Bitcoin Forum

I am a Long-Term Bull.

1. Fundamentally, the block chain technology is the first system in existence featuring a technologically enforced, pre-defined monetary policy which cannot be manipulated. After almost 3 years, Bitcoin is still king of the block chains. In the long run, it trumps fiat money because of its decentralized nature. It trumps precious metals because of its digital nature. It’s also near impossible to counterfeit, unlike Gold and cash.

2. Chart: https://i.imgur.com/U8uDh.png
Technically, the divergence in RSI since August continues (no new low in RSI for the second major time, while price again did a new low). Same with the MACD. All this despite huge sell volumes. The bears are losing control just like the bulls did when price got to 30.

3. Sentiment seems almost completely destroyed, judging from recent polls. Everyone is expecting this thing to fully crash.

I have cash – I always turn into a closet bear when things look bad short term to gather more Bitcoins. I will continue snatching up coins. Our kind is almost ready to take over this market.

Why are you a Long-Term Bull?

+1

Ah, denial.  From $30 to $4, and there are still suckers in the game.

No, from 1$ to 0.5$ to 30$ to 4$. I have made my gains (and took them).

Perhaps you are in denial that Bitcoin might indeed work as a store of value? Perhaps you are in denial that you could be wrong on this one? Downtrend to zero, losing 4$ a month, eh?

Here’s a statistic for you:

All of 2009: practically worthless
Oct. 2010: 0.06$
Oct. 2011: 3.98$

According to you, it will go back to near worthless. Explain why.

  I'm not, I'm agnostic.  It's really the only honest position one can take at the moment, given the public information about bitcoin.

I trust in the technology to monetize the web in a decentralized way. There's a lot of services not possible with any other payment system. The currently existing uses of Bitcoin barely scratch the surface of its full potential.

That's one of the reasons why I'm bullish on Bitcoin adoption. The good thing is, that for most applications the price of 1 BTC does not matter much (ie. they work equally well at 0.1 USD per 1 BTC). Therefore I don't care that much about the actual price of Bitcoin (1 BTC is an arbitrary unit after all). In the long term I expect the price of Bitcoin to go up along with larger adoption though.

BOOM!  Way to drop the reason-bomb!  +1

Because Bitcoin is fucking legendary futuristic and Uranus rules my chart hard.  Plus the surrounding mystery of its creator just adds to the appeal for me.  If I were any more insane, I'd refer to it as the second coming of Christ.

Well, from what I've read long-term bears compare bitcoins to dutch tulips.
NFI how they arrive at this conclusion as tulips were never intended as a currency and bitcoin is.. I think most of it actually is about their wishful thinking that we get such a situation so they can buy it all up.

Alas they are really hidden long-term bulls.

Personally I think bitcoin has yet one more bubble ahead and possibly even bigger one then the last time.  But I am not a long term bull - because the electricity cost look completely crazy for me, I am waiting for the next digital currency that will not bear this cost.

It's a certainty that EVERYBODY, even the investors that bought at $14 think and want the price to be lower in order to buy more. But if it drops too low, can it recover? What if we're committing suicide? On the other had, if price sparks up to 4.7 MANY will sell, wanting to buyback at 3

Well it's a confidence game, and as long as there are early adopters willing to sell this can continue. But not till we are at the accumulative cost of all bitcoin currently in existence. I admit this figure is quite low but once we get near it there is no rational explanation for it to go lower and the figure increases every day.

My point is: Somebody has to own these bitcoins, even at the point of accumulative cost. There are only 2 choices either attribute some value to them or destroy them. The latter makes no sense, at least none I can think of.

without long-term bulls like you guys, the price will crash to 0.1 or lower instantly. I'd like to say thanks. Because of you guys, I can continue to sell the coins I mine every day.

Right this second it's possible to get ~$4 per day on hardware that would have otherwise mined $1.50 worth of bitcoins using $1.20 in power.  You gotta love leveraged speculation.

P.s. Tulips were used as currency in Holland.  They were routinely exchanged for a far wider range of goods and services than bitcoins today.

Well, these power rates are beyond anything the average user has access to. And industrial scale mining does not exist yet.

PPS: does the term "intended to" mean anything to you? People have traded with coal, cigarettes, whiskey, chewing gum and toilet paper but that doesn't mean that it is a currency. Heck bitcoin is even more a currency than gold is, even with it's wider acceptance it is mostly used for jewelry and the currency aspect playing a minor role.
With bitcoin it is almost exclusively a currency, while the hash chain can be used as a verification method of any data.

You’re welcome, enjoy your full subsidy until Peak Bitcoin (end of 2012 I expect).

Please continue regularly dumping at market price so that long term investors get better deals, and the coins get spread to more people. Thank you!

Also, I just added a chart for my technical picture in the OP. https://i.imgur.com/U8uDh.png

Bull = bull
Bear = bull in disguise
Someone yet to hear of bitcoins = bull waiting to happen

Would some people like to talk down the value of bitcoins so they can get in cheaper?  Sure.  But bitcoin is a big boy now.  It has been around for a relatively long time (Internet time) and shouldn't be affected by the jawboning of a few people.  The only way one should reduce the value of bitcoins is to sell them off and depress the market.  But that means they already have a bunch if bitcoins to sell, so why would they want to drive down the price of something they already own?  It doesn't make sense.

The comparison with tulips is a little flawed, but it does highlight the maina which people can fall into as they attribute great value to something that essentially has none.  Sure, tulips were never viewed as a serious currency.  They didn't require electricity or run on the internet.  But they did show the trap people can fall into when they think 'it can only go higher from here!' and 'it's different this time!'.  Tulips, dotcoms, houses, bitcoins.  It doesn't matter what it is, people can turn manic.

+1

Btw only one thing is scaring me a little - that somebody find a major security bug. That can make Bitcoin worthless almost instantly. Otherwise there will be still many places where will be Bitcoins better than any other payment system.

There are two kinds of long-term bears, those that think that bitcoin is not a real currency and will therefore fail, and those that think that bitcoin rests on solid foundations but that the circumstances for its potential rise in value will be hampered/suppressed for various reasons (political, etc). I only care to open-mindedly listen to the latter, because the former know nothing about economics. Most of the former aren't even austrian-minded libertarians, which is a prerequisite for any kind of logical discussion on this forum.

I am long-term bullish on digital currency, and to whatever extent bitcoin remains the best example of digital currency, I am long-term bullish on bitcoin too. Perhaps we won't see significant gains until the block reward is halved in 2012, but then again, if everyone expects this to cause a significant drop in miner-caused inflation and thus a rise in bitcoin value, the major buying will begin potentially far before the 25btc/block date. So sometime between then and now, whenever the market determines the best balance of investor fear/cynicism/phantom bears and investor confidence spurred by the 2012 reward change.

When I think of bitcoin I think of the Squeeze Theorem. The fundamentals of bitcoins as digital currency make it indisputable that they will replace paper currency --- backed or unbacked --- in the near future. Now, until then, it can take as wild a course as you can imagine to get there, but ultimately, we know where it is going to go. We are at this point in the present, and we know there is a point in the future where it will be adopted en masse. And so regardless of whatever kind of path you think bitcoin will take, this path will ultimately be squeezed to conform to its necessarily upward destination.

+1

That's really elitist and snobby of you... but it's so true.  ;)

What does the eventual ascendancy of bitcoin or other decentralized cryptocurrency have to do with the current block chain and its exchange rate to the dollar?

"The fundamentals of bitcoins as digital currency make it indisputable that they will replace paper currency --- backed or unbacked --- in the near future"

I'll eat my PC when the USA gives up the US dollar, or the Japanese abandon the Yen, or the Chinese decide the Yuan is no good and decide to use bitcoins.

What, do you have your money invested in US treasuries, then? The Euro? Or even better, Greek bonds? Good luck with that...

None of the above.  Gold, silver, Australian dollars, and paying off mortgage debt.

Ahh, so all of your investments aren't really investments, but rather hedges against currency inflation. Gold and silver have gone up a lot in the past 10 years because the currencies they are denominated in have fallen, and as further fears surface as to the immense overestimation of the West's credit-worthiness. But so has Apple stock. 43-fold. This is an investment, because actual innovation is occurring. That's what bitcoin is, an innovation upon an existing idea. And bitcoin is unlike an investment into a product, or a commodity, or some other valuable, because bitcoin is the unit of value itself. Invest in a revolutionary car, make a small fortune; invest in a revolutionary industry that fuels cars, make a large fortune; invest in a revolutionary unit of value that serves as an intermediary for cars, energy, and anything else, make a Bitcoin fortune. Ford, Rockefeller, Satoshi. This is why I'm a bull.

I have investments in various companies too, in resources and service sectors.  I don't have anything invested in Australian dollars directly, but all the companies are Australian and that has a direct effect on the currency's value through exports, etc.


There is an interesting debate on various investment forums at the moment, that the value of gold, silver, and other commodities that are traditional hedges against inflation will get crushed in the coming years due to credit deflation.  The idea is that no matter how low interest rates go, and how much central banks intervene, if people aren't willing to borrow there is less credit therefore less money in the economy.  A prime example is Japan: effectively 0% interest rates for a decade yet precious little growth.


One of these is not like the other ones, one of these is just not the same.  Maybe we can email Satoshi and arrange an interview for his opinions.  Anyone know where we can contact him?

I think Bitcoin was originally misunderstood (and remains so) by many, including it's own creator, Satoshi, to be a currency despite the market not treating it as a currency.  It is actually just a ledger with arbitrary numbers declared by Satoshi to be currency, and then given a name that reinforces that metaphor.  How could it be a currency before anyone used it at all (let alone not having widespread use throughout the market) as a currency?  I wonder how things would have played out had a less metaphorical name been given to it, such as "BitLedger"...

