Do Bitcoins need something REAL to back them?

[Mike Christ]

Gold is a very useful element especially for things like the development of technologies of space travel

wrong, gold have uses: cables(stuff that is useful) and jewellery(which is just people thinking its pretty).

kokjo:  People don't generally buy gold because they want to use them on cables (but probably will buy them as jewelry, which is a lot like using gold as a store of wealth/showing off wealth.  Looking pretty is exactly why people think it's valuable.)

But the point I'd like to make is that because Gold is useful in many applications, it should not be used as money.  The fact that Bitcoin can literally do nothing but act as money is one of its better qualities; you don't want Bitcoin to have any other uses.  This is why we don't store wealth in food; not only does food rot, but it has a very important purpose, which is, being sustenance.  Certain items are better at this, precious metals being one, but even they have many applications in the real world.

Bitcoin does not.  It does nothing but be money.  It cannot be used in any other way.  It will never be used in any other way.  Nobody can say, "Well we need Bitcoin to build our space ships and it's kinda expensive so we need subsidies" no, it will never happen.  Bitcoin has value only because it is given value, the same as gold, minus the uses outside of storing wealth.

[1krona]

"The bitcoin is backed by math argument" is kinda silly if you ask me. It´s backed by people who belive in it, but it have no other use than a medium of exchange, therefor it will fail.. In the long run, or short run. It could even be tommorow who knows. The problem is that the source code of bitcoin can be copied to infinity and create infinite new eCoins, you cant do that with physical things like gold.
You can also do something else with physical things like gold rather than use it as a medium of exchange, you cant do that with bitcoin.

Why is the "Backed by math argument silly"? It is true. You can't have a currency back by people cause then you might as well as back it by hope. Math is a way to prove that the coins aren't double spent, are fairly handed out and keep bitcoins rare. So instead of just hoping it works, you can prove it works. So it the best argument is that it is back by math.

Beacause math is an "abstract 'idea' " you cant really touch it or measure how many other identical cryptocurrencies there could be or how much better you could make them, the answer is infinte. I´m just saying that I can create xCoin, yCoin, zCoin with the exact same properties and now the challenge is to get other people to value those as much. This expansion of cryptocurrencies will probably happen. And therefore you will see an "inflation" of all cryptocurrencies so I dont think the deflation argument of bitcoin stand either.

You cant just look at the properties of Gold and then Copy it into existance without putting extreme amount of energy into it, do you see the problem?
Gold = Physical matter that have some real-world properties, Cryptocurrency value= Abstract and Subjective, can be copied to infinity.

But I´m still a cryptocurrency supporter but I dont think it will stand for much long. I wouldnt bet my life on it, thats it.

[kokjo]

kokjo:  People don't generally buy gold because they want to use them on cables (but probably will buy them as jewelry, which is a lot like using gold as a store of wealth/showing off wealth.  Looking pretty is exactly why people think it's valuable.)

But the point I'd like to make is that because Gold is useful in many applications, it should not be used as money.  The fact that Bitcoin can literally do nothing but act as money is one of its better qualities; you don't want Bitcoin to have any other uses.  This is why we don't store wealth in food; not only does food rot, but it has a very important purpose, which is, being sustenance.  Certain items are better at this, precious metals being one, but even they have many applications in the real world.

Bitcoin does not.  It does nothing but be money.  It cannot be used in any other way.  It will never be used in any other way.  Nobody can say, "Well we need Bitcoin to build our space ships and it's kinda expensive so we need subsidies" no, it will never happen.  Bitcoin has value only because it is given value, the same as gold, minus the uses outside of storing wealth.

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

[1krona]

Everything material that has value in this universe ONLY has value because people agree that it has value, that is all. If anyone tells you differently, they are either ignorant or are trying to sell you something.

If you were totally alone in the universe and then you could choose between a bitcoin or physical stuff that you could form, shape, build things with. What would you choose? Not agreeing with anyone else but yourself

[Mike Christ]

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

No, frozen carrots would be better as food, which is why you'd eat them instead of trade them for something else (like more food.)  Bitcoin makes the perfect money because it does nothing outside of being money.  There's no incentive to use it in any other application.

[1krona]

kokjo:  People don't generally buy gold because they want to use them on cables (but probably will buy them as jewelry, which is a lot like using gold as a store of wealth/showing off wealth.  Looking pretty is exactly why people think it's valuable.)

But the point I'd like to make is that because Gold is useful in many applications, it should not be used as money.  The fact that Bitcoin can literally do nothing but act as money is one of its better qualities; you don't want Bitcoin to have any other uses.  This is why we don't store wealth in food; not only does food rot, but it has a very important purpose, which is, being sustenance.  Certain items are better at this, precious metals being one, but even they have many applications in the real world.

