That's why I considered 2 types of value in my post above - [1] utility and [2] exchange. Your life falls into category one by definition - it's of value because you are using it and not planning to exchange it. The term "intrinsic" is a philosophical one which means different things to different people. In science and engineering it actually has a proper definition - an intrinsic property of a material is one that is independent of the quantity of material present or it's environment. For example density and heat capacity would be intrinsic whereas weight, volume and kinetic energy would be extrinsic because they all depend on external factors.

If we apply that definition to money, then value is an extrinsic property because it depends on markets. The intrinsic properties are things like fungibility, resistance to counterfeiting and so on. So according to that perspective, Bitcoin shares those intrinsic properties with gold.


I think that modern fractional reserve banking owes more to President Nixon needing to get off the gold standard so he could inflate the money base to pay for the Vietnam war amongst other things.

Also, I think you're mixing 2 things - the advent of paper money and fractional reserve banking. You can have a banking system which issues paper money (so people don't have to "carry coinage around") on a 1 to 1 reserve ratio. That wouldn't be a fractional reserve system, just a banking system.

Conversely, there's nothing stopping a fractional reserve banking system springing up around a cryptocurrency economy, in fact the exchanges probably do a bit of that already just to "oil the wheels" of their transaction engines.


I don't see you disagreeing with me on anything. Also, you said you had no feelings on the subject so I'm not even aware if your making a challenge to viability of cryptocurrencies or not    

I really wonder what planet people are living on when they suggest Bitcoin has no "instrinsic value". Please consider these 3 things:

[1] - the term "intrinsic value" implies that the thing is of value to itself. It's meaningless. Things either have a utility value or an exchange value, end of story.

Gold has a "generic exchange value" because it was the bitcoin of the day before we had a worldwide electronic trading platform. i.e. was a rare manifestation of something that had a high resistance to counterfeiting, fairly limited supply, was fungible and "worked" as a generic token of wealth. Unfortunately gold is physical, it doesn't travel through wires and so something new has to be found that performs the same function on an electronic network. Numbers alone are not enough because they require a massive amount of counterparty involvement to endorse their value.

[2] - as a technology, Bitcoin has an economic value because is makes a multi-billion dollar counterparty industry known as the banking system theoretically redundant. It has a utility value because it can perform a peer-to-peer monetary function where nothing else can. Until Bitcoin was invented, no such technology had been discovered or invented. Please think about that for a minute - not one single technology existed that was capable of performing this monetary function universally without a counterparty. So it not only has utility value due to the diverse and unprecedented functionality of the Bitcoin network, but it also has exchange value because it works as a generic token.

[3] - Anything that works as a generic token of exchange automatically accrues to multiples of it's utility value because there are just so few things that have satisfactory properties to perform this function. Try going to a funfare and purchasing one of those plastic tokens that let you go on rides. Now compare the price of the plastic token at the funfare and the price an equivalent piece of plastic in the hardware shop. There will be about a 10000% (ten thousand percent)  difference and that difference is the value that the token has while performing a monetary function. It has nothing to do with "intrinsic value", it's to do with whether that thing is performing a monetary, store-of-wealth function or not. The same applies to gold - it has a high value because it's in the role of the plastic token at the funfair. No other reason - not because it's "nice and shiny", not because it's used in Jewellery, teeth, electronics or any other nonsense. Because it's performing a monetary function as a token of exchange and works as such.

People who don't get this are like aliens from space who land on the planet and see gold as "just another bit of useless metal lying in the ground". I don't blame aliens from space for saying that because they are right - until someone decides to start using it as money. That's when everything changes. Same applies to Bitcoin.

So conclusion: things don't get used as money because they have "intrinsic value", it's the other way around. "Intrinsic value" accrues to something through it's ability to be used as a token of exchange.

Retailers usually don't have a choice.

They support whatever payment methods they have to attract customers. If the choice is between paying a 2% transaction fee or loosing 10% of your customers then they pay the 2% fee. On the other hand, they could start to offer discounts for crypto currency payments handled by one of the crypto-payment processors like Bitpay, Coinbase or Scharmbeck.

In that case, we could see a gradual migration to crypto-currency transactions and away from the traditional payment processors, at which point Visa and Mastercard etc will simply start making corporate acquisitions of crypto-currency payment processors and support those type of payments in addition to their existing services.