At best, Bitcoins are a metaphorical commodity (not even a metaphorical currency/money).  It would be very interesting if the market does adopts a metaphorical commodity to be it's currency.  However, I don't think a metaphorical commodity has any chance at all in the market (I see no reason for the market to give up real, tangible commodities for a metaphorical one to use as it's money), but we'll see.  Even a quick google search for metaphorical money seems to provide no results whatsoever, hinting at near zero demand for such a thing.  Perhaps it's just because no one thought of the idea of a "metaphorical money" or "metaphorical commodity" before?  What I do know is that I certainly prefer a real money or commodity to a metaphorical one.

I think Bitcoin as a whole is just a bubble/mania based on a misunderstanding of the technology it is based on and will eventually only be in demand by a very small number of people (much smaller than currently interested in Bitcoin) who may never accept the facts of what Bitcoin really is and is not and will instead cling to treating it's commodity (or less accurately, money) metaphor as reality.  It will take time for the Bitcoin community and potential Bitcoin adopters to understand and/or accept what Bitcoin really is vs. the money metaphor most believe it is.

As more come to accept that the past adoption that we have seen is the result of Satoshi declaring the numbers in the ledger to be money and many others believing his mistake as reality, rather than the understanding that it's merely a ledger with arbitrary numbers that people can manipulate, Bitcoin prices will overall start to tend towards a market price based on reality rather than false beliefs in a commodity or money metaphor.  Maybe a widespread increase in accurate understanding of what Bitcoin is will give Bitcoin an edge over real money or commodities in the market, and adoption will increase...maybe.  However, I have yet to find any reason to expect this to happen.  I'm very interested to see how things play out from here.

By this definition no currency could ever be created.

By that logic, there seems to be near zero demand for "non-metaphorical money" either - what does that tell us? ;)

Yeah, it will also take some time until people finally understand and/or accept that this whole Internet thing is just a series of tubes as well, vs. this global communication network metaphor most believe it is.

Please don't take it personally but that's one of the funniest posts I've read in a while :)

All currency was something or was redemable for something. That something may have been later taken away, but log0s statement stands. A currency is a generally accepted medium of exchange. Implied is that a currency was first exchanged, rather than a currency first, then exchanged.

Clearly commodities were traded before some were generally accepted as currency. I am not aware of any fiat currency established without first backing it by something else. Even the euro was backed by sovereign currency pegs that were backed by the dollar that was at one point backed by gold and silver. That bitcoins are backed by processing power or cryptography is an entirely new 'something' that might be difficult for many to 'generally accept'.

The Tulip industry is still a billion dollar industry today - people still buy tulips.
Even Tulips didn't fail.

Perhaps we could update the tulip bubble meme to... garlic.

http://www.guardian.co.uk/world/2010/jul/30/garlic-chinese-commodity-bubble

"One broker, Li Chunting, told the Global Times newspaper: "Garlic beats any other kind of investment, including stocks and real estate. I just need to wait for several months to enjoy the price difference.""

About a year later...

http://www.chinadaily.com.cn/china/2011-06/19/content_12730878.htm

"Garlic prices have tumbled more than 35 percent over the past three months"

Tulips, dotcoms, garlic, bitcoins.  The market sometimes turns manic and investors pile in for the simple reason that others are piling in.  Soon enough, there's a feedback loop and the price rise becomes exponential.  Inevitably (and it always does) the bubble bursts and prices revert to their long term trend.

There are the usual 'but this time it's different' and 'the market is supported by fundamental X and won't fall because of Y' arguments.

Humanity has been documenting economic bubbles for almost 400 years yet it seems we haven't learned the lesson yet.  We probably never will.

Garlic hasn't failed as such.  It's still tasty in many dishes and there will always be demand.  But that doesn't mean the bubble hasn't failed thousands of speculators who joined the garlic gold rush and invested their savings in it (or worse, borrowed money to invest). 

In some ways the garlic bubble mimicked what we saw with bitcoins.  Early 2011 the price starts to rise.  Speculators eye the gains and invest either directly in buying bitcoins or in hardware to create them.  Supply inevitably massively exceeds demand, people who got in early start to cash out, and the price collapses.  Ipso facto, a classic economic bubble.

netrin already gave a good reply to that immediately after your post: https://bitcointalk.org/index.php?topic=47360.msg565572#msg565572 (https://bitcointalk.org/index.php?topic=47360.msg565572#msg565572)

Feel free to replace "metaphorical" with "fake" or similar and "non-metaphorical" with "real"...I somehow don't expect there to be many people preferring fake or pretend money over real money.

Bitcoin is a decentralized ledger with a set of rules for storing and modifying arbitrary numbers associated with cryptographic keys, is it not?  When you look at the raw block and wallet data, do you see bitcoins anywhere?  (I'm guessing you've never looked.)  No.  There are pieces of data that say which number is associated with which public key (or it's hash), and the rules allow only the corresponding private key to decrease the number associated with that key pair and increase a number associated with a different public key (or it's hash).  That is the Bitcoin system.  Thinking anything more of it than that (concepts like actual "bitcoins", spending bitcoins, receiving bitcoins, losing bitcoins, destroying bitcoins, etc.) are metaphors intended to support the (false) idea of it being a currency.

In a world where real money fuels real wars, yes I'd prefer fake money please.

I'm def a long term bull. Or perhaps one of those little bulls, about a foot tall and stampeding in all my cuteness....
:P In other words, I own very little share in bitcoin but regularly accumulating more!
The ups and downs don't bother me much, nor do the short term prices of electricity to bitcoin. If In the end I lose out, thats okay, I didn't have much to begin with and I have already found decent use for this lovely coin. However, without a deep flaw in the bitcoin concept and code I don't expect it to fail. Perhaps get down below a dollar again for a few months before the demand catches up with the supply or the supply drops when the rate halves.

If it goes even lower, that just means more opportunity for me to buy in deeper.

What is electronic banking?  A bunch of decentralized ledgers with a set of rules for storing and modifying arbitrary numbers associated with routing numbers and account numbers.  When you look at the raw ledgers of the banks, you don't see dollars, you see pieces of data that say which number is associated with what account number and increase that number based upon transactions in or out.

For long term bulls, here an update: http://www.bitcoinbullbear.com/index.html (http://www.bitcoinbullbear.com/index.html)

Bitcoin is pretty close to "god's gift" (and no I'm not religious) to the small-medium sized business operating internationally. It's ability to quickly process payment enables this type of businesses to get things done quickly which is essential when A things go wrong or B your looking for a "cash" discount when trading internationally for smallish sums.

What bitcoin has done for me personally in terms of extra business etc. I've outlined in https://bitcointalk.org/index.php?topic=46254.msg561339#msg561339 (https://bitcointalk.org/index.php?topic=46254.msg561339#msg561339)

Given the above I don't really see bitcoin going to new lows or even staying at current levels for much longer. And the second we get into the "tomes of law" somewhere as a whatever then the sky's the limit. Especially given that that would enable businesses to put bitcoin expenses directly on their books (I see this as the main hurdle to cross atm, but then again I'm not an accountant).

"Real money"? those pieces of paper printed with pyramids and dead presidents.

I agree, but the definition is a bit problematic for practical purposes, because when is something _generally_ accepted on the Internet? Would you say Paypal is generally accepted? Credit cards? (yes they are payment systems, but what about WoW gold, Facebook credits etc...) By that definition there will probably never be such a thing as an Internet currency - yet by common terms we have several. My point is that the definition of "generally accepted" is so vague and difficult to apply to the Internet that it doesn't really help as an argument and for most practical purposes, currencies are "created" (ie, nobody disagreed when you called the Euro a currency even before it existed in physical form). But anyway - Satoshi did not introduce an electronic currency but an "electronic cash system" so the argument does not even apply.

I say: Bitcoin is a currency, because it is generally accepted as a medium of exchange within the Bitcoin community. It was from the beginning, albeit the Bitcoin community was smaller then.

What is fake and what is real? Are the bits and bytes on the storage system of your bank which happen to correlate with your bank account's balance "real money"? People provide goods and services in exchange for that bits and bytes and that's the only thing that matters. Again, the distinction between "real" or "metaphorical" money becomes somewhat moot - some people provide goods and services for certain bits and bytes in the blockchain, so where's the problem?

Don't worry, I have been working with the Bitcoin code and raw transaction data for quite some time now and you are right, Bitcoin is just a kind of abstract concept - a name we give the balance of the ledger of some cryptographic keys. But you know what - people deal with such abstract concepts all the time.

Your arguments are highly theoretical and have about the same merit as someone arguing that forests cannot exist because all there really ever is, is a collection of trees and it will take some time until people finally realize they have been wrong all the time when they thought of going for a walk in a forest.

Again, nothing personal - have fun :)

I have serious concerns regarding bitcoin's susceptibility to price manipulation by a determined entity with deep pockets. I also question its inherent value and scarcity.

Currently the inherent value of a bitcoin is self-reflexive - the cost of producing a bitcoin - determined by the rate at which they are generated. The entire utility of a bitcoin is not the coin but the protocol, neither of which have a utility cost to the user currently. As long as the exchange price decreases (which we should expect with its current inherently massive monetary inflation), the velocity of exchange should reflect its use purely as an exchange of value but not a store of value. In other words, the only immediately rational purpose of a bitcoin today is to exchange for fiat, transact, confirm, then sell the bitcoin as quickly as possible to the next transacting party. With 100-500 million confirmed transactions possible each day, we are not reaching any theoretic limitations. Bitcoins are not scarce and are grossly over bought.

