Bitcoin Forum

Everytime, when I tried to advertise bitcoin to my friends, the typical question they asked is: What is this thing backed by? What's the use of it?

Although I can explain to them that it is backed by mathematics and P2P network, and you can use it to buy anything online, it still does not make them feel safe enough, since that is real money, they are afraid of it's just a scam or a bubble

Just like MBS, CDS, eventually they are backed by a house, which is needed by majority of people, so no matter how abstract in concept and construction they are, they still get accepted. Because a house is a house, even the price crashed to 0, it still can provide some utility and that is the reason the price will never drop too much

"If the USD exchange price of this thing drop to 0, what is the use of it?"
There is an answer for gold/silver/diamond/house, even WoW gold
But there is no answer for bond/stock/options/futures

So it seems bitcoin fall into the second category, e.g. a financial security, and unlike bond/stock/options/futures, it has no underlying base instrument, or to say it is based purely on some promises

If we could find some good use of bitcoin even when the exchange price is 0, then it will flourish for sure

The only reason the price will go to 0 is if there ends up being more than 21 million coins meaning someone has cracked the underlying encryption which allows them to print bitcoins at will.

Let's just suppose the worst case scenario ;)

Some people provide goods/services and accept btc payment, if they could still accept btc payment even btc exchange price is zero, that will give it some basic support, but is there any merchant provide exchange rate independant btc price for their service today?

Bitcoins can be sent in very small amounts. I could send a message using bitcoin transactions.

E would be the lowest, at one satoshi, and Z would be twenty-six (based on this https://i.imgur.com/H5yqeKX.png (https://i.imgur.com/H5yqeKX.png)). Spaces and punctuation could be accounted for too, but would cost extra to communicate. I could send a message in this way by a series of transactions in very small denominations. You would pay a few thousand satoshi to have a method of communication that is completely anonymous.

If the two communicating nodes had an agreed upon cipher they could encode messages in the values sent, and nobody watching would know what was being said, or who was saying it.

I would put money into Bitcoins just to be able to do that.

Bitcoin opens up so many possibilities for creative application.
I'd put money on it for that too

The question suffers from circular logic. In reality, the only way exchange rate would drop to 0 is if you suddenly couldn't do anything with Bitcoin.

It is this kind of thinking that led to some of the ideas the clans using the various galactic currencies in the Galactic Milieu came up with.

Basically if you want to issue a credible currency in a universe of many currencies that all float with respect to each other, one of the ways you can help make your currency seem "credible" is to "back" it with boatloads of each of the other currencies, or even focus on just some of the other currencies. Like, you could keep only US dollars, Japanese Yen, and Swiss francs in your "reserves" (if you were the Brits) or also keep some Brit currency in your reserves (if you were none of the above).

So basically as more and more miners, or stake holders, or interested parties, or Bitcoin Reserve Funds, or Bitcoin Foundations, or whatever, keep more and more quantity of more and more variety of other currencies in stock, poised to buy bitcoins with any time bitcoin's exchange rate with respect to that currency drops, well, then you are playing the Minister of Finance game, or the Royal Exchequer game, or whoever it is in each nation that tries to keep that nation's currency's exchange rates from dropping to zero.

(At what price would YOU snap up any bitcoins you saw going cheap? Would the amount of USD you'd find yourself willing and able to dig up to snap them up with differ for different actual numerical values of the term "cheap"? If so In what way?)

To directly answer your question: what I could do would be "increase the USD exchange price".

It has already been done: bitcoins already had a 0 USD exchange price way back when.

-MarkM-

Let's say instead of being zero instead say it was just a penny, or a fraction of a penny even, instead.

Bitcoin is a protocol for a payment network.  Even valued at a fraction of a penny, bitcoins can be used to send and receive value.

So even if the total dollar value of all ten+ million BTC that currently exist was only valued at about $100K USD (10,800,000 * $0.01 each), there still would be demand for bitcoins to be used for transferring value.

And because it works well for that, there will be more transactions that occur.

But since there are only 10.8 million BTC that exist, the only way to accommodate the greater dollar value of the money transfers (assuming a constant currency velocity) is for the exchange rate to be a higher value.  So the exchange rate rises to meet the level needed for transactions.  And then there is speculation that future demand for the coins for use in sending money will continue to rise.

And you end up to where we are today.

Buy it.

Take all and give the seller a bonus

Do you really want a house that has a market price of 0 by the way? A 'house' is not always a house.

I doubt bitcoin will ever go to 0. While bitcoins isn't backed by any official authority, they are backed by hard work and a dedicated community. So as long as we have people that still believe in Bitcoin, work hard to promote it and have some great businesses, the price will never drop that much (even thou that is probably the jinx and next week it will be back at $10 LMAO).

