What are your thoughts on BitCoin?

[Zelig]

Sure, but you can't claim that it's going to suck because both deflation and loss of value.

 

[Crezth]

Not in those exact terms, but I can claim it's going to suck because of the cause of deflation (constant constriction of the money supply) as well as the block chain making them difficult to use. I hadn't considered that the block chain would actually, paradoxically, counteract the imminent threat of deflation though, that's a good point... but really that convinces me more than anything that the design is just goofy.

 

[Symphony D.]

BitCoin exchange service providers are legitimate and not at all shady.

But a second case brought against him in Maryland last month includes charges for a murder-for-hire that Ulbricht, or [Dread Pirate Roberts, former owner of Silk Road], allegedly negotiated with an undercover federal agent, who was paid $80,000 to torture and kill a former administrator of the Silk Road drug emporium. In that case, federal agents staged the torture and killing of Curtis Clark Green, a former administrator of Silk Road who lives in Utah. Green has acknowledged that federal agents took photos of the mock torture and murder. Federal officials told WIRED that half a dozen images, including ones showing mock waterboarding and a “corpse,” were sent to DPR to prove that his former administrator had been killed

e: Meanwhile, The Atlantic, with an opinion piece.

You can kind of see these absurd price moves in the chart below. But only kind of, because the vertical up-and-downs have come so fast that they've blurred into each other. It's almost as if Bitcoin doesn't have a single price at any one time, but rather a range of possible prices that depend on the observer.

BitCoin, the world's first quantum currency! Be part of the magic! And remember, BitCoin is not subject to vile national monetary policies! BitCoin is also a totally worthwhile use of the world's largest computing network, as well as the attendant electricity costs (several hundred thousand homes worth), greenhouse gas emissions, and bandwidth usage; detractors will tell you that buying Cheetos and gift-cards anonymously is not worth this expense, but they're filthy fiat money supporters!

 

[Zelig]

BitCoin, the world's first quantum currency! Be part of the magic! And remember, BitCoin is not subject to vile national monetary policies! BitCoin is also a totally worthwhile use of the world's largest computing network, as well as the attendant electricity costs (several hundred thousand homes worth), greenhouse gas emissions, and bandwidth usage; detractors will tell you that buying Cheetos and gift-cards anonymously is not worth this expense, but they're filthy fiat money supporters!

You're the only person in this thread making this argument.

 

[Cutlass]

Not in those exact terms, but I can claim it's going to suck because of the cause of deflation (constant constriction of the money supply) as well as the block chain making them difficult to use. I hadn't considered that the block chain would actually, paradoxically, counteract the imminent threat of deflation though, that's a good point... but really that convinces me more than anything that the design is just goofy.

The thing to keep in mind about deflation is that the holders of bitcoin actually want deflation! Because if you are holding money, as cash, and the system has deflation, the holder of the money is now holding something of increasing real value. They are either ignorant of, or indifferent to, the fact that that deflation is utterly destructive to those who need the money, and do not have it on hand, but rather have to do something to get it (work for it, or trade some other asset for it). And so while the bitcoin economy is not actually sustainable because of deflation, the bitcoin holders, and advocates, personally stand to benefit, at least in the short-medium term, from what ruins the system for everyone else.

 

[Symphony D.]

And so while the bitcoin economy is not actually sustainable because of deflation, the bitcoin holders, and advocates, personally stand to benefit, at least in the short-medium term, from what ruins the system for everyone else.

Or in other words:

See, the idea behind Bitcoin is to create a decentralized currency that central banks can't inflate and governments can't tax. Basically, digital gold. And like actual gold, the only way to get new bitcoins is to "mine" for them. That involves running a computationally-taxing program on your computer that mostly generates gibberish, but maybe, just maybe, some bitcoins too. The key, though, is that mining for more of the virtual currency doesn't create more of it. That's because there's a predetermined number of bitcoins. Specifically, there are around 12 million today, and there will be 21 million in 2040—and no more after that. Of course, this limited supply means Bitcoin should tend to increase in value against the dollar. But only tend to. See, its deflationary bias means Bitcoin prices will go up and down quite violently. Think about it this way. The supply of bitcoins can't increase much to meet increased demand, so increased demand will make prices soar. And soaring prices will make early adopters try to cash out their winnings—which will send prices crashing back down.

In other words, Bitcoin is a Ponzi scheme libertarians use to make money off each other—because gold wasn't enough of one for them.

Also, since some people can't take a hint:

But techies say so what. That this misses the point. That what's revolutionary about Bitcoin isn't that it's a currency with no state-backing. What's revolutionary is that it's a payments system with no third-party, like a credit card company, standing in between buyers and sellers. See, any time you buy something, it's a minor leap of faith. You choose to believe that the seller will deliver as promised—and if they don't, you want your money back. That's where financial intermediaries like credit card companies and Paypal come in. They make sure buyers and sellers are both trustworthy, and handle any disputes.

Now, it's nice to be able to get your money back if things go wrong, but that's not free. The middlemen take their cut. Bitcoin, though, has no middlemen. It's just a decentralized peer-to-peer system. So you can't get your bitcoins back if things go wrong, but there won't be any transaction fees. The question is whether non-enthusiasts will think this trade-off is worth it.

 

[timtofly]

So what does it mean when China drops USD in favor of BitCoin? They are trying to destroy both?

 

[Symphony D.]

