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Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

nytimes.com

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Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#71

Post by kruhft »

danielweber wrote: post #69
kruhft wrote: post #68

Earlier quoted context omitted.

And you have set the last sale price of APPL at 1 Tablet. If the current price of APPL was higher than the sticker price of a Tablet you have just gotten ripped off and vice versa. Some of the value just evaporated until the next sale, AKA arbitrage. The point was that you can't do that even if you wanted to as the 'stock' is completely electronic without a way for you to transfer it's value to your seller of Tablets…

I chose "Surface" as something that was around the price of a share of AAPL stock. I didn't think that would become an issue, but apparently it did. So just do the same thing with gallons of gas measured down to the cc, if you wanted. PS: There are such things as fractional shares of stock. The current system has no convenient general way to transfer their wealth in AAPL stocks from yourself to any person without goi…

APPL doesn't pay dividends.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#72

Post by donald_draper »

danielweber wrote: post #56
skylan_q wrote: post #34

Earlier quoted context omitted.

People value units of money because of their expected purchasing power; money will allow people to receive real goods and services in the future, and hence people are willing to give up real goods and services now in order to attain cash balances. Thus the expected future purchasing power of money explains its current purchasing power. http://mises.org/daily/1333 From a theoretical perspective, this is been the clear…

The reason the value of bitcoins is going up is because people who buy bitcoins expect that others will pay a higher price for it in the future. That has a much shorter name: http://en.wikipedia.org/wiki/Greater_fool_theory The price of the Mona Lisa won't go down because the art community won't let it. It can do that because there is only 1 Mona Lisa . Such a force doesn't exist with Bitcoins.

"This whole country was made by greater fools!"

–

Oh sorry, wrong movie.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#73

Post by danielweber »

kruhft wrote: post #71
danielweber wrote: post #69

Earlier quoted context omitted.

I chose "Surface" as something that was around the price of a share of AAPL stock. I didn't think that would become an issue, but apparently it did. So just do the same thing with gallons of gas measured down to the cc, if you wanted. PS: There are such things as fractional shares of stock. The current system has no convenient general way to transfer their wealth in AAPL stocks from yourself to any person without goi…

APPL doesn't pay dividends.

This has gotten increasingly silly. I still don't know why you brought up stocks but now I have to waste time looking up very basic information.

#1. Yes, they do. [1][2]

#2. "Growth stocks" are just one more abstraction removed but in the end it all comes down to expected future earnings.

[1] http://www.dividend.com/dividend-stocks/technology/personal-...

[2] http://investor.apple.com/faq.cfm

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#74

Post by kruhft »

danielweber wrote: post #73
kruhft wrote: post #71

Earlier quoted context omitted.

APPL doesn't pay dividends.

This has gotten increasingly silly. I still don't know why you brought up stocks but now I have to waste time looking up very basic information. #1. Yes, they do. [1][2] #2. "Growth stocks" are just one more abstraction removed but in the end it all comes down to expected future earnings. [1] http://www.dividend.com/dividend-stocks/technology/personal-... [2] http://investor.apple.com/faq.cfm

4 dividends over 17 years, starting again about 7 months ago. Sorry for not knowing the latest news as all I've been hearing is that they don't. And what formula will give proper and accurate pricing on that many data points?

Don't answer that, this is getting silly. Have a good day. :)

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#75

Post by brc »

skylan_q wrote: post #34
AndrewDucker wrote: post #7

I'd love to get an economist studying why the value of bitcoins goes up. After all, they're infinitely reusable, totally fungible, and incredibly low friction. The only reason for their value to rise (rather than them just being passed around at the same price indefinitely) is if people expect them to rise, or if there's a shortage (forcing people to use fractions of a bitcoin to represent the same number of dollars…

People value units of money because of their expected purchasing power; money will allow people to receive real goods and services in the future, and hence people are willing to give up real goods and services now in order to attain cash balances. Thus the expected future purchasing power of money explains its current purchasing power. http://mises.org/daily/1333 From a theoretical perspective, this is been the clear…

Good link. This particular paragraph struck me:

"Menger's theory avoids all of these difficulties. According to Menger, money emerged spontaneously through the self-interested actions of individuals. No single person sat back and conceived of a universal medium of exchange, and no government compulsion was necessary to effect the transition from a condition of barter to a money economy."

If Bitcoin is to be a success, it is the polar opposite of the origins of money. Instead of developing naturally as a more efficient means of exchange, it has had to be designed top-down in order to work backwards against all the cruft that fiat currencies have collected - features that would have prevented the original money from ever being widley adopted.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#76

Post by lftl »

danielweber wrote: post #65
lftl wrote: post #42

Earlier quoted context omitted.

