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Bitcoins Are Digital Collectibles, Not Real Money

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Re: Bitcoins Are Digital Collectibles, Not Real Money

#51

Post by mpyne »

Houshalter wrote: post #42
mpyne wrote: post #34

Earlier quoted context omitted.

> 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. > I…

>If your job depends on receiving income then you can appreciate why it also depends on other people spending money. Well the point is prices adjust. If people aren't spending money, then prices just fall until the people that are spending money can afford it. Sure you make less income, but everything is cheaper too so it's not a loss. Actually it's a gain. The same amount of goods are in the economy, but since some…

> > If your job depends on receiving income then you can appreciate why it also depends on other people spending money.

> Well the point is prices adjust. If people aren't spending money, then prices just fall until the people that are spending money can afford it.

But remember that the reason the prices are dropping is because no one is spending money. This is a positive feedback loop: the only reason that sellers are dropping prices is because they are under extreme pressure to make some income somehow. So they drop prices and receive a bit of income. So these businesses are then unable to pay their suppliers, who are forced to either drop their prices or suffer default, and so on straight up the chain.

So it's not that deflation itself is hazardous per se, but that it tends to amplify its own effect. If you reach the "flashover" point the whole economy goes to crap, much as what happened when the mortgage failure rate finally got high enough with the sub-prime mortgage derivatives.

> Exporting more things isn't necessarily a good thing. Ideally we could import everything we need and not have to actually work to produce things to export.

That would perhaps be ideal, but it can't possibly occur that every country only imports and doesn't export. Someone has to lose in that transaction. Is that ethos really what we want to base a global financial system on?

Re: Bitcoins Are Digital Collectibles, Not Real Money

#52

Post by weavejester »

zeteo wrote: post #37
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 buy…

When dealing with physical objects, sure, you have the same problem as regular currency. You need to rely on the weight of the law and the reputation of the seller to give you the material item you requested.

However, (a) that's not a deal-breaker, otherwise fiat currency wouldn't work, and (b) you can programmatically enforce rules on the transfer of intangible assets.

For instance, Namecoin adapts the Bitcoin protocol for the purchase of domain names, which are a limited but intangible commodity. If I buy a domain name with namecoins, the network itself enforces the sale.

Even when dealing with something that requires a central authority, like regular currency, Bitcoins have worth. For instance, if I want to transfer money between service A and service B, Bitcoins can act as a common intermediate protocol. Although the two endpoints are still required, we can replace a lot of the inbetween mechanism, and reduce the dependencies between the two services.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#53

Post by weavejester »

Ingaz wrote: post #46
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…

>>Comparing Bitcoin to a fiat currency like the dollar is a little like comparing the English language to TCP/IP. Bitcoin could not be compared to currency. It's comparable to gold, oil, diamonds, etc.

Well, again, not exactly, because a bitcoin-like network can potentially enforce rules in a way that a physical commodity cannot do.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#54

Post by weavejester »

hazov wrote: post #45
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'm not a network engineer but I believe Tier 1 and Tier 2 networks are needed for the Internet to exist. They do not act as a central authority, but the Internet itself needs them to work like it do now. I simply do not understood what you wanted to say by your last paragraph. EDIT: To clarify my point is that I believe the internet is poorly decentralized, it simply means some guys has too much power to shutdown tr…

My understanding is that's more an artefact of how the Internet is physically laid out, rather than as something inherent to the TCP protocol itself. If we took all the machines on the net and put them in one huge building, we could construct a far more decentralised network architecture.

Regarding my last paragraph, both the English language and TCP/IP could be broadly said to be protocols for distributing information, but are also obviously so completely different it makes little sense to draw any parallels between them.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#55

Post by zeteo »

weavejester wrote: post #52
zeteo wrote: post #37

Earlier quoted context omitted.

>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 buy…

When dealing with physical objects, sure, you have the same problem as regular currency. You need to rely on the weight of the law and the reputation of the seller to give you the material item you requested. However, (a) that's not a deal-breaker, otherwise fiat currency wouldn't work, and (b) you can programmatically enforce rules on the transfer of intangible assets. For instance, Namecoin adapts the Bitcoin proto…

Of course it's not a deal breaker. All I'm saying is that Bitcoin doesn't enforce exchange. There's nothing in the Bitcoin protocol that forces Namecoin to give you a domain name.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#56

Post by weavejester »

zeteo wrote: post #55
weavejester wrote: post #52

Earlier quoted context omitted.

When dealing with physical objects, sure, you have the same problem as regular currency. You need to rely on the weight of the law and the reputation of the seller to give you the material item you requested. However, (a) that's not a deal-breaker, otherwise fiat currency wouldn't work, and (b) you can programmatically enforce rules on the transfer of intangible assets. For instance, Namecoin adapts the Bitcoin proto…

Of course it's not a deal breaker. All I'm saying is that Bitcoin doesn't enforce exchange . There's nothing in the Bitcoin protocol that forces Namecoin to give you a domain name.

Actually there is. You can entwine a pair of transactions such that if the bitcoins are claimed by the seller, the corresponding namecoins can be claimed by the buyer.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#57

Post by Houshalter »

mpyne wrote: post #51
Houshalter wrote: post #42

Earlier quoted context omitted.

>If your job depends on receiving income then you can appreciate why it also depends on other people spending money. Well the point is prices adjust. If people aren't spending money, then prices just fall until the people that are spending money can afford it. Sure you make less income, but everything is cheaper too so it's not a loss. Actually it's a gain. The same amount of goods are in the economy, but since some…

> > If your job depends on receiving income then you can appreciate why it also depends on other people spending money. > Well the point is prices adjust. If people aren't spending money, then prices just fall until the people that are spending money can afford it. But remember that the reason the prices are dropping is because no one is spending money. This is a positive feedback loop: the only reason that sellers a…

>So it's not that deflation itself is hazardous per se, but that it tends to amplify its own effect.

It will stabilize eventually though as no new people start saving instead of spending, or as the people who were saving eventually need to buy things or decide to finally cash out and spend their money.

>That would perhaps be ideal, but it can't possibly occur that every country only imports and doesn't export. Someone has to lose in that transaction. Is that ethos really what we want to base a global financial system on?

The point was that we shouldn't strive to export more things as if that was a good thing in and of itself. The benefit of exports is the foreign money you get in return, and the benefit of that is the imports you can get in exchange for it.

Re: Bitcoins Are Digital Collectibles, Not Real Money

#58

Post by glomph »

TylerE wrote: post #14
zeteo wrote: post #13

Earlier quoted context omitted.

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.

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

There is actually quite a bit of discussion into 'coloured' bitcoins, which would basically work exactly like that.
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