seems a natural consequence of bitcoin's adoption and growth. I see virtually no barriers to entry here, no limit to the number of competing currencies that could be introduced, and as a result no real value to bitcoins. How long can one cryptocurrency expect to be allowed to grow before another comes along and dilutes the market? What factors prevent the average consumer from considering them substitutes? Bitcoins and competing currency are fundamentally similar. They vary only in retail and consumer adoption. I can't make sense of this bitcoin hype.

Re: Bitcoin exchange rate reached $100 USD per BTC

#443

Post by adrianwaj »

kiba wrote: post #39
spartango wrote: post #28

I worry that as Bitcoin's value rises, people are buying in not to use it as payment for services or goods, but simply as an investment vehicle. In principle, there's nothing wrong with this; currency trading is common and well-explored. The problem is that the value of a currency is supposed to also be somehow related to its utility in acquiring goods and services. When it is rarely used to that effect, people may r…

It'd also be interesting to look at the effects of deflation in the fledgling bitcoin economy, although the actual exchange of currency for goods and services is a bit small to judge this effectively. The GDP stats for bitcoin is not systematically collected. The blockchain data only gives us a approximate picture. So most people just rely on their guts and vague feeling about the size of the bitcoin economy. Bitcoin…

Good idea. I find it interesting to track # followers of http://twitter.com/bitrific and http://twitter.com/btcprice. Probably lots of other accounts too worth following. But good correlation vehicles nevertheless.

Re: Bitcoin exchange rate reached $100 USD per BTC

#444

Post by anonymoushn »

millstone wrote: post #411
vrotaru wrote: post #393

Earlier quoted context omitted.

You totally wrong, and the reason you are wrong, is because you do not understand growth. Like... totally. Yes, I'm arrogant and I'll deal with an idealized model where the same set of resources is transformed into final goods, but bear with me. In order to get a real growth of 4% be it per year or per century in such a scenario, you need to find a better use of resources so that with the same resources you may produ…

> In order to get a real growth of 4% be it per year or per century in such a scenario, you need to find a better use of resources so that with the same resources you may produce an output which is 4% greater than before Let's work through an example. I buy 100 seeds for $1 each. I plant them, let them grow, and harvest the result. I now have 104 seeds. My real growth is 4%! Now I want to sell the seeds back to recou…

Do you suppose that there is some sort of seed-factory producing the seeds at no cost and selling them into the market, or do the other seeds in the market come from plants which produce only 4% y/o/y growth in the number of seeds? In the latter case, has the entire seed-planting industry taken a loss over the last year? And if so, would less people plant the seeds this year, so that planting the seeds would again be profitable (assuming demand is static relative to decreased production)?

Do the seeds or plants have any purpose other than the production of more seeds to eventually be sold?

Re: Bitcoin exchange rate reached $100 USD per BTC

#445

Post by aleyan »

vrotaru wrote: post #393
lolcraft wrote: post #176

Some people here seem to think that this is temporary, that sometime in the future Bitcoin will stabilize into a glorious future global currency -- never mind the new class of cryptobarons it will have created from its inner circle, through shameless hoarding. My question is, what then will happen when Bitcoin stabilizes, that is, when the time to new coin mined approaches practically infinity? Let's assume the globa…

You totally wrong, and the reason you are wrong, is because you do not understand growth. Like... totally. Yes, I'm arrogant and I'll deal with an idealized model where the same set of resources is transformed into final goods, but bear with me. In order to get a real growth of 4% be it per year or per century in such a scenario, you need to find a better use of resources so that with the same resources you may produ…

Let me paraphrase that the way I understood you.

In a case where monetary supply is fixed (ie gold), if you hold on to it for a period of time, you will get more goods for it than now. That 'more' will correspond to economic growth over the period. You will have the same fraction of the purchasing power pie as before, but now the pie is larger. Does not look like a win to me, but this is the judgement call for the reader.

PS. Yes, I am simplifying and ignoring some thing like velocity of money and fluctuations in economic output, and growth of capital, human resources, and technology.

Re: Bitcoin exchange rate reached $100 USD per BTC

#446

Post by andyakb »

calinet6 wrote: post #195
andyakb wrote: post #148

Earlier quoted context omitted.

