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Author Topic: I'm an undeserving early adopter, and here is my side.  (Read 4262 times)
phillipsjk
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July 04, 2011, 02:46:59 PM
 #61

Still not sure that I understand your attitude regarding $3 vs $20, doesn't the ratio 20/3 remain the same even if the price goes to $7000 ? i.e. if you bought e.g. 200 bitcoins at $3 each then in dollar amount you would have $7000x200=$1,400,000, but if you buy at $20 each then you would have $7000x30=$210,000

With exponential growth Bitcoin looks like a scam. I don't plan to exclusively buy and hold. So, if I bought at $3, I may have spent half already leaving me with only 100 BTC. If I buy at $20, the same goods and services would only cost 15 BTC, leaving me with 15BTC.

Having just typed that, the calculation looks even worse. Keep in mind the only way bitcoins will go up to $7000 each is if people actually spend them. Those 10,000 BTC pizzas probably paved the way for eventual dollar parity.

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i hope you meant 670mhash/s (not khash), but still if you're not using a pool then the chance of getting the 50 BTC reward is way too negligible.
I am helping out the network by relaying transactions. I know the odds of "winning" are something like 1 in 50,000. I plan to move mining to my laptop which draws only 12 Watts (and can be run from solar power if need be). (Edit: Why would I even bother with 670 milihashes/second? (In SI notation case is important))

As for security, I don't think I have any trojans to worry about. In the coming weeks I plan to play "musical computers", reformatting several disks. I am more concerned about making a costly mistake. Two months ago I don't think I knew about the possibility of just using a paper wallet/bitbill.

James' OpenPGP public key fingerprint: EB14 9E5B F80C 1F2D 3EBE  0A2F B3DE 81FF 7B9D 5160
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kite
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July 04, 2011, 03:12:15 PM
 #62

So you used some conjugation of "invest" at least 10 times in your post. Why can't bitcoin be a currency, not an investment? (Aside from programming design, of course.)

Is it because it wouldn't have caught on? There is so much praise for how bitcoin will revolutionize the world, but this could only be accomplished by promising wealth off of the fiat of others?

Currencies are, inherently, investments.
Really? I thought they were a medium of exchange. Just because they are used as an investment does not make them "inherently" one.

Business minds disagree with you.

http://www.businessinsider.com/why-currency-can-never-be-an-investment-2010-9

"Business minds" disagree with me? Likewise, business minds (i.e. me and probably most people) disagree with that author's simplistic semantics.

Don't get confused with the word investment. Just because something isn't a good investment doesn't make it any less of an investment. Just because something isn't purposely conceptualized around the dream of yielding a better return doesn't make it any less of an investment. All of your assets are technically investments. You're placing your future in them.
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July 04, 2011, 03:39:01 PM
 #63

Fine. Do you agree then that the primary role of a currency is to be a medium of exchange?

If that is the case, why are there only 10s of trades per block when there are 50,000+ people mining for bitcoins?
Are most of those trades just trades from mtgox and tradehill?

Is Bitcoin safe as a currency when almost a negligible amount is actually used as a medium of exchange, and the rest used to speculate?

There is no end in sight for the investment aspect. Why would anyone ever spend?

We're supposed to imagine that in a year or two when the reward drops to 25BTC, half of the miners have to quit or that there will be 50,000 transactions per 10 minutes (at .0005)? [or twice as easy to over take the network]

If bitcoin can't act as a medium of exchange, it is going to fail.

kite
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July 04, 2011, 04:19:49 PM
 #64

Fine. Do you agree then that the primary role of a currency is to be a medium of exchange?

If that is the case, why are there only 10s of trades per block when there are 50,000+ people mining for bitcoins?
Are most of those trades just trades from mtgox and tradehill?

Is Bitcoin safe as a currency when almost a negligible amount is actually used as a medium of exchange, and the rest used to speculate?

There is no end in sight for the investment aspect. Why would anyone ever spend?

We're supposed to imagine that in a year or two when the reward drops to 25BTC, half of the miners have to quit or that there will be 50,000 transactions per 10 minutes (at .0005)? [or twice as easy to over take the network]

If bitcoin can't act as a medium of exchange, it is going to fail.

