I was having a little exchange with J603 on another thread, and realized it was getting a bit off topic so I'm posting this instead of replying there.
I suppose I shouldn't be shocked, since the price soaring and the media coverage is bound to attract investors who's eyes fill with dollar signs, but I am still surprised by how many of those who discuss bitcoin on this forum seem to completely miss the point, or vastly underestimate the importance of this technological development.
I'm here to make
BTC not $.
Here's the reply I was going to post in
https://bitcointalk.org/index.php?topic=258888.0:
Well I think that there will never be a day when everyone has a phone. If everyone could afford a phone, then everyone can afford food and a house. And if everyone is living in some utopia where there's no starvation or homelessness then why would we need a currency in the first place? Like I said,
70% of the world does not have Internet access. Kenya has only 28.08 million cell phones (CIA World Factbook) in a country of 44 million. That's only 63% of the population if each person has only one phone which is rare in Africa where phone services drop all the time.
Investing money in bitcoins?
Bitcoins are money. Fiat is
monopoly money. It will inflate naturally as more and more of it is printed off, and it will inflate with alarming rapidity as more and more people realize that they've been fooled. Even gold will lose it's value as people storing their value in gold will have so few advantages and so many disadvantages compared to people storing their value in bitcoin. It will naturally become the universal measure of value and we will someday look back upon the days of fiat with incredulity. Gold will naturally hold some of it's value but it has been replaced already, as it is no longer the overall best store of value on the market.
What did you purchase your first bitcoins with? More bitcoins?
Many people acquire their first bitcoins through sale of goods or services. It's as simple as announcing that you accept bitcoin as payment.
But that's irrelevant--obviously we are currently in a system of fiat money and the only way out is to
exchange your fiat for bitcoin and wait for the rest of the world to join you. They will.
Currently, bitcoins are not viable money. There isn't much you can buy with them. I can't buy gas or groceries with them, and those are necessary purchases. You can't argue with that. The biggest bitcoin market seems to be the silk road, which is far from and will never be mainstream.
Well, that depends where you're located. Here in NYC there are many stores that accept bitcoin over the counter, and I can buy food from hundreds of restaurants using foodler, and I can use a temporary workaround by buying prepaid visa gift cards which can be used for gasoline and groceries, which while it's definitely not buying gasoline with bitcoins, does allow me to store all my savings as bitcoins and then use them to buy whatever I want, a fine
temporary measure until bitcoins gain wider acceptance. So it's really not important that they're not widely accepted
yet. They will be, and in the meantime they are still the best store of value available.
I look at it this way--Fiat currency is so fundamentally flawed that holding your wealth in any fiat currency is a dangerous and risky "investment." Bitcoin is so fundamentally suited to being used as currency that it will undoubtedly become the universal standard for exchange. Therefore, switching from holding your wealth in fiat to holding your wealth in bitcoin is a near sure bet.
Explain to me why bitcoin is foolproof- you haven't so far. Explain why fiat money can collapse but bitcoins cannot. Bitcoins can be destroyed, much like fiat, however they are never reprinted. And like I said before, I don't have a choice but to invest in fiat. I don't want to starve.
In a nutshell, bitcoin is
decentralized and
deflationary. That's why. No fiat money has existed that was truly deflationary like bitcoin is.
Fiat can and will collapse because it is an inflationary model which ultimately leads to the currency being worthless and being abandoned, and now that bitcoin exists as an alternative, it will be apparent that it is the best alternative as one fiat currency after another falls.
People will swap one fiat money for another more and more frantically as one by one they crumble and fall, and gradually more and more people will notice the honey badger of money just not giving a shit as it marches onward and upward.
Well, no fiat currency has ever been successful in history, I see no reason to expect the USD, Euro, Pound, or Yuan to do any better. In fact I think it's a near certainty that all of the above will reach a value of 0 in our lifetimes. Read
http://georgewashington2.blogspot.com/2011/08/average-life-expectancy-for-fiat.html and
http://dailyreckoning.com/fiat-currency/ and maybe try the wikipedia entry for "fiat currency" and the dictionary entry for "fiat."
While bitcoin could plummet and never recover, I think it's far more probable that it will not, and I have a hard time coming up with any scenario in which bitcoin would reach a value of 0. Anything is possible, of course, and if the internet were entirely eliminated, bitcoin would likely eventually reach a value of 0.
