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1 bitcoin worth more than dollar

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Re: 1 bitcoin worth more than dollar

#71

Post by mkramlich »

solipsist wrote: post #67
mkramlich wrote: post #64

Earlier quoted context omitted.

Ummm.... http://www.bitcoin.org/

> I tried looking it up, can't seem to understand what it really is.

Understood. I didn't understand it either til I read several descriptions of it online. The official site I cited, Wikipedia, various tutorials and forum posts about it. The usual places. Google is pretty useful too.

In short: pure-digital currency, created out of thin air, backed by cryptographic algorithms, aligned with a libertarian/anarchic philosophy, and designed to avoid many problems associated with traditional national paper currencies. It has flaws and quirks which critics will jump on, but then so does say the US dollar and the US Federal government and banking system, so arguably somewhat of a case of pick your poison, or lesser of two evils.

Re: 1 bitcoin worth more than dollar

#72

Post by mkramlich »

hristov wrote: post #57
hippich wrote: post #32

Earlier quoted context omitted.

'cos "it's rare, it's portable, it's fungible."

And it can be quickly sent and received over the internet anonymously, which is something gold cannot do.

And today, not only do we not send gold over the Internet to buy things, we don't even send paper US dollars. Instead, banking systems send electronic messages to one another, indicating a transaction has occurred and that two or more accounts should be modified in a certain way.

Take this second thing, get rid of actual physical gold or actual paper dollars, and you basically have what Bitcoin is. Pure electronic, pure virtual, and not backed by any single bank or national government. Paper was to gold somewhat like Bitcoin is to paper. A step further in the same direction, just more extreme, with a couple of cool additional features and potentially scary quirks. (Counter: arguably the US Federal government and world banking system has some "scary quirks" but we're effectively forced to accept them.)

Re: 1 bitcoin worth more than dollar

#73

Post by kablamo »

sgornick wrote: post #10
solipsist wrote: post #5

Anyone want to offer some insight into what a bitcoin is? (Sorry for my ignorance. I tried looking it up, can't seem to understand what it really is.)

Security Now on TWIT tv covered Bitcoin today. Steve Gibson does a pretty decent job describing it. http://twit.tv/sn287 Bitcoin coverage is from 0:41:25 to the end of the podcast.

I followed all kinds of links and couldn't figure out bitcoins. This link actually answered some questions. Sounds really fascinating. Definitely will look into this more.

Re: 1 bitcoin worth more than dollar

#74

Post by nopassrecover »

iheartmemcache wrote: post #3

I read the wiki on BitCoin and I still don't understand how the BitCoin forex market is made. Usually currencies are based on national GDP and that sort of thing, but I haven't the faintest as to what controls the strength of this currency. Can someone enlighten me?

Floated currencies are NOT based on national GDP and that sort of thing. They are based on the price that someone is willing to pay and someone is willing to sell. I.e. if someone will spend 1 AUD to buy 1 USD, and someone is willing to sell 1 USD for 1 AUD then the price of 1 USD is 1 AUD. This is completely unrelated to GDP (although GDP might be used as a marker of confidence that indicates security of currency investment).

Re: 1 bitcoin worth more than dollar

#75

Post by zohebv »

0x6763 wrote: post #55
jerf wrote: post #31

Earlier quoted context omitted.

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 are a creation by some who don't understand what a currency is." How ironic that someone would say such a thing, and then immediately post a few paragraphs displaying their own misunderstandings of what a currency is. Do you know what a "hard money" is? Bitcoin is a digital hard money. You talk so much about backing...backing is nonsense. Gold isn't backed by anything. It's just matter, like everything else…

> Then go to http://mises.org

You lost me here. Thats the favorite website of Internet economists. It is unable to explain real economic/business cycles.

Re: 1 bitcoin worth more than dollar

#76

Post by sgornick »

hunterp wrote: post #61
sgornick wrote: post #15

Earlier quoted context omitted.

Not really, but to make MORE bitcoins yourself you would need to expend a fair amount computing power that chews up a fair amount of electricity. Here's a chart showing that possibly as the price rises, the amount of computing power (and thus electricity) rises to match. http://www.bitcoin.org/smf/index.php?topic=2399.msg42269#msg...

mobiles take pennies a day of electricity to power. mobiles are computing and cheap to power.