Sure, of course, government-backed currency makes exchange practical, just as much as it serves in the role of regular people depending on its future worth.

Bitcoin is insanely speculative, for sure. As far as I can see, the vast weight of its current worth in USD rests -- beyond the novelty, hoarders, and speculative fantasies -- almost entirely on the drug market. What happens when they start using something else? The fact of the matter is that bitcoin will never exist as a complete currency in the way a lot of people here envision. Its entire existence is dependent on being able to cash out into 'real currency.' I don't see how that could ever change. There's absolutely no incentive for most merchants to accept it otherwise. ...and, yeah, actually making it secure and consumer friendly is a whole 'nother matter.
Vladimir
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July 04, 2011, 04:54:05 PM
 #65

medium of exchange... shmedium of exchange...

This is a fairly simple concept. Fiat money are presently a decent 'medium of exchange', gold is historically a decent 'store of value'. At the same time fiat money are horrible 'store of value' and gold is lousy 'medium of exchange'.

It's a little miracle that Bitcoin actually has properties which make it (maybe only potentially yet) both decent 'medium of exchange' AND 'store of value'. It is just for some reason people tend to focus on one side or another and fail to see the big picture.

Perhaps one needs an INTP mind (or some serious effort plus knowledge of basics of crypto and economy) to get all the bitcoin's intertwined concepts and see how it is a nobrainer that bitcoin is way better than both fiat and gold.

Survival of the fittest at it's finest.

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fm1234
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July 04, 2011, 05:45:38 PM
 #66

Why is gold a lousy medium of exchange?
Etlase2
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July 04, 2011, 05:58:29 PM
 #67

medium of exchange... shmedium of exchange...

This is a fairly simple concept. Fiat money are presently a decent 'medium of exchange', gold is historically a decent 'store of value'. At the same time fiat money are horrible 'store of value' and gold is lousy 'medium of exchange'.

It's a little miracle that Bitcoin actually has properties which make it (maybe only potentially yet) both decent 'medium of exchange' AND 'store of value'. It is just for some reason people tend to focus on one side or another and fail to see the big picture.

Perhaps one needs an INTP mind (or some serious effort plus knowledge of basics of crypto and economy) to get all the bitcoin's intertwined concepts and see how it is a nobrainer that bitcoin is way better than both fiat and gold.

Survival of the fittest at it's finest.


Gold is historically a decent 'store of value'? Did you miss that a few decades ago, gold was the medium of exchange? It was printed on paper though, so perhaps that is confusing you.

As long as bitcoins are difficult to acquire and people demand them, bitcoins will have value. Giving out less to each person who mines as more people mine, and on top of that halving the amount given out every few years is unnecessary to retain value; it is necessary only to increase value. As fiat currency inflates, bitcoins would equally require more fiat to buy since they currently require fiat to produce. That would make it a safe hedge against inflation. Not so great an investment, but certainly a nice medium of exchange which is what bitcoin is advertised as. As it is now, it really is only an investment backed on the idea that it could be a medium of exchange. But that falls apart when people realize that the coins they mine serve to make every coin before it more valuable.

You can't eat your cake and have it too.

And what does survival of the fittest have to do with anything?

Vladimir
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July 04, 2011, 06:00:06 PM
 #68

Why is gold a lousy medium of exchange?

Why people have invented paper money in the first place?

Looks like gold bugs will eat me alive now, what a heresy "gold is not a perfect medium of exchange". Can you you teleport gold?



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RodeoX
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July 04, 2011, 06:24:33 PM
 #69

I find the "early adopters" bashing so strange. I took a bigger risk in buying early and so, as with any business venture, I stand to gain more. I think a lot of newcommers here simply don't understand the economics going on arround them.
If you are really into sodomy try day-trading with the big kids for real money. Try making a profit in commodities or currency trading. Unfair? Pfft. If you knew how your 401k money was being used, then you would really cry foul.

