BitCoin: an alternate currency

Discussion in 'West Mall' started by Bevo Incognito, May 23, 2011.

  1. bystander

    bystander 10,000+ Posts

    YES! I got that email. A-holes.
     
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  2. Mr. Deez

    Mr. Deez Beer Prophet

    Believe me. I see the appeal. It's a global currency that operates across national lines. Furthermore, I understand the worry about the dollar. Our debt is enormous, but even worse, we don't have a solution. The politicians don't care. The Right wants taxes low and defense spending high. The Left wants social spending high. Both have realized that they can "compromise" by both taking their spending and tax priorities and running up deficits. We can blame the politicians all we want, but the reality is that they only do that because the public is ok with it. Well, so long as that's the dynamic, our debt is going to continue to explode. We're not going default on it, because it would look bad, and people will stop buying our bonds. We're instead going to monetize our debt by printing money and inflating the debt until it's manageable. In theory, a non-sovereign currency gets you around that problem. However, I can see some major problems that I can't see being overcome.

    First, Bitcoin will always have to compete with sovereign currencies, because governments will always do business in their own currencies and because countries will never want to share currencies with other countries that have different values and priorities. People in the United States, Europe, China, Japan, and Canada aren't going to share a currency with Somalia and Tanzania.

    Second, the problems that are present with sovereign currencies can still happen with Bitcoin just for different reasons. Governments may not be able to use them to monetize sovereign debt, but somebody will figure out how to scam or "counterfeit" it. Once that happens, the house of cards falls apart and probably does so suddenly. At least the USD and the EUR are turning to crap gradually. Lol
     
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  3. Monahorns

    Monahorns 5,000+ Posts

    It's not that simple. Printing money leads to price inflation and economic bubbles bursting. If the Fed and US gov care about those things, they kind of do, then they will be constrained in how much money they can create to pay for stuff. The more they try it the more it will hurt the economy.

    Also, not sure Bitcoin or similar alternatives will ALWAYS compete with legal tender. They currently do and that puts them at a disadvantage. I think that is enough to say.

    Not sure why the US cares if Somalians use dollars. US banks don't want Somalian banks to create more dollars because they want to control the value. I think it is more correct to say that Somalian government doesn't want their people to use US$ because they don't control it and can't manipulate it. The countries with weaker currencies are the ones where the government will want to keep more valuable currency out of their markets.

    Possible counterfeiting of bitcoin isn't a weakness currently. So it really isn't a factor in keeping it from being more widely used. Plus, governments already counterfeit. That is what monetizing debt is. That is one of the big reasons to find alternatives to legal tender, it isn't a reason to keep from using them, yet.
     
  4. Mr. Deez

    Mr. Deez Beer Prophet

    Of course it leads to price inflation and all kinds of problems. If it didn't, there'd be no reason not to monetize debt. Despite that, we're willing to take those risks.

    You're nitpicking a little. No, we don't care if Somalis use US dollars. However, we're not going to share an official currency with them, because it would put us in the same situation with them that the Eurozone is in with Greece.

    This is true. My point is that what is often claimed to be a Bitcoin advantage actually isn't - certainly not in the long term.
     
  5. Monahorns

    Monahorns 5,000+ Posts

    Maybe I am but I am not trying to. Part of it is what does "share" mean to you? I was trying to describe the reasons why the US would care or not. The US central bankers would not want to give any power over to Somalian banks to affect the supply of dollars. So if you mean that US banks don't want to include Somalian banks in the US banking system I agree.

    But even your example I think is backwards. Greece using the Euro doesn't hurt Germany or France it actually helps them. It hurts Greece. They were talking about leaving the EU for a while because they wanted to monetize their own debt but Germany didn't let the because they would get paid back in less valuable currency. They actually want Greece to be tied to their (the EU's) banking system.

    Maybe I have it backwards but that is what I read a couple of years ago.
     
  6. Mr. Deez

    Mr. Deez Beer Prophet

    It's not a simple thing. Keep in mind that Greece chose to adopt the Euro. It wasn't forced on them. It helps some in Greece and some in Germany, and it hurts some in Greece and some in Germany. It also depends on the situation. It helps Germany when it comes to trade. It doesn't help Germany when they have to bailout Greece to keep their screwups from damaging Germany's currency and fleecing German creditors. Trust me. The UK was happy not to be caught up in that mess.
     
