Re-visit the question: What is bitcoin's value backed by?

[Arros]

Arros, I just don't buy the proposition that Bitcoin will be more valuable in the future because it will be more valuable in the future therefore the price will be higher in the future therefore the value is higher now, without first asserting some cause for the future rise in value or some cause for the present value.

...

It's not an asset "will be more valuable in the future because it will be more valuable in the future". What I mean is whatever number you come up with as a value for it now, has to involve estimating/guessing the uncertain future. Of course, if an asset is doing useful work right now, that also has to be counted.

In bitcoin's case, since it isn't really doing much important now (unless you count safeguarding the share of early adopters as important), it's usefulness to the world isn't realized in the present, but only in some possible future.

[johnyj]

I just don't buy the proposition that Bitcoin will be more valuable in the future because it will be more valuable in the future therefore the price will be higher in the future therefore the value is higher now, without first asserting some cause for the future rise in value or some cause for the present value.
...

Look at this statement: USD will have a relatively stable value in the future because it have a relatively stable value in the past and now therefore the price will be relatively stable in the future

The value of money is decided by a consensus, and when people reached a consensus, it will just hold that value even the supply and demand changes. In USD's case, that consensus is reached through people's historical experience, so even the gold that originally backed USD have been removed, its value still kept relatively stable (In theory when the gold back it was removed, it should drop to zero)

In bitcoin's case, the consensus will be that this money will always rise in value because of its limited supply and unlimited demand. People won't reach such consensus if they don't know about supply and demand theory in economics, but I suppose that more and more people will gain such basic economy knowledge over time

So, the consensus about USD's value is reached by historical experience, while the consensus about bitcoin's value is reached by economics theory, they are both psychological phenomenon but that's what essentially drives people's behavior

[NewLiberty]

I just don't buy the proposition that Bitcoin will be more valuable in the future because it will be more valuable in the future therefore the price will be higher in the future therefore the value is higher now, without first asserting some cause for the future rise in value or some cause for the present value.
...

Look at this statement: USD will have a relatively stable value in the future because it have a relatively stable value in the past and now therefore the price will be relatively stable in the future

The value of money is decided by a consensus, and when people reached a consensus, it will just hold that value even the supply and demand changes. In USD's case, that consensus is reached through people's historical experience, so even the gold that originally backed USD have been removed, its value still kept relatively stable (In theory when the gold back it was removed, it should drop to zero)

Not to zero, there is no theory that suggests unbacked currency are always worth zero (or bitcoin would be zero as well)... The dollar plunged by a third during the '70s, though.

At about the time the gold backing for the dollar was removed, there was also the establishment of the EPA, and massive federal government appropriation of land and land use rights associated with that.  This was a genius move by Nixon to co-opt his hippy opponents into giving him a new backing other than gold, by taking much land into the government treasury. December 2, 1970 The wilderness Act seized a bit over 9 million acres. (Now over 100 million, and growing).
To end the effect of Gresham's law on the dollar vs gold, and to prevent a run on the dollar, stabilize the economy, and decrease unemployment and inflation rates, on August 15, 1971, Nixon issued Executive Order 11615, pursuant to the Economic Stabilization Act of 1970, which imposed a 90-day maximum wage and price ceiling, a 10% import surcharge and most importantly, "closed the gold window", ending convertibility between U.S. dollars and gold, leaving only "Full faith and credit" in its wake.

In bitcoin's case, the consensus will be that this money will always rise in value because of its limited supply and unlimited demand. People won't reach such consensus if they don't know about supply and demand theory in economics, but I suppose that more and more people will gain such basic economy knowledge over time

So, the consensus about USD's value is reached by historical experience, while the consensus about bitcoin's value is reached by economics theory, they are both psychological phenomenon but that's what essentially drives people's behavior

They act similarly for those reasons.  The difference being the "legal tender" issue.  Taxes must be paid in dollars, and any debt may be discharged by payment in dollars (thus all debts public and private).

You are free to specify other terms contractually, but in a legal court dispute, unless you can get "specific performance" the best you are going to get is dollars as a debt satisfaction, though the amount may be based on the value of something else (such as bitcoin).

[Kluge]

Weed

Weed

Weed

Weed

Still arguing about that ?




D   r   u   g   s

Soooooo.... yup. 

[klee]

 

[btdir]

hahahahaha

[superresistant]

Weed

Weed

Weed

Weed

Still arguing about that ?




D   r   u   g   s

Soooooo.... yup. 

Told ya

[NewLiberty]

Still arguing about that ?


D   r   u   g   s

It seems... not so much anymore.
http://thegenesisblock.com/analysis-silk-roads-historical-impact-bitcoin/

[Corelianer]

Fiat currency is inflating, Bitcoin is deflating, so price of Bitcoin will rise naturally.
With every exchange between Fiat and Bitcoin the exchange rate will rise at least with the ammount of inflation.