The gospel according to Satoshi - https://bitcoin.org/bitcoin.pdf

Free bitcoin=https://bitcointalk.org/index.php?topic=1610684
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July 04, 2011, 06:26:31 PM
 #70

I apologize, but I just saw "early adopter" and got >9000 points of rage.
If the bitcoin system were fair, they'd either distribute it equally or just fundamentally change how you get bitcoins.

But, then again, life ain't fair either.
Congrats on your success of being there first.

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fm1234
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July 04, 2011, 06:56:27 PM
 #71

posted by Vladimir:
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Why people have invented paper money in the first place?

Looks like gold bugs will eat me alive now, what a heresy "gold is not a perfect medium of exchange". Can you you teleport gold?

1) Not a gold bug

2) Sarcastic replies to any question of your points severely undermines your points.

3) Yes, you can teleport gold -- sort of.  Digital gold, digital certificates backed by gold, etc.

Gold backed much of the early paper money.   The paper was not the medium of exchange -- it was merely a representation of same.

Gold bars, coins etc. can surely be thought of as having limitations as mediums of exchange, from transport to security to making change for them etc.   But the issue there is not the gold, it's the bar.   Fiat money is a decent medium of exchange, until you try to buy a Cadillac with boxes of nickels.   

What I mean is:  you're conflating the actual form of conveyance with the medium.   Gold is an excellent medium of exchange, because of its physical properties which make it uniform, fungible etc.  LBMA 400oz gold bars are not very good for paying for lunch at a restaurant, but this doesn't have anything to do with gold's value as a medium of exchange.   Buying a $0.50 pack of gum with a $100 bill, or trying to stick a quarter in the bill slot of a change machine also present problems, without affecting the value of the USD as a medium of exchange.

I hope that makes sense. 

So, again, aside from the settled issue of conveyance, why is gold a lousy medium of exchange?


Frank
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July 04, 2011, 07:48:27 PM
 #72

posted by Vladimir:
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Why people have invented paper money in the first place?

Looks like gold bugs will eat me alive now, what a heresy "gold is not a perfect medium of exchange". Can you you teleport gold?

1) Not a gold bug

2) Sarcastic replies to any question of your points severely undermines your points.

3) Yes, you can teleport gold -- sort of.  Digital gold, digital certificates backed by gold, etc.

Gold backed much of the early paper money.   The paper was not the medium of exchange -- it was merely a representation of same.

Gold bars, coins etc. can surely be thought of as having limitations as mediums of exchange, from transport to security to making change for them etc.   But the issue there is not the gold, it's the bar.   Fiat money is a decent medium of exchange, until you try to buy a Cadillac with boxes of nickels.   

What I mean is:  you're conflating the actual form of conveyance with the medium.   Gold is an excellent medium of exchange, because of its physical properties which make it uniform, fungible etc.  LBMA 400oz gold bars are not very good for paying for lunch at a restaurant, but this doesn't have anything to do with gold's value as a medium of exchange.   Buying a $0.50 pack of gum with a $100 bill, or trying to stick a quarter in the bill slot of a change machine also present problems, without affecting the value of the USD as a medium of exchange.

I hope that makes sense. 

So, again, aside from the settled issue of conveyance, why is gold a lousy medium of exchange?


Frank

gold is a lousy medium of exchange for all the reasons you're trying to gloss over, and a couple others.

Quote
LBMA 400oz gold bars are not very good for paying for lunch at a restaurant, but this doesn't have anything to do with gold's value as a medium of exchange.

yes, it does.  gold is simply not practically divisible.  $5.00 worth of gold to pay for that lunch is beyond our technical ability to mint as a denomination, and carry around without worry.  how do you carry around 1/300th of an ounce (0.0846 gm!!) of anything, without putting it into some (comparatively) massive support structure, like plastic or tempered-glass caddies?  and note that the caddy makes it easy to counterfeit:  who's going to pry open every 1/300 oz caddy to perform an assay?

how does one make change in gold for all the various price-points which exist in the marketplace?

the "physical properties which make it uniform, fungible etc." are exactly those properties which make it easy to counterfeit gold: i.e., alloy it.