Credit card transactions only appear to be reversible to the end user. If someone nicks your credit card and buys some gas, it may appear to you that the money just came back but someone in the chain (usually the gas station) is eating that cost. So the only functional difference between bitcoin and a credit card in this respect is that there's someone big (the bank) sitting in between you and the transaction that ha…

The money lost to someone buying some gas is minimal. Transactions are completely reversible until someone involves physical goods, including cash. The system can deal with tiny levels of fraud. With Bitcoin, someone can do a complete transfer of my life savings in an instant, and then what?

If a hacker manages to get into your online bank account and transfer everything out, you're still out of luck unless the bank decides to cover it for you. As far as I know, unless the bank catches it before a transfer is made (which they very well might with fraud detection), they don't necessarily have any means to reverse the transaction after it hits the hackers account. I don't really have any deep experience with that side of banking so feel free to correct me if I'm wrong, but in my limited experience I've seen that once money leaves your account it's only reversible in the sense that the bank may decide to cover the loss for you. There might be some tiny window to reverse things, but I don't think it's a terribly large one.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#77

Post by epaga »

rubyrescue wrote: post #40
brazzy wrote: post #29

Earlier quoted context omitted.

Except it is not a counterargument to that at all. If anything it reinforces that argument by treating Bitcoin as an asset rather than a currency.

That's the best one sentence summary of why it's deflationary, actually.

It is deflationary, of course. What I think the sentence shows is that this is not that huge of a problem. You still will spend your dollars, obviously, even though there is a deflationary currency out there that you COULD make a profit on, because at some point you want or need to spend your dollars. The same logic would apply within the realm of BTC.

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#78

Post by danielweber »

lftl wrote: post #76
danielweber wrote: post #65

Earlier quoted context omitted.

The money lost to someone buying some gas is minimal. Transactions are completely reversible until someone involves physical goods, including cash. The system can deal with tiny levels of fraud. With Bitcoin, someone can do a complete transfer of my life savings in an instant, and then what?

If a hacker manages to get into your online bank account and transfer everything out, you're still out of luck unless the bank decides to cover it for you. As far as I know, unless the bank catches it before a transfer is made (which they very well might with fraud detection), they don't necessarily have any means to reverse the transaction after it hits the hackers account. I don't really have any deep experience wi…

For personal banking in America, there are almost assuredly laws that say it's the bank's responsibility. (Note that the rules are different for businesses.)

I'm still trying to find the reference I mentioned yesterday, the gist of which was that personal banking theft is limited by the number of cash mules who can be recruited. Krebs[1] has many articles about money mules that I hope will lead me to it.

EDIT I found it! [2] "Federal Reserve Regulation E guarantees that US consumers are made whole when their bank passwords are stolen."

[1] http://krebsonsecurity.com/2010/01/top-10-ways-to-get-fired-...

[2] Is Everything We Know About Password-Stealing Wrong? http://research.microsoft.com/apps/pubs/default.aspx?id=1618...

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#79

Post by danielweber »

danielweber wrote: post #61
rlpb wrote: post #35

Earlier quoted context omitted.

Cash needs more security than credit cards because transactions are irreversible. Say his mother has a significant part of her savings in cash, and they get stolen. What's she gonna do then? Answer: let a bank deal with it. Banks can be insured.

For physical cash, banks don't give a hoot, and their insurance doesn't either, because the sums stolen are so small. Even the dollars a bank has uninvested, they are stored electronically, and it's very easy to undo electronic transactions. Plus, the limiting factor on stealing electronic money from banks is finding a stool pigeon who will do it with cash.[1] With a system where transactions cannot be undone, you ne…

Here is the paper: http://research.microsoft.com/apps/pubs/default.aspx?id=1618...

Re: Bubble or No, This Virtual Currency Is a Lot of Coin in Any Realm

#80

Post by simondlr »

pakitan wrote: post #31
simondlr wrote: post #24

Earlier quoted context omitted.

Litecoin is currently the leading alternative. It's got a shorter confirmation time, uses scrypt as opposed to sha256, and will in the end have a larger total of coins. All these make it seem like a better alternative for micro-transactions in the end.

How can larger number of coins be an advantage (or disadvantage for that matter)? As long as the supply is fixed it doesn't matter if the total is just 1 coin or 100 trillion coins.

There's been debates running now in the Bitcoin community what the new 'denomination' should be. So far, it mBTC (millibitcoins) is leading. You can still write it as 0.001 BTC, or 1 mBTC.

I'm just wondering in terms of psychology, what impact it has to write in ever decreasing denominations? Pricing something as 0.000232 BTC is much more difficult to read and understand. So, if there are more coins in circulation, this would hopefully not happen until much later. It will inevitable happen (if it is also a success). But just for adoption and ease of use in the short and medium term it will be easier to read.

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