as a holder of PM bullion, i'll argue that PM's have history behind them as well as a physicality. ppl like to touch and feel there money. also the hobo on the street can trade it as well as USD. these are the advantages of the current system. having said all that, i do see potential in Bitcoin but it has a long uphill battle to fight. Steelhouse is right, ultimately you need large merchants who will accept it. all this talk here about how bitcoin is already a currency is way too premature. i've looked at many of the transactions and they are way too small in value and volume to be conclusive. in fact, there is an attempt by the geek community to "prop" transactions and commerce to legitimize the bitcoin concept. not saying it to criticize, but it is what it is. its just way too early to tell.
I think I figured out the missing link in bitcoin. IMHO, bitcoin can be cornered and might already be. This is the method Bill Still said was used to steal 1/2 the homes west of the Mississippi in the 1800s. Support a high currency then crash it, take loans with it. Might even be used today in this housing market. Say you privately back bitcoin at $1 per coin - all 21,000,000 of them. Suppose one you wake-up and the price is $1.25 you can sell 10000 and make $2500. One day the price will drop to $0.80 and the manipulator will buy til the price reaches $1. The manipulator might cause wide fluctuations in the price of bitcoin to create chaos to gain the most. I think you should find a backer of this currency to publicly back it with a stable currency/commodity like aluminum and announce what the backing rate is. You can also use part of the transaction fees to create the worlds first appreciating currency. |
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IMHO, the best investment right now is shorting stocks.
stocks, gold, silver, real estate are good to buy. |
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You just contradicted yourself. Silver = gold = Bitcoin = commodity money.
silver = commodity gold = commodity wood = commodity bitcoin = nada Federal reserve notes = nada |
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Funny! Imagine how old this kind of stuff gets to those of us who have been here a long time.
Being here a long time and seeing the same questions over is not an answer. Mob rule is not reality they still burned witches in Salem. I realize it all depends on merchants, if merchants leave bitcoin is done and there is no intrinsic value thus you have nothing. So technically if the number of total merchants is rising so can bitcoin. The answers that you seek are written in the forum's archives, as well as several different wiki's, at least one FAQ, and the technical white paper. I'm more than happy to point you in the right direction if you are confused, and answer questions that arise from reading those documents. However, neither myself nor anyone else who can answer those questions have the time to repeat ourselves for each newbie who misunderstands how the system works. If you really wish to know and/or have this debate, then at least attempt to educate yourself on the details before you come to the table. I would really appreciate if you send me to the best source. |
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I am not here to be a troll. Has there ever been a currency that was not commodity based or fiat? Shells were fiat based. You have to admit, coins decreed as valuable, with nothing behind them seem to be what they are intrinsically nothing.
Ah, I see the problem. You misunderstand the word fiat. Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.
Today, all national currencies are fiat currencies, including the US dollar, the euro, and all other reserve currencies. This trend began with the Nixon Shock of 1971, which ended the backing by precious metal of the U.S. dollar. Shells, gold, and Bitcoin are not fiat because they are not declared valuable by a government. What would happen to the U.S. dollar if it wasn't backed by the "full faith and credit" (as if that is worth something) of the U.S. government? It would become worthless. What would happen to gold if the U.S. government stopped accepting it as payment? I bet practically nothing. You can go on youtube and watch "The Money Masters" and "The Secret of Oz". If you ask Bill Still if gold based money is fiat he will say yes. It only has value by government regulation or law. Gold is just a yellow metal. Bitcoin is not fiat, in fact it may be the only non fiat currency other than commodities. You can take an ounce of silver go to Austrailia and get money for it. Due to the demand for silver alone. Shells were declared valuable by the tribe - the government - fiat. |
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Funny! Imagine how old this kind of stuff gets to those of us who have been here a long time.
Being here a long time and seeing the same questions over is not an answer. Mob rule is not reality they still burned witches in Salem. I realize it all depends on merchants, if merchants leave bitcoin is done and there is no intrinsic value thus you have nothing. So technically if the number of total merchants is rising so can bitcoin. |
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How would "more metals" back up a currency? Do you mean it would give value to a currency or make a currency more desirable? If yes, what gives value to those metals or makes them desirable? Or do you mean that limited availability of such metals would/could limit the amount of the available currency?
The melt value of a penny before 1982 is 2.7 cents and a value of a nickle in the US is about 7 cents. That is the market rate of those metals. The value is the worldwide demand for those metals to build stuff. What is to prevent someone making a clone of bitcoin and calling it bbitcoin. If each bitcoin was backed by 100 pennies, it would have a $2.70 value on the world exchange. Thus owning the bitcoin you know you would get the pennies. |
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What gives gold value? What gives silver value? What gives copper value? What gives anything value? People give it value. Period. If I see that bitcoin has properties that I can use, I value it. As long as there is a community that shares that opinion with me, it will have value. What is your goal in trying to convince others that bitcoin has no value? My goal is to see why bitcoin does not go to zero. Gold silver copper are all actually all fiat currencies, the government gave it value and demanded its use. Bill Still even said gold is a fiat currency. |
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OMG, this has already been hashed out bazillion times...
