What you can do with a bitcoin if the USD exchange price dropped to 0

[niko]

What you can do with a bitcoin if the USD exchange price dropped to 0

The question suffers from circular logic. In reality, the only way exchange rate would drop to 0 is if you suddenly couldn't do anything with Bitcoin.

Furthermore, you don't have to ask "what if...?". The price already was zero before the first trade occurred. People were sending coins back-and-forth just for the heck of it, as coins had no value - because you couldn't do anything useful with them. We've come a long way since then.  By the way, remember "bitcoin faucet"? Somebody was just giving coins away for free, for a long time. That means those coins had zero value - they were given away for free. And yet, at least some of the recipients did find a use for them.

[johnyj]

What can you do with your  fiat when the government calls a "bank holliday" and devalues your money to 0 ?

You can pay tax with that money at least

[niko]

I thought of another one:
http://people.scs.carleton.ca/~clark/biblio/bitcoin/Clark%202011-3.pdf

[johnyj]

So basically as more and more miners, or stake holders, or interested parties, or Bitcoin Reserve Funds, or Bitcoin Foundations, or whatever, keep more and more quantity of more and more variety of other currencies in stock, poised to buy bitcoins with any time bitcoin's exchange rate with respect to that currency drops, well, then you are playing the Minister of Finance game, or the Royal Exchequer game, or whoever it is in each nation that tries to keep that nation's currency's exchange rates from dropping to zero.

(At what price would YOU snap up any bitcoins you saw going cheap? Would the amount of USD you'd find yourself willing and able to dig up to snap them up with differ for different actual numerical values of the term "cheap"? If so In what way?)

To directly answer your question: what I could do would be "increase the USD exchange price".

It has already been done: bitcoins already had a 0 USD exchange price way back when.

-MarkM-

Very nice call, if we could connect 2 million people that is willing to buy 10 coin at $10 each, then each btc will worth at least $10, similar to the effect of a central bank intervention

So far it is volunteered and non-organized, if we could get support from enough people, make it a mutual agreement, then btc's downside risk will be firmly fixed

Most of the usages of bitcoin I can think of rely on its exchange price, so protect the exchange price should be part of the responsibility of btc community

[johnyj]

What you can do with a bitcoin if the USD exchange price dropped to 0

The question suffers from circular logic. In reality, the only way exchange rate would drop to 0 is if you suddenly couldn't do anything with Bitcoin.

Furthermore, you don't have to ask "what if...?". The price already was zero before the first trade occurred. People were sending coins back-and-forth just for the heck of it, as coins had no value - because you couldn't do anything useful with them. We've come a long way since then.  By the way, remember "bitcoin faucet"? Somebody was just giving coins away for free, for a long time. That means those coins had zero value - they were given away for free. And yet, at least some of the recipients did find a use for them.

I'm thinking about a possible scenario where bitcoin were hit by either a severe internal split or an external regulation, where the trust crisis hit it hard and everyone is trying to dump their coin, like what happened with mtgox hack

If bitcoin get mainstream adoption and such an event happened, if there are no fundamental support or exchange rate support, people's faith about cryptocurrency in general will diminish and bitcoin will remain as a computer geek's game in cyberspace

[edd]

There already is fundamental support for bitcoin. Many of us believe in bitcoin for the advantages it offers over all fiat currencies, not because of any exchange rate. As long as those ideologically motivated individuals find strength in the bitcoin protocol, bitcoin will have value.

[hazek]

OP:

Bitcoin is a money system with some very desirable features that allows for some points called bitcoins to be transferred to anyone, anywhere in the world anytime with practically no chance of fraud via chargebacks, currency debasement or having your bitcoins get blocked or frozen and this doesn't stop being true if these points have no value, so to answer your OP question: The same thing as you can do with it now.

[jl2012]

Everytime, when I tried to advertise bitcoin to my friends, the typical question they asked is: What is this thing backed by? What's the use of it?

Although I can explain to them that it is backed by mathematics and P2P network, and you can use it to buy anything online, it still does not make them feel safe enough, since that is real money, they are afraid of it's just a scam or a bubble

Just like MBS, CDS, eventually they are backed by a house, which is needed by majority of people, so no matter how abstract in concept and construction they are, they still get accepted. Because a house is a house, even the price crashed to 0, it still can provide some utility and that is the reason the price will never drop too much

"If the USD exchange price of this thing drop to 0, what is the use of it?"
There is an answer for gold/silver/diamond/house, even WoW gold
But there is no answer for bond/stock/options/futures

So it seems bitcoin fall into the second category, e.g. a financial security, and unlike bond/stock/options/futures, it has no underlying base instrument, or to say it is based purely on some promises

If we could find some good use of bitcoin even when the exchange price is 0, then it will flourish for sure

That is free good (http://en.wikipedia.org/wiki/Free_good). Since bitcoin is scarce, it could not be a free good.