I believe Satoshi was correct to bestow an eventual greater role to transaction fees over block rewards. When a transaction has a cost, then we can measure the market value of a bitcoin transaction. Unfortunately the value of a bitcoin is more difficult to measure because the cost of a transaction is generally independent of the number of bitcoins sent. The inherent value of a bitcoin is not the cost of electricity, it is only the utility value of the secure transactions that bitcoin make possible.

An international bank transfer cost me 5 EUR and took a short week. Apparently I'm willing to give my credit card company 2% of my instantaneous purchases, perhaps 0.5 EUR per transaction. A one hour confirmed bitcoin transaction costs (at most) 0.0005 BTC. Even if bitcoin were used only as a transaction protocol, we never denominated prices in bitcoin, but could be used everywhere credit cards are accepted today, would 1 BTC = 1000 EUR ? I think I'm bullish again!

+1

This is exactly the point I've been trying to make for ages, when discussing bitcoin and value. Thanks for adding the numbers to it. Then factor in the less waiting time as well for businesses and ordinary peeps and well start seeing even higher numbers.

The main hurdle towards potentially reaching those numbers is legally becoming something token/digital commodity/ currency/ currency overlay/ whatever in just one fairly civilized country once that happens:

http://www.gifs-paradise.com/animated_gifs/rockets/animated-gifs-rockets-05.gif

Interesting to watch you edit your post multiple times and changing your sentiment during the process :)
I often find it helpful myself to express my thoughts in written form, re-reading and editing them a bunch of times until I'm happy with them.

I totally agree with you on the value of Bitcoin as a secure medium of exchange, but remember that it is a secure store of value at the same time. In fact, its probably the most secure store of value in the world (albeit still a very volatile one).

It's this dual-use function of Bitcoin which gives me confidence in the long run, but hey - its an experiment in its infancy. All kinds of things may happen, but if you ask me, its certainly one of the most exciting social/economical and technological experiments to watch.

I read somewhere that bitcoin has been declared a curency overlay by one of the European countries. I dont remember who but it was only a couple of weeks ago.

Nothing official it seems, just a rumour on IRC:
https://bitcointalk.org/index.php?topic=41155.40

In other news...

http://edition.cnn.com/2011/10/09/tech/mobile/google-mobile-wallet/index.html

Missed opportunity to get bitcoin mentioned.  Someone go spam the comments section  :D

This is exactly how I feel too.

People created ledgers for the purpose of keeping accounts of a good (such as ounces of gold or dollars).  The numbers in electronic banking ledgers do this.  The numbers in bitcoin do not represent any good.

Of course they do - whenever I buy something with Bitcoins, the corresponding entry in the Bitcoin ledger is a representation of the value of that good or service at that point in time - what else would it be?

WoW gold is pretend currency used in a game.  People value it for it's necessity in gameplay.  This value, however, gives it much more potential than Bitcoin to become a currency, as it could be better argued than Bitcoin that it is a commodity.  If you were to consider it a commodity, it's still not anywhere close to (and almost certainly never will be) as marketable as other commodities that have become money, and therefore is not going to become a real money itself anytime soon.

Facebook credits are merely a dollar substitute (1/10th of a dollar, to be exact).  The numbers in the "facebook credit" ledger are representing dollars, not "facebook credits".

When Satoshi created Bitcoin, he asserted that it was a currency long before one was ever traded for the first time.  Someone else adopted it, probably under the false belief that it was a currency (because that's what Satoshi told them), before the first trade as well (there couldn't be a trade until a second person adopted it).  There is a time-based conflict.  They believed it to be a currency before even the first trade ever, yet if something was never traded, it by definition cannot even be a commodity, let alone a currency.  On top of that, if only two people are trading it, it is certainly only barter, otherwise all goods traded would be considered currency.  Their assertions and beliefs contradicted reality.  Yet why have the vast majority of Bitcoin adopters adopted Bitcoin?  Because they believe it either already is a currency or might become one in the future.  After all, this is what http://bitcoin.org, Satoshi's whitepaper introducing Bitcoin (written and released before the first trade of any Bitcoins occurred), and most other Bitcoin users assert, and it is even implied in the name "Bitcoin".  Without these false beliefs, Bitcoin would almost certainly have never had anywhere even remotely close to the adoption it has seen (which is still minuscule compared to real commodities and money).  Bitcoin prices would most likely be a small fraction of a penny today, assuming people even saw any reason to metaphorically "trade" them at all, when considering the actually implementation of the system (vs. potential more marketable implementations).

Again, the numbers in the bank's storage system are representing dollars.  The numbers in the Bitcoin system are not representing anything.

You don't think it matters that people are willing to offer goods and services for Bitcoins under the false belief that it is or will become a money?  This doesn't have the potential to create a Bitcoin bubble?  Have Bitcoin prices been a reflection or reality or a reflection of false beliefs?

I think that as soon as a person that was offering goods for bitcoins understands that Bitcoin is not even a commodity, let alone a money, and that most other Bitcoin users falsely believe it is a money, their plans regarding their trade of Bitcoins are going to change.  They may continue to accept them, because others that falsely believe it is or will become a money (and a few that know better) are willing to pay so much for them.  But their expectations of Bitcoin's future will likely change, and they will adjust their actions and plans accordingly (cash out immediately or when prices are relatively high after selling non-money goods, or be prepared to sell when they see signs of a price crash, or whatever makes sense to them in their situation).

Prices will adjust to reflect reality as more people understand their beliefs were unfounded.

This isn't about whether or not people can deal with abstract concepts.  This is about people falsely believing a metaphor to be the reality rather than just a metaphor.

The word "forest" is basically defined as a collection of trees (well, an area with a high density of trees).  Trees are real, and areas of land with a high density of trees are also real.  Comparing my argument to that suggests you do not understand my argument.  My argument is actually similar to the claim that the actions of an organization (such as a government or a business) are metaphorical, as it is really the people that are considered a part of that organization that are taking those actions.

Entries in your bank's ledger do not represent the value of a good you bought with your dollars.  They represent the dollars deposited and withdrawn from your account.

This discussion is getting a sillyness flag from me. The dollar and Bitcoin are no different in terms of "being backed up" or "being real". Both are worth something only because people trust that you can get goods with them, and usually a certain amount of certain goods. Bitcoin, still being very small, additionally requires the trust that you can change it to dollars or euro because it can't be used to buy everything yet. Or it can, in theory, but it's not convenient for most people.

But beyond this dollar is actually more worthless than Bitcoin, because Bitcoin at least has cryptography and a strong p2p network behind it. The dollar has nothing but a broken, centralized banking system based on exponential debt that tries hard as hell to hide the fact that they're printing so much money that would cause hyperinflation right now if people knew about it, but don't. That hiding is just delaying the inevitable though.

Sources: http://inflationdata.com/inflation/inflation_articles/m3_money_supply.asp

The bottom line is that fundamentally Bitcoin is no less a currency than the dollar and I believe that in some ways it's actually more of a currency. Consider what currency has been, for most of human history. The current type of fiat currency was adopted in the 70's and it's not backed by anything and the rules for creating more and more money (through debt) have become more and more loose to support ever increasing debt based "growth".

Bitcoin however is scarce, decentralized, can't be controlled and is secure. It only requires that people trust it as a currency, just like any currency does. It's very rare that a currency is actually worth something for something else than the scarcity needed for it to work as a medium of exchange. Gold is used heavily by the industry though and it isn't used as a medium of exchange very much, not anymore.

Gold and silver have always been valued and are good stores of value, not because they are useful for much in themselves (traditionally at least), but mostly because they have known scarcity and are impossible to replicate. And of course the beauty of these metals has also been one reason why they are so highly valued.

What is funny with the dollar is that we don't even know the total amount of dollars in existence anymore, it's unknown. This is a very good recipe for disaster. It's quite possibly more important than anything else, for a currency, that we know how much of it there is and how much more is created or found. With Bitcoins this is very clear, with dollars it certainly isn't.

Ha ha ha ha... You saw that? It also didn't help that it was 04:00 in the morning my time.

Log0s, while no money has (to my knowledge) been a currency first then a commodity with utility, I don't think the chronology of suspended disbelief is relevant. However related, what is relevant in my opinion, is that a money has a base value. Gold can never hyperinflate for two reasons: not only predictable scarcity, but an inherent base utility and value.

However, as Wareen witnessed in my previous masturbation of calculus, I believe a bitcoin transaction's only inherent value is its utility as a superior transaction. Unfortunately the value of each bitcoin is only supported by the friction of its transaction rate, which if you followed my masterpiece above, is practically unlimited.

Wareen, it is arguable whether bitcoin is a good INHERENT store of value.  You've certainly got two years of history on the side of your argument. However, what prevents a sufficiently determined central bank from maintaining a bitcoin exchange rate plunge? Could this central bank maintain the plunge even with a growing user base? I posit yes, but I am at a loss to quantify the cost (you can bet I've already re-edited this post several times trying :D).

Technomage, the collapse of M3 appreciates M0 dollars, sufficiently that tripling M0 has had no net effect on the gross money supply. All money is faith, it's just the level of abstraction people are willing to accept or ignore.

Contrary to popular belief, the dollar is backed by something. If you are a citizen of the United States, there is a certain currency you need to pay taxes in. There is no way to avoid purchasing the USD in some way without being punished. Therefore, your USD will always be exchangable for "protection" and "non-punishment". This is why the USD is refered as "fiat" currency, because it is backed by and only by law.

Therefore, the dollar is effectively backed at the moment by the law enacted by the Government of the United States.

Bitcoin is currently not backed by any law, so it cannot yet be considered "fiat" currency. There is no promise of any goods exchangable for Bitcoin at the moment, as it has been demonstrated numerous times when sellers renege on their prices. There is also no promise of safety from holding bitcoins. This is not to say Bitcoin is unable to be backed, as it fully can be.