There will be no incentive because there won't be a problem. The blockchain is not a cash register and will never be used en-masse to support point of sale payments in any crypto currency. That isn't it's purpose.

So whether a coin has a 30 second or 10 minute transaction time is irrelevant to it's suitability for use at the point of sale in a retail (in shop or online) environment.

The source is between your ears 

.... sorry for rambling, but just one last thing (before I depress anybody too much    ).

Although I've made a lot of challenges in the last posts, these are just my opinions. The whole cryptocurrency stage is uncharted waters and there's a huge amount of experimenting to be done. If people really feel that a currency can be "branded" in the way the Worldcoin is trying to do (i.e. a semi-proprietary infrastructure as opposed to just having a loose 'theme' like Earthcoin, say, and then slamming it on all the exchanges) then obviously there may be ways to overcome the issues I've outlined.

Everybody's got different priorities and visions and nobody knows the future, least of all me. I raise these issues out of a genuine curiosity and process of discovery to try to get to the core of what's interesting about a coin and what may give it value. I think the challenges I've raised are real ones though.

I don't think you fully appreciate how a retail environment works. There are several clearing stages between a supermarket cashpoint and a bank account. When you swipe your card at the retailer, it isn't communicating directly with your bank account, it's communicating with a till which may buffer the transaction to allow the retailer to reverse it or adjust it before finally comminting it. Then it goes to a clearing house like Visa which buffers it again and eventually it hits your bank account (by which time you're already home).

Just because we use the blockchain as the permanent 'parking ground' for our funds doesn't mean that the payment processing industry won't still be needed to clear transactions at the point of sale. Can you imagine today's crypto currency exchanges clearing every trade through the blockchain in realtime ? They'd grind to a muddy halt, even with 30 second transaction times. Instead we "charge" our exchange accounts with crypto in a single blockchain transaction, then do lots of trading, then we use a single blockchain transaction to withdraw our balance to cold storage when finished.

This is how it will work in a retail economy as well. You'll "charge" your Visa account with crypto in a single blockchain transaction, (or be credited with it if its a credit and not a debit card), then go to the shops with your card. Transactions will be instantaneous.

Crypto's may make banks redundant but they won't make payment processors redundant. A payment processor and a bank are 2 different things.


Because to do that it would have to support all major cryptocurrencies as well as Fiat currencies at the point of sale. No payment processor is aligned with a single currency because they'd be uncompetitive and go out of business very quickly.


Yes, they could do and I'm sure any PoW coin could have anti-51% measures boilerplated on. The point I was making was that competitors and "serious seconds" to Bitcoin are more likely to have modern, forward looking designs from the ground up rather than boiler-plated last generation technology.


I've held about 10 different coins from one time to another, including WDC. In fact I still have about 400 WDC. I'm not trying to troll it, I just think that these forums are about having honest discussions about the relative merits of coin properties. I accept that there are people who work very hard to develop and promote one thing or another but I think I've stuck to making relevant technical and commercial points rather than empty attacks. People are spending serious money on these things and are more interested in an informative exchange than feeling warm and fuzzy (I hope !    )

I think Worldcoin should be seen for what it is - a brand. If people want to buy into a brand then fair enough, everybody has different investment priorities. My point is that I don't think you can create a brand out of a currency. The two things have conflicting priorities as I outlined in my last post.

Yes. I'll give you that.

You wouldn't want a silly name like Google, Twitter, Bitcoin, Peercoin or Apple.

The name "Worldcoin" actually tells people what the coin's for so it may still be successful   

For lazy readers:

Cryptocurrencies are about to come free with Cornflakes packets, so don't build a business that depends on a particular one.

You're mad. (In my humble opinion )

If you really think Scharmbeck project is so great, invest in it not the coin. If there's any coin people should be hoovering up just now its PPC and XPM with all this 51% attack fear.

If the Scharmbeck project has one ounce of business sense, they won't be coupling the fortunes of their business infrastructure with the fortunes of any one coin, specially now that alt coins with a similar technical spec to WDC are popping up like mushrooms after a rainshower. So where does that leave you when Scharmbeck decides it needs to 'diversify' and support other coins to keep its business alive ? You'll be a bag holder for another "dodo"coin.