  7. bystander

    bystander 10,000+ Posts

    Here's a poem I wrote that touches on human beginnings, barter, communes and the evolution of man:


    Egalitarianism

    Let there be light
    Let there be man
    Give him a garden
    Give him a companion
    It is all so very simple
    A world just for two
    Nature will provide
    Now what should they do?

    The seasons are learned
    Along with day and night
    There are dangers in the wild
    What about wrong and right?
    The beauty of one another
    Bring them together
    One day something happened
    There was more to consider

    There was a baby to feed
    And other families emerged
    They were drawn by need
    Their problems converged
    Food, shelter, water, safety
    These things required action
    Someone must do something
    Reality caused a reaction

    But who would do what?
    Kill an animal, lift a stone
    Are they a village?
    Or to each his own?
    Who would decide?
    Who would object?
    Did they accept?
    Or did they reject?

    One selfish man
    And a plan will fail
    One greedy man
    And the garden is for sale
    Can a man live for need
    And not for wants?
    Can a man save a life
    And accept only thanks?

    Will a man read a book
    And study until he sleeps?
    And then use his knowledge
    And reject the reward he reaps?
    Is this the way to achieve greatness
    No discernment among men?
    Everyone the same
    No matter how driven?

    The ocean beckons
    As do the mountains
    The lakes and the streams
    Are natures fountains
    Will they be cared for
    If we live wild and free?
    Will a man be happy
    Not owning what he can see?

    And so the rock must be lifted
    And we look around the cave
    A man’s back is broken
    Another says, “I’m no slave”
    So the rock remains
    As do we in the cave
    Who will get food tonight?
    “It’s not my turn” he said with a wave

    How much is too much
    For you to have all you need?
    How much is too much
    Before you notice the greed?
    Think of it this way
    You ask a man to play a flute
    He can make you smile
    But will praise be enough fruit?

    A good man will share what he has
    And he will accept what he receives
    But how many good men do you know?
    And how many are thieves?
    Would you rather wear a fur
    Or harness the heat?
    Would you rather live outdoors
    Or in a home on a nice street?

    And who will do this for you
    Without their just reward?
    Can you live like an animal
    Or accept the monetary sword?
    Where do we begin
    If nobody will cooperate
    Where do we begin
    When it’s too late?

    And so do you want my wool
    In trade for your milk?
    But the home I built for you
    Requires that I receive silk
    But milk is all I have
    So then live on the land
    How can we accommodate
    If you reject what is in my hand?

    It becomes a matter of trust
    I say what I render
    Equals what you accept
    As this paper is legal tender
    And you agree
    Even though paper is not milk
    Because now I will build your house
    Because now I can buy my silk

    And in this way
    Our wants become cultivated
    And the lazy man
    Is suddenly motivated
    As the thinking man observes
    The power of the capitalist tool
    And the rivers of paper
    That once was milk and wool

    He wonders how it came to pass
    That a world of cows and sheep
    Became one of oil and gas
    It happened while some did sleep
    In the fury of comfort and reward
    And technological devices
    Are we better off
    Have we invented new vices?

    I long for my children’s comfort
    But at what cost to another?
    Is it a zero sum game
    With a winner and a loser?
    Will the next big thing happen
    Without their just reward
    Should we just pray to God
    And put down the monetary sword?

    Is there consensus among men
    That can ever be reached?
    Or will we always fail
    Will egalitarianism be breached?
    Everyone the same
    Everyone equal
    Will we ever know
    Are we God’s people

    I wonder of these things
    As we print more and more
    The paper is all that matters
    We want ours and all else we ignore
    Is there a limit
    On the value of wool and milk
    Will we continue as we are
    Or rather destroy all we ever built?
     
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  8. bystander

    bystander 10,000+ Posts

    What I tried to do with the poem was start everything from scratch with a group of innocent good faith beings trying to forge a life together. The rhymes increased the difficulty a tad but I was trying to layer it up and up to get to the point of the piece of paper that we are now comparing to a light on the computer. I didn't take it as far as Bitcoin.
     
