I actually really like this sub-board. It's okay if most people have no clue about economics, this is a great place to debate it and learn.
I can't tell you how refreshing it is to see individuals here referencing Mises and pointing out the monetary fallacies of Keynesianism.
And of course, this is all expressly relevant to Bitcoin. If the economics are sound, then it will likely succeed as a currency.
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Hey that's MY article!! LOL I'm glad you like it Pretty lousy record huh?
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a troll just escaped the newbies section.
Some people have a low threshold of "troll." I thought the OP's post was quite true. The cost of mining bitcoins will surely go below the cost of the electricity required to mine them, because many people can find ways around paying for electricity. Long term, however, the equipment required to mine will get more and more advanced. It is unlikely that normal company or university computer systems would have the hardware to make mining worthwhile even if the electricity is free - even controlling 100 university computers right now is pretty worthless unless they've got gaming GPUs.
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The exchange rate of bitcoins will go up. The value of bitcoins is in the hands of the miners for the most part. If they have to raise the cost of bitcoins in order to make a profit after paying their hydro, then it will go up.
Not sure how many fallacies were in that short snippet. The value of bitcoins is in no group's hands. It is an open market, affected by tens of thousands of participants each valuing a bitcoin slightly different, with different outlooks, goals, and assumptions. Bitcoin's value is determined by supply and demand. Difficult could triple tomorrow, and the price of Bitcoins could fall at the same time. The cost of mining is but one of many inputs to the price of Bitcoin, and easily overshadowed by a simple coalition of the other inputs.
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Is there value in Bitcoin?
Thanks for the great post. Regarding whether Bitcoin has true value, let's also remember that it is both a money AND a software. The software allows the sending of ledger information between any two parties, and as the OP mentioned this is done with no central authority. It is this software component that gives Bitcoin significant "inherent" (pardon the term) value, and the currency which is built into that software is then traded freely on open markets, and valued by supply and demand. If we remember that Bitcoin is both a digital commodity, and a software, then it's easier to understand why it's so valuable.
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(6) "Bitcoins have had volatile ups and downs but never a full crash." // VERY MISLEADING. Bitcoin value has gone UP form $0.06 to about $20 today. That is UP UP UP. No crash at all.
All the other points were valid, but this one seems misplaced. I think this particular statement in the article is not wrong. It's certainly not "very misleading." Bitcoin value has not been "up up up," and in fact it would be very misleading for a news article to claim that it has.
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Has anyone even considered the possibility of highly organized social engineering and manipulation of bitcoin for various hidden agendas?
Sometimes market prices fall, dude.
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I was thinking you could hard-code in an array of "illegal" bitcoin addresses (those of the perpetrators) so that no client will invalidate Bitcoins originating from them. Also, you could hardcode in an address that starts with the amount of Bitcoins stolen, and give allinvain the private key. I'm sure it could be done though I don't know the technical specifics.
You could actually turn it into an entire component of the client where you hardcode in reversals of fradulent activity, based on democratic and fair judgements.
The day something like this is done, while the intentions may be noble, is the day Bitcoin dies.
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I think similar people made youtube videos in the early 20th century where they scoffed at the motorcar, stating that never would they give up their horse for such a silly, expensive, dangerous, and useless invention.
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Maybe the world is not ready for a free market. They shout manipulation and speculation when prices rise quickly. They shout manipulation and nefariousness when prices fall quickly. And when prices stay flat? Manipulation, it must be!
I'll propose an alternative theory = Bitcoin is brand new, and will be extremely volatile and unpredictable for a long time. Part of true volatility is the 2nd order - even the volatility itself will be volatile! Stop obsessing with charts.
The monetary concept of Bitcoin is solid. So, too, is the technology. Given this, if you believe in Bitcoin go out and build businesses around it. Buy with it, sell with it, and trade with it. Stop worrying if the short-term dollar/btc exchange rate is not precisely where you think it should be. Let free markets be free, and enjoy the freedom, tumultuous (or flat) as it is.
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That can be really helpful to make bitcoin price higher I see your winky face, but it's still worth stating that the goal of press and interviews should not be to "make bitcoin price higher." The goal should be to expand the Bitcoin market in goods and services. The price of coins will likely rise as a result, but such a rise should be the effect of our intentions, but not our intentions themselves.
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The thing keeping MtGox money the most safe, is that the owners have an extreme self-interest in preserving the integrity of their trade platform. They will be getting rich for as long as it remains the primary trusted Bitcoin exchange. It would be the height of foolishness to "cash out" and run off with Bitcoins. They'd never be able to offload them before prices crashed and they'd have nothing of value, and no exchange to sell it on. Even if they did cash it all out and make a fortune, they'd have sacrificed what could be one of the most successful companies of the next decade. It'd be like someone selling full ownership of the NYSE for $10m.