For example, in theory it is possible to sustainably back Bitcoin with gold. Since only $21000000 will be produced, if I obtain 21000oz of gold I can back every 1000 bitcoins with 1 oz of gold. This is a promise, and therefore a backing of Bitcoin.

Both dollars and bitcoin are backed by a mutable value denominated in that same value.

If the value of a dollar was reduced to the value of a grain of salt, then taxes would be similarly related to a grain of salt.

Bitcoin value is backed by the electricity cost while the electricity cost maintains a strong correlation to the value of a bitcoin. If a bitcoin were worth one grain of salt, the electricity cost would be roughly one grain of salt.

However, bitcoin transactions have a utility value, and the value of a bitcoin will eventually be determined by the market's assertion of a transaction fee. But we haven't seen real market values because we have not met any practical limits.

It's a valid point that the dollar is legal tender, and I'm well aware of this. But I don't really consider that the same kind of backing. That only means that if you are a merchant in the US you have to accept USD, right? It has nothing to do with the kind of backing I was talking about. The amount of dollars in existence and the expansions of the money supply aren't really backed by anything. From that perspective Bitcoin is backed, by cryptography and the network.

The trust required for commerce can form regardless of what the state decides is official, it can form even without a state. Considering most of human history, the issue of legal tender is not that significant. A medium of exchange is a medium of exchange if both the seller and buyer agree that it is.

But I do get the point. Bitcoin is less regulated in many ways but this makes it no less of a currency, just makes it more unreliable in some cases. This can be considered a bad thing and I do agree in part. This is why I've already suggested many times that we need to get community sites going where we actively review all BTC merchants so that the trust required for proper commerce can form.

+1
Yes. I think merchants rating merchants would also be beneficial.

I think the discussion of 'backing' is nonsense. The cryptography and hash difficulty of bitcoin is analogous to anti-counterfeiting measures. Neither of these say anything of the exchange value of the currency. Only the authenticity of each unit.

The unique properties of gold make it difficult to fake and these add to its utility value as a money, it's scarcity only speaks of stability, but neither say anything of its exchange value. Only supply and demand. Same with bitcoins and dollars. Each provide different utilities as money with very different supply rates and demand.

Yep - made me smile while I was having breakfast ;)

While I'm not 100% sure I understand what you mean by a bank maintaining a Bitcoin exchange rate plunge, I think anybody with sufficient capital could repeatedly crash the market, trying to make people lose confidence - but only at an ever increasing cost. If Bitcoin were to be outlawed however, that would surely give its value a big blow.

My case for Bitcoin as a unique store of value however was, that it has never before been possible to put a considerable amount of money in a form (encrypted Bitcoin wallet) that is absolutely safe from theft, has no storage costs, is usable no matter where you are on the globe and cannot even be detected by anyone.

I realize that this is no inherent value and of course depends on the exchange rate, but with a sufficiently mature economy on hopefully sound legal foundations, I see that store of value function becoming increasingly appreciated.

As for the backing: why not set up a "Bitcoin floor fund" (credits for the idea and the term go to apetersson (https://bitcointalk.org/index.php?action=profile;u=17506)) to finally put that discussion to a rest.
Everybody really believing in Bitcoin could contribute to a collective promise to pay a certain amount of gold/USD/EUR/... for Bitcoin in the event of its failure. Henceforth, Bitcoin would be backed by the value of that fund :)

Although I'd personally contribute to such an endeavor, I don't think it's necessary - Bitcoin is already "backed by" all the things people are ready to do for it.

As this discussion seems to get more and more theoretical/philosophical, I don't think I can contribute much more. As for my practical purposes: I regularly buy some Bitcoins, spend some and save some. Call me ignorant, but I don't really care if it is metaphorical-money or not-a-true-currency or only-some-bits-on-a-ledger or not-even-backed-by-anything etc... I'm just happy with the way Bitcoin works and how I can use it. I know I trust the technological foundations - that's what I understand and can be certain of. As for the rest: who knows - it's an experiment and we'll see how it turns out. I for one just use Bitcoin and try to have fun :)

I'm not an American so 'dollar' has no real value to me - no one where I am has to accept dollars - I've never actually seen a real dollar except on Miami Vice (or was it Kojak). 

I would think the cost gets smaller as the price decreases and confidence diminishes. I have dreamed up numerous strategies, but I honestly don't know, and I'd love to see an intelligent discussion on the topic.

That IS an inherent utility value! However, I question whether it is a scarce utility. Numerous (even inferior) alternate chains can provide these utilities. Perhaps the bitcoin network will make it more secure and its size will make transactions more obscure, such that its network effect will make alternatives worthless, but I am not yet sure.

I don't give that any chance of being implemented, effective, nor trusted.

You are being silly. Perhaps exchanging a dollar has extra costs, but I promise if $1000 landed in your pocket, it would be worth several fine dinners and toys where ever you are. I don't use dollars every day either, but I won't pretend it has no value to me today.

I currently live in China - a wink is legal tender here.

Oh, then surely you know very well that a dollar in China is worth more than a dollar in the United States.

The Chinese seem to be dumping their dollars as fast as they can.

Agreed; +1

This is where I have to disagree. Dollars cannot be worthless due to the tax backing, because there is always demand. Bitcoin, in contrast, does not have guarenteed demand because you cannot excange Bitcoin for electricity.

Some interesting statements from http://wiki.mises.org/wiki/Money (http://wiki.mises.org/wiki/Money) (please read the sources cited for further study):

(emphasis added)

All government fiat currencies originated as commodity backed currencies (whether directly or indirectly) before governments broke their promises to make them redeemable in the commodity.


The rules of the Bitcoin system (maximum block sizes, total number of bitcoins, block generation, how people "send" Bitcoins, etc.) are a social contract that anyone can freely agree with or not.

The rules of mathematics are not subject to belief. But the technical details of the bitcoin system makes no assertion of value, only authenticity. According to Mises, bitcoin is perhaps not money. But Ludwig von Mises is dead. We should not extrapolate from what he once said before computers existed to what he might say today.

The bitcoin protocol does provide a serviceable good. But there are very few whose benefit from that service was greater than the cost of that service. In other words, today it is a pain in the ass to obtain bitcoins and very few people have made a transaction for which that difficulty was worth it, in and of itself. Once we have a bunch of bitcoins, acquired due to fascination, then perhaps we begin to see some later benefit. But I think things get interesting if/when anyone who currently offers services on the net can reasonable expect to receive bitcoin and spend them on goods or services the same day without an account on an exchange.

Who's talking about belief?  I'm talking about people agreeing to abide by a certain set of rules.

It's not about who said it, but rather about what they said and whether or not it is logically sound.  My reference to that wiki page was not an appeal to authority, but was an attempt to point people towards further arguments that have already been analyzed and expanded on by many economists (and others have failed to refute).

The Bitcoin system, which is a very ingenious system, has the potential to provide a direct service, but does a bitcoin itself provide a direct service to people?  The only direct service the Bitcoin system that one could argue it currently provides is to "send" bitcoins to others.  But if a bitcoin does not provide a direct service, why are people willing to exchange goods for them?  I believe there is among Bitcoin users a widespread misunderstanding of Bitcoin, and after so much discussion on this thread, a misunderstanding of the concept of money itself.  This calls into question the value of the Bitcoin system since it's only direct service is to allow people to "send" an alleged good which provides no direct service.

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

Your system requires that people trust you as a third party. Bitcoin requires no such trust.

A transaction system which requires no trusted party - this is as revolutionary as email... and like email, it'll take a while for people to realize the ramifications.

Nah; it's totally relevant, otherwise people wouldn't use Bitcoin.

Exactly

You are right that it all revolves around trust.  The fact that you can buy something for dollars (or gold) is because other people trust that whey they in turn need something they'll be able to turn the dollar they received into something else.  This is the same case with bitcoin.   Dollars don't provide any what you call 'direct service' (if you don't use them as a wall paper that is), or 'use value' (in Marks terms I think), they only value is 'exchange value'.  

Yes, your ledger services would be valuable.  The service would solve at least a couple problems including:
- the double coincidence of wants
- time preference for consumption

However, you would need to convince a critical mass of people that your "nums" are somehow superior to other peoples' "nums" such that people would feel confident that the "nums" they control will be worth something at the time they need to trade them for something.  Given that your system has a weak, centralized point of failure and there are better alternatives, it's unlikely your "nums" will gain widespread adoption.

Banks almost work as you describe, except that they introduce new "nums" by lending them at interest (which creates a whole other set of problems).

I still disagree that the ability to pay taxes is not a direct service. I know that I need to pay a certain amount of taxes. So, for me, the dollar is backed: this 1000 dollar bill will be able to pay off 10% of my taxes, so if I get 10 of them they have served a direct service (me not being in jail).

Currently, Bitcoin is not backed this way. However, it can be. That's the extent of my argument.

Wow, did all of you miss this line?

"Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone."

The same is true of Bitcoin.  Despite having full trust in the Bitcoin system, a bitcoin is not a directly serviceable good.

EDIT: To clarify, it was irrelevant as far as my the argument I was making was concerned.  It seems many of you got hung up on something other than the argument that I was making, like the probability of my service gaining wide-spread trust.  However, trust was irrelevant, because even if I were trusted by everyone just as much as they trust the Bitcoin network, the "nums" still would not be a directly serviceable good.

Dollars, like all other fiat money, originated as a commodity backed currency, either with direct backing of a commodity, or indirect backing of a commodity by being backed by another currency that originated as a commodity backed currency.  Bitcoin is not a commodity in itself (only directly serviceable goods can become a commodity), and has no direct or indirect commodity backing it.