  9. Driver 8

    Driver 8 Amor Fati

    I would submit that modern fiat like USD are no less imaginary, it's just that it is a familiar and well established fiction that we are all heavily invested in. And it works well enough for now.
     
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  10. bystander

    bystander 10,000+ Posts

    I don't think he's saying that. CLEARLY the US dollar could be categorized the same as a Bitcoin but our history, the backing of the confidence factor, FDIC insurance, the valuation of our assets and oil in US dollars make the relative fiction the difference between lust and love; you feel both but only one means something (until it doesn't; ha).
     
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  11. Mr. Deez

    Mr. Deez Beer Prophet

    It is imaginary in the sense that it's "just paper." However, it is backed up by something. We may not have a lot of faith in that something and may not always trust it, but it is something.

    The Bitcoin isn't even paper, and it isn't backed up by any institution - trustworthy or not.

    Frankly, the same argument could be made of gold. Gold is said to have "inherent value," but it really doesn't. Gold is valuable because people simply choose to value it. It's a largely subjective value.
     
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  12. bystander

    bystander 10,000+ Posts

    That's how I feel about it. Bitcoin is a light on a computer. Gold can't do anything for you. Maybe we should go back to barter. What about shares of stock in Enron? My ex lost $100K and that was a company. There is so much we trust. Paper money is convenience because of the headaches inherent in barter. We'd all have to hang out at the farmer's market everyday and what would we trade for food? At least beautiful women can trade their bodies. The rest of would have to cultivate something with inherent value and it has to be inherent value that someone wants at the moment or else you're SOL.

    Yes, we've all agreed on the paper. It has value because we believe in it. I'm 60 years old and my family came before me. It's always worked. Always.
     
  13. Dionysus

    Dionysus Idoit Admin

    Money is just a technology humans have created, an abstraction of value. In the past it has been sea shells, clams, wampum beads, cattle — various artifacts that people agreed to value and trade.

    Gold has value for certain industrial and ornamental uses, but its classification as money and a store of value is based on other key properties, namely its scarcity and difficulty to produce (“unforgeable costliness” -Nick Szabo).

    The Bitcoin proposition (“digital gold”) is similar. Bitcoin miners have to invest huge amounts of computational power and electricity to order transactions, generate new bitcoins, and cryptographically secure the network. It is game theory in action: playing by the rules is incentivized and rewarded with new bitcoins; attempts to hijack the network and steal funds will quickly be recognized by other network participants (validating nodes), causing the miner to be rejected from the network, left with their high costs and no chance of reward. That’s the unforgeable costliness. The scarcity is the 21 million cap on bitcoin. As of April last year 17 million have been mined.

    The argument is that, if bitcoin is “backed” by anything it is this difficulty/costliness and the security of the distributed network. To the extent that people trust this model it accrues value by consensus.
     
  14. Monahorns

    Monahorns 5,000+ Posts

    Value is subjective. It is created in the will of human beings. Value is never inherent or objective.

    This issue isn't there being inherent value. The issue is that people broadly see gold as having utility, from ancient times until now. Paper doesn't have the same utility and it is not as scarce.
     
  15. Joe Fan

    Joe Fan 10,000+ Posts

    "John McAfee, the eccentric antivirus pioneer known for his brushes with the law, said he has spoken with Bitcoin creator Satoshi Nakamoto and plans to reveal the person’s identity."

    Bloomberg - Are you a robot?
     
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  16. Clean

    Clean 5,000+ Posts

    McAfee is an interesting guy. But, he's also a prolific liar and attention *****. On his Wikipedia page he is quoted as saying that the price of one bitcoin would jump to $500,000 within three years, and, if not, he'd eat his own dick on national television.
     
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  17. Dionysus

    Dionysus Idoit Admin

    I suspect the statement “Facebook would aim to keep the coin's value stable” means they would peg it to USD like some of the “stablecoins” out there.

    ------------------------

    USA TODAY:
    Facebook considering its own bitcoin for payments


    SAN FRANCISCO — The Wall Street Journal reports that Facebook plans a cryptocurrency-based payment system that it could launch for billions of users worldwide.

    The system would use a digital coin similar to bitcoin, but different in that Facebook would aim to keep the coin's value stable. Bitcoin and similar cryptocurrencies have been susceptible to wild fluctuations in value.