So everyone who is holding Fiat is actually stupid cause Bitcoin is not loosing while every one else is.

Everyone that just holds Bitcoin will keep their values reather than all the Fiat money users who in-fact loose money in the speed of inflation.

This fact changes when you also look at the market value, here is Bitcoin dangerous cause the market is small and the volatility high.

[drewph]

Eisenhower Standard!

[Corelianer]

Eisenhower Standard!

No I don't think Eisenhower would concider Bitcoin as "Standard".

Gold is still a physical commodity, but Bitcoin isn't a commodity.
But that's also not neccessary, most of the other attributes apply.

Gold was also used for hundrets thousands of years. Bitcoins are used 4 years now.

But Bitcoins have also advantages:
- Fewer costs in storing
- Fewer costs in transporting

[superresistant]

It seems... not so much anymore.
http://thegenesisblock.com/analysis-silk-roads-historical-impact-bitcoin/

Not much any more and that's a good thing. Bitcoin need trust and stability.

[NewLiberty]

Eisenhower Standard!

No I don't think Eisenhower would concider Bitcoin as "Standard".

Gold is still a physical commodity, but Bitcoin isn't a commodity.
But that's also not neccessary, most of the other attributes apply.

Gold was also used for hundrets thousands of years. Bitcoins are used 4 years now.

But Bitcoins have also advantages:
- Fewer costs in storing
- Fewer costs in transporting

The two complement each other very nicely, and now with the Bitcoin Specie pieces, also very easily.
Each of us are a part of the decentralized bank, and each of us can back Bitcoin's value with our hard assets, including gold and silver.

[TERA]

Your btc are backed by the value, either in fiat or in goods and services, that you will be able to redeem them for somewhere, either now or at any point in the future in which you choose to spend them.

[Corelianer]

I want to add some things:

- Well both BTC and Gold are both rare.
- You can make jeweleries out of gold but you can't make that out of Bitcoin.

So Gold has a purpose for itself, Bitcoin hasn't.
The purpose of Bitcoin is to pay, trade and store values. Bitcoin is backed by trust.

No trust, no Bitcoin.

The more secure Bitcoin trading systems are, the more valuable and trustable Bitcoin will become.
More security means normally more inconvenience in handling. Here is Bitcoin unique, it's secure but still easy to handle.
But there are still things to improve.

Why is the paper-wallet generator for example not included in the standard-bitcoin client?

[superresistant]

I want to add some things:
- Well both BTC and Gold are both rare.
- You can make jeweleries out of gold but you can't make that out of Bitcoin.
So Gold has a purpose for itself, Bitcoin hasn't.
The purpose of Bitcoin is to pay, trade and store values. Bitcoin is backed by trust.

I think this is irrelevant. Money doesn't have to have a purpose as an object. You can wipe your asshole with dollar bills.

No trust, no Bitcoin.

No trust, no exchange, no trade, no human interaction at all.

Why is the paper-wallet generator for example not included in the standard-bitcoin client?

I'm wondering too. We could then say bitcoin have a purpose, wiping my ass.

[crumbs]

Fiat currency is inflating, Bitcoin is deflating, so price of Bitcoin will rise naturally.

1. My clonecoin is more deflationary than bitcoin (which is currently inflating -- the miners aren't mining for TX fees ).
2. My clonecoin's worth rel. BTC will continue to increase.
3. ? ? ?
4. PROFIT!!!

With every exchange between Fiat and Bitcoin the exchange rate will rise at least with the ammount of inflation.

See above

So everyone who is holding Fiat is actually stupid cause Bitcoin is not loosing while every one else is.

Everyone holding BTC instead of my clonecoin is stupid.  See (1).

Everyone that just holds Bitcoin will keep their values reather than all the Fiat money users who in-fact loose money in the speed of inflation.

This fact changes when you also look at the market value, here is Bitcoin dangerous cause the market is small and the volatility high.

Buy my clonecoin pl0x.  What can possibly go wrong?

[crumbs]

...Money doesn't have to have a purpose as an object. You can wipe your asshole with dollar bills.
...

I hope that's not an admission of guilt   Destroying/defacing US currency is a (petty) crime!

[polarhei]

Trust.

Trusting only 21M available
Trusting never double spent
Trusting the monitoring network, To build this, need different nodes to check out.
Trusting the being not to be used in bad ways (The blockchain implies you cannot do bad with it)

[manfred]

Trust.

Trusting only 21M available
Trusting never double spent
Trusting the monitoring network, To build this, need different nodes to check out.
Trusting the being not to be used in bad ways (The blockchain implies you cannot do bad with it)

Very true, only problem is if I take the code, not change a thing and start another Blockchain every single one of your points is still valid. The value of the identical other run would not be the same, so no it is't it.