1.29! 1.29!

Hey! I'll sell you my BTC @ 1.3USD!!! 

No problemo

I see what you're getting at, but you are forgetting that money has a velocity. Yours is an extreme example, but the idea is that the borrowed money will be spent into the economy to purchase productive capital and pay wages to produce a good or service that will then be bought with some of those very same bitcoins that you just borrowed and spent. 1BTC can change hands many times. If the terms of the loan allow for monthly installments, then meeting the terms of the loan is possible in your scenario, so long as the lender is also spending bitcoins. It becomes even more possible when you're only talking about lending out a fraction of the BTC in circulation.

Agreed! Gold also is not "backed" by anything and so what? I am just arguing that bitcoins are also not backed and should be valued at their market price.

This is the argument I'm making. That they are not backed by energy/processing power/intellectual property/hash/whatever because they cannot be redeemed for those things. Those things are actually either the cost of producing them or the mechanism by which their supply is limited or the security measures that keep them from being counterfeited.

Of course, I might buy energy and/or processing power from someone with bitcoins at the market rate.

What part of Denver are you in?

I've developed a formula for converting bitcoins into capital.

Step 1. I have BTC, I want to buy productive capital
Step 2. Hi! I build productive capital for BTC. Wanna buy?
Step 3. OK. I buy! Wait, I don't have enough.
Step 4. That's ok. Do you want to pay in installments?
Step 5. Sounds good!

I disagree. I think we can easily classify it as "non-backed" at least. That doesn't mean it doesn't have value, of course.

Edited to add:

Unless you can show me instance of a bitcoin being redeemed for the processing power and electricity used to create it.

Yeah, I realized this shortly after posting.... Doh!

I'm actually really glad I took the time to read this thread. Now I can finally go to bed after a good laugh!

+1 sgornick

Transaction complete! Thanks, sgornick!

Tor+Bitcoing is a win, in my book! If I have a decent number of BTC before this bounty ends, I'll contribute.

John Robb @ http://globalguerrillas.typepad.com! I'll email him.

I am in tight with a community supported cafe/community center here in Portland, OR. I could probably get them on board, even if its only me who uses BTC at first. I help with their accounting, business planning, etc, and spend about $25 a week at the cafe, so I could probably convince them . Keep me posted!

I just got mine.... $3!!!

I argue that bitcoins are not "backed" by anything at all. The algorithm, computations, computing power, etc. only serve to restrict their supply and make them hard to counterfeit. So they are no more "backed" by intellectual property, etc. than gold is "backed" by the complex mining equipment used to extract it. The processing power and electricity used to create a bitcoin represent the cost of producing a bitcoin, but that should not be mistaken as their value (or backing.) For instance, an ounce of gold, once extracted, is valued at its market value (what you can get for it in trade) rather than what was expended to extract it. You may hold in your hand an ounce of gold that was extracted in medieval times, and cost thousands of manual labor hours to pull from the ground and smelt, but it will still trade at its market value (unless it is in the form of rare bullion, of course.)

Their value derives from what you can trade them for; which right now is ~$.30 per BTC.

I'm sure others have said all this before, though 

I see where the confusion is coming from. S3052 mis read me or mis typed "Poland" in one of his replies. I live in the City of Portland in the United States.

Mine is yet to arrive. It does indeed look like someone is manually doing this. I'm patient.