Bitcoin Forum
December 08, 2016, 04:21:17 PM *
News: To be able to use the next phase of the beta forum software, please ensure that your email address is correct/functional.
 
   Home   Help Search Donate Login Register  
Pages: [1] 2 »  All
  Print  
Author Topic: Lack of hard asset backing for bitcoin a problem? Witness QQ coins.  (Read 6434 times)
nofuture
Member
**
Offline Offline

Activity: 94


View Profile
January 04, 2011, 01:26:30 AM
 #1

http://mobile.associatedcontent.com/article/199253/a_virtual_currency_the_qq_coin_has.html

Not if QQ coins are any guide.   And QQ coins have a number of disadvantages.    It is not a decentralized architecture so they can be taken down.   Nothing to prevent rampant inflation should more be minted.  
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
1481214077
Hero Member
*
Offline Offline

Posts: 1481214077

View Profile Personal Message (Offline)

Ignore
1481214077
Reply with quote  #2

1481214077
Report to moderator
RHorning
Full Member
***
Offline Offline

Activity: 210


View Profile
January 04, 2011, 12:00:41 PM
 #2

First of all, you are comparing something equivalent to a World of Warcraft gold coin or from some other MMORPG.  Generally those games forbid as part of the terms of service that you shouldn't exchange that money for "real world currency", although there are exceptions like the QQ coin and Linden dollars.

The main thing is that with the QQ coin they are dealing with the Chinese government in China from a Chinese company who is issuing this virtual coin and how it is being used for retail trade in China.  If there is an analogy, it will be in terms of how the Chinese government might react to Bitcoins, and if you are a Chinese national it might be something worth worrying about.  Since the Chinese government is so open to new political ideas and is willing to let you express them freely (in a jail cell or with a bullet through your head), you can be assured that something so radical as cryptocurrency will be more than welcomed in that country.

The legality of Bitcoins in America or the EU is something much more ambiguous and likely to be seen as legal with a number of precedents in terms of alternate currencies that can and are being used.  There are certainly groups like the Free State Project and other "anarchists" groups that can and have embraced philosophies like Bitcoins where this is less of a problem.

Inflation of the currency is the least of the problems when dealing with something like the QQ coin.

1FLK3uUT3Vup5JtkGJVXKHAoS3AZWPcKdv
nofuture
Member
**
Offline Offline

Activity: 94


View Profile
January 04, 2011, 12:53:34 PM
 #3

My only point was on hard asset backing.  That is where the comparison to QQ coins ends.     The political and legal aspects are another issue.   On that issue bitcoin still wins.   Bitcoin will be legal where it can.   In oppressive regimes that outlaw it it will serve as an underground alternative currency.
RHorning
Full Member
***
Offline Offline

Activity: 210


View Profile
January 04, 2011, 01:09:36 PM
 #4

My only point was on hard asset backing.  That is where the comparison to QQ coins ends.     The political and legal aspects are another issue.   On that issue bitcoin still wins.   Bitcoin will be legal where it can.   In oppressive regimes that outlaw it it will serve as an underground alternative currency.

Neither the Euro nor the U.S. Dollar have hard asset backing, yet they are widely used.  It doesn't even stop them from being used as a world reserve currency.

The advantage of both of these currencies is that the organizations which control the release of those currencies from the "central banks" have some self-interest in keeping the release of those currencies under control and not getting out of hand.

The big difference between them, the QQ coin, Linden dollars, and most other "fiat" currencies compared to Bitcoins is that Bitcoins have a mathematical formula that determines when additional coins are released.  It happens at a fixed rate with Bitcoins and attempting to force that rate to change backfires due to the mathematics involved.

If anything, the QQ coin is another example to show how virtual money can have value in spite of the fact that it has no "hard backing" or anything other than its pure value, although in the case of the QQ coin it is pegged to the Yuan, sort of like how things such as Ithaca Dollars are pegged to the U.S. Dollar.

What gives value to Bitcoins is that people are willing to trade for them and use them as a medium of exchange.  That is sort of the point of having money.

1FLK3uUT3Vup5JtkGJVXKHAoS3AZWPcKdv
Nefario
Hero Member
*****
Offline Offline

Activity: 602


GLBSE Support support@glbse.com


View Profile WWW
January 04, 2011, 06:40:50 PM
 #5

RHorning is correct.

The backing of QQcoin was the virtual goods you could buy for your QQ avatar/profile/account, orginaly at least. Then it began to be accepted by ordinary people.

With the exception of comoditiy currency which has use other than as money (salt for Ancient Rome, cigarettes in prison) all money is "backed" by the goods and services people will trade for that money. No money is "backed" by a government or central bank, backed by what? this has no real meaning.