    It could reportedly undermine credit cards by sidestepping the processing fees that generate much of their revenue.

    The Journal report cited unidentified people familiar with the matter. It said Facebook is recruiting dozens of financial firms and online merchants to launch the network. Facebook's plans may include ways to financially reward users who interact with ads or other features.

    Facebook says only that it is exploring many different applications for cryptocurrency technology.
     
  18. Statalyzer

    Statalyzer 10,000+ Posts

    I've seen plenty times where a scammer's online threat is real and they still demand payments in bitcoin from people. It's pretty stupid as the average person getting caught by those is going to have no clue how to use bitcoin in the first place.
     
    Last edited: May 8, 2019
  19. Driver 8

    Driver 8 Amor Fati

    Bitcoin the last 3 months
    Just crossed 10k
    What's going on?

    btc10k.png
     
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  20. Musburger1

    Musburger1 2,500+ Posts

    When there is instability and fear, people, especially wealthy people, tend to move assets toward what they perceive as a safe haven. Traditionally this might have been gold. Now it might be cryptocurrency. I expect that as either the economy deteriorates or the prospect of war increases, bitcoin will rise.
     
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  21. Monahorns

    Monahorns 5,000+ Posts

    Bitcoin value increases shows why credit expansion/low interest rates is such a bad deal. Bitcoin value goes up because your pay check $s value is going down.
     
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  22. Statalyzer

    Statalyzer 10,000+ Posts

    I suspect that when it went up, after a surprisingly long amount of time that was both stable and much lower than its peak, a self-fulfilling prophecy happened. Confidence in Bitcoin rose, so people said "oh it's going back up, that means I should buy now", which kept it moving upward and made people more confident in it and thus even more people bought it. Which can work, but can also end up the complete opposite of Buy Low Sell High.

    FWIW, I sold about half of mine when it hit 8k. Took me about two hours to do so, spread over the course of a week, with multiple support requests, and I ended up having to switch wallets to get it to work. And I'm in IT. So again I reiterate, if they can't make it far more intuitive and accessible to the average user, it's unlikely to take hold as something that people use as a regular means of transactions as opposed to essentially being a stock.
     
  23. Monahorns

    Monahorns 5,000+ Posts

    Thanks for that detail. I don't have any bitcoin even though I am interested in alternative currency and crypt in particular.

    For currency to be successful it has to have broad utility meaning, everybody has to know how to use it. The problems you describe sound like self-inflicted problems.
     
  24. Driver 8

    Driver 8 Amor Fati

    Classic FOMO (Fear of Missing Out)
    In late 2017 retail buyers FOMO'd like crazy, buying at 10,000 and 15,000 and higher, and then when it dropped to 4,000 on the sell-off they were like nah, I don't want it at that price

    If you believe it has fundamental value then 4k is a discount, but FOMO is short term price speculation, not investing for the long term
     
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  25. Joe Fan

    Joe Fan 10,000+ Posts

    Biden boosting BTC
    $20,000

    Good for BTC longs, but maybe not a great look for the USD
     
  26. Monahorns

    Monahorns 5,000+ Posts

    USD is suffering from the $3 Trillion printed on Trump's watch.

    I have no doubt Biden is likely to do something worse.

    Bitcoin value is going up for because 1) the $ is losing value, 2) demand going up as $ price is going up and seen as long term value store, 3) people coming around on accepting it is a currency.
     
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  27. Dionysus

    Dionysus Idoit Admin

    And the institutions are coming in now. This is different from the 2017 run-up which was mostly retail and FOMO driven.

    The past year’s chart, March low of $3,858

    btc.png
     
  28. Joe Fan

    Joe Fan 10,000+ Posts

    trigger warning for a bad word in a cartoon

    [​IMG]
     
  29. iatrogenic

    iatrogenic 2,500+ Posts

    Here is an actual name of one of the 4,000+ cryptocurrencies. Its value is up 97% in the last 24 hours:
    [​IMG]
    Chimpion (BNANA)

    Obviously, cryptocurrency is a serious asset and sound investment.
     
    Last edited: Dec 19, 2020
  30. Joe Fan

    Joe Fan 10,000+ Posts

    If Warren Buffett had invested his entire net worth in bitcoin in 2009, he would be worth $719 trillion today
     

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