If you're going to plough so much into a single coin on the basis of an initiative that *isn't* the coin itself, at least see it from the negative perspective before weighing up the advantages. If you find that hard, I'll give you a hand:

[1] - One of WDC's main 'selling' properties that's always touted is speed. But this is just blockchain transaction speed. In a point of sale situation, payments are handled by payment processors through accounts. Look at cryptocurrency exchanges for example - all trades happen instantaneously regardless of a coin's particular blockchain transaction speed. I've said this often on other forums, but if a crypto coin ever makes it into a grocery store or supermarket, we *won't* be doing blockchain transactions, we'll be using payment processors like Visa and Mastercard and transactions will all be instantaneous. A few minutes is fine for blockchain speed.

[2] - Look at the date on this link: https://bitcointalk.org/index.php?topic=204894.0   When that announcement was made, about 40 of the alt's on the market today didn't exist. A new 'alt' was quite a big deal. Now it isn't. You can even roll your own...http://coingen.io/  Want a fast coin ? - just set the right parameters and have it delivered to your email box.

[3] - Proof of work is toast. It's now emerging that the previously "theoretical" concept of a 51% attack brought about by excessive concentration of hashing power is now a practical reality due to the phenomenon of massive hashing pools and mining viruses that can hijack millions of browsers. Proof of stake is the future because it's almost immune to this particular problem. (Doesn't mean there aren't other issues, but not this one). So that leaves PPC, XPM, NXT and such like as the contenders for challenging bitcoin. It's unlikely that Bitcoin itself will die because it's so established that the developers will find ways to defend against the 51%, like checkpoints etc. But second place downwards is going to go to proof of stake coins IMO.

[4] - Have a look at what Scharmbeck actually does. Basically 3 things:

a) - a fiat exchange
b) - a client (secret mobile WDC clients)
c) - a payment processor

Talk about playing to your weaknesses:

regarding a) a fiat exchange that only supports one coin vs fiat exchanges that support many

regarding b) ok, it might be a nice client, but a good client doesn't sell a coin, besides, there probably could not be a more competitive area right now

regarding c) as I said previously, if anybody is going to be doing payment processing in any significant way for cryptocurrencies, it will be existing people - Visa, Mastercard, Maestro, the banks etc. They already have an infrastructure that's currency independent, so adding a cryptocurrency will be peanuts if they think it's worth it.

Sorry to rain on your parade, but if crypt's are to get anywhere, people have to get real and actually think things through. They are a great store of value and potentially a huge threat to fiat because they are unlevered base money, but the blockchain is not a retail point-of-sale tool. It's a bank account and as long as you prioritise things that way the future looks bright for cryptos I think.

My advice:

Dump all your WDC into PPC, XPM, NxT and possibly QRK. Although the latter 2 have a bit of an "instamine scam" reputation, they are still good coins and have a massive potential liquidity which could spread far and wide. None are proof of work except QRK and all have properties unique to the coin itself which is a better investment criteria than relying on a solitary business supporting the coin.

In my opinion, Scharmbeck *might* survive if it starts to support other coins, but WDC will be history by christmas.

  Sorry, I can't resist calling it that. Lived with that abbreviation for so many years it's tattooed on my brain.

(I'm actually on a private crusade to rename the coin     )

There's always Power PC.

That's what Power PC was invented for - exactly to address this 51% issue that hangs around the neck of proof of work coins. Since it's a proof of stake coin it's far less vulnerable - just make sure you've got at least as much Power PC as you have Bitcoin and you'll be ok if the rollover ever happens.

Excellent and very pertinent point. I've often described it as a "pressure gradient" from fiat into cryptoes. I do quite a lot of commenting in online articles and sometimes describe cryptocurrencies as "unlevered, base money". Whereas credit money is highly levered, in other words there is only 1 chair for every 10 people in the credit money economy whereas that ratio is 1 to1 in cryptos. When the music stops (as in, when the US or Japan finally default on their levered-to-kingdom-come debt) it's clear where the "other 9" in the fiat world are going to run.

Your point about crypto currencies being more about a technological revolution than price is also dead on. I actually crossed swords with a capital funds manager today on that. Here's the exchange (I was posting as 'indigopete').

http://www.telegraph.co.uk/finance/currency/10554405/Bitcoin-value-moves-back-above-1000-after-Zynga-move.html#comment-1189647862

No 

It's just that when bitcoin goes up, I feel like it's going ballistic and the whole world economy is about to change **tomorrow** and when it's going down (as it did today) my rose-tinted specs come off and dark misty ones come straight on which make me think, of course, its actually going to zero

Brother JohnF ("good evening everyone, time for another bitcoin report, this is the 4 hour mt gox...") thinks we might be about to repeat the early December pattern which would project a $6000 BTC very quickly. But even he acknowledges it could be the 'long drawn' drift down before the next rally.