Bitcoin does not.  It does nothing but be money.  It cannot be used in any other way.  It will never be used in any other way.  Nobody can say, "Well we need Bitcoin to build our space ships and it's kinda expensive so we need subsidies" no, it will never happen.  Bitcoin has value only because it is given value, the same as gold, minus the uses outside of storing wealth.

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

Well put it!

[evgonoba]

The professor who said Bitcoin should be backed by something but that it is a "step in the right direction" wrote a book called Capital as Money.

It proposes a new form of money, too.

http://www.amazon.com/Capital-As-Money-ebook/dp/B009AP9ZG6

I think the argument for "backing" money with something is that it SHOULD have a backing, even though we all agree that our current money does not. That is part of the problem....it's just made up with no real controls other than bankers issuing new notes or issuing credit.

[St.Bit]

The following blog by a PhD of Economics ...

There is your problem right there

As long such idiots run central banks there is no need to back bitcoin.

Wait a sec ... That might be the REAL backing of BTC. Bitcoins are backed by goverment stupidity. Every smart goverment could launch a premined crypto currency and bitcoins would be worthless. Unfortunately there is no such thing as smart gov ...

No goverment on earth is capable to create a online currency without a total screwup or adding at least 10 stupid features that make worthless. There must be AML to fight wars they can't win. There must be confiscation so they can pay for their dep ... ehm fight terrorism.

[kokjo]

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

No, frozen carrots would be better as food, which is why you'd eat them instead of trade them for something else (like more food.)  Bitcoin makes the perfect money because it does nothing outside of being money.  There's no incentive to use it in any other application.

so stuff that have alot of uses, is less useful. and stuff that does one thing and one thing only is more useful. i feel kind of wrong, but im not able to explain it.

[Mike Christ]

The professor who said Bitcoin should be backed by something but that it is a "step in the right direction" wrote a book called Capital as Money.

It proposes a new form of money, too.

http://www.amazon.com/Capital-As-Money-ebook/dp/B009AP9ZG6

I think the argument for "backing" money with something is that it SHOULD have a backing, even though we all agree that our current money does not. That is part of the problem....it's just made up with no real controls other than bankers issuing new notes or issuing credit.

To be frank, dollars are backed by banks.  Because it's next to illegal to use anything else but the prescribed national currency (see: liberty dollars), you're SoL and at the mercy of whatever the higher-ups decide to do with that currency.  It's completely out of the hands of the people.

On the other side of the spectrum is Bitcoin, which also is also backed by "nothing", but to correlate it with fiat, it's backed by the public.  In other words, we're in control of its price, and where it goes.

[1krona]

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

No, frozen carrots would be better as food, which is why you'd eat them instead of trade them for something else (like more food.)  Bitcoin makes the perfect money because it does nothing outside of being money.  There's no incentive to use it in any other application.

But that expect someone else to value it as much as you did when you traded it otherwise you loose, and in case of a catastrophe of some kind I would have big problems accepting something that is subjectived valued.

[kokjo]

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

No, frozen carrots would be better as food, which is why you'd eat them instead of trade them for something else (like more food.)  Bitcoin makes the perfect money because it does nothing outside of being money.  There's no incentive to use it in any other application.

But that expect someone else to value it as much as you did when you traded it otherwise you loose, and in case of a catastrophe of some kind I would have big problems accepting something that is subjectived valued.

oh god no! not another debate about subjectivity...

[Mike Christ]

so stuff that have alot of uses, is less useful as money. and stuff that does one thing (be money) and one thing only (be money) is more useful as money.

Any better?

But that expect someone else to value it as much as you did when you traded it otherwise you loose, and in case of a catastrophe of some kind I would have big problems accepting something that is subjectived valued.

In a zombie apocalypse, Bitcoin would be useless, and you probably wouldn't survive anyway.  In a realistic catastrophe, and the Internet was knocked out, Bitcoin would also be useless.  However, you still could not eat gold, and you still could not eat dollars.  In a catastrophe, odds are, you'll revert to communism, or forced communism (a.k.a. stealing.)

[evgonoba]

Good point in many ways that dollars are backed by banks. They are backed by banks needing to pay back dollars to someone else. Dollars are also backed up by underwriting procedures that say what is "worth" putting money into in order to get more money BACK from....which is how banks try to tap into value and productivity in the economy. So there IS the IDEA of being backed by the real value that is out there in the economy. Of course, that doesn't cover credit cards...

[kokjo]

so stuff that have alot of uses, is less useful as money. and stuff that does one thing (be money) and one thing only (be money) is more useful as money.

Any better?

Sort of makes more sense. but i do not understand why money should have no "value"(you know what i mean!).