It is possible that money started as commodity - but the point is that what differentiates money from commodity is that it has much higher 'exchange value' then 'use value'.  This is really what defines money - so when you have something that has only exchange value and no use value - then it is kind of 'pure money'.

I'm willing to trade all kinds of umarketable, worthless shi...err, I mean "pure money" for your real money.

Money can only emerge in an economy if it is first a directly serviceable good.  If something provides no direct service to anyone (meaning it does not provide a direct means to anyone's desired ends, and is therefore not valued by anyone), why would anyone buy it?  If people realize that it provides no direct service to anyone, and therefore has no value to anyone, and no one is willing to give up something they do value in exchange for it, how could it ever emerge as a money?  What business would accept it?  What person would accept it as a salary?  Social contract based "pure money", metaphorical goods, etc., only have exchange value when there are people buying them that do not fully understand what it is that they are buying.

Bitcoin is, and always has been a bubble.  It's price is disconnected from the reality that it is not a directly serviceable good.

And therein lies the crux of the debate.  Some people, like yourself, believe this statement to be true.  Others do not.

 What other options are there?

Gold? - gets confiscated at customs (the typical $10,000 allowance is getting smaller every day)
Other digital currencies - centralised. Remember eGold? Hmm...

 So is Bitcoin is the only option? Even if it's thought to be going down... it still has utility.

No one has created a decentralized digital system of highly marketable, directly serviceable goods, yet.  I suspect one will be created soon.

Because they think someone else will in turn exchange it for something valuable.  This is based on speculation just like with all other kinds of money and it is really the essence of money.  The use value of all gold in the world is much less then it's current exchange value - the difference is what makes gold money.  Bitcoin does not have use value at all and this is what makes it 'pure money'.

How money emerged naturally is not that important, believing that it can do it only in one way is like people believed that only nature can produce organic matter (http://en.wikipedia.org/wiki/Vitalism) until  Friedrich Wöhler synthesised urea.

namecoin fits that criteria. http://dot-bit.org

edit: i geuss whether namecoin is "highly marketable" remains to be seen at this point.

Log0s, in the past 36 hours, here and elsewhere I've thought you saw something that I was trying to express, but we were using very different words from different angles of attack. But there's a step that I miss and your conclusions surprise me.

I can agree with you that a bitcoin unit was not first a good before it was declared a money and therefor has no inherent value as a commodity. I don't think the order of events matters very much. We could have a money and then discover that it's a wildly useful commodity. But the bottom could always fall out (just like fiat) if it's utility is solely based on its use as a money.

I think your emphasis on the ledger service is the correct perspective. But why don't you see the service as inherently valuable? There exist similar services in various shapes and sizes, but no service has the unique set of properties including a momentous network effect, that bitcoin currently enjoys.

Bitcoin may be a horrible storage of value (arguable), an unreliable unit of account (volatility makes this true), but the system provides a revolutionary exchange of value. So, perhaps today it does not act as money, nor is it a physical commodity. But if you will allow for a new coined term (pun intended) bitcoin transactions are already a valuable fungible "service commodity", from which we can hope the other properties of money will emerge.

It's obvious to me that you do not have an adequate understanding of how money emerges.

This book, especially Chapters 1-3, will be a good start: http://mises.org/rothbard/mes.asp

If you really want dig deeper, you can read this book: http://mises.org/resources.aspx?Id=3250&html=1

It is an emergent social phenomenon that arises out of the subjective values of individuals in the economy.  To create an "artifical money" would require somehow manipulating the subjective valuations of a huge number of individuals in an economy so that they now value the worthless object enough for it to gain widespread adoption.  The only potentially practical way (as the impractical way is to physically alter the brains of people directly) is by communicating false information to them about this object (whether it be convincing them it has some direct serviceableness, or just directly asserting it is a money, or hyping it, or whatever), yet this will almost certainly work for only a short time since more and more people will learn the true nature of this object and realize it's worthlessness, and from then on be less willing to accept it in exchange for something of actual value.  Once you cannot convince anyone that a worthless object is valuable to anyone at all, no one will give up something they value for it.

I have found no reason to believe a currency can emerge when it's valuation is based on false information.

I believe this to be what has been happening with Bitcoin (false beliefs of what it is, unfounded assertions that it is a money, hype, communicating the expectation of future high prices, etc).  Whether or not Satoshi was intentionally communicating false information about Bitcoin (asserting that it is money) is anyone's guess at this point (I think he, like most people in this day of fiat money, had some misunderstandings of money).  Regardless of his intention, his assertion that Bitcoin was a currency back then was incorrect and remains so.  As more and more people begin to understand the nature of what bitcoins really are (or aren't) and how that will prevent it from becoming widely adopted and highly marketable, as people become aware of the realities of bitcoin rather than believing the metaphors to be the reality, their valuations of bitcoin will change, and with that change will be a shift in bitcoin prices, and the bubble will go away as bitcoin prices begin to reflect reality for the first time ever.

Excellent analogy

what does it matter if somebody calls it money and somebody else doesnt, isnt this purely semantics.

those who understand its usefulness will use it (as we are doing) in peer to peer transactions. those who dont see the usefulness wont.

who gives a shit if soembody does not want to call it money. i would be happy if it wasnt called money any way, leave that to wall street and treasury crooks.

if it is not classed as money and i can take payment for services in it i wont be paying taxes with it and that makes me 20% richer straight away for using bitcoins.

While it's popular to believe barter of commodities came first, then currency, then credit, the evolution of money is in fact the opposite. The going school of thought in anthropological economics is that credit emerged from bonding and prestige, then currency for convenient accounting, and then when it collapses, barter. You actually know this is true among friends. "Hey thanks, I owe you one".

When we play a friendly game of poker, we may accept these silly plastic tokens as valuable. Even if we don't 'buy in' nor are rewarded with cash. We even we accept penalties and loans in chips. In fact, while it may be against the rules at many tables, it's entirely conceivable that the plastic tokens can be used to buy goods and services, "I'll throw 5 chips in the pot if we replace this music and play my CD".

We don't need to be 'fooled' that the chips are valuable. They are the accepted unit of account. As long as they are scarce and we believe no one is cheating we may rationally agree to use them for exchange and storage. We only require something more robust as the community of players expands.

Well said.  As for log0s, I would suggest that you not take the writings of popular Austrian economists as dogma.  It is possible they weren't right about everything.  Also, it's possible they would disagree with you and point out that bitcoin is not inherently worthless.  They might see an inherent value in its ability to facilitate an electronic, irreversible, private exchange between any two parties anywhere in the world.  Is it that difficult to imagine that this quality is enough to give rise to its use as money?

Having articulated my perma-bull treatise, my perma-bear is something like this:

Bitcoin units have no inherent value. Even if we accept them as a unit of account, the 35% monetary inflation puts massive downward pressure on prices. The hyperinflation we've experienced (50% depreciation per month) since June may be indicative. Because there is no inherent value, not only could bitcoin exchange prices go to zero, but even the possibility decreases confidence in bitcoin's use as a store of value.

Further more, the only aspect of the bitcoin system that has inherent value is the distributed record and transaction service. While transaction fees and block rewards are denominated in bitcoin and thus represent usage and inflationary taxes, the price in dollars does not reflect the utility cost of a transaction. Until transaction costs are negotiated through market forces, bitcoin should be considered over bought.

Having said that, I feel we are approaching the level of negotiation. I don't mine nor pay much attention to their industry, but I understand that bitcoin miners are finally capitulating, which is a good sign. Of course I enjoy free transactions, but for the health of the bitcoin economy, I would like to see users capitulate and offer transaction fees. When both miners and users negotiate the bitcoin price of a transaction "service commodity", then I believe bitcoin "money" will be fully born.

Hey Steve, while you're on this thread and because it's more relevant here, I'd like to share a snippet I wrote elsewhere:


My train of thought is that you provide an excellent currency agnostic service to merchants, but not to the customer.

With an account (or a pay-as-you-go, passive non-refundable "bitcoin" card), the customer could share the benefits with the merchant, perhaps loyalty rewards or 3% off all purchases. More agnostic, but far more complex/risky the user has a bitcoin/visa/mastercard whose stored value is denominated in bitcoin or dollars as preferred.

I agree that type of object can be exchanged and have an exchange value prior to a discovery of a direct serviceableness (Bitcoin is an example of this).  However, I do not believe that such a type of item will, prior to it becoming a directly serviceable good, become more widely adopted than already existing directly serviceable commodities that have already been used as money for thousands of years.  I also do not believe it would gain any adoption at all in the first place without the first adopters either misunderstanding the concept of money, or intentionally deceiving others in order to acquire valuable goods from them in exchange for worthless items.

The value of the ledger service is dependent on whether the type of object the ledger is capable of keeping account of has a market value.

If a potential customer recognizes the type of object is not a directly serviceable good (a plain number that does not represent an actual good and has no other special meaning or interpretation) and no one else is willing to offer any goods for it, and they don't expect anyone to, they will have no reason to acquire any themselves, and the ledger service will have no customers as it is of no value to them (it is worthless, just like the numbers it keeps account of).

If a potential customer believes that they can benefit in some way by having a larger number in their account on the ledger, they may choose to offer goods to increase their number.  Because they believe they could benefit from having a larger number in their ledger account, they then value the ledger service.

What do you mean by "exchange of value"?  My understanding is that people exchange goods, not some abstract concept of value.

Bitcoin transactions have no value without "bitcoins" having an exchange value, as the only thing normal Bitcoin transactions can metaphorically be used for are to "send bitcoins to someone's address".  If no one was willing to exchange any goods for a "bitcoin", there would be no value in creating a Bitcoin transaction, and the whole Bitcoin system in it's current implementation would be worthless.

