I started by giving several BTC to friends' kids as birthday gift, hope that will grow with them to payback their school in the future ![Cool](https://bitcointalk.org/Smileys/default/cool.gif)
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Please give an example of a business that can only be profitable using BTC as payment method?
Silk Road? ![Smiley](https://bitcointalk.org/Smileys/default/smiley.gif) Good, so BTC is suitable for annonymous payment, while the payer want to hide the identity. Is that going to reduce the unemployment and control the inflation? I have another thought: It could be regarded as a digital asset which is very secure and can hedge against inflation, since it is not issued by any government, the risk of default is zero. But first the exchange should be well regulated and accepted by pension funds And if lot of people put their savings into BTC, it will reduce the unemployment (they dare to spend more since their retirement is secured now), and inflation will be low (Fed does not need to print more money to stimulate spending)
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People use USD/EURO/JPY etc... because they get them as their salary, then it is very natual to use it
But if you need to spend BTC, you must first open an account in mtgox and transfer money, or setup a minning rig, that is way too complex
If someone can use BTC to pay out various online contest, more people will get access to it
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To be more clear, how could BTC reduce the unemployment? It allows people to operate businesses that would otherwise not be profitable or permitted due to government-enforced economic oppression. Please give an example of a business that can only be profitable using BTC as payment method?
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I think you should find a balance in between spending and saving.
If nobody spends anything, then there would be no economy.
Actually, you must use a balance between spending, investing and saving. You should save money but also invest it. But again, what are you if you only invest and save money? Nothing, if everyone is doing that. (You have people living minimalisticly just to save money, while they could be partly spending it on things they enjoy.)
Someone on this world must SPEND his money to make your INVESTMENT a good deal. You should SAVE money for the day you must SPEND the money.
That's how I think about it, you might say that I'm thinking with blissful ignorance but w/e.
Quite right! In modern economic theory, they always say that today's saving = future's spending. But that spending could come 20 years later when majority of people are feeling unsafe, so it is quite different view from long term perspective If consumption = production, goods and services will be consumed very quickly and the amount of money needed for transaction is minimum (if you earn and spend 3000$ every month, money supply require maximum 3000$ throughout the year) If consumption < production, you will create excessive amount of goods/services and they will be stocked and start to depreciate. At the same time, the amount of money supply will be magnitudes higher than previous case (If you try to save 30000$ for one year's life, money supply need to reach 30000$) If consumption > production, then you are consuming value that has not been produced by you, you are in debt, and your future labour is contracted to pay back today's consumption. But that is risky since no one can guarantee the future
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In a deflation world when everyone tries to hoard USD, I don't see the benefit of BTC, but in an inflation world, BTC might gain some ground as a hedge for inflation
After financial crisis, everyone is still trying to save. When they put saving in action, the money supply need to be magnitudes higher than normal volume for transaction purpose
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That's one of the functions of bank, online BTC bank will have good potential due to this safety demand
Insurance could also help, you lost every coin and insurance company pay you 90% of your loss
I read about that you need only an account number in a swiss bank to get all your deposited funds, but no one has been robbed of this number yet, although it is much easier than robbing BTC
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If you save a lot of gold, then comes natural disaster, what is the use of those gold if all the factories have been wiped out in an earthquake?
trade. you could invest in frozen carrots instead of gold. No freeze ![Grin](https://bitcointalk.org/Smileys/default/grin.gif)
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Some high productivity people have small spending while low productivity people have no spending power. High productivity people are only a few, and their needs have mostly fulfilled, they will not generate enough consumption, move some of those spending power from high productivity people to low productivity people will make the total consumption more even
In this process, those talent people might leave this country or move his operations abroad, so unless the same concept is applied everywhere in the world, it is difficult to set higher tax on rich people
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If you save a lot of gold, then comes natural disaster, what is the use of those gold if all the factories have been wiped out in an earthquake?
Even if a private person think that he is saving, his saving at bank will still be loaned out for investment projects
Saving means: consumption < production, it always created excessive goods/services. If those goods/services can not be used to support future investment, then they will just degrade and become useless. So when people put saving in action, it is very high pressure on investment front
And today's problem is that there is really very little choice that you can invest and make sure you can make money, maybe only long term investment will generate some return for sure
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That's a good point, if BTC's price can rise continuously, then it is very reasonable that everything paid by BTC will get at least 15% discount
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Environment has big influence. Take air for example, on this planet, supply is aboundant, it worth almost nothing, but on the moon, a can of compressed air can worth a lot
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To be more clear, how could BTC reduce the unemployment?