Just to be clear, bitcoin is not backed by the work that went into it, it is backed by the work people are willing to do to get it. Bitcoin is not backed by the mining equipment people bought for bitcoin, it is backed by all the merchandise people are willing to sell to get bitcoin.

I was getting more at sweat equality in bitcoin how hard people are willing to work to keep it as a strong as it is. While your looking at it from a pure bitcoin being currency and what you get for it.

Its not a realistic scenario, so probably will not happen. The bitcoin is just entering its second growth phase. The dollar would have to start being backed by gold just to make it start having real value again. Its never happened in history ( somebody check me out ) that a fiat currency was reconnected to gold after being taken off it.

here is one hypothetical scenario:

1. Bitcoin price (for whatever reason) drops down to 0, that means there is absolutely no demand for Bitcoins, no one wants to pay even $0.00000001 for BTC 1.
2. The number of transactions on the network will reduce, eventually drop to 0
3. Few or no transactions will means there will be no blocks to mine
4. But also, the reward the miners receive for their work (BTC 25 currently) will be worth 0 and as there is no transactions and fees, the reward will be nullified
5. Many miners will stop their machines, only the ones that are mining for the sport of it and their electricity is free will keep mining empty blocks (is this possible?)
6. The difficulty will collapse dramatically, proportional to the hard-core miners hashing power left on the network
7. These few miners will earn(?) Bitcoins at a rate they never dreamed about, but of course these Bitcoins will be worth 0 at that moment
8. Everyone by default will become a hoarder.
9. All hoarders will wait for one of the two things to happen - someone suddenly decides he need Bitcoin and creates demand for Bitcoins or the end-goal of 21,000,000 million Bitcoins is reached and then the network suddenly stops to a halt, as there is no transactions, no fees, no reward, and no reason to waste electricity on.
10. Years later, someone invents a great application for the well forgotten Bitcoin, resurrects the projects, Bitcoin jumps to $zilion level, then everyone frantically starts searching through their grand parent's computers and USB drives for wallet.dat's with the hopes of becoming Bitcoin zilionaires, again...

What can you do with your  fiat when the government calls a "bank holliday" and devalues your money to 0 ?

This is not true.  It is perfectly valid to mine a block where the only transaction is the coinbase transaction that pays the miner their subsidy.  There are many blocks like this in the blockchain already


The reward will be greater than 0 as long as one person runs one miner for the next 136 years.


Yes it is possible.


Maybe someone will buy two pizzas for 10,000 BTC?  It has happened before.  The moment that happens, bitcoin instantly has a value again (price of 2 pizzas divided by 10,000).  This creates a starting point for competition which can drive the price back up.  (I'll sell 2 pizzas for 9,000 BTC!).

Call me when bitcoin price drop to 0.

I'll sell 2 pizzas for only 8000 bitcoins!

-MarkM-

Furthermore, you don't have to ask "what if...?". The price already was zero before the first trade occurred. People were sending coins back-and-forth just for the heck of it, as coins had no value - because you couldn't do anything useful with them. We've come a long way since then.  By the way, remember "bitcoin faucet"? Somebody was just giving coins away for free, for a long time. That means those coins had zero value - they were given away for free. And yet, at least some of the recipients did find a use for them.

You can pay tax with that money at least ;)

I thought of another one:
http://people.scs.carleton.ca/~clark/biblio/bitcoin/Clark%202011-3.pdf

Very nice call, if we could connect 2 million people that is willing to buy 10 coin at $10 each, then each btc will worth at least $10, similar to the effect of a central bank intervention

So far it is volunteered and non-organized, if we could get support from enough people, make it a mutual agreement, then btc's downside risk will be firmly fixed

Most of the usages of bitcoin I can think of rely on its exchange price, so protect the exchange price should be part of the responsibility of btc community

I'm thinking about a possible scenario where bitcoin were hit by either a severe internal split or an external regulation, where the trust crisis hit it hard and everyone is trying to dump their coin, like what happened with mtgox hack

If bitcoin get mainstream adoption and such an event happened, if there are no fundamental support or exchange rate support, people's faith about cryptocurrency in general will diminish and bitcoin will remain as a computer geek's game in cyberspace

There already is fundamental support for bitcoin. Many of us believe in bitcoin for the advantages it offers over all fiat currencies, not because of any exchange rate. As long as those ideologically motivated individuals find strength in the bitcoin protocol, bitcoin will have value.

