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Author Topic: Let's compare USD and BTC  (Read 3728 times)
justusranvier
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October 19, 2012, 10:24:18 PM
 #21

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.
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October 20, 2012, 06:05:17 PM
 #22

The difference is that while you may hold BTC on the asset side of your balance sheet, this BTC doesn't appear on the liability side of anyone else's balance sheet. When you hold USD on the asset side of your balance sheet, a corresponding entry appears on the liability side of someone else's balance sheet.

Specifically, if you hold paper USD, it appears on the liability side of the Fed's balance sheet. If you hold a USD bank deposit, it appears on the liability side of a private bank's balance sheet.
However, it really doesn't matter what the number is on the liability side of the Fed's balance sheet (as long as it doesn't go to 0).

You could invent a Bitcoin Reserve and pretend that every bitcoin mined is a liability on the Bitcoin Reserve's balance sheet. It would be exactly the same thing (except that the Bitcoin Reserve's liabilities are limited to 21 million).

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October 22, 2012, 09:43:27 PM
 #23

A more direct approach would be to envisage that one party issuing USD as 'debt' has a big claim on the asset side of the balance sheet, while the holders of USD have a big liability on the liabilities side of the balance sheet (but spread out over millions of balance sheets).

BTC is no one's debt.

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thezerg
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October 23, 2012, 07:47:02 PM
 #24

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.

It reduces the cost, increases the speed, and increases the potential user base of payments, especially international.  The efficiency savings allow businesses to hire more people, and the speed/availability allows the business to reach markets it may otherwise not have access to.  This access allows the business to grow, or even exist.
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October 25, 2012, 07:06:57 PM
 #25

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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October 25, 2012, 08:16:05 PM
 #26

Please give an example of a business that can only be profitable using BTC as payment method?

Silk Road? Smiley

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johnyj
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October 25, 2012, 09:20:56 PM
 #27

Please give an example of a business that can only be profitable using BTC as payment method?

Silk Road? Smiley

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)

bitcoinbear
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October 26, 2012, 07:18:40 PM
 #28

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


The risk of default may be 0, but the risk that there is a flaw that will reder bitcoins worthless is non-zero. There is also the risk that people will stop using bitcoins, which would drive down the value, which to the hoder works out to about the same thing as a default.

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johnyj
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October 30, 2012, 01:03:23 AM
 #29

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


The risk of default may be 0, but the risk that there is a flaw that will reder bitcoins worthless is non-zero. There is also the risk that people will stop using bitcoins, which would drive down the value, which to the hoder works out to about the same thing as a default.

As a high end investment target, people will not use BTC at all, it will only be operated by institutions. Buying and selling them in the exchange is their daily work, and why people buy? Since it hedges against inflation, better than a USD saving account

I believe the demand for saving is endless, no one will complain if they die with several millions of saving in their account, with extra amount of saving, people will live a very different life: secure and happy every day

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October 30, 2012, 03:50:56 PM
 #30

So USD is a liability, but BTC is an asset. USD represents the future value that will be imparted to it, which is uncertain. BTC represents the past value that was put into it, which is certain since it is already past.
No, neither one is an asset.

Both are claims on future production, which may or may not occur, and which may or may not be honored.

The difference is that USD can be arbitrarily diluted and BTC can not.

Yes. You actually own bitcoin. You never really own a dollar.

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bitcoinbear
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October 30, 2012, 04:54:27 PM
 #31

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


The risk of default may be 0, but the risk that there is a flaw that will reder bitcoins worthless is non-zero. There is also the risk that people will stop using bitcoins, which would drive down the value, which to the hoder works out to about the same thing as a default.

As a high end investment target, people will not use BTC at all, it will only be operated by institutions. Buying and selling them in the exchange is their daily work, and why people buy? Since it hedges against inflation, better than a USD saving account


But why wouldn't individuals invest directly in bitcoins? Getting bitcoins is easier than (or at least as easy as) investing in an institutional account.  Large institutional investors might want to buy some bitocins as a hedge against inflation, but that doesn't stop individuals from doing the same thing. The beauty of bitcoins is that it serves so many roles at the same time. Bitcoins can be used by large investors, small savers, day traders, people transferring money across the globe (to do large investments in other countries, or as a way to send small amounts to family members) or by people buying things online, or by people donating money anonymously, or for micropayments. The more people use bitcoin, the stronger it becomes, and the better it serves for all the other functions. For instance, as more people use bitcoin as savings, the price will go up, and the total market cap will go up, which will make it easier to use bitcoins for larger transfers.

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johnyj
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November 01, 2012, 09:32:49 PM
 #32

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


The risk of default may be 0, but the risk that there is a flaw that will reder bitcoins worthless is non-zero. There is also the risk that people will stop using bitcoins, which would drive down the value, which to the hoder works out to about the same thing as a default.