Going from bitcoin to dollars is easy...going from dollars to bitcoins is a whole different ball of wax (due to the problems of fraud and theft associated with all other methods of online transactions), but you're right...making it easy to go from dollars to bitcoins, engage in an irreversible, two party transaction, then go from bitcoin back to dollars is a great way to introduce bitcoin to people (without forcing them to hold bitcoin for any length of time and be exposed to exchange rate risk).  The more of these types of transactions that occur, the more people will have an interest in keeping some of their revenues in bitcoin instead of converting back to dollars.  This is because they'll find that they can spend bitcoins in various ways and will want to avoid having to incur exchange related fees.

When I say that the origin to money is not that important you lecture me with 'you do not have an adequate understanding of how money emerges'?  It's obvious that you are not paying attention to the arguments and only discuss with the straw man in your own head.

You challenged my alleged belief that money can emerge only in one way.  So I provided you links to material that explains how money naturally emerges, and then I provided some simple explanations as to a couple of ways you could theoretically create an artificially determined money using the knowledge of how money emerges naturally, one way being through propaganda, and the other through impractical direct physical manipulation of the brains that you want to value your artificial money.

Knowledge of how money emerges is extremely important if you want people to adopt a specific money.  Having that knowledge helps you not waste your time on certain things, or make stupid mistakes.  And I have a hard time imagining someone that understands how money emerges would say that how it emerges doesn't matter that much when talking about the adoption of a supposed money, so the simplest explanation was that you lack some understanding of the topic.

My point in referencing the chronology of assertions of bitcoins being money and the adoption of Bitcoin was how the initial adoption (and even it's creation) of Bitcoin was due to a misunderstanding of what money is.  The assertions that it was money combined with the rules of the system turned out to be more of a social contract where people agree to pretend it is money (though most adopters likely believed it actually was money, and weren't making a conscious decision to pretend it was, due to the lack of an explicitly stated agreement, and the lack of serious questioning of whether it really is money among most adopters).

I think that most people that adopted bitcoin more recently also did so because they also believed it was money.  Their introduction to bitcoin was a bunch of false information about what bitcoin really is.  Few adopters seemed to care that almost no one accepts the "money".  Few adopters seemed to care that it provides no direct service.  The only thing most adopters knew was that others called it "money" or "currency", and that it had a quickly increasing exchange value.  Almost all adopters did not realize that almost everything they knew about Bitcoin was merely a metaphor.  It was "catching on" and "becoming mainstream" and they were going to be rich...who cares about reality?

Believing this state of affairs leads one to suspect that it's not going to last, that Bitcoin is just a bubble.  Someone that's considering adopting bitcoin and understands these things would likely only acquire bitcoins for as long as they think they can sell them at a profit, if it's within their risk tolerance.  Those that already adopted under a false understanding of the system and later come to this realization would also likely change their strategy as far as accepting bitcoins.  And these adopters and potential adopters will likely realize that other adopters and potential adopters will eventually come to the same realizations.  This means we could end up with a larger and larger percentage of adopters anticipating the end of bitcoin, or at least a very serious decline in future bitcoin prices.  Some will decide they're done and cash out and leave.  Some will stick around and try to make some more money while it's still possible.  Many will remain in denial until it becomes so painfully obvious that it's over, and finally cash out losing almost everything they invested into it.  Many will be very vocal in claiming that bitcoin's future is bright and that those cashing out now will be sorry in a few years when they're worth thousands of dollars, not understanding (or worse, fully understanding) that's just speculation at the "wishful thinking" end of the spectrum of possibilities, and isn't even close to being supported by any facts or logic.  Some of these irrational attitudes towards bitcoin are very widespread in the community, and the degree of how widespread they are should be an additional hint at bitcoin being a bubble.

The market is doing it's thing, extracting money from those that perform poorly in their investing and giving it to those that perform better.  The bubble is going to end, and it's going to line the wallets of some, while the rest are left holding the bag.  I know this stuff isn't easy for many bitcoin holders to think about.  It would make me sick to my stomach if I were holding a lot of bitcoins bought a couple months ago when prices were much higher.

The Bitcoin developers have the power to change the software and allow bitcoins to possibly become a directly serviceable good.  That could give it potential to becoming a commodity and maybe a real money.  I wouldn't bet on them actually doing it, though.

http://www.libertariannews.org/2011/07/07/the-economics-of-bitcoin-challenging-mises-regression-theorem/

Can you guys hurry up and read this already? We're busy over in the technical analysis and project development threads. There's no time for silly misunderstandings.

I suspect the so called "spread to more people" actually means "more dip-buying from the same group of bitter coin holders". Sorry to sound mean but I don't think average joes are considering buying at this level because they think this might be the future currency...

By selling coins I'm locking in the profit now. If bitcoins are really adopted widely (I consider the chance is very low), it won't happen overnight. I still have opportunities to buy them back.

Log0s, do you see bitcoin acceptance as a chicken-egg scenario in which the egg just won't hatch?

I don't think it is strictly necessary to bootstrap the economy, but none the less, I think services like Bit-pay can cleverly do just that. If we momentary disregard the notion (whether by misunderstanding or intentional deception) that bitcoin is money and focus only on its transaction utility (fast, secure, semi-anonymous, limited counter party risk), do you not think that this is a quantifiably valuable service?

Do you think people would use this service?

Is it possible that the transaction volume could sustain a stable exchange rate?

If this transaction service grew in popularity, is it not possible that the exchange rate would in fact appreciate?

If the units exchanged through this service themselves become desirable, would people not prefer to hold them rather than exchange them for depreciating currencies?

Might they then prefer these units for accounting?

If after having accumulated these units, would they be willing to accept more of them and trade them with others who also prefer to accept them in exchange for other things that they need?

While it's all conjecture, is there any step that is inconceivable?


> However, I do not believe that such a type of item will,
> prior to it becoming a directly serviceable good, become
> more widely adopted than already existing directly
> serviceable commodities that have already been used as
> money for thousands of years.

By what process could this type of item become a directly serviceable good? If we think of a bitcoin as a unit necessary for this unique and valuable transaction record then isn't the bitcoin unit a directly serviceable good? Just as a boat is a good necessary for traveling on water. If sending an SMS (text message) required tokens, couldn't the tokens emerge as money? Can't postage stamps be seen as money - much better if they were not consumed but could be traded endlessly while still being necessary for transmission?


> The value of the ledger service is dependent on whether
> the type of object the ledger is capable of keeping account
> of has a market value.

The reverse is also true and is why I focus on the quantifiable value of the "commodity service" rather than the unit exchanged with that service. That the unit exchanged is required as payment for the "commodity service" gives value to both.

Suppose cow excrement has absolutely no value to you. But one day you discover that magic roses grow in and can not exist without cow excrement. Now the previously worthless cow excrement has a quantifiable value in so far as it enables magic roses.


> If a potential customer recognizes the type of object is not
> a directly serviceable good (a plain number...) and no one
> else is willing to offer any goods for it...no value to them
> (it is worthless, just like the numbers it keeps account of)

Yes, this is true for every single thing in the world. Perhaps you personally like gold, and no matter what anyone else in the world thinks, you will still value gold. I probably would too. And it is true, if no one in the world wanted bitcoin and no one wanted to exchange worthless numbers on the bitcoin network, then I would find bitcoins worthless as well. But bitcoins are not gold and needn't be analogous. What you can do with bitcoins on the bitcoin network is in some ways superior to what one can do with gold. You can't make jewelery out of bitcoins. Just as you can't send gold around the world in ten minutes.


> Bitcoin transactions have no value without "bitcoins"
> having an exchange value

That is strictly true only if bitcoins have zero value and are unobtainable, which by some random accident of nature is not the case today. As soon as a bitcoin unit has the least infinitesimal, non-zero value, then a bitcoin transaction is enormously valuable. As long as I can obtain bitcoins at any price and moments later someone else can convert them back to their preferred unit of account at no significant loss, then a bitcoin transaction is valuable. And if that transaction was easier, faster and cost less than any other comparable service then it will be my preferred medium of exchange and I will encourage everyone I know to do the same.

That's all very reasonable argumentation - but writing 'you do not have an adequate understanding of how money emerges' - is not - it is only an insult.

Ad rem - I don't believe you exhausted all possible ways that money can emerge.  Bitcoin has already emerged as money - you can exchange it for goods etc and in this respect it is no different then gold.  Why people would sell you something for bitcoin?  Because they believe that later someone will buy that bitcoin from them.   This is already happening and it did not involve any direct brain manipulation, you can argue that it involved propaganda and misleading - there sure were some dubious claims all over the internet about bitcoins - but this is not different from any other tradeable asset and in particular with gold.


The simplest explanation is that your imagination is limited.

And since a bitcoin is not a directly serviceable good, that is the *only* reason to buy bitcoins.  It's commonly known as the "greater fool theory": http://en.wikipedia.org/wiki/Greater_fool_theory

Isn't it nice to know that the entire "bitcoin economy" is based on everyone expecting to find a greater fool to buy their bitcoins?

You seem to be very emotional about this - but call it as you wish - this is the same thing with all money and with gold in particular.  The use value of gold is just a little fraction of it's exchange value - so why people buy it? Because they expect someone else to buy it back from them.

Bitcoin is a currency - how it emerged is not relevant for the definition.  If it will survive is a completely different question - lot's of currencies are dead now.

netrin:

Imagine a new shipping company.  This shipping company only offers a free service to ship a special type of box that can only be used to hold a specific type of object, and that this type of object is worthless (it will not fulfill the ends of any person).  Their shipping service cannot ship any other types of boxes.  Their boxes cannot be used for anything else.