OP:

Bitcoin is a money system with some very desirable features that allows for some points called bitcoins to be transferred to anyone, anywhere in the world anytime with practically no chance of fraud via chargebacks, currency debasement or having your bitcoins get blocked or frozen and this doesn't stop being true if these points have no value, so to answer your OP question: The same thing as you can do with it now.

That is free good (http://en.wikipedia.org/wiki/Free_good). Since bitcoin is scarce, it could not be a free good.

If you dont have a card and no checks that happens every Sunday in the Western World.

Cash still works.

If there are many true believers like you then this is out of question, but I doubt how many  :)

Let's change the question: If by some reason the supply of bitcoin were doubled every several year, do you still buy bitcoin when the price crashed?

No, because the price crash will lead to a difficulty drop, which if the situation keeps going will lead to more and more coins pouring out of my magic money machine hardware. ;)

Cheap coins = great time to (re)enter the mining business! :)

-MarkM-

A good rough answer to that question would at least be what has historically happened to other currencies that have become worthless.

Why don't you direct your hashing power towards LTC now?  ;)

I still remember the day that I0coin went online, I hashed out several blocks during the first couple of minutes, and after a day I have hundreds of coins. And then ... less and less people care about it, less and less people know about it, I don't know if the network is still there  :P

Because for me the long term value of the bitcoins, namecoins, devcoins, groupcoins, i0coins, ixcoins and coiledcoins I get by merged-mining seems better than the short sighted attempt to grab tiny amount of high difficulty litecoins.

Plus many of the merged-mine-able coins are low difficulty enough to be vulnerable, they need more hashing not less, once ASICs arrive we will be merged-mining them all with ASICs

-MarkM-

Even though they might have used the "worthless" cash for keeping the stove lit in Weimar Germany, the cash still had value > 0.   Zimbabwe 100 trillion dollar notes trade for more today on eBay than when they were too "worthless" to be used any longer as currency in Zimbabwe.

That's what I worried, bitcoin does not have any forms of such utility, if the exchange rate drops to 0, then it become like any other dead cryptocurrencies

Anyway, as long as this community is here, it won't

It could be used as an unalterable and indestructible proof that some information(e.g., a certian value) is sent from one online identity to another, as long as the infrastructure is still there, fiats can't do this because there is no way you can prove the total amount of money in circulation when the money was given to you. So in case that no more exchange exists, people keeping large amount of bitcoins could still use it as a medium of exchange, or at least as a ledger.

Nah, you can make unalterable timestamps with BBQcoin.

Oh wait, how difficult exactly do you need it to be for a 51% attacker to alter?

(Actually though I think people have pointed before to cheaper timestamping technologies.)

-MarkM-

Realistically, a 51% attack would only happen when the number of Bitcoin users drops to 1, that would be when it really irreversibly dies, otherwise it would be silly to even attempt such an attack, as long as you're not government/some powerful organizations whose sole purpose of involvement is to destroy Bitcoin.

I assure you that ...

If I hold a currency that has been made essentially worthless due to hyperinflation like Germany's Papiermark in 1923, do I really care that it still has some value as a substitute as firewood?    Nearly the entire value is destroyed.  That my worthless currecy is still worth 0.01% of the value that I paid for it means in my mind it was a complete and total loss.  Not a 99.999% loss, but a 100% loss.  What difference is it to me at that point if it were to go from being worth $0.0001 to $0.0000 ?

But since a Bitcoin's worth was greater than zero back before they could be used to buy anything (like back when Laszlo had to nearly beg for someone to take 10,000 of his BTC and in exchange send him a couple of pizzas), I think it is safe to say that bitcoins will always have value above zero, as long as the expectations about the network remain  (i.e., that a 51% attack doesn't happen, and that sha256 and ecsda cryptography are not broken).

@DannyHamilton - the OP is about the use of Bitcoin if the USD exchange price dropped to 0, not about the probability of the USD price dropping to 0. Hence my hypotetical scenario describing what could happen if it dropped to 0

I think most of the posters went on a tangent here, hence IMHO the tread lost its potential to list uses for Bitcoin in this most (albeit highly unrealistic) extreme event

Okay, try a related category: what things / processes are useful yet are worth zero dollars?

Air? No, wait, cylinders of air cost more when full than empty, next...

-MarkM-

sure, its a good analogy, it may invoke useful thoughts...

what about this one?

1. what if USD collapses to 0, because the rest of the world (miraculously) decide they head enough of this.

2. At the same time, BTC worth in other currencies sky-rockets.

3. Finally, after week-long deliberation, the US Senate declares that they could willnot be able to hadle this new cliffhanger and are ruling that they will adopt the BTC as a official USD legal tender with immediate effect.

4. Then overnight the BTC=(old)USD=1.32xEU.

5. All BTC users say bullshit, we will not allow US to adopt Bitcoin as their legal money, as such use will hugely devalue the Bitcoin.