This is not rational thinking. Simply because something has gone up in the past does not mean it will continue to. The returns for the past 5 months have been insane, but that doesnt mean it was a good investment 5 months ago because thats based entirely on results oriented thinking. In a casino, if a roulette wheel hit black 10 times in a row, somebody letting it ride on black the whole way would have made a fortune…

> In a casino, if a roulette wheel hit black 10 times in a row, somebody letting it ride on black the whole way would have made a fortune, but that doesnt mean it would have been a good bet, it means the people making those bets got lucky. Equating a currency to a game of chance based on independent events—now that's irrational thinking. My conclusions might not be valid, this isn't something I'm an expert at, but I…

the problem is that you did not base any of your arguments on actual facts. you just said "if you would have invested 5 months ago, your investment would have grown by a factor of 10." when that is the logic presented, the analogy holds. if you were to give specific reasons why you believe bitcoins grew at that rate AND why the will continue to grow, then it would be a different argument [not that it would necessarily be correct]. however, my point is that when you do not have any sound logic underlying your "investment" it is truly the same as gambling.

Re: Bitcoin exchange rate reached $100 USD per BTC

#447

Post by reedlaw »

stouset wrote: post #430
randallsquared wrote: post #232

Earlier quoted context omitted.

> The reason it's bad is that deflation makes it more profitable to do nothing than to invest. This makes no sense to me. If keeping 100 units makes one richer because they are worth more in a year, then any investment which has a positive return (that is, you end up with more than 100 units in a year) must be that much better... What am I missing?

Because the money supply of BTC is fixed, BTC are effectively proxies for the value of the entire economy that they're a part of. When the economy grows by 5%, so does the value of your BTC. It's at the absolute optimimum point of the risk/reward curve: you could hypothetically invest in a way that performs better than the average, but when factoring in the risk, your expected value is slightly worse than if you'd si…

So Keynesian economics forces everyone to invest in order to avoid the inflation tax while Austrian economics encourages saving allowing savers to reap the benefits of deflation. Both serve as proxies for the economy, so tell me again the downside of saving and prices going down over time?

Re: Bitcoin exchange rate reached $100 USD per BTC

#448

Post by danpat »

numbsafari wrote: post #111
kaonashi wrote: post #92

Earlier quoted context omitted.

Gold is a commodity; same with bitcoins. Not that there's anything wrong with that, but it isn't the same thing as a currency. Gold was only ever a currency when it was stamped by the issuing authority.

As a commodity, gold always had an intrinsic value separate from its value as a currency. So if the authority stamping the coin disappeared, I could always melt down the gold and sell it as a simple commodity. In the case of bitcoins, they do not have a utility outside of their use as a medium of value exchange. You can't really melt them down and use them to make jewelry, build cables or any of the myriad other uses…

I'd say that that utility is sufficiently valuable enough to allow BitCoin to survive. Just look at the precursors, like Hawala, and the more modern stuff like Western Union. If nothing else, BitCoin will find a niche like them (and possibly replace them).

Re: Bitcoin exchange rate reached $100 USD per BTC

#449

Post by sirclueless »

oleganza wrote: post #181
lolcraft wrote: post #176

Some people here seem to think that this is temporary, that sometime in the future Bitcoin will stabilize into a glorious future global currency -- never mind the new class of cryptobarons it will have created from its inner circle, through shameless hoarding. My question is, what then will happen when Bitcoin stabilizes, that is, when the time to new coin mined approaches practically infinity? Let's assume the globa…

1. Unjustified moral reference to "shameless hoarding". Where is the magical date when your property belongs to you for "too long" and you should give it to someone? And to whom exactly? 2. Why take credit for business if you can save your own earned money which appreciates over time and have 100% stake at your own project? 3. How deflationary spiral is supposed to happen? Will people be paralyzed and dead of hunger…

Re: 3. The deflationary spiral doesn't end in a whole bunch of people dying of hunger, exactly, it ends with them all starting their own subsistence farms rather than spending on food, and making their own clothing rather than buying pre-made. Basically it retards progress, sends people back into the dark ages where they have to fend for themselves. I can't imagine a country ever allowing that to happen, so you had better believe that they wouldn't allow something as deflationary as bitcoin to become the de-facto currency. When you need a loan, the banks will be giving you something other than bitcoins. So I don't worry too much about this particular dystopia, it will never come about.

Re: Bitcoin exchange rate reached $100 USD per BTC

#450

Post by narrator »

Evbn wrote: post #433
narrator wrote: post #301

Earlier quoted context omitted.

If you want to take the red pill: Please read F.A Hayek's critique of "The Paradox of Savings" ( http://mises.org/daily/2804 ) for a refutation of inflationist monetary policy. This was an essay he wrote during the debate with Keynes and others, explaining the flaws in the Keynesian theories. It was written in the 1930s , but explains better than any other theory the dynamics of a fixed money supply currency like bit…

Too many nested critiques of refutations of theories for a novice to make sense of that article.

It's hard to do a TL;DR on this. Here's a link to a meta reddit post I made of all my debates with traditionally trained economists :(http://www.reddit.com/r/austrian_economics/comments/kufu2/ca...). It should be somewhat easier to understand.
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