PGP key id at pgp.mit.edu 0xA68F4B7C

To get help and support for GLBSE please email support@glbse.com
ShadowOfHarbringer
Legendary
*
Offline Offline

Activity: 1470


Bringing Legendary Har® to you since 1952


View Profile
January 04, 2011, 11:15:00 PM
 #6

http://mobile.associatedcontent.com/article/199253/a_virtual_currency_the_qq_coin_has.html

Not if QQ coins are any guide.   And QQ coins have a number of disadvantages.    It is not a decentralized architecture so they can be taken down.   Nothing to prevent rampant inflation should more be minted.  

1. QQ is not a hard-backed currency.
2. Bitcoin is  backed by intellectual assets such as solutions to complex mathematical problems. It has an inherent value.
3. China issues this.  I do not want anything to do with China government which surelly will control that currency (if it doesn't already).
4. It is ultra-inferior when comparing to Bitcoin in almost every other way.

Vinnie
Full Member
***
Offline Offline

Activity: 126


View Profile
January 04, 2011, 11:19:51 PM
 #7

2. Bitcoin is  backed by intellectual assets such as solutions to complex mathematical problems. It has an inherent value.

How so? It may cost computational power to create bitcoins, but that doesn't mean that they are "backed" by anything.

Anonymous Cash-By-Mail Exchange: https://www.bitcoin2cash.com
casascius
Mike Caldwell
VIP
Legendary
*
Offline Offline

Activity: 1344


The Casascius 1oz 10BTC Silver Round (w/ Gold B)


View Profile WWW
January 05, 2011, 12:04:21 AM
 #8

2. Bitcoin is  backed by intellectual assets such as solutions to complex mathematical problems. It has an inherent value.

I'm not sure that I can quite agree with this statement.  A proof of work isn't an asset with intrinsic useful value, any more than a receipt from a grocery store is.  Such "solutions" are only useful for proving that something took place, no differently than your receipt proves you went shopping.  Beyond what they attest to by design, the receipt is worth nothing more on the open market beyond its kindling value as paper, and a hash with lots of 0's is worth nothing more than any other random number.

To me, examples of intellectual assets with intrinsic value would be like E=mc^2, or the MPEG-4 algorithm, or the cure for cancer.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
ShadowOfHarbringer
Legendary
*
Offline Offline

Activity: 1470


Bringing Legendary Har® to you since 1952


View Profile
January 05, 2011, 03:40:44 AM
 #9

Well, you're right. It's not exactly "backed". It's more like soft-backed, or half-backed (not half-baked).

It's not backed in something physical, but every coin is linked to something intellectual, as a solution to some mathematical formula. It's not physical, but better than nothing.
Certainly it's better than just bits on some bank's server.

FreddyFender
Full Member
***
Offline Offline

Activity: 215


Shamantastic!


View Profile
January 05, 2011, 04:03:42 AM
 #10

The hard asset of bitcoin is the actual algorithm that is immutable and self-sustaining.

ptd
Member
**
Offline Offline

Activity: 114


View Profile
January 05, 2011, 03:11:07 PM
 #11

The hard asset that backs it is the fact that it is incredibly hard to create (no matter what happens we get ~5 coin per minute). All other currencies can be inflated by making more.

Rarity is the first requirement for money to have value, the second is that people actually want it. Investors like gold because it provides a potent combination of both. To become seriously value bitcoins need to be easy to spend, accept (as payment) and obtain. The third requirement (easy to obtain) is the hard one.
Vinnie
Full Member
***
Offline Offline

Activity: 126


View Profile
January 05, 2011, 06:38:22 PM
 #12

I argue that bitcoins are not "backed" by anything at all. The algorithm, computations, computing power, etc. only serve to restrict their supply and make them hard to counterfeit. So they are no more "backed" by intellectual property, etc. than gold is "backed" by the complex mining equipment used to extract it. The processing power and electricity used to create a bitcoin represent the cost of producing a bitcoin, but that should not be mistaken as their value (or backing.) For instance, an ounce of gold, once extracted, is valued at its market value (what you can get for it in trade) rather than what was expended to extract it. You may hold in your hand an ounce of gold that was extracted in medieval times, and cost thousands of manual labor hours to pull from the ground and smelt, but it will still trade at its market value (unless it is in the form of rare bullion, of course.)

Their value derives from what you can trade them for; which right now is ~$.30 per BTC.

I'm sure others have said all this before, though  Smiley

Anonymous Cash-By-Mail Exchange: https://www.bitcoin2cash.com
ShadowOfHarbringer
Legendary
*
Offline Offline

Activity: 1470


Bringing Legendary Har® to you since 1952


View Profile
January 05, 2011, 08:00:04 PM
 #13

I think i know why we're having this discussion.

It's because bitcoin is a completely new invention - nothing like this has ever been done before, so no comparison at all to anything known. Our minds get lost because this is a completely new situation.

I believe that bitcoin is not backed nor it is non-backed. It's somewhere in between. Still better than not backed at all.

nofuture
Member
**
Offline Offline

Activity: 94


View Profile
January 06, 2011, 06:22:25 PM
 #14

I think i know why we're having this discussion.

It's because bitcoin is a completely new invention - nothing like this has ever been done before, so no comparison at all to anything known. Our minds get lost because this is a completely new situation.