I say "that's interesting", then reach for a fresh packet of popcorn and a new ice-cold coke-zero can from the fridge.

Certainly, and my post pointed out three mistakes and incorrect assumptions in the OP and then went on to provide an additional example of "What you can do with bitcoin if the USD exchange price dropped to 0".

If this community is what gives value to bitcoin, what happens if it fails? The time is getting short for a valid explanation to be brought to light on this. I think it needs to be an open source solution.

Maybe a really simple algorithm such as always stand ready to buy back any bitcoins you sell, for no less than X% of what you sold them for. ?

-MarkM-

Right.  At this point, Bitcoin, as the first successful implementation of a decentralized cryptocurrency, has nonzero collectible, historical, and sentimental value.  Personally if all 21 million were to be dumped on the market, I would bid against goldlyre to possess them all, and I'm sure so would several others.  There is definitely a nonzero floor to the price.

Specific coins or private keys (e.g. Genesis block, even if unspendable) might have even higher value as collectibles.  Who here wouldn't bid at least $1 in an auction for the keys to the first Bitcoins ever mined?

Then the bank would not be required. :)

When the dollar was worth zero, i'd probably exchange to euros instead :)

This community stands for the spiritual support that believe in the bitcoin's long term success

And this spiritual support will not disappear as long as there are people who do not believe in today's debt based monetary system/infinite growth and do not want their financial freedom to be controlled by FED

I foresee that in the coming years of hyperinflation (FED has produced 3x times of money in a very short time, they will pour out soon), there will be more merchants claim that "we only accept bitcoin"  :D

I don't know about the coin itself, but I imagine one could hang themselves with the cord to their mining rig...

If it looks like and acts like a house, then it's a house.

Do you see it happening before 2015?

"What is it good for if it is worth 0" is the same as saying "What is it good for when no one on Earth thinks it's good for anything or has any chance of being worth anything again".

You and/or your friends should instead spend time coming to grips with why people value it in order to see that they aren't all going to stop valuing it randomly at some point in the future.

I would pay someone to develop an easy to use anon msg service though bitcoin. this would help bitcoin grow by huge proportions. It would need to work on mobile devices though.
 

I could see online merchants switching away from credit card to Bitcoin only transactions starting in 2013. I can see Brick and Mortar start doing so in 2015. Apps will need improvement for online usage, then physical wallet devices will need to roll out before making Brick and Mortar purchases popular with Bitcoin.

I don't know of other instances of this, but here is a message sent through Bitcoin transactions.

yocko06 sent me the satoshi sequence 20,8,1,14,11,1,1,25,15,21

The alphabet goes A=1 -> Z=26
two 1s in a row is a space, AA=28

https://i.imgur.com/BgjlilJ.png

'THANK YOU' sent through Bitcoin transactions.

Its pretty much an inverse reaction. The more dollars get unpopular, the more bitcoin gets popular.

01010100 01101000 01100101 00100000 01110000 01100101 01110010 01110011 01101111 01101110 00100000 01110010 01100101 01110011 01110000 01101111 01101110 01110011 01101001 01100010 01101100 01100101 00100000 01100110 01101111 01110010 00100000 01110100 01101000 01100101 00100000 01000010 01101001 01110100 01100011 01101111 01101001 01101110 01101001 01100011 01100001 00100000 01101000 01100001 01100011 01101011 00100000 01110011 01100101 01101110 01110100 00100000 01101111 01110101 01110100 00100000 01100001 00100000 01101101 01100101 01110011 01110011 01100001 01100111 01100101 00100000 01110101 01110011 01101001 01101110 01100111 00100000 01100011 01101111 01101001 01101110 01110011 00100000 01100001 01110011 00100000 01100001 00100000 01100010 01101001 01101110 01100001 01110010 01111001 00100000 01101101 01100101 01110011 01110011 01100001 01100111 01100101 00101110 00001101 00001010

Interesting.  I wasn't aware of that.  What did the message say?

00100010 01000101 01111000 01110000 01100101 01100011 01110100 00100000 01101101 01100001 01110011 01110011 00100000 01101100 01100101 01100001 01101011 00100000 01110011 01101111 01101111 01101110 00100010 00101110 00001101 00001010

then I can just keep playing satoshidice all day

This is a good question, I think i'll keep the bitcoins or i'll start a donations site, where people can leave some btc!

The same thing you can do with gold if the price of gold goes to 0.

Gild baby-slippers? I don't think so...

-MarkM-

the same thing you could always do... hold them or send them to another wallet address....

the ONLY thing you couldn't do was exchange it for USD