As a high end investment target, people will not use BTC at all, it will only be operated by institutions. Buying and selling them in the exchange is their daily work, and why people buy? Since it hedges against inflation, better than a USD saving account


But why wouldn't individuals invest directly in bitcoins?

You need to be very confident about your computer knowledge before you do all this alone by yourself

When the sum of money becomes larger than salary, it need to be managed against potential loss, people start to rely on institutional services. Even if you stashed 10000 BTC in your offline wallet, you will feel unsecure

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November 01, 2012, 09:43:36 PM
 #33

You can't really invest in bitcoins since bitcoins don't generate bitcoins. You can speculate and you can park funds.

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November 01, 2012, 10:53:14 PM
 #34

You can't really invest in bitcoins since bitcoins don't generate bitcoins. You can speculate and you can park funds.

You could be investing in bitcoin if the way you put money in helps to grow the bitcoin economy or make bitcoin better.

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November 02, 2012, 12:01:28 AM
 #35

You can't really invest in bitcoins since bitcoins don't generate bitcoins. You can speculate and you can park funds.

You could be investing in bitcoin if the way you put money in helps to grow the bitcoin economy or make bitcoin better.

True.

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November 04, 2012, 03:32:09 PM
 #36

BTC wins Smiley

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November 04, 2012, 05:05:08 PM
 #37

BTC wins Smiley

That's what I'm banking on.

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johnyj
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November 06, 2012, 01:50:28 AM
 #38

The risk of default may be 0, but the risk that there is a flaw that will reder bitcoins worthless is non-zero. There is also the risk that people will stop using bitcoins, which would drive down the value, which to the hoder works out to about the same thing as a default.

This is a valid concern, I think at the end it is still people that is backing anything, but when BTC get enough acceptance, there will be many more computer scientists/security experts/network experts continuously analyze it and give recommendations to improve it

BTC has a very important political neutral position, it is purely backed by science

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November 08, 2012, 05:56:43 AM
 #39

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


The risk of default may be 0, but the risk that there is a flaw that will reder bitcoins worthless is non-zero. There is also the risk that people will stop using bitcoins, which would drive down the value, which to the hoder works out to about the same thing as a default.

As a high end investment target, people will not use BTC at all, it will only be operated by institutions. Buying and selling them in the exchange is their daily work, and why people buy? Since it hedges against inflation, better than a USD saving account


But why wouldn't individuals invest directly in bitcoins?

You need to be very confident about your computer knowledge before you do all this alone by yourself

When the sum of money becomes larger than salary, it need to be managed against potential loss, people start to rely on institutional services. Even if you stashed 10000 BTC in your offline wallet, you will feel unsecure

No I would not.  Knowledge is power, and when it is decentralized, it is freely available ("freely" meaning free of tyrannical control, as opposed to "freely" as in "without cost".  I pay for my rigs (and their proceeds) mostly in frustration (it's a sort of deranged enjoyable frustration).

EDIT:  But I have come to realize, many people are not so blessed with extra time for researching this compendium of knowledge the Internet. And even if they did, who's to say they'd feel comfortable with copying and pasting long strings of seemingly random characters?  I understand, many people just are not computer savvy, even if they are moderately computer-literate.  And that's the main thing about Bitcoin right now -- Currently, it is not enough to be merely computer-literate in order to fully control and secure one's own BTC; one must be at least computer-savvy for this.   I think in order for it to expand and fulfill its intended ideals, Bitcoin should evolve to reach out to those that are merely computer-literate, but still have a desire for fiscal liberty and demand for BTC.
As for those that are computer-literate and are indifferent, disinterested, or otherwise to Bitcoin -- THOSE are the people that all these Libertarians are alluding to with maximum disdain.  The less psychotic Libertarians, anyway...

Look at it like this:  Is there anyone selling services to help people set up their email accounts?  Probably not many of those in existence today.  Similarly, professional for-profit money management services will be an equally goofy concept in the future (perhaps not for the elderly).

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November 09, 2012, 08:41:23 PM
 #40


You need to be very confident about your computer knowledge before you do all this alone by yourself

When the sum of money becomes larger than salary, it need to be managed against potential loss, people start to rely on institutional services. Even if you stashed 10000 BTC in your offline wallet, you will feel unsecure

No I would not.

You WILL if one BTC exchange value is $1000, by that price, a team will brake into your house with a gun pointing to you to get that string  Grin Grin If they succeed, no trace to chase them, it is almost a risk free robbery. Actually this could be a problem preventing BTC from going main stream

And to the computer part, either a web based online account or a managed pension fund, normal people can not go higher than this degree of complexity






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