So what does it mean when China drops USD in favor of BitCoin? They are trying to destroy both?

If you think getting USD out of MtGox is hard you should see how hard it is to deleverage $1.2938 trillion worth of treasury securities! Zing!

 

[Cutlass]

So what does it mean when China drops USD in favor of BitCoin? They are trying to destroy both?

They won't. China is not that incompetent.

 

[Zelig]

The thing to keep in mind about deflation is that the holders of bitcoin actually want deflation! Because if you are holding money, as cash, and the system has deflation, the holder of the money is now holding something of increasing real value. They are either ignorant of, or indifferent to, the fact that that deflation is utterly destructive to those who need the money, and do not have it on hand, but rather have to do something to get it (work for it, or trade some other asset for it). And so while the bitcoin economy is not actually sustainable because of deflation, the bitcoin holders, and advocates, personally stand to benefit, at least in the short-medium term, from what ruins the system for everyone else.

What's the problem for people who want it as a unit of exchange?

Also, since some people can't take a hint:

Sounds like craigslist.

 

[Cutlass]

What's the problem for people who want it as a unit of exchange?

Rapid price swings and limited people and organizations that are willing to accept it as payment.

 

[Cheetah]

As far as I can interpret it all: Bitcoin is digital gold. It's just as useless (actually less, gold has some practical uses), both things are "mined", both come in real, limited supply, both have value simply because other people agree they have value, and neither can be used for a proper economy.

The only differences are that physical gold is much harder to move around than digital bitcoins, and one doesn't lose gold due to hard drive crashes.

Still, as long as it works the same way as gold, I suppose there is an actual, real value that can be put on bitcoins... Perhaps I should have gotten into it earlier?

 

[timtofly]

They won't. China is not that incompetent.

What is this then:

It’s been a surreal week. Bitcoin continued its upward ascendancy fueled by a unanimously positive and wild acceptance by the Chinese, at one point with the value touching $900, leaving most of us wondering why we didn’t get in when it was still worth the less than the price of two Xbox Ones.

Now, seemingly out of the blue, China has announced that it would rein in its purchase of US dollars. "It's no longer in China's favour to accumulate foreign-exchange reserves," Yi Gang, a deputy governor at the central bank, said on Wednesday.

 

[Crezth]

The thing to keep in mind about deflation is that the holders of bitcoin actually want deflation! Because if you are holding money, as cash, and the system has deflation, the holder of the money is now holding something of increasing real value. They are either ignorant of, or indifferent to, the fact that that deflation is utterly destructive to those who need the money, and do not have it on hand, but rather have to do something to get it (work for it, or trade some other asset for it). And so while the bitcoin economy is not actually sustainable because of deflation, the bitcoin holders, and advocates, personally stand to benefit, at least in the short-medium term, from what ruins the system for everyone else.

Oh, I understand that. I'm just saying it bodes poorly for any who want BitCoins to rise above their current station as Instrument of Theft & Wealth Destruction.

Rapid price swings and limited people and organizations that are willing to accept it as payment.

Limited organizations that, as has been established in this very thread, can and will cheat and steal all of your money!

 

[Zelig]

Rapid price swings and limited people and organizations that are willing to accept it as payment.

Those really seem like fairly minor problems to me - rapid price swings don't particularly matter in the long run and you wouldn't use bitcoins if the thing you were trying to trade for didn't accept them.

As far as I can interpret it all: Bitcoin is digital gold. It's just as useless (actually less, gold has some practical uses), both things are "mined", both come in real, limited supply, both have value simply because other people agree they have value, and neither can be used for a proper economy.

The only differences are that physical gold is much harder to move around than digital bitcoins, and one doesn't lose gold due to hard drive crashes.

Still, as long as it works the same way as gold, I suppose there is an actual, real value that can be put on bitcoins... Perhaps I should have gotten into it earlier?

Yes, I pointed this out in post #3 of this thread.

 

[Symphony D.]

Now, seemingly out of the blue, China has announced that it would rein in its purchase of US dollars. "It's no longer in China's favour to accumulate foreign-exchange reserves," Yi Gang, a deputy governor at the central bank, said on Wednesday.

It's a long logical leap to take "no longer accumulating foreign-exchange reserves" as "dump all US treasuries now, sell sell sell!"

 

[timtofly]

I understand that, and that was not the point. Is it not telling that no longer in the market for USD, but hopping on the BitCoin wagon, not enough?

 

[Symphony D.]

I understand that, and that was not the point. Is it not telling that no longer in the market for USD, but hopping on the BitCoin wagon, not enough?

The PRC and CCP are not the same as individual Chinese specifically seeking to circumvent their government's monetary policy, so no, it really isn't enough, particularly when the CCP has likely reached that decision for a whole host of geopolitical and economic reasons, invariably none of which is BitCoin.

 

[Cutlass]

Those really seem like fairly minor problems to me - rapid price swings don't particularly matter in the long run and you wouldn't use bitcoins if the thing you were trying to trade for didn't accept them.

They matter in the long run if they make people distrust using them.

 

[Cheetah]

Yes, I pointed this out in post #3 of this thread.

Sorry, never felt like reading through 24 pages before I posted.

They matter in the long run if they make people distrust using them.

There only needs to be a stable minimum number of people willing to trade with bitcoins for them to work properly.

I suppose they're not as interesting as gold though, so there's a danger the novelty wears off. Unless that happens, they seem to be running well enough.