No fiat has been successful? The Euro is the most valuable currency in the world (not per note, but overall) and it was introduced in 1996. Bitcoins have existed for only 4 years, but they have not surpassed a single fiat currency in value. If the euro fails (which I don't think it will as it is more popular than any other currency that has ever existed), it will be replaced by another fiat. If bitcoins fail, they will be done.
You're looking at the last four years. Look at the history of fiat currency in it's entirety and you should see some patterns that make it seem unlikely that the euro will last very long.
No fiat has been successful. Ever.
Did you even read the links in the portion you were addressing here? The Euro is well into what will be a short life. Fiat currency just doesn't work.
It also distributes all the wealth in a very biased manner, and allows governments to finance wars that simply wouldn't be within reach without just printing money off the press. But that's why it's evil, not why it doesn't work.
It doesn't work because it's an inflationary model.
So basically, I disagree with all of your statements.
I think you are invested for all the wrong reasons, looking at it like a stock to buy and sell, and fail to see the enormous globe-changing potential ramifications of this elegant idea we call bitcoin.
What "globe-changing" ramifications are there? And why are fiat currencies destined to fail, when they have existed for
thousands of years versus bitcoin's four?
No single fiat currency has existed for thousands of years. All of them fail within a fairly short timeframe, and are replaced, usually by new fiat currencies, because there was (up until now) no other option. Now we have a viable option to replace them that solves the problem of inflation.
Because of the law of supply and demand, when fewer bitcoins are available the ones that are left will be in higher demand, and therefore will have a higher value. So, as Bitcoins are lost, the remaining bitcoins will eventually increase in value to compensate. As the value of a bitcoin increases, the number of bitcoins required to purchase an item decreases. This is a deflationary economic model. As the average transaction size reduces, transactions will probably be denominated in sub-units of a bitcoin such as millibitcoins ("Millies") or microbitcoins ("Mikes").
The Bitcoin protocol uses a base unit of one hundred-millionth of a Bitcoin ("a Satoshi"), but unused bits are available in the protocol fields that could be used to denote even smaller subdivisions.
You tell me not to treat it like a stock, yet you do the same. "when fewer bitcoins are available.. therefore higher value". This implies that not everyone has one- that fiat is not dead (unless the people without bitcoins have no form of currency) and that people are still purchasing bitcoins with fiat, as if they were stock. What value would bitcoins have at this point? 1 BTC may be worth 1 billion dollars some day, but then it's worth
1 billion dollars. Without anything to buy with that bitcoin, it's only value comes from its exchange rate with fiat.
Wrong. "When fewer bitcoins are available.. therefore higher value" does not imply that not everyone has one. Everybody can have bitcoins and there can still be fewer or more available in total, because they are divisible to such tiny fractions. Even if there were only one single bitcoin left and all the others had somehow been lost, one bitcoin could divide into enough pieces for the entire global economy to function using that ONE COIN as it's currency.
One bitcoin may be worth 1 billion dollars
worth of goods one day and be accepted by
everybody as the standard currency.
But I digress. Convincing people like you is boring. You're set in your view and you likely won't be convinced, even when the evidence is right in front of your face. The dollar is a temporary illusion, a giant ponzi scheme robbing the lower classes of their wealth and allowing the groups in charge of printing money and adding it to the money supply to skew the whole economic system and devalue everybody's savings while redistributing that value as they see fit. Bitcoin is real money, with real rules, that apply fairly and evenly to all users.
As they say, you cannot teach a man anything, you can only inspire him to learn ("They" in this case being the people who write the fortune cookies for my favorite chinese food place). So unfortunately I will not be able to teach you the value of bitcoin, you will have to learn for yourself.
Those who will profit the most will be those who saw bitcoin for what it truly is way back when each coin was worth only pennies. They recognized bitcoin's potential and invested accordingly and will not ever cash out. When all the world conducts all of it's exchange using bitcoin, they will be the worlds superpowers.
Those of you who only saw the value of bitcoin
after seeing people make huge returns on their investments
haven't really seen the value of bitcoin. You have dollar signs dancing in your eyes, I have
BTC dancing in mine, and when you "cash out" back to worthless fiat you will be throwing away the most valuable thing you've ever had.
The worst part is, you'll probably "cash out" at the worst possible time--when bitcoin seems to be at deaths door and hits record lows, you and countless others will be convinced that "bitcoin failed" and when you should be trading all your fiat for coin, you will buy worthless empty promises from deceitful governments printed on fancy paper that are destined to lose all their value.
BTCBTCBTC not $$$!!!!
-Henry Romp