IMO, if enough money flow into BTC market, it will create many mining business and BTC investment companies, just like mortgage backed securities, there will be many people find work around it, the price rise continuously, and finally FED has to tighten the monetary policy to stop it from building a bubble
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I am ignorant on all the ins and outs of this. I am posting this to try to learn what the possible economic outcome is of bitcoin. I am prompted by this comment from the 'Hoarding Bitcoins' 'study' that hit slashdot and everywhere else. Comment: "So what you're saying is that there is a limited resource which we cannot make more of that people are hording? And the more people horde it, the higher the deflation? And people watch their value rise in USD as this happens? And you're surprised?
What motive is there to spend your BTC? Isn't this how deflationary spirals [wikipedia.org] occur? Wasn't this an effect of The Great Depression and lead to FDR implementing a pump-priming strategy [wikipedia.org]?
Could someone explain how they would escape that spiral? I'm not an economist so I don't know if there are other routes of which I'm unaware."What are the economists thoughts on this? Could small businesses such as satoshidice and webhosting for bitcoins spark an actual economy? Or is this just a long term pump and dump? EDIT: I was made aware below that the article being commented on was funded by institutions that have something to lose if bitcoin goes primetime. Does anyone have information about this? If BTC is the only currency, it will go into deflation spiral, but since there are other fiat currencies, it will just get hoarded without causing too much problem If some very popular product (like Iphone) only sell to BTC owners and reject payment in USD, that will cause a mass adoption of BTC
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Years ago, I had a similar idea: If something has energy inside, then it has value, the amount of value depends on the energy it contained. That was an effort to identify the value through a scientific way, to get rid of personal bias
But in later days, I realized that people are emotional, and that emotion will change the perceived value. For example famous painting contains very small amount of engergy, but it still can be sold for millions, because of its scarcity
So basically, supply and demand together are enough to decide the value
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The biggest difficulty in finding BTC related laws is that BTC's position is higher than any government issued money, it is global
Current laws seldom go over country border, due to the difference in culture and constitution. For example the interbank market is not regulated, it is purely banks' playground
Same as internet, at international level, it is very difficult to regulate, the only thing people can do is protecting themself from being harmed, and benefit from the best of it
For example, chinese government set a stop to all youtube clips (so called ideology control), while another country will see no reason for that, and chinese people lose lots of useful information in this practice
Same, one country can stop BTC, but they also miss the big opportunity brought by this new medium of exchange, and who knows the first country who officially supported BTC (Iceland) will become a robust country in finance since it got rid of banks' control
BTC do not conflict with local currency, it just added another choice, which suit inflation-hating people's taste
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IMO, the drugs and weapons selling problem falls to the responsible area of police, not bank. Banks doing this regulation for other pusposes, to make sure everyone should follow their decided way of working, so that they stay on the top of the food chain
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I suppose, in the early days, lot's of coins are lost due to their almost non-existent value, application uninstalled, hard drive erased, computer sold out, etc...
So the total amount of BTC in existing are much lower than advertised 21 million
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I still don't really understand why money laundering is bad and banks want to stop it, is it because banks want to control each person's activity more thorough?
Wikipedia: "Money laundering is the process of concealing the source of money obtained by illicit means."
What is defined as illicit? FED printing money out of thin air, is it illicit? In certain point of view it is, and the amount is enormous. They call it QE, but that is exactly "a process of concealing the source of money obtained by illicit means". It is like saying: Only banks have the right to laundry money freely
In my opinion, money can be robbed, stealed and lost, as long as it's money, there is no question of its legality, because if you trace the origin of today's money, they are all generated by illicit means (printing, or adding 0s to account, not working)
If money laundering is out of question, then BTC will gain some other ground and support
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Well, for one, the US dollar is a liability. In the dollar's case, it's a liability of the Federal Reserve System. Euros are a liability of the ECB. Yen are liabilities of the Bank of Japan etc. You can actually see the liability-nature of the dollar by looking at the Fed's balance sheet: http://www.federalreserve.gov/releases/h41/current/Note that the Fed has got 1.136 trillion in outstanding currency liabilities. Bitcoin, on the other hand, is not a liability of any institution. This is very true, FED owns those printed money, if they do not own it, they can not use it to buy bonds and claim the ownership of those things But they own these money not for any personal reason, they use these money to adjust the money flow of the whole society: When there is a shortage of money, they create more by buying assets; when there is too much money, they get the money back to their account buy selling assets Of course in this process, commercial banks and institutions always get the benefit, FED's money do not translate into each people's income directly, but first increase the income for banks and then banks' big customer and so on...
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