That's been tried! You can run a slightly modified version of bitcoin on a Nokia N900, and it will mine as well. The N900 performs at about a 150 Khash/second level. http://www.bitcoin.org/smf/index.php?topic=2125.msg27918#msg... For comparison, one single ATI Radeon HD 5970 pumps out about 600,000 Khash/second, or the equivalent of 4,000 N900s.

Re: 1 bitcoin worth more than dollar

#77

Post by rdixit »

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…

This is largely true. Bitcoin is a brilliant idea combining a several innovations that in and of themselves would be laudable. Still, it is most likely true that expecting Mr. Satoshi Nakamato to have a perfectly formed working model of a new financial system at one go is unrealistic, even with his obvious brilliance and dedication.

As a corollary to your point, other world currencies are going to be considerably more inflationary than Bitcoins the longer this experiment last. Then converting bitcoins to a national currency with a more profitable interest rate is an inevitability. bitcoins will be sucked into financial services rather than building out a viable economic platform for the currency.

That strikes at the heart of it, IMHO. The current currency distribution model is good at least in the sense that the newly "printed" currency is allocated for the most part by banks with (ostensibly) some degree of investment saavy. Here, we are asking "network operators" doing the proof-of-work algorithms to essentially act like banks and distribute bitcoins into larger circulation. That seems likely to cause problems.

Re: 1 bitcoin worth more than dollar

#78

Post by sgornick »

johnny22 wrote: post #36
sgornick wrote: post #22

Earlier quoted context omitted.

Ecosystem? How about the Payment portion of the ecosystem ... let's take a "competitor", PayPal, for example. When you send $100 to a business using your Paypal, the recipient gets $97, or less. With bitcoin, when you send $100, the recipient gets $100 (at least until fees are necessary ... but even when that starts being necessary the fees should be just a FRACTION of what Visa / MC / PayPal / etc. take.)

so, you're saying if paypal/mastercard/visa charged no money for transfer, you would continue using them? that example isn't reason enough for me to use bitcoin.

A less expensive payment network is one reason bitcoins might be used. Ask ten people why they use bitcoins and you'll get ten different answers. For some, it will be the ability to send money without needing a bank. For another person the reason might be related to the anonymity that bitcoin offers. Bitcoin's benefits range from supporting micropayments to supporting large transfers with no chargeback risk.

But for the long term, When the list of payment methods reads:

  Visa / MC / AmEx / Bitcoin (receive 2% discount)
which button do you think most consumers will choose?

Re: 1 bitcoin worth more than dollar

#79

Post by cmontgomeryb »

phirephly wrote: post #65
trotsky wrote: post #21

Earlier quoted context omitted.

A gentleman's agreement between a certain faction of econ-crypto-tinfoil-hat-botnet nerds to assign trade value to the wastage of increasingly large amounts of electricity.

Best description I've seen yet. Granted, I'm impressed with how much momentum they seem to have already collected, so I feel like their implementation is sound, but still tin-foily. They are working on a real problem though. Paypal kind of works, but isn't ideal.

Why 'tin foily'?

Re: 1 bitcoin worth more than dollar

#80

Post by 0x6763 »

hristov wrote: post #70
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…

You are entirely correct. This will eventually develop all the problems associated with a strictly limited currency. If a nation's economy was purely based on bitcoins, one would expect that economy to quickly grind to a halt as people start hoarding their bitcoins instead of investing them in businesses, etc. (BTW something like this is currently happening to the world with gold). However, I doubt any economy will b…

If bitcoins become so valuable, this by definition means that people are offering and trading MORE goods and services to get bitcoins, not less. Prices will adjust! Trades will continue to be made. That is not what I would call an economy grinding to a halt. This is the opposite of grinding to a halt.

You do realize that bitcoins are extremely divisible, right?

You have heard of Time Preference, right? People aren't going to stop buying goods and services altogether because they believe they could buy more in the future. Sure they'll actually save more than they would with a money that loses value over time, but they still have necessities they want to buy, and toys they want to play with now rather than later, old goods that wear out, need new cars, want a new house (or another house), etc. Why do you think people want money in the first place? To live a long destitute life and maybe spend it if they don't die first?

People have used gold as money for thousands of years...how come suddenly current generations are trying to stock up on it more than previous generations? This surely couldn't have anything to do with the insane economic environment created by the various governments, their central banks, and the giant businesses practically created by those governments!?

Bitcoins will never become "too rare" for internet transactions. The protocol currently supports the total bitcoin supply being divided into 2,100,000,000,000,000 units, and that can always be changed if most bitcoin users think they need it to be divided further.

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