What it seems like you keep saying over and over again is that because the box can be used to send a worthless object to someone else, the worthless object that you put inside the box must be worth buying.  (To make sure the analogy is clear, the shipping company is like the current software implementation of the bitcoin rules and the resulting blockchain ledger, the boxes are like bitcoin transactions, and the worthless objects are like the numbers in the "value" field in a bitcoin transaction output.)

Indirect exchange is only one of multiple reasons people buy gold.  There are many directly serviceable uses of gold and at least one of those reasons (ornamentation) were why people wanted to acquire gold before it was ever used for indirect exchange. 

There has only ever been one reason to buy bitcoins.  It is circular in that the only reason anyone buys them is to sell them to another buyer, who is only buying them to sell them to another buyer, etc., etc.  No one buys them to provide some direct service because they do not provide a direct service.  They are just a number in the "value" field of a bitcoin transaction.

Although I acknowledge that it is not 100% certain to collapse, I believe it's chances of success are very poor, especially when considering all of the misconceptions bitcoin users have about the system they are using.  This is why I say bitcoin prices do not reflect reality (this is the case with all bubbles), but rather reflects false beliefs that promote higher prices, and therefore is a bubble that is not done deflating.

I'm trying to introspect here and as I reflect on my own intentions I can't find any other reason that I buy dollars with my labor than to sell them to another buyer.  What am I missing?  If that's a criticism of bitcoins, surely it's also a criticism of dollars.

Gold is used as ornamentation mostly *because* it is expensive.  The technical uses of gold are tiny.  Most of gold value is what you call indirect - and it relies on other people buying it back from you later.  You can say that the tiny fraction of what you pay for gold is somehow backed by it's serviceable use - but what with the rest?  In bitcoins you don't have that tiny fraction - only the rest, but in exchange it is more convenient as a medium of exchange, in the internet age, then gold.  If you read the books you lectured me about - you'd found out that the reason gold was used as money was because it was a convenient medium of exchange.

Personally I don't like many of the bitcoin system solutions - but bitcoins are money.

It is my position that bitcoin is superior in every way to a fiat currency except that it suffers low volume in its infancy. The problems associated from this low volume may be too great for bitcoin to surmount. But I believe the advantages today are already apparent and useful and bitcoin will be rapidly adopted.

My focus on the bitcoin transaction before the bitcoin unit is only to demonstrate that a bitcoin has value with superior monetary properties that is backed by the inherent utility value of transactions.

Although I would change the objects of analogy, your shipping metaphor correctly highlights a circular logic. Transactions only ship units, which if not for the properties of the transactions, the units would be worthless. This circular logic is precisely what backs the vast majority of all fiat currency today. Paper is used to pay taxes, which are used to support the issuing authority, without whom the paper would be worthless.

The fact is people do value units of account and bitcoin in particular because of the properties with which they can be exchanged. In so many words, I previously asked a single question: Even if bitcoin was used exclusively to transfer wealth denominated in dollars (exchange, transact, exchange) wouldn't that be a valuable service whose value would grow relative to the volume of transactions?

Dollars had the advantage that they were already a very widely accepted money before their commodity backing was removed.  Bitcoin is not a commodity and has no commodity backing to help in it's adoption.

What prevents you from performing the same service as Dwolla? Your users have an account topped up by slow boring bank transfers, cash, and money orders. A merchant publishes a bitcoin address with a value in dollars. The user sends that amount in dollars plus fee through your service. Behind the scenes an amount of dollars are exchanged for bitcoins and sent on the p2p network. On the other end, if the merchant happens to be a Bit-pay customer, you receive the bitcoins and convert them to dollars. Of course you hedge your risk, pass risk as cost, and minimize the actual number of transactions, skipping bitcoin completely if both parties are customers. In this way your customers can choose to hold, send, and receive either currency as appropriate or preferred.

In defense of Log0s' argument, the fact that a bitcoin has no base value means that it can collapse to zero. Simply because it can collapse to zero means that people will fear that possibility and it is more likely to occur. Gold is a great example. The price of gold is above $1600 this week. We can never guess the 'true' value of gold, but I imagine a huge number of people would buy an ounce above $50 even if they believed no one else in the world would exchange them. When the price of gold dramatically tanked from $1950 to $1550 many people panic sold, but absolutely no one feared that the price would fall to zero. Bitcoin on the other hand is much more susceptible to panic sells. Even if we imagine a higher volume and lower volatility, a crash has no theoretic bottom and that fact alone will lead to more dramatic crashes.

Everyone with eyes to see and history books to read knows that this is precisely the same problem with fiat currencies. What differentiates the two asset classes are volume/adoption rates and scarcity. Bitcoin has no inflationary risk due to monetary policy. In the entire miserable history of fiat currency, very few (if any) have fallen out of use with fashion but were either absorbed into another currency or more often hyperinflated. "Inflation is always and everywhere a monetary phenomenon." (Friedman and Schwartz, 1963)

EDIT: Since I quoted Milton Friedman, it's worth noting that while he was critical of Keynes, his economic philosophy shared the belief in a central authority to control the amount of money in circulation. In contrast he thought that money supply targets could and should be fully automated based on a simple algorithm.

Even Dwolla has issues providing Dwolla's service (see the recent issues with Dwolla chargebacks).  Dwolla is based on ACH and ACH is reversible (even a push ACH transaction).  That's the crux of the problem.  Dwolla also had some pretty poor security practices which lead to a pretty severe problem with compromised Dwolla accounts being used to buy bitcoins on exchanges. 

At lot of people (namely the exchanges) have put a lot of thought into this issue...at the end of the day, an ACH or credit card transaction is reversible and the banks have set it up such that it's the recipient (merchant) that is always stuck with the losses in cases of fraud.  Wire transfers can be irreversible, but they are very expensive.  It's interesting to note that one of the major advantages of bitcoin (irreversibility) it also part of the reason why they are a bit of a hassle to purchase.  I think ExchB has an excellent service for people in the US where you can deposit actual cash at a bank branch and be able to use that cash for buying bitcoins within a few minutes.  The only other possibility I can see is a ripple like trust network for delivering bitcoins in exchange for dollars owed (I may not trust you, but I might trust a local exchanger who trusts you).  If something like that could be built and made easy to use, it might be possible to better facilitate the dollars->bitcoin exchange.

No, going from dollars to Bitcoins seems to work well.  Prying dollars out of the "exchanges" that owe you money is the hard part. That's where customers are constantly complaining. See all the "Mt. Gox won't send me my money" threads.

I see. I came to the same conclusion when I looked into this in 2010. After the Dwolla/TradeHill charge backs and alternate methods, I had just assumed the risks had magically been reduced.

Not what I was talking about (though I personally have never had any issues getting dollars out of an exchange).

I was speaking about the risk situation.  Going from dollars (when using anything other than physical dollars) to bitcoin is asking the seller (the exchange) to deliver bitcoin via irreversible transaction in exchange for dollars delivered via a reversible transaction.  The exchange has to mitigate the risk of fraud in some way.  Conversely, the exchange has no risk (aside from short term double spend risk) in accepting bitcoin and sending you dollars.

I don't see how that's relevant to reasons people buy dollars and sell them to other buyers.  Not once, for example, have I ever bought dollars with my labor with the reason in mind that dollars have the advantage that they were already very widely accepted money before their commodity backing was removed.  As I said, the only reason I've ever had in mind, so far as I can tell, is that I can sell them to another buyer.

You made the claim that that's the only reason people buy bitcoins.  I'm suggesting that for the vast majority of the world's population that's also the only reason they buy most other currencies.  So, if the claim that the only reason most people buy bitcoins is to sell them to other buyers is a criticism of bitcoin, then, if a similar situation obtains for dollars it should count against dollars in the same way.  It seems that the only reason most people buy dollars is to sell them to other buyers.  I'm certain this is true for me.  I'm just a sure it's true for my wife, and I'm quite confident no other reasons (e.g. that dollars had the advantage that they were already a very widely accepted money before their commodity backing was removed) enter into the minds of any of my friends.  Can anyone else speak to this?  Facts about the history of dollars may make dollars more stable compared to bitcoins, but what I'm saying is that those facts don't enter into the minds of most people as reasons they buy dollars.  What is in the minds of most people, I suggest, is that they can sell those dollars to other buyers.

Very Yes

LOL

I think his argument is that today bitcoins are not valuable and are grossly overpriced. Since (he claims) there is no reason for the price to go up it will continue to collapse as more people understand this certainty.

He hasn't said this, but I believe his argument assumes a certain acceptance threshold must be reached. The current prices assume that threshold will be crossed, but that as prices come down and more people exit, the threshold becomes less obtainable, and bitcoin will just peter out.

When dollars WERE backed by gold, they easily crossed this acceptance threshold. When the backing was removed, the fiat was sufficiently established. So, while the historical backing is not relevant today, it was relevant to its establishment in people's minds.

I personally believe establishing a link between BTC and the OWS Movement in people's minds will be pivotal in widespread acceptance of Bitcoin.

If bitcoin can link the Tea partiers, End the fedders, Occupy wall streeters, with Madison avenuers and Wall street traders we'd have a truly revolutionary medium.

Agree 100% with you. This is a big opportunity for bitcoins. If fits very well. At least well enough that it has a strong likelihood to catch a big wave.

I think if that happens those groups would be obsolete. Among many other things....

Right -- to that extent, the world would be completely different.

So we have one  investment that can drop from $1950 to $50 and other one that can drop from $1950 to $0.  Is that a big difference?

