What are your thoughts on BitCoin?

[El_Machinae]

Are you implying that because it continues to trade at a high level, that the fundamental concerns about what people think it is are incorrect?

 

[Narz]

I don't honesty understand the technical aspects of bitcoins but it is clear that many is finance feel threatened and angry about it.

I scanned the concerns posed in this thread, seems like it takes too much energy to create a bitcoin, is that right? But a currency that is limited does has an inherent superiority over one that doesn't (why it trades so high in places like Zimbabwe), plus no currency transfer fees to use it in a company in Europe or South America.

Eventually probably a better version of it will be created.

 

[El_Machinae]

It's not that it takes too much energy to create a bitcoin, that part doesn't matter if people are willing to pay more for a bitcoin than it costs to mine new ones. My concern is that it costs too much energy to update the blockchain, which means that the transaction costs are actually a lot higher than people realize because they're currently being subsidized by bitcoin miners.

But the finance people don't like it because it's not actually what it's being advertised as - a currency. Sure, it's a tradable commodity, like hockey cards or whatever. But it's also a bubble. People are buying it, not because it's useful, but because they think it's going to go up in price. And its long-term utility is a lot lower than people realize for a variety of reasons.

But the fact that it's trading at high levels doesn't really mean much, other than lots of people think it's going to go up in price. Same with tulips or houses in 2008. But if you press people on why they think it will go up in price, their fundamental understandings are incorrect. This certainly doesn't mean that a savvy person cannot profit off of the bubble riding.

 

[BvBPL]

Switzerland bets on bit coins.

 

[Moriarte]

But the finance people don't like it because it's not actually what it's being advertised as - a currency.

Are you sure your fundamental understandings are correct? Some finance people including top wall street execs are confessing lately they have no idea what it is and what will become of it, which is honest and understandable. It is used as a currency, worldwide. Widely enough to be considered a currency. Used for store of value, speculation, paying for goods and services, a medium of exchange. Perhaps it is a new type of currency - digital decentralised stateless currency, but currency nonetheless. Finance officials from ECB, IMF call it a currency (with crypto-, digital- or whatever in prefix) in their statements. Just curious, what are Your grounds to challenge the obvious?

 

[uppi]

I don't honesty understand the technical aspects of bitcoins but it is clear that many is finance feel threatened and angry about it.

If they are, they do not understand much of bitcoin either.

I scanned the concerns posed in this thread, seems like it takes too much energy to create a bitcoin, is that right? But a currency that is limited does has an inherent superiority over one that doesn't (why it trades so high in places like Zimbabwe), plus no currency transfer fees to use it in a company in Europe or South America.

Eventually probably a better version of it will be created.

A limited currency is not desirable at all. To keep a currency stable, you need to be able to expand the money supply, when the economy expands. Of course, this needs to be done responsibly. It is also not true that Bitcoin is inherently limited, it is only limited by convention that less Bitcoins are created over time. A group that controls a majority of the mining power would be able to change that (possibly creating a fork). And due to the professionalization and inevitable concentration of Bitcoin mining, the power over Bitcoin will end up in a few hands. In the end, as with any currency, the question is about control. The way Bitcoin is designed, control will end up with an oligarchy of those who have the most mining power. Do you really want that?

The technology could certainly be used to create a better version. However, the question remains, who do you want to give control? I do not think that giving control of a general currency to those with the biggest mining rig is a good idea. But if you give control to a trusted organization, you do not need to use horrendously cryptography to protect it.

Are you sure your fundamental understandings are correct? Some finance people including top wall street execs are confessing lately they have no idea what it is and what will become of it, which is honest and understandable. It is used as a currency, worldwide. Widely enough to be considered a currency. Used for store of value, speculation, paying for goods and services, a medium of exchange. Perhaps it is a new type of currency - digital decentralised stateless currency, but currency nonetheless. Finance officials from ECB, IMF call it a currency (with crypto-, digital- or whatever in prefix) in their statements. Just curious, what are Your grounds to challenge the obvious?

1) Its properties are not suitable for a currency, it is far to volatile and far to expensive to use as such.
2) In most cases where you can buy anything with Bitcoin, it is not used as a currency, but as a payment system: The Bitcoins are immediately converted to a conventional currency and the vendor gets the latter. In that sense it is not more a currency than credits on your Paypal account are (and at least the value of your Paypal account is not subject to Bitcoins volatility).
3) Bitcoin is in some ways similar to gold. They have a symbolic value that far exceeds its inherent value, but are expensive to use as a method of payment. You would be able to find vendors who accept gold as payment, but that does not mean that gold is a currency - currencies were invented long ago to get rid of the hassle of dealing with raw gold.
4) The practical usage of Bitcoin at the moment is mostly limited to speculation (and that is where the obsession with its current price comes from, also in this thread). However, speculation is usually bad for a currency that you want to actually use.

 

[Moriarte]

1. Yes, it is currently volatile - a trait, not uncommon with other world currencies of present and past. Doesn't stop them from being currencies. Perhaps when and if it gets broader use and application, matures in decades, no group will be able to speculatively influence the price to the degree currently on display, bar devastating economic conditions. As for being expensive, the problem is solved before it appeared, as users are able to use 1/1000000 share of one bitcoin in their transactions.

2. Immediate conversion is temporary insurance against volatility, until system matures and actors will get more confidence in the system. Currency hedging is commonplace practice with other conventional currencies. That doesn't make hedged conventional currencies "credits on yer paypal account".

