No, Synaptic, let's stay with the same post and examine that, for the sake of clarity. A number of people have mentioned how great BTC are for international currency transport and exchange and they're correct, though this use doesn't require any valuation higher than relative parity with the strongest currencies; In fact it still works perfectly fine at 10:1 or even 100:1, the only reason for it to be higher is greedy miners hoarding to artificially restrict supply.
What are you saying here exactly? That for international currency transfer and exchange we don't need a BTC value of more than $1? That's a total of $6m? Explain. Look I'm getting really fucking tired of your inability to comprehend the very words you're reading... This isn't about you. Well I'm sorry that I have no interest in throughly explaining myself to someone who doesn't understand what I've already written. I hope that someone else wouldn't mind "translating" or elaborating for you. Let's me see here... It seems that in order to make OP's assertion valid, one must simply rephrase "The long term trend for bitcoin value is contraction, not expansion." as "The long term trend for fiat/bitcoin exchange rates is contraction, not expansion." See, we no longer talking about bitcoin's value--only about the ability of market makers (like MtGox crew, etc) to maintain fiat/bitcoin current exchange rates for more than a month or two. OP is right, bitcoin's true value is WAY BELOW current exchange rates due to bitcoin not having any economy to call Home. So, stop worrying about the exchange rates that market makers are feeding you every day. Instead, start offering your bitcoins to merchants... Let's see if they do value BTC more than their local fiat currencies. |
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I agree on one point - markets should be minimal escrow transactions and confirmed by the block chain, not full accounts that Mt Gox can reverse whenever it likes. However without a liquid market there is simply no way to determine BTC value. Gold can be traded for sheep. Fencing wire can be traded for francs. And Bitcoins can be traded for US dollars.
Yes, liquidity is important, but false (or perceived liquidity, which the market makers tend to create/maintain) is very dangerous, especially for a young currency that yet to prove its advantages/applicability as a secure and relatively stable medium of exchange. Who's to say that the reason why USD/BTC exchange rates have been hovering around $13-$14 this past week is NOT the result of the exchanges simply massaging their database numbers to create the appearance that demand for BTC is on a par with supply? |
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I agree until there is enough drive and acceptance from merchants bitcoin will always be leaning on other forms of currency.
Why would any "established" merchant welcome the idea of taking payments in BTC when it's exchange rate is constantly being manipulated by "unregulated" market makers, whose sole purpose is to make profits from the herd mentality of clients (traders/miners)? Taking payments in well established fiat currencies is safer from the merchant's perspective. |
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the problem is that retail usage of BitCoins has not yet gotten anywhere close to a useful level, so people will use BitCoins to get a useful currency in the meantime. True, the retail usage is still in its infancy. Nevertheless, why go to market makers for a quote... Why not just send bitcoins directly to someone who has something you want (e.g. dollars, bananas, etc.)? What value do market makers bring to bitcoin economy? |
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tl;dr: let the merchants decide what BTC is worth, not the market makers (e.g. MtGox, TradeHill, etc.)
I’m not saying that buying fiat currencies is a bad idea. All I’m saying is that each purchase of a fiat currency should be—in the very spirit of bitcoin—handled as a purchase (confirmed by the bitcoin block chain), not as a trading transaction in some BTC exchange’s private (read: hidden from scrutiny) database. Who cares what you want to buy with your bitcoins? In fact, that’s the whole point of bitcoins anyway—to be able to buy anything you want without having to worry about some 3rd party invalidating your transactions.
But what useful purpose do the market makers have in the bitcoin economy? Do you really think that USD/BTC exchange rates on Mt.Gox reflect the bitcoin supply and demand trends? Keep dreaming!!!
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You know, you can set your own rates... Just offer someone your bitcoins in exchange for something you want from them.
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Many of bitcoin supporters measure BTC’s value in fiat currencies (e.g. how many USD can BTC buy). I, however, think that the true measure of BTC’s value is in BTC total money supply (not to be confused with BTC monetary base = 21,000,0000). Hence, more bitcoins in circulation = greater bitcoin’s value.
Essentially, I see 1BTC having a potential value of 100,000,000BTC (based on 1BTC’s divisibility to 0.00000001). However, this can only occur if bitcoins are used to buy bitcoin-denominated goods/services, not currencies. Therefore, it’s safe to say that current USD/BTC rates are simply the result of market makers (i.e. those who run the most popular BTC exchanges) successfully manipulating the herd mentality of the masses.
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Hi... Here to make frenemies with speculators. Bitcoin needs its own economy, not its own exchange rate.
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