What are your thoughts on BitCoin?

[Zardnaar]

The way bit coin works isn't it like a pyramid scheme?

Early adopters can mine it easier, but less and less will get mined as time goes on?


I've often thought a more stable crypto currency would be a game with in game currency you can buy gets floated and you can earn the money in game as well.

That means there's a conversion rate to official currency and new currency being minted in game.

So new currency can be created by buying it or whatever the game spits out.

 

[El_Machinae]

I'm not really sure what you're arguing then? Any ponzi or pyramid scheme can feel valuable to you if you believe more people are going to keep buying in, but like you say that value is entirely in your own head. My point though was I highly recommend against it because there's no true value or guarantee of any kind, and as soon as people no longer want it you're screwed.

I'm not really arguing much. I'm discussing how it is and isn't a Ponzi scheme (not all speculative bubbles are Ponzi schemes, and the two concepts don't even need to overlap). Modern buyers are blend of people who think there's a greater fool, who think that Bitcoin can become a type of currency, and who think that Bitcoin can be part of a diversified savings portfolio. Once people shift from thinking of Bitcoin as a way to 'make money' as compared to 'preserve money', we will see what happens.

I have also recommended against Bitcoin, but this is a 1500 post thread. I don't think it fills any holes in our society. Or, if it does, none of those holes are benefited from us buying some, and buying it causes net damage.

 

[Modder_Mode]

A bitcoin seems to have no underlying value outside of just being mathematically pretty.

Modern money/currency really is no different to Bitcoin though when you think about it, it really is just a number in a banks system as a fiat currency unlike the old days where the currency was backed by gold or silver. We as consumers agree that the USD has value, the whole concept of the modern monetary system really is a bit of shambles and why I said in another thread I'm not a big fan of fractional reserve banking but the reality is it's the only system that is going to work for our lifestyles.

The problem is that Bitcoin does not scale well and thus the transaction costs become too large for a serious currency. So waiting for it to get increasingly adopted is futile.

That's where Ripple comes into the picture, it's transactions costs are ridiculously small compared to other cryptos, it's slowly being adopted by financial institutions, time will tell how successful it will be.

Bitcoin is depressing..used for black market, criminal underground etc payments which always was the only purpose besides gambling on their price.

Bitcoin is decentralized and said to have been originally developed to avoid another GFC crisis in which the banks and financial institutions were bailed out by Obama and the general public left to pick up the tab for these robber barons, having Bitcoin hypothetically would mean people could switch to Bitcoin and completely turn their backs on the USD. The reality is Obama turned his back on the general public, this really was the one and only moment when the reset button could have been pushed.

The way bit coin works isn't it like a pyramid scheme?

Early adopters can mine it easier, but less and less will get mined as time goes on?

Yes this is true Bitcoin becomes harder and harder to mine as the algorithms to solve each block become harder and harder requiring more CPU usage to mine, this is deliberately added so it will hold/increase value as per a supply/demand rarity model, it's basically set up like you would mine gold, it becomes harder and harder to mine for gold as the easily available gold that is near the surface of the earth is all but mined, so accessing the gold deeper into the earth costs more money to mine and thus can increase the value of gold.

 

[Zardnaar]

Modern money/currency really is no different to Bitcoin though when you think about it, it really is just a number in a banks system as a fiat currency unlike the old days where the currency was backed by gold or silver. We as consumers agree that the USD has value, the whole concept of the modern monetary system really is a bit of shambles and why I said in another thread I'm not a big fan of fractional reserve banking but the reality is it's the only system that is going to work for our lifestyles.



That's where Ripple comes into the picture, it's transactions costs are ridiculously small compared to other cryptos, it's slowly being adopted by financial institutions, time will tell how successful it will be.



Bitcoin is decentralized and said to have been originally developed to avoid another GFC crisis in which the banks and financial institutions were bailed out by Obama and the general public left to pick up the tab for these robber barons, having Bitcoin hypothetically would mean people could switch to Bitcoin and completely turn their backs on the USD. The reality is Obama turned his back on the general public, this really was the one and only moment when the reset button could have been pushed.