3. Yes, it is similar to gold in a sense that gold is a commodity with limited supply. Bitcoin strives to evolve beyond mere gold, adding element of being a digital currency and removing debt encumbrance. The latter is a fraction of the reason B value is soaring.

4. Currency with ties to the State, which would soar like bitcoin might be devastating to that state's economy. Luckily, B is stateless. And it is both a currency and a commodity. At the same time.

Again, it is obviously and increasingly used as a currency. Today. Why argue that?

 

[uppi]

1. With expensive, I meant transaction costs. Are you willing to pay 20 dollars per transaction?

2. A real currency is in circulation. It needs a significant amount of people who earn money in that currency and spend it again in that currency. With Bitcoin, companies essentially use it as a payment service: They pay a service provide to handle the transaction (in Bitcoin) and just get their money in real currency. It is not unlike paying VISA to handle your transactions via credit card. That does not make credit cards a currency.

3. Bitcoin is soaring because of speculation and just that. The value soaring is exactly the reason, why it is useless as a currency and as long as that is the case, it will be dominated by speculation.

4. It is devastating to anybody using Bitcoin as a currency - which is why no one really is doing that.

Again, it is obviously and increasingly used as a currency. Today. Why argue that?

Because it is a delusion that Bitcoin is used as or even can be used instead of a real currency. By design it cannot.

 

[Ajidica]

RON PAUL FUN BUX isn't currency, and it barely qualifies as a commodity because there quite literally isn't anything keeping its value up beyond techo-fetishists, hobbyists, and criminals. A currency needs to be backed by something. At its most basic, the USD is backed by the requirement you pay taxes in USD, keeping demand up. RON PAUL FUN BUX can't be used for any of that and it literally electronic bits floating around in your hard drive. Come the apocalypse (expected mid 2019), the USD can at least be used as a crude toilet paper.

EDIT: Oh, and there is the fact a currency needs to have some degree of stability, which RON PAUL FUN BUX doesn't have.

 

[Synobun]

Come the apocalypse (expected mid 2019), the USD can at least be used as a crude toilet paper.

You can use the bitcoin mining rigs as a heating element.

 

[Narz]

But the finance people don't like it because it's not actually what it's being advertised as - a currency. Sure, it's a tradable commodity, like hockey cards or whatever. But it's also a bubble. People are buying it, not because it's useful, but because they think it's going to go up in price.

Functionally it's a currency. I can spend it on things. Mostly it's an investment. Whether it's a bubble no one knows. It hasn't been shown to be one yet.

EDIT: Oh, and there is the fact a currency needs to have some degree of stability, which RON PAUL FUN BUX doesn't have.

Someone's sad he could've made $100,000 and didn't. Aww. Yeah, stability is much better than your money going up 10-fold. Makes sense.

Eventually the price will level out. Maybe at $8,000, maybe lower. Who knows?

 

[Lexicus]

But a currency that is limited does has an inherent superiority over one that doesn't

The truth is almost the exact opposite of this.

 

[Samson]

So if bitcoin is so bad because mining is so wastfull, what about ethereum? As I understand it "mining" in that is solving useful problems that people will pay to have solved.

(Ethereum) provides a decentralized Turing-complete virtual machine, the Ethereum Virtual Machine (EVM), which can execute scripts using an international network of public nodes. Ethereum also provides a cryptocurrency token called "ether", which can be transferred between accounts and used to compensate participant nodes for computations performed

 

[El_Machinae]

I currently have 10,000 credits for my work on SETI@home

What will you give me to transfer them to your account?

@Moriarte - what do you mean by debt encumberance? Vs gold, I mean

 

[Samson]

I currently have 10,000 credits for my work on SETI@home

What will you give me to transfer them to your account?

Not really interested, but if you have cycles to spare on a GPU I may pay you (or the etherium network which you can join) to run my deep learning training. The demand for this sort of processing is only going up.

 

[El_Machinae]

That was an excellent answer. It totally targeted what I was missing. Etherium then holds a real-time value of the underlying demand for the calculation. But why would I hold onto them? Do they store value?

 

[Samson]

That was an excellent answer. It totally targeted what I was missing. Etherium then holds a real-time value of the underlying demand for the calculation. But why would I hold onto them? Do they store value?

I think so. For me to get them I had to pay someone real currency, or at least something that the seller would take. As long as people want etherium jobs run there should be demand for "ether".

Edit: I like it that they named the currency after something that famously does not exist, even though everyone thought it did.

 

[Ajidica]

Someone's sad he could've made $100,000 and didn't. Aww. Yeah, stability is much better than your money going up 10-fold. Makes sense.

Eventually the price will level out. Maybe at $8,000, maybe lower. Who knows?

Currency needs to have some degree of stability, because, you know, it is a currency. I need to be pretty sure that the amount of stuff I can buy for $100 today is going to be pretty much the same amount of stuff tomorrow and a month from now.
If you want to earn money through risk and volatility, like with commodities, securities, or whatever horrifying crossbreed RON PAUL FUN BUX is masquerading as right now, that's also fine. Just don't say those instruments would be a good currency because "look at all the money I can earn off the risk and volatility".

 

[Narz]

Kicking myself for selling, price continues to rise. Still have 1

 

[El_Machinae]

Don't kick yourself, you should be playing according to your risk tolerance. It was always possible to get more money while speculating in any basket of Commodities. But it's not always more possible to replace your losses.