Funny! Imagine how old this kind of stuff gets to those of us who have been here a long time. I am not here to be a troll. Has there ever been a currency that was not commodity based or fiat? Shells were fiat based. You have to admit, coins decreed as valuable, with nothing behind them seem to be what they are intrinsically nothing. |
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Just one question for you steelhouse--what or who backed the money cowry? There is plenty of precedent for currencies with no other use than as currencies. All that is required is that they be limited in supply, fungible, and easy to transport. As a purpose-built currency, BitCoin beats out cotton-linen pictures or little printed squares of plastic any day. That's all it needs to succeed. Shell money was fiat money. "In northern Australia, different shells were used by different tribes, one tribe's shell often being quite worthless in the eyes of another tribe." Fiat money is money that has value only because of government regulation or law. |
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Bitcoins are based on nothing. It takes cpu or gpu time but you are are still creating money out of nothing. The dollar could have been based off if you jog 1 mile around a track, but in the end the dollar would still be based off nothing. The dollar is valuable only because it is fiat, demanded to be used by the U.S. government. 21 million of these bitcoins are going to be created out of nothing.
You can use public key private key encryption to create a digital coin similar to bitcoins. But, who cares you all you have is wasted hard disk space.
Money will only work if vendors of goods are willing to accept it. Now some of the vendors are selling junk, socks, or trading computer time you have some vendors. But the reality is the bitcoin is still based on nothing. It is not backed by anything nor demanded to be used by government. Thus, if the vendors tire of it, it will crash. I predict the bitcoin will fail and be worth $0.01 in 10 years. Now, if a critical mass of vendors exist creating a market as old vendors drop out and new vendors come online to replace them it could work.
If the 21,000,000 bitcoin was based off say 100 pennies minted before 1981, you could say there will always be a vendor of last resort, you could convert your bitcoin for pennies. That is my suggestion to the bitcoin folks.
If I was running bitcoin I would set-up a 1% tax on transactions. Where would this money go? It would be use to add more metals to back up the currency. Thus over time each of the 21,000,000 bitcoin might be backed by 100 pennies, 1 ounce of silver. Where did the 1 ounce of silver come from, the 1% transaction tax over years. Then maybe you could buy an island with it an create your own country -tax free government free. I wonder it is is possible to buy land somewhere and create your own country.
The current bitcoin can be fixed by just demanding the $0.01 transaction costs go to buy wealth to back up the currency.
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EDIT: Also, I think you might be right about the future price of Bitcoins, and as a show of friendship, I'll pay you triple ($.03) your quote for any of those worthless bitcoins you might have. This is a limited time offer, however, so hit me before I come to my senses!
Will you still provide this offer 10 years from now? The intrinsic value of a bitcoin is zero, that is where it will go with no iron hand. |
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I still don't believe you can open a store in the United States and accept euros, gold, Canadian dollars, bitcoin, as payment or competing currency. If you could the dollar would be gone tomorrow and everybody would be collecting welfare and doing their real exchange in bitcoin. Are there any addresses in the United States that accept bitcoin and have no fear of being raided? I do think bitcoin goofed, if there is no exchange for a commodity, why would anyone use it. They could have backed bitcoin by 50 pre-1981 pennies, and sold the 21 million off, which imho would always give a merchant to the coin thus it would always have value. I bet bitcoin goes to $0.01.
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This is incorrect. The U.S. has legal tender laws, which enshrine the U.S. dollar as the official currency of the government. That means precisely two things: 1) Taxes are paid in USD 2) Courts will enforce contracts in USD That's it. As a merchant, you are free to accept any payment method you want. As a creditor, your debts will only be honored by courts if you allow your debtors to repay in USD. I highly doubt that, if you live in California you can't accept Euros, silver for payment. If you could no one would use the dollar. |
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1. Neither is gold.
2. Because Bitcoin is becoming more popular, while U.S. government continues to debase the dollar.
1. Because gold is backed by gold. If every bitcoin was backed by an ounce of gold. Then it could be exchanged to any currency for the going rate of gold. If it was backed by gold you could get your gold back. 2. According to the chart the bitcoin is presently inflating 50% in 2011, 33% in 2012 and 13% in 2013. But assume all 21 million are out, so what if you are out of the loop why use it. The only reason to use it is if merchants demanded payment in it. So I guess I answered my own question, it all depends on whether merchants want to accept it as payment. Thus, Exxon Mobil tomorrow could demand payment in bitcoin. But it would only be valid for products that can be mailed or labor over the internet. Thus to make bitcoin successful you need merchants. All merchants in the USA are required to only accept dollars. |
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No offense but bitcoin is not backed by anything. There is no government forcing its use. How can bitcoin go to anywhere but to zero? What would be exciting if a country adopted it for its currency.
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