Yes this is true Bitcoin becomes harder and harder to mine as the algorithms to solve each block become harder and harder requiring more CPU usage to mine, this is deliberately added so it will hold/increase value as per a supply/demand rarity model, it's basically set up like you would mine gold, it becomes harder and harder to mine for gold as the easily available gold that is near the surface of the earth is all but mined, so accessing the gold deeper into the earth costs more money to mine and thus can increase the value of gold.

It's not a bad idea in theory.

Problem is all the other cryptocurrencies.

 

[Modder_Mode]

It's not a bad idea in theory.

Problem is all the other cryptocurrencies.

Blockchain technology is interesting and has other uses than currency/money, a technology firm wants to use the technology to completely wipe out piracy in using the technology against intellectual rights thefts especially with movies, I didn't quite understand how they would do this but I do remember reading they are certain they can permanently stop movies being pirated with the blockchain technology.

 

[MaryKB]

Modern money/currency really is no different to Bitcoin though when you think about it, it really is just a number in a banks system as a fiat currency unlike the old days where the currency was backed by gold or silver. We as consumers agree that the USD has value, the whole concept of the modern monetary system really is a bit of shambles and why I said in another thread I'm not a big fan of fractional reserve banking but the reality is it's the only system that is going to work for our lifestyles.

United States dollars are backed by the United States government ... value is guaranteed. You will always be able to pay the US government with US dollars, but no one's doing so with Bitcoin, you have no guarantee that someone will want it. And "backing by gold" is completely meaningless anyway.

 

[Zardnaar]

United States dollars are backed by the United States government ... value is guaranteed. You will always be able to pay the US government with US dollars, but no one's doing so with Bitcoin, you have no guarantee that someone will want it. And "backing by gold" is completely meaningless anyway.

There's a huge amount of faith with money.

You believe in it's value because you have to. Bad things happen when we don't. That stamp of approval from a reputable state/EU is massive.

 

[Modder_Mode]

United States dollars are backed by the United States government ... value is guaranteed. You will always be able to pay the US government with US dollars, but no one's doing so with Bitcoin, you have no guarantee that someone will want it. And "backing by gold" is completely meaningless anyway.

Yes this is true, Bitcoin was designed to be decentralized though to avoid the problems faced with the GFC. I always thought the best way to overthrow corrupt politicians and business people was to just stop accepting local money/currency and transact with a different currency, with wide-scale adoption this is possible, but then the problem arises when the robber barons and corrupt politicians also adopt said money/currency and you're just back at square one again.

Money/currency backed by a gold standard was actually really important and if you have a look at how modern money/currency is made you might be surprised how it all comes about, it's almost printed out of thin air! The debt ceiling complicates the whole process even more. There was a really good video on Youtube a few years ago explaining it all and I highly recommend watching it.

 

[Modder_Mode]

This is the one I was talking about, now take note the presenter has an agenda in regards to gold and silver trading, that's obvious and he doesn't try and hide this, but his presentation is very accurate and unbiased on how the federal reserve works, this video might actually blow your mind on how it all works if you didn't already know, it's one of those videos "if you watch one video, watch this one" type of video.

 

[Zardnaar]

TLDR they print money and we accept it's worth something?

 

[Lexicus]

TLDR they print money and we accept it's worth something?

No, they print money and it's worth something to us because we either use it to pay taxes or we go to jail.

United States dollars are backed by the United States government ... value is guaranteed. You will always be able to pay the US government with US dollars, but no one's doing so with Bitcoin, you have no guarantee that someone will want it. And "backing by gold" is completely meaningless anyway.

I wouldn't say backing by gold was meaningless, exactly, but it certainly did not prevent wild swings in the value of currencies that were attached to the gold standard.

 

[MaryKB]

I mean more trying to switch back to a gold standard, there's really no upside - the only one you get is if absolutely every country uses it, then exchange rates don't fluctuate. But gold can have bigger problems, like prolonging recessions/depressions, harming the economy, and so forth, for pretty much no benefit.

 

[Lexicus]

I mean more trying to switch back to a gold standard, there's really no upside - the only one you get is if absolutely every country uses it, then exchange rates don't fluctuate.