The safety of the deposits is more in MtGox's interest than it is in the interest of MtGox clients, I would presume.
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Can anyone let me know if I'm supposed to post this on the Wiki, or if that is for mods?
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what is the intrinsic value within the Bitcoin currency that will stop it going to zero?
Personally, I think the sheer time and energy focussed on and invested in Bitcoin in mining and trading produces that intrinsic value, which forms a valid base for its value as a medium of exchange.
"Intrinsic value" is a myth... it's like saying something is intrinsically beautiful. Value, and beauty, are always subjective and in the eye of the beholder (though many people tend to agree on what is valuable and what is beautiful). Bitcoin's value comes from its efficacy as a money-commodity (fancy econ term). Its properties simply make it excellent money, and thus the free market has been valuing it higher and higher as people try to figure out just how valuable Bitcoin actually is. The same is true for gold - its value is not "instrinsic," but rather comes from its properties which make it an excellent money (scarcity, homogeneity, divisibility, durability, etc.). Cars are valued for their use in transportation. Food is valued for use in human sustenance. Xbox is valued for entertainment. Gold, and now Bitcoin, are both valued for use as a medium of exchange. Cars will never be useful as money, and Bitcoins will never be useful for transportation. Both are valuable for their specific properties and the functions that those properties permit. The open market will decide, over time, the exchange rate between all goods, and you can bet that something as revolutionary as Bitcoin will swing wildly up and down in price as the market labors to value it appropriately according to its usefulness as a money.
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I'd spend some portion of it to hire programmers and designers to help me build a bad-ass bitcoin related business. Would also spend some to hire professional GUI designers to make the client much better. I'd produce a motion-graphics video explaining true monetary economics to laymen so that they would understand why Bitcoin is revolutionary. I'd try to find other entrepreneurs and seed-fund their ventures if they seemed profitable.
Basically, I'd be a capitalist, because I'd have real capital instead of this ridiculous toilet paper we call Federal Reserve Notes.
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Hi all, My company, Beakon Limited, is now accepting Bitcoin. Beakon offers photo editing and floorplan services for real estate agents and brokerages. We also do photo enhancement for portraits/models when those jobs come our way. If any of you have ANY photos that need improvement, get in touch - our prices are super good Domain is http://www.Beakon.co - Bitcoin payment badge is shown, and anyone interested in a Bitcoin payment can email us to negotiate. Does a moderator list this announcement on the "Vendors" wiki? Long live the coin!
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Many of us Austrian econ types have been concerned about Bitcoin as it relates to the regression theorem. Money is supposed to emerge from its "use value" toward a "trade value". Gold is useful for decoration and other purposes, beyond being a money. But, what is Bitcoin useful for beyond its use as money? If it's only useful as money, can it really be a money?
Well, consider the following: Bitcoin is also a service. With the Bitcoin software, you can send a payment to another person, free of charge (almost). In the normal economy, other companies provide similar services (paypal, western union, bank transfers, etc.). Sending money from one person to another is indeed a demanded service.
So perhaps Bitcoin's "use value" comes in full or in part from this ability it bestows to send money, or value, or units of account, across distances securely. In this way it offers a substitute service to the paypals of the world. From this "use value," the regression theorem is perhaps satisfied, is it not? And perhaps many people don't initially see this, because "Bitcoin" is both a money and a software service, and the fact that both components share the same name obscures the service of Bitcoin behind the monetary unit of Bitcoins.
Gold's use value is primarily as a decorative good. Bitcoin's use value is primarily as a transfer service. Bitcoin as a transfer service then allows the open market to value the units for this transfer... and then the price on day 1 is based on the price on day -1, etc etc.
Thoughts?
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Because the value of gold is based on the fact that people think it's valuable, nothing more.
False. I've posted this before and will post it again... "It's extremely important to understand why gold is valuable if one is to understand why Bitcoin may be even better. Gold's value comes from its physical properties - it's divisibility, durability, homogeneity, scarcity, etc. Think of all things out there in nature... few offer all the same attributes as gold. Iron is divisible and durable, but it's not scarce enough. Wooden sticks are divisible, but not able to be recombined. Food can be used as money, but it spoils when saved and two pounds of food are not identical - not homogeneous. Cows make a poor money because dividing one in half would kill it. Gold, and other precious metals, are the only things mankind has found that work extremely well as a money. Anything CAN be used as a money, but some things are much better than others for this purpose. We use fiat paper now, of course, only because governments backed with violence and guns have forced us to do so." The value of gold is based on the fact that it's properties make it useful as money. Not because everyone just "arbitrarily" assigns value to it.
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All nations are engaged in "unfair currency pricing." China is neither worse nor better than the US in this regard. Both are despicable. Thankfully, we have Bitcoin now!
Thanks for the Germany post OP.
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