[Mike Christ]

Sort of makes more sense. but i do not understand why money should have no "value"(you know what i mean!).

Specifically, it should have these qualities: durable/long-lasting, easily transferable, and limited in supply (that is, in the case with fiat, more should be printed only to replace the old.)  The trouble with money that can do other things (lets say gold for example), if someone needed gold to build a spaceship, that spaceship is now much more expensive, simply because gold is treated as a store of wealth and its price is way over what it's actually worth in practice.

If gold were not used as a store of wealth, it wouldn't come with the added price tag of being money, and wouldn't cost so much to use in application.  This makes it harder to get shit done.  If a single Bitcoin hit $5,000,000 it would be a killer for someone who needed exactly 1 Bitcoin to create their time-flux capacitor

[mitsanaga]

I don't quite follow bitcoin is useful, because its not?
I only halfly get your point and it does not feel right, i would be much more comfortable with something i could use.

You can't eat bitcoins in case of a zombie apocalypse. Frozen carrots would be a better currency.

No, frozen carrots would be better as food, which is why you'd eat them instead of trade them for something else (like more food.) Bitcoin makes the perfect money because it does nothing outside of being money.  There's no incentive to use it in any other application.

i agree completely. its exactly what makes them perfect for use as currency.

[1krona]

"The bitcoin is backed by math argument" is kinda silly if you ask me. It´s backed by people who belive in it, but it have no other use than a medium of exchange, therefor it will fail.. In the long run, or short run. It could even be tommorow who knows. The problem is that the source code of bitcoin can be copied to infinity and create infinite new eCoins, you cant do that with physical things like gold.
You can also do something else with physical things like gold rather than use it as a medium of exchange, you cant do that with bitcoin.

Why is the "Backed by math argument silly"? It is true. You can't have a currency back by people cause then you might as well as back it by hope. Math is a way to prove that the coins aren't double spent, are fairly handed out and keep bitcoins rare. So instead of just hoping it works, you can prove it works. So it the best argument is that it is back by math.

Beacause math is an "abstract 'idea' " you cant really touch it or measure how many other identical cryptocurrencies there could be or how much better you could make them, the answer is infinte. I´m just saying that I can create xCoin, yCoin, zCoin with the exact same properties and now the challenge is to get other people to value those as much. This expansion of cryptocurrencies will probably happen. And therefore you will see an "inflation" of all cryptocurrencies so I dont think the deflation argument of bitcoin stand either.

You cant just look at the properties of Gold and then Copy it into existance without putting extreme amount of energy into it, do you see the problem?
Gold = Physical matter that have some real-world properties, Cryptocurrency value= Abstract and Subjective, can be copied to infinity.

But I´m still a cryptocurrency supporter but I dont think it will stand for much long. I wouldnt bet my life on it, thats it.

Math isn't an abstract idea, do you even know what an abstract idea is? If I said I had 2 jelly beans, you can see I have 2 jelly beans, you can feel I have 2 jelly beans. I can prove that I have 2 jelly beans. Math is based on proof, and you can prove everything in bitcoin. Today the dollar is based on debt and that is not the faith we should have.

Also look at how many crypto currencies have failed and never picked up steam, litecoin is the only other bitcoin like currency that is actually being used. We can have a 1 million other currencies I don't see how that will take away from bitcoin, it was the first and probably the one that will be used 50 years from now.

Gold is physical, but it is abstract in that we could go into a deep cave and find a lot of it, then the price would go down even more. It isn't defined that there is a certain amount of gold, we just have a hard time finding so we have proof it is rare. Bitcoin we know how there is, we know how much there will ever be, we can prove which address owns an amount.

Your not betting your life cause you should never do that, and plus you don't understand.

I always get the answer "You just dont understand", but I have studied currencies, economics, finance a lot.. And when youre saying that we will be using it 50 years from now I see your total lack of understanding from my subjective view. 50 years from now I think there is a much greater chance that we will be using some kind of money measured in energy. It is portable, durable, fungible, and you can do shit with it. So no I dont think cryptos like Bitcoin, Litecoin will stand much more than 5-10 maximum 15 years. But I could be wrong, but I have a bunch of ideas that would serve a much better purpose as a medium of exchange than Bitcoin.

I also have big issues with the asymmetric distribution of bitcoin. Some entities are sitting on 1 - 10 % of all Bitcoins just for them self, thats even worse than the Fiat distribution, although this is not an argument for that bitcoin is bad and will fail, I just dont like the asymmetric distribution. Read this: http://eprint.iacr.org/2012/584.pdf Check pg 8 and 9 for distribution of the coins.

[russokai]

It seems like they would but then again a lot of fiat really doesn't have much backing it when you get down to it .

[internationalaw]

Fiat currency really doesn't have anything backing them anymore.