I believe that bitcoin is not backed nor it is non-backed. It's somewhere in between. Still better than not backed at all.



Best response.   Bitcoins are novel and defy categorization.
Vinnie
Full Member
***
Offline Offline

Activity: 126


View Profile
January 06, 2011, 06:29:48 PM
 #15

Best response.   Bitcoins are novel and defy categorization.

I disagree. I think we can easily classify it as "non-backed" at least. That doesn't mean it doesn't have value, of course.

Edited to add:

Unless you can show me instance of a bitcoin being redeemed for the processing power and electricity used to create it.

Anonymous Cash-By-Mail Exchange: https://www.bitcoin2cash.com
casascius
Mike Caldwell
VIP
Legendary
*
Offline Offline

Activity: 1344


The Casascius 1oz 10BTC Silver Round (w/ Gold B)


View Profile WWW
January 06, 2011, 08:26:51 PM
 #16

Best response.   Bitcoins are novel and defy categorization.

I disagree. I think we can easily classify it as "non-backed" at least. That doesn't mean it doesn't have value, of course.

Edited to add:

Unless you can show me instance of a bitcoin being redeemed for the processing power and electricity used to create it.

+1 vinnie on both counts

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper wallets instead.
ShadowOfHarbringer
Legendary
*
Offline Offline

Activity: 1470


Bringing Legendary Har® to you since 1952


View Profile
January 06, 2011, 10:55:57 PM
 #17

Best response.   Bitcoins are novel and defy categorization.

I disagree.
(...)
Unless you can show me instance of a bitcoin being redeemed for the processing power and electricity used to create it.

This is a wrong way of thinking. Bitcoins cannot be redeemed, because they are not a fiat currency or I-OWE-YOU notes. They are more like a commodity, a bullion. They are almost physical, except that You cannot touch them or hold them.

What you are asking me to do is not to "redeem" bitcoins for something. You are asking me to either put the mined gold back to the ground [EDIT: or convert it to power, manhours & devices used to extract it]. But what would be the point of that ?

--
EDIT: To be exact, you cannot put the mined gold back to the ground in precisely the same way it was previously stored, atom-by-atom. It is impossible with current technology. The same with bitcoins. Once you mine the bitcoin from the "ground", you cannot put it back in exactly the same way it was stored there previously. Also, you can't convert the mined gold back to the electricity, fuels & manpower used to extract it - the same as with bitcoin.

--
EDIT2:
The more i think about this, the more i see how incredible invention bitcoin is. Satoshi & whoever invented the idea of electronic commodity based on hashes are undoubtedly geniuses.

Vinnie
Full Member
***
Offline Offline

Activity: 126


View Profile
January 06, 2011, 11:15:52 PM
 #18


This is a wrong way of thinking. Bitcoins cannot be redeemed, because they are not a fiat currency or I-OWE-YOU notes. They are more like a commodity, a bullion. They are almost physical, except that You cannot touch them or hold them.

What you are asking me to do is not to "redeem" bitcoins for something. You are asking me to either put the mined gold back to the ground [EDIT: or convert it to power, manhours & devices used to extract it]. But what would be the point of that ?

This is the argument I'm making. That they are not backed by energy/processing power/intellectual property/hash/whatever because they cannot be redeemed for those things. Those things are actually either the cost of producing them or the mechanism by which their supply is limited or the security measures that keep them from being counterfeited.

Of course, I might buy energy and/or processing power from someone with bitcoins at the market rate.

Anonymous Cash-By-Mail Exchange: https://www.bitcoin2cash.com
ShadowOfHarbringer
Legendary
*
Offline Offline

Activity: 1470


Bringing Legendary Har® to you since 1952


View Profile
January 06, 2011, 11:20:41 PM
 #19

This is the argument I'm making. That they are not backed by energy/processing power/intellectual property/hash/whatever because they cannot be redeemed for those things. Those things are actually either the cost of producing them or the mechanism by which their supply is limited or the security measures that keep them from being counterfeited.

Of course, I might buy energy and/or processing power from someone with bitcoins at the market rate.

OK, but gold is not also backed by anything itself.
So what ?

For thousands of years the only reason people wanted gold was because it was shiny, cool & trendy (I'm not talking about modern times when gold is used in electronics and so).
So if bitcoin becomes cool & trendy like gold, it can easily become the commodity everyone wants itself. It has an inherent value.

Also, if somebody finds another use for bitcoins (the same as gold is used for electronics today), then it will have all the properties of a commodity (except that you can't touch a Bitcoin).

Vinnie
Full Member
***
Offline Offline

Activity: 126


View Profile
January 06, 2011, 11:22:27 PM
 #20


OK, but gold is not also backed by anything itself.
So what ?


Agreed! Gold also is not "backed" by anything and so what? I am just arguing that bitcoins are also not backed and should be valued at their market price.

Anonymous Cash-By-Mail Exchange: https://www.bitcoin2cash.com
Pages: [1] 2 »  All
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!