one of the reasons gold coinage failed was the 'shavers':  the people who walked around with gold coin in a bag all day, jingling the coins together, and collecting the dust in the bag at the end of every day.  or who actually shaved bits off the coins with a knife.

i repeat:  gold is a lousy medium of exchange.  and not as good a store of value as most seem to think.

it's heavy, it's delicate, it draws violence like shit draws flies, it can't be hidden easily, it can't be transported across borders without being discovered, it can't be backed-up, and it can't be spent easily in any denomination.  frankly, just as a matter of simplicity, security, and convenience... i'd rather have USD.
fm1234
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July 04, 2011, 08:24:51 PM
 #73

posted by Jaime Frontero:
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gold is a lousy medium of exchange for all the reasons you're trying to gloss over, and a couple others.

I didn't gloss over anything. 

I hate these kinds of conversations, because I'm not a "gold bug" and don't particularly care if gold is used as money or not; but I hate even more having questions answered with insults and non sequiturs, so let me address your response here as best as I can.

Quote
Quote
LBMA 400oz gold bars are not very good for paying for lunch at a restaurant, but this doesn't have anything to do with gold's value as a medium of exchange.

yes, it does.  gold is simply not practically divisible.  $5.00 worth of gold to pay for that lunch is beyond our technical ability to mint as a denomination, and carry around without worry.  how do you carry around 1/300th of an ounce (0.0846 gm!!) of anything, without putting it into some (comparatively) massive support structure, like plastic or tempered-glass caddies?  and note that the caddy makes it easy to counterfeit:  who's going to pry open every 1/300 oz caddy to perform an assay?

Digital gold has existed for fifteen years or so.  It doesn't solve the issue of physical conveyance, obviously, but then neither does cash for large purchases, or Bitcoins for anything offline, etc.  Cheques and later debit cards largely solved the problem of fiat currency conveyance in large amounts; a debit or cheque system for gold would solve the issue of how to pay for your lunch in gold.   As I have stated previously, conveyance issues are separate from the medium of exchange.

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how does one make change in gold for all the various price-points which exist in the marketplace?

(conveyance issue)

Quote
the "physical properties which make it uniform, fungible etc." are exactly those properties which make it easy to counterfeit gold: i.e., alloy it.

I don't understand this statement.   Gold's uniform qualities and extreme resistance to chemical bonding making it virtually impossible to counterfeit gold.  Gold is easy to assay. 

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one of the reasons gold coinage failed was the 'shavers':  the people who walked around with gold coin in a bag all day, jingling the coins together, and collecting the dust in the bag at the end of every day.  or who actually shaved bits off the coins with a knife.

I was unaware that gold coinage failed -- I was pretty sure it was abandoned due to the annoying tendency for gold to refuse to bend to the state's needs.  Shaving as a practie was a failure of coin manufacturing processes, corrected by the advent of reeding.  Sweating, which is the practice to which you are referring (shaking coins in a bag) has been around for as long as gold coins have been, and while not entirely fixed, is certainly mitigated by the alloying process.  Gold is not delicate -- this is absurd.  Minted gold coins with complex surfaces have delicate fine edges, but this is again a problem of manufacturing processes, not of gold itself, and is to an extent addressed by alloying.
 
Quote
it's heavy, it's delicate, it draws violence like shit draws flies, it can't be hidden easily, it can't be transported across borders without being discovered, it can't be backed-up, and it can't be spent easily in any denomination.  frankly, just as a matter of simplicity, security, and convenience... i'd rather have USD.

Everything about this statement reads as problems with large-denomination gold coins and bars, which are means of conveying gold, not gold.  As far as the violence goes, there are few outbreaks of violence over gold in the modern world, yet no shortage of violence.  Maybe this is a problem with humans, rather than gold.   


Frank
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July 04, 2011, 09:33:51 PM
 #74

'grats on your luck, i hold no hard feelings toward you (but of course i wish i had been as lucky too)

didn't read OP eh?  It didn't have to do with luck.

Hippy Anarchy
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July 04, 2011, 09:37:54 PM
 #75

Everything is luck if you follow the chain of causality deep enough

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