The actually-existing gold standard amounts to class warfare against the working class, because governments inevitably try to retrench living standards in order to preserve the currency's parity with gold. You often see the same problems with a fixed exchange rate.

 

[MaryKB]

In my personal experience, I've found I've met two types of people who want to go back to the gold standard:

- people who know absolutely nothing about economics (but like to pretend they do)
- people who really want to expand our wealth inequality, like what you said

 

[Lexicus]

- people who know absolutely nothing about economics (but like to pretend they do)

The free space in Economic Illiteracy Bingo (a Lexicus Fun-Time Game™) is actually "BaSiC eCoNoMiCs!"

 

[Moriarte]

People talk about bitcoin having no intrinsic/underlying value, but the reality is that other currencies' intrinsic value is completely in the hands of the ruling class and it will depreciate rapidly at any moment said class will deem this "profitable". British oligarchs decide to carve a peace of country for themselves. Result? Pound goes through the floor on a whim of small group of high-seated activists at the expense of everyone else in the public. It's all fine talking about "intrinsic value" when economy is in good shape, when dow is at all time high, etc. But when the time comes this intrinsic value will be re-assigned like it always is: caviar for the rich, fish scales for everyone else. Having currency backed by government is in itself a mechanism to transfer value for the rich, while assigning debt to the general public. So, traditional currencies provide stability at the expense of surrendering all control in the interest of central government. And central (capitalist) government will always put a certain small group ahead of wide population.

Government control is not a bad thing in itself, especially in good times, like now. But it's nice that we finally have an alternative. btc's intrinsic value is the network it creates. There are intrinsic downsides too. One of them: it is subject to free market forces, which, as usual, can prove even more devastating than government oversight. However, volatility problem can significantly diminish with wider adoption.

 

[MaryKB]

People talk about bitcoin having no intrinsic/underlying value, but the reality is that other currencies' intrinsic value is completely in the hands of the ruling class and it will depreciate rapidly at any moment said class will deem this "profitable".

That's not quite what we're talking about - any values can fluctuate, but national currencies are guaranteed to have value. No matter what happens, the United States will always give you value for US dollars, and the United Kingdom will give you value for British pounds, etc. No one is guaranteeing Bitcoin, it's entirely different.

Yes, if you don't trust in the stability of those countries, then you wouldn't value their guarantee - but that's why everyone buys US dollars and unstable banana republics can't find investors.

 

[Lexicus]

Having currency backed by government is in itself a mechanism to transfer value for the rich, while assigning debt to the general public.

This is backwards. Having the government always issue debt instruments to offset deficit spending is arguably a mechanism to transfer value for the rich. Then the government can act as a collection agency for the rich bondholders.

That's not quite what we're talking about - any values can fluctuate, but national currencies are guaranteed to have value. No matter what happens, the United States will always give you value for US dollars, and the United Kingdom will give you value for British pounds, etc. No one is guaranteeing Bitcoin, it's entirely different.

Yeah, to be clear, what has to happen for the US dollar to not have any value is that the US government has to collapse or become crippled.

Yes, if you don't trust in the stability of those countries, then you wouldn't value their guarantee - but that's why everyone buys US dollars and unstable banana republics can't find investors.

And of course the irony here is that the economic policies favored by people whose main policy goal seems to be to maintain the dollar's value against other currencies are precisely the policies likeliest to undermine the health of the US economy and ultimately to depreciate the dollar.

 

[El_Machinae]

Dollars are backed by debt. Originally, dollars were backed by taxes. And then they were backed by gold. But they have inherent value, because they're backed by debt.

A dollar is the least valuable thing you can use to clear your debt

 

[Samson]

Having currency backed by government is in itself a mechanism to transfer value for the rich, while assigning debt to the general public. So, traditional currencies provide stability at the expense of surrendering all control in the interest of central government. And central (capitalist) government will always put a certain small group ahead of wide population.

Who in this model is doing the surrendering? I guess it is the central government who is getting control, in that with a fiat currency they have economic mechanisms that do not exist with a gold backed currency, but who exactly is giving up control?