USD *is* a virtual currency

[Steve]

I encounter a lot of people that are skeptical that a virtual currency could work.  This is a very odd position for someone to take because the USD is a virtual currency (and clearly has worked to a degree for quite some time).  Most people keep their savings in bank accounts, which are nothing but book entries in a database on a computer system.  The banks themselves have accounts at the FED or other banks that are also nothing more than database entries in a computer system.  The difference is that this virtual system is rife with a haphazard design cobbled together over the the years and full of vulnerabilities, whereas bitcoin was designed from the ground up to be secure and trustworthy (time will tell whether it meets this goal).

I point this out to people because it sometimes dramatically changes their perception of bitcoin.  They are then basically left with the question of whether a currency not backed by any gov't or institution will work...and of course, for that you have the example of gold.

[BitcoinHoarder]

But you understand why there is vastly more risk in Bitcoins than USD, right?  For every risk to the USD there is one thing going for it: it is accepted almost everywhere that your audience goes to.

[Nicolai Larsen]

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

[pokwer]

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

This is extremely incorrect.  Unfortunately, it's what a lot of people believe...
You could start reading here: http://en.wikipedia.org/wiki/Fractional_reserve_banking

[ColdHardMetal]

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

Wat?

[Yankee (BitInstant)]

One difference to note:

USD, like other currencies, are backed by the US Gov't

[Fakeman]

The metal in a US nickel is currently worth more than its face value. But no, there are not enough coins to back all the paper and electronic dollars out there.

[Steve]

But you understand why there is vastly more risk in Bitcoins than USD, right?  For every risk to the USD there is one thing going for it: it is accepted almost everywhere that your audience goes to.

Yes, of course and it's an important point.  My point was that USD is a virtual currency and as such is evidence that virtual currencies do in fact work.  And gold is evidence that currencies do not necessarily need gov't backing to work.  However, USD is a vastly larger market than BTC, so absolutely there is much higher risk and people should deal with it as such.

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

LOL...I'm pretty sure this was a joke people.  And a good one!

[BitcoinHoarder]

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

LOL...I'm pretty sure this was a joke people.  And a good one!

Really? I highly doubt it was a joke, the guy who pointed out http://en.wikipedia.org/wiki/Fractional_reserve_banking was smart to do so.  Only a very slim percentage of people understand how modern banking functions.

[hugolp]

But you understand why there is vastly more risk in Bitcoins than USD, right?  For every risk to the USD there is one thing going for it: it is accepted almost everywhere that your audience goes to.

Bitcoin has its risks, but the dollar has guaranteed devaluation.

[imperi]

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

Are you visiting from the 1800s? lol

[JoelKatz]

Im pretty sure banks have whatever amount of currency they got somewhere as "real" currency. Coins etc.

Exactly. When you deposit $1,000 in the bank, they lock your $1,000 in the vault. They pay you interest out of the goodness of their hearts.

[TheGer]

Actually the Government isn't backing shit.  The USD is backed by Debt, meaning your tax dollars.  All the Government is doing is holding a gun to your head to make sure you pay the bill.  Pay the bill, while they spend the money ofcourse.

One difference to note:

USD, like other currencies, are backed by the US Gov't

[Yankee (BitInstant)]

Actually the Government isn't backing shit.  The USD is backed by Debt, meaning your tax dollars.  All the Government is doing is holding a gun to your head to make sure you pay the bill.  Pay the bill, while they spend the money ofcourse.

One difference to note:

USD, like other currencies, are backed by the US Gov't

hahaha thats a good way of putting it.

The value of the American Dollar is actually based on what people will pay for it (hmm sounds similar to Bitcoin) Some other factors, but not limited to is, the American consumer confidence, the world communities confidence in the American economy, America's credit rating....

[MeSarah]

Another non bitcoin thread. Admin please move this fed bash trash.

[TraderTimm]

Another non bitcoin thread. Admin please move this fed bash trash.

You have no idea how badly the dollar is going to fare in the next few months/years. It is only the beginning.

And to the other commenters point - try going into your bank and asking for your entire balance in cash. The answer might surprise you. (Assuming you have more than say, $1,000 in your balance.)

[grndzero]

Another non bitcoin thread. Admin please move this fed bash trash.

You have no idea how badly the dollar is going to fare in the next few months/years. It is only the beginning.

And to the other commenters point - try going into your bank and asking for your entire balance in cash. The answer might surprise you. (Assuming you have more than say, $1,000 in your balance.)

1 person asking for $1000 in cash isn't going to make a dent in a bank. 1000 people withdrawing $1000 might be a problem. I have personally taken $5k out of my bank in cash upon asking for it without a problem and I'm positive I could do it anytime. You vastly underestimate the holdings of a bank, they are required to keep a a certain amount of cash on hand just in case. That's why big banks have big safes, and small banks don't.

[guywhogotgoxed]

Another non bitcoin thread. Admin please move this fed bash trash.

You have no idea how badly the dollar is going to fare in the next few months/years. It is only the beginning.

And to the other commenters point - try going into your bank and asking for your entire balance in cash. The answer might surprise you. (Assuming you have more than say, $1,000 in your balance.)

1 person asking for $1000 in cash isn't going to make a dent in a bank. 1000 people withdrawing $1000 might be a problem. I have personally taken $5k out of my bank in cash upon asking for it without a problem and I'm positive I could do it anytime. You vastly underestimate the holdings of a bank, they are required to keep a a certain amount of cash on hand just in case. That's why big banks have big safes, and small banks don't.

I know of two banks in my country, the largest two, who will most likely tell you you have to notify them atleast one day before you wish to have your money in cash. They will also ask you what you intend to do with such large sums of cash (might avoid this question of youre a native and wear a suit and tie).

Although I have been in a bank where it was no problem taking out $2000. I guess this depends on banks.

[TraderTimm]

The point was, they don't keep a lot of cash on hand. It is just charged electrons on a whirling platter in a hard drive somewhere. Welcome to your virtual US Dollar.

[elggawf]

Actually the Government isn't backing shit.  The USD is backed by Debt, meaning your tax dollars.  All the Government is doing is holding a gun to your head to make sure you pay the bill.  Pay the bill, while they spend the money ofcourse.

I had to explain Bitcoin to a friend yesterday, and I think it's concisely explained thus (when he asked what backs up Bitcoin):

The USD is given value by people who accept it, and the threat of violence from the United States government.

Bitcoin is only given value by one of these things.