[mobile4ever]

What can you do with your  fiat when the government calls a "bank holliday" and devalues your money to 0 ?

If you dont have a card and no checks that happens every Sunday in the Western World.

[edd]

What can you do with your  fiat when the government calls a "bank holliday" and devalues your money to 0 ?

If you dont have a card and no checks that happens every Sunday in the Western World.

Cash still works.

[johnyj]

OP:

Bitcoin is a money system with some very desirable features that allows for some points called bitcoins to be transferred to anyone, anywhere in the world anytime with practically no chance of fraud via chargebacks, currency debasement or having your bitcoins get blocked or frozen and this doesn't stop being true if these points have no value, so to answer your OP question: The same thing thing as you can do with it now.

If there are many true believers like you then this is out of question, but I doubt how many  

Let's change the question: If by some reason the supply of bitcoin were doubled every several year, do you still buy bitcoin when the price crashed?

[markm]

No, because the price crash will lead to a difficulty drop, which if the situation keeps going will lead to more and more coins pouring out of my magic money machine hardware.

Cheap coins = great time to (re)enter the mining business!

-MarkM-

[bg002h]

A good rough answer to that question would at least be what has historically happened to other currencies that have become worthless.

[johnyj]

No, because the price crash will lead to a difficulty drop, which if the situation keeps going will lead to more and more coins pouring out of my magic money machine hardware.

Cheap coins = great time to (re)enter the mining business!

-MarkM-

Why don't you direct your hashing power towards LTC now? 

I still remember the day that I0coin went online, I hashed out several blocks during the first couple of minutes, and after a day I have hundreds of coins. And then ... less and less people care about it, less and less people know about it, I don't know if the network is still there 

[markm]

No, because the price crash will lead to a difficulty drop, which if the situation keeps going will lead to more and more coins pouring out of my magic money machine hardware.

Cheap coins = great time to (re)enter the mining business!

-MarkM-

Why don't you direct your hashing power towards LTC now?  

I still remember the day that I0coin went online, I hashed out several blocks during the first couple of minutes, and after a day I have hundreds of coins. And then ... less and less people care about it, less and less people know about it, I don't know if the network is still there  

Because for me the long term value of the bitcoins, namecoins, devcoins, groupcoins, i0coins, ixcoins and coiledcoins I get by merged-mining seems better than the short sighted attempt to grab tiny amount of high difficulty litecoins.

Plus many of the merged-mine-able coins are low difficulty enough to be vulnerable, they need more hashing not less, once ASICs arrive we will be merged-mining them all with ASICs

-MarkM-

[Stephen Gornick]

A good rough answer to that question would at least be what has historically happened to other currencies that have become worthless.

Even though they might have used the "worthless" cash for keeping the stove lit in Weimar Germany, the cash still had value > 0.   Zimbabwe 100 trillion dollar notes trade for more today on eBay than when they were too "worthless" to be used any longer as currency in Zimbabwe.

[johnyj]

A good rough answer to that question would at least be what has historically happened to other currencies that have become worthless.

Even though they might have used the "worthless" cash for keeping the stove lit in Weimar Germany, the cash still had value > 0.   Zimbabwe 100 trillion dollar notes trade for more today on eBay than when they were too "worthless" to be used any longer as currency in Zimbabwe.

That's what I worried, bitcoin does not have any forms of such utility, if the exchange rate drops to 0, then it become like any other dead cryptocurrencies

Anyway, as long as this community is here, it won't

[oakpacific]

It could be used as an unalterable and indestructible proof that some information(e.g., a certian value) is sent from one online identity to another, as long as the infrastructure is still there, fiats can't do this because there is no way you can prove the total amount of money in circulation when the money was given to you. So in case that no more exchange exists, people keeping large amount of bitcoins could still use it as a medium of exchange, or at least as a ledger.

[markm]

Nah, you can make unalterable timestamps with BBQcoin.

Oh wait, how difficult exactly do you need it to be for a 51% attacker to alter?

(Actually though I think people have pointed before to cheaper timestamping technologies.)

-MarkM-

[oakpacific]

Nah, you can make unalterable timestamps with BBQcoin.

Oh wait, how difficult exactly do you need it to be for a 51% attacker to alter?

(Actually though I think people have pointed before to cheaper timestamping technologies.)

-MarkM-

Realistically, a 51% attack would only happen when the number of Bitcoin users drops to 1, that would be when it really irreversibly dies, otherwise it would be silly to even attempt such an attack, as long as you're not government/some powerful organizations whose sole purpose of involvement is to destroy Bitcoin.