Not to sound like a deadbeat argument: But anything is possible, to some extent. However some things are highly unlikely. As for gold it definitely has more intrinsic value but bitcoin has some too. (You can validate the existence of any digital data if you destroy some satoshis. Ie send some to the hash of the data)

I don't think this counts for nothing, it is just that this value hasn't been realized yet by most people. ( I think the implications of this are quite profound if you consider that everything having to do with open source ideology was pretty much the only engine for growth in the last few years. )
This will change the world in the next 20 years dramatically independent of bitcoins success.

Infinitely different.

What is left is infinitely bigger in the first case but the loss is not even 3% bigger in the second case :)  How it is weighted depends on your utility function or your psychology.  If you rely on it to be your last resort reserve - then it is a big difference but if it was an investment (or a lottery ticket) - then there would not be much difference.

Prices are geometric nor arithmetic. It's a curve not a line. A drop from $1000 to $10 is just as dramatic as from $10 to $0.1 repeat that logic, then repeat again, infinitely.

The point though is that because a crash MIGHT be dramatic, then the panic will be greater and thus actually cause a greater drop, and that feedback process might have no end. Whereas pressure to buy gold builds (exponentially?) as the speculative to inherent ratio decreases. A good with no inherent value always has an infinitely inflated speculative value/inherent value irrespective of it's price. The value of a dollar is absolutely arbitrary, but is riding on purely psychological momentum since it launched from its gold backing.

For posterity, I note again ad nauseum, that a bitcoin transaction has value and is priced exclusively in bitcoin (fees and inflation tax). If euros had wings, we'd trade all our dollars for flying money. Bitcoins are better.

One thing in the comparison of bitcoin to gold that I don't quite understand, is this whole assumption that gold (and/or silver, etc.) would always have a minimum price that people won't let the commodity fall under, presumably because those commodities are so much more precious (and useful?) than BTC...

But... I am never going to buy any gold or silver or anything like that, that I cannot personally HOLD in my hands.  My bitcoins, even though virtual and non-tangible, they are MINE on my usb and micro sd drives and I can do what I want with them, directly.

Any asset backed by gold is valuable because you believe you can obtain your gold. The risk that perhaps you can not should be priced in. If you don't have the gold in your hand you are only speculating. You are not gaining any reward from the good itself.

In response to the statement "but you can't do anything with gold" Marc Farber says he'll take all of your gold and then soon he'll have all of your women. "If it were not for women, all of the world's money would be for naught". Bitcoins on a usb stick have very low chick appeal.

That depends on stick I guess.

+1, Yes; how could I forget?  First we get the money, then we get the khakis, THEN we get the women ...

my bull's horns are like 16GB long

i buy dollars because they are made of paper, i like paper becuase it is made of trees trees were real creatures before they came money, not metaphorical creatures.. real creatures. dollars are green and i like the color green. i also like the picture of the pryamid with the eye in the middle and i like to collect all the presidents so i can remember who they are.  i also buy dollars cause there is a neat trick you can do that shows the picture of the twin towers with a plane crashing in to them.

I also think it is great that the government and the isrealian people in the federal reserve can print dollars out of thin air.

thats so cool man. i love dollars.

Oh totally, the USD is by far the most aesthetically pleasing out of them all

There are only 21 million bitcoins out there, so ANYONE could back bitcoins with Gold. If you have 21000oz, you can give out an oz for every 1000 bitcoins.
I don't think the value of a dollar is arbitrary. It certainly has a floor because 300 million people in the US find it directly usable, unlike Bitcoin. Until you can pay taxes in Bitcoin, it will be completely speculative.

nice one man, that would be the best description of the dollar's value by far

Who is gonna verify that?

Let me propose something: What about a system were which anonymously and autonomously selects people living in your area to meet with you were you can verify each others physical assets and exchange them. We can exchange some public keys when we meet and provide reputation for each other.
This could also be implemented as a decentralized web of thrust and a decentralized exchange for bitcoins against physical assets.

Uh... I could today. Maybe this week. But I won't make an indefinite guarantee. And neither will anyone else.

Everything is speculative. The history of fiat currency since long before the Chinese invented paper is an inauspicious tale. Dollars will decompose, it's just a matter of when.

The US made an indefinite guarantee, and reneged on it later on. You're still backing it.

Only an idiot would trust some anonymous dude who pinkie-swears that he'll redeem gold for bitcoin indefinitely. A sufficient number of people were so Shocked by Nixon's default that they named it precisely that.

http://www.youtube.com/watch?v=U1S9F3agsUA

http://www.youtube.com/watch?v=iRzr1QU6K1o

http://www.youtube.com/watch?v=MvBCDS-y8vc

From my stock trading experience, a "long-term bull" usually becomes a "long-term bag holder"...

just depends on if the venture succeeds or fails. So yes, the long term bulls are the bag holders, or the big winners.

I've grown tired of this discussion and don't have as much time to put towards it at this point.  So here's the last few thoughts I intend to post for a while:

Two main factors that go into whether or not someone chooses to adopt Bitcoin long term are if it provides a direct service to the adopter (they will adopt for as long as that expected serviceableness is worth the expected cost to them), and how strong their expectation is of Bitcoin gaining widespread long term adoption (according to their own idea of widespread).  Their expectation of Bitcoin's widespread long term adoption is based on how strongly they trust their own understanding (regardless of correctness) of why others are or might adopt it long term.

I do not think most people will be very confident in their understanding of why others are willing to adopt Bitcoin long term:

First most people do not and will just never understand Bitcoin at all.  All they know is that some people keep telling them it is a crypto-currency, and that it's secure, and that it's p2p, etc., but these assertions are near meaningless to most people, as are the technical details of how it works.

Second, they see that hardly anyone uses it, and no major merchants use it, so they quickly realize that can't spend it anywhere in any practical sense without costly research and perhaps a costly change in their lifestyle.

Third, it's not easy to acquire Bitcoins.

Fourth, most people don't feel like they gain anything by using Bitcoins when they could much more easily just continue using their government's fiat currency and credit/debit cards for trade.

The last three points are potentially fixable with time and effort, but the first one almost certainly isn't (most people have "better things to do").

I think the quickest and easiest way to overcome all of this and increase Bitcoin's chances of widespread adoption is for bitcoin to provide some direct service that the mainstream actually cares about (and of course at a cost people are willing to pay).  If they don't value the bitcoins or the system, and they aren't really sure why anyone else does, they aren't going to adopt it.  Very, very few will bother going out of their way to try to understand, either.  However, if they confidently understand what it can do for them and others at a small enough cost, they might be interested.  People don't understand all of the technical details of how paypal does what it does, but they do understand how it can help them send and receive already established government fiat currency easily online...Paypal's service is a directly serviceable good.  People are told that when using Bitcoin you can easily send and receive bitcoins...but this is practically meaningless to almost everyone.

Unless you believe pure hype can sustain the "bitcoin economy" indefinitely (I'd point to the fall in prices since $32+ as evidence suggesting it can't), Bitcoin needs to provide something a significant portion of the population would actually care about, and it's not doing so, yet.  This is why I keep coming back to bitcoins needing to be a directly serviceable good, because without that, adoption will almost certainly continue to be very low as very few people will be confident in their understanding of why anyone else would adopt it, eliminating the only reason left to adopt it themselves.

this is precisely why it doesnt matter whether you call bitcoin money or not. most people dont understand monetary policy or the mechanics of money and they still use it because it is functional. whether people understand it or not bitcoin allows people to engage in finacnial exchanges across international boundaries without interference from government or corporate entities. you cannot do that by any other means at present.

Did you bother to read down my post just a little bit further?

Right, except the "most people" you are referring to in your post, that don't understand "monetary policy or mechanics of money" are also people who don't give two shits about international boundaries or interference by corporate entities or cryptocash.  That adds nothing of value for the majority of the public (in their perception).  

ah! yes, this is true... at present.

Where are you bulls? I really need you guys to lift up the price so I can sell my remaining coins...

BTW, I like how people started to use stock indicators such as RSI to study the bitcoin price. (Of course the difference is if a company/currency is destined to fail, its RSI value won't really matter that much)...

As in $1000 face bags of junk silver?  Please don't throw me in that thar brier patch Brer Bear!

lol, you don't quite get it. The price is great the way it is going. We're not in a hurry or panicking, just silently refueling more and more in the drops.

I'm almost back at the level I held in May. It was fun watching people play bust with my coins, now it's time for them to return. I'll keep some extra if nobody wants them. :)

Bitcoin is not a stock.

Companies can go bankrupt if they loose too much money.  Bitcoin is not as easy to kill.


If bitcoin was a company, it would be a company that doesn't have to pay for employees, a building, advertisement, etc.

Bitcoin needs an infrastructure of miners, exchanges, and merchants to survive. Without that, try to spend your Bitcoins. Maybe the alpaca-socks guy will take them. Or you could try selling them on eBay.

Just to throw this out there.  IXcoin was not only laughed at as being an altblockchain, it is known to be hacked and has been declared dead, yet people continue to mine on it. I think it has something like 8Ghash right now.  (I know, I was/am collecting old coins just for S&G) 

So for people to claim the same for Bitcoin, which hasn't been compromised AFAIK and enjoys a much higher mining pool, is extremely misguided. 

Emphasis mine.

You don't have to have a specialized market like MtGox to be able to trade.  bitcoin-otc is an excellent example of that.  In fact, even if all 'exchanges' were to close, you'd still have people trading p2p without a middle man.

If you want to get all crazy about distinguishing between a 'merchant' vs 'barter' vs 'exchange', so be it.  All three of those are essentially the same thing when you think about it.

I wasn't very clear. I mean your anology doesn't apply since nobody accepts ixcoin for anything. Mining something doesn't mean it's accepted.