(See from 4:30 if you're impatient).

http://www.youtube.com/watch?v=sQ79__nkttQ&feature=c4-overview&list=UU2ORQrqEEJ168UCXJfJdNtQ

(b.t.w. the whole 4 series of those is definitely worth watching - really fascinating stuff about the cryptolodgy and NSA compromising your PCs with listening devices).

The thing that cryptos need now is some real world use.

Their speculative value has probably reached saturation point. None of the coins are in use, just sitting in wallets being traded for other coins which are also not in use.

How they will actually be used in real world trading remains to be seen. My own opinion is that transaction speed is irrelevant because blockchain transactions will never be used at the point of sale. Payment processors like Mastercard and Visa will handle all that - cryptos will just be another way to "charge your account". (Witness todays cryptocurrency exchanges - trades are more or less instant, regardless of a particular coin's blockchain transaction time).

So the dam will have burst for me if one of those payment processors (even Paypal) lets you charge your account with cryptos. Until then the crypto economy is mainly hypothetical and speculative I think.

Yeap. I also bought (on the Litecoin market).

Decided they were cheap - although they may still continue to go down. Doesn't matter, if a 50% discount to the previous week isn't a good time to buy, when is ?

Quarks are probably one of the best potential "mass adoption" coins around. Fast, secure and plentiful, so I agree - there's nothing wrong with the coin so either they're dirt cheap now or they're never coming back. Take your pick.

Good points, up til this paragraph which is way off in my opinion...


Bitcoin has a value at the moment because it is "base money". That's to say, it is at the end of a chain of trust (i.e. not 'backed' by anything).

Money which has to be 'backed' by something, by definition, is not base money and so has no intrinsic value of its own. Bitcoin has intrinsic value because it works as a unique token of value with a high resistance to counterfeiting. Cryptocurrencies which have to be "backed" by something are by definition of far less value than ones that are not and so I think its unlikelt that banks will start to do this.

They should ALL be on there.

There's no reason for censoring any of them. People on this forum and elsewhere are being pathetic in seeing "marketcap" as some kind of measure of merit when it isn't. Its just a statistic.

If I decide to create a new coin tomorrow with 100 Billion units and it trades for an appropriate price, it will have the biggest marketcap of all coins and that fact should be reflected in the marketcap statistics.

Coins should not have to "earn" their right to a marketcap position - its a statistic that includes the number of coins in circulation, thats all.

I haven't bought into all the NxT 'scamcoin' fud.

[1] - I did quite a bit of looking into it and concluded that its one of the very few new coins out there which is radically different and highly competitive (i.e. worth investing in long term, not pump and dump)

[2] - the ease with which I was able to pick up a pretty huge amount of the coin for a very little BTC investment convinced me that its going to get well distributed and that there isn't a huge amount of 'market manipulation' going on using tiny volume trades

In fact, that coin is far better value than most of the pump and dumps out there which actually don't have any new development effort put into them.

NxT at least does and is still cheap. If the price ever gets 'slammed" by big stakeholders, it's not going much below what it is at the moment if even a couple of the coin's new features become established. Even then, it'll come back up because there are a lot of them about and that means a lot more holders and buyers than 'elite' brands like PPC and XPM.

The fact that people try to "manipulate" a coin's price is no reason for excluding it or distorting its market cap statistics.

The two things have nothing to do with each other.

You're mixing a whole load of politics with the proper reporting of statistics.

I bought some NxT knowing the full background to that coin. I knew it was mostly premined. I knew that there were probably some big stakeholders. If it hadn't already been listed on Marketcap I would have taken a calculator and multiplied the coinbase by the current price on the dgex exchange in order to furnish myself with that particular piece of data.

What's the problem ? If you don't like the coin don't invest in it, but stop patronising other investors by trying to push for the censoring or "tainting" of coin statistics just to suit some political vendeta you've got against premined coins.

Some of us are grown up and can make up our own minds about it.