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Question: Is bitcoin going to catch on and become a pretty high volume trading currency online?
Yes
No
Iunno???

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Author Topic: Is bitcoin going to catch on or crash and burn? You vote!  (Read 2058 times)
wormbog
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July 20, 2011, 01:19:00 PM
 #21


Bitcoin is the virtual equivalent of gold. People don't spend gold. We need the virtual equivalent of cash.


This statement nicely summarizes your post, and also the complete error of it. Remember gold WAS the currency of the United States of America up until gold confiscation in 1933. However US dollars were still technically redeemable (if you were a foreigner) and thereby backed by gold up until 1971.

A perfect example of the exact opposite of your argument happens everyday. Technology continues to improve everyday and become cheaper as it does so.  The deflationary pricing of technology does not cause anyone to shy away from purchasing today what they know will be obsolete or even useless in a mere couple of years. It could be argued hi-tech is the only industry that has done well in the last few decades (edit: besides the financial services industry).

The hoarding argument is a fallacy, an illogical argument disputed by the facts. However this argument has been ingrained into the social subconscious by inflationists, as I'm sure you can find video evidence of Ben Bernake supporting your view.

Just because we used to have a gold standard doesn't mean there were no problems with that system. It was abandoned in 1933 to counteract severe deflation in the US economy.

http://en.wikipedia.org/wiki/History_of_the_United_States_dollar#The_Gold_Reserve_Act

 Severe deflation? Sounds familiar...

As for your counter-argument technology example, you're right, technology has been getting cheaper. Unfortunately it's a bad example because it's just about the only thing that's getting cheaper over time. It's also mostly a luxury category. People have to buy staples such as food, housing, fuel, medicine, etc. before they buy electronics. And the price of staples has been steadily rising.

Lastly, if the hoarding argument is a fallacy feel free to offer some facts to support that position. It's ironic that you cite Bernake's hypothetical agreement (with me) as evidence to support your own position. You assume that "everyone" knows that whatever Bernake thinks must be automatically wrong. I hear Ben Bernake goes to church every Sunday... OMG, you've just proven that God doesn't exist!
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wormbog
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July 20, 2011, 01:29:11 PM
 #22

I see the 21 million limit on coins to be ultimately stifling to the economy. If more people get interested in bitcoin there will be more demand and exchange rates will rise. As rates rise people start to look at bitcoin as an investment. There is a strong motivation to hold onto whatever bitcoins you get, because of the "buy low, sell high" investment mentality.

The problem is, bitcoin will never be widely used if there is not a growing base of people using it actively for commerce. People will hold their bitcoins and spend their deflationary dollars instead. Dollars are always slowly losing value. There's no motivation to hoard.

What bitcoin needs is a parallel currency that slowly deflates so people will be motivated to get rid of it. Let's call it Newcoin for the sake of argument. Newcoin would be identical to bitcoin but with a slowly increasing yield from mining instead of a decrease. When people want to buy something they spend Newcoins. When they want to set aside money for the future they'll trade newcoin for bitcoin and hold it in an offline wallet.

Bitcoin is the virtual equivalent of gold. People don't spend gold. We need the virtual equivalent of cash.


I see the part about people hoarding could be a problem, but I think they will realize that the community needs to grow, and will do what they can to encourage it.
The comparison to gold breaks down when we talk about breaking gold down.  If gold were as convenient as bitcoins it wouldn't be a problem, and people would use it and invest it.  You are right that there are 21 million, but not JUST 21 million.  Being able to divide them infinitely with no cost is an amazing benefit.  Currently the true cap is 21,000,000.00000000
That's 2.1E15 possible bitcoins.  That could be expanded if needed.

Gold can be subdivided just as easily. You just use notes that are redeemable for gold rather than actual gold. Here's a list of 7 providers doing this already.

http://en.wikipedia.org/wiki/Digital_gold_currency#Providers

apis
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July 20, 2011, 01:33:46 PM
 #23

I think only legal or technical problems can stop it, that are real risks though.
Fountainhead
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July 20, 2011, 01:39:38 PM
 #24

The bubble is going to burst, the real question is if there's anything left afterwards.
nix930
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July 20, 2011, 02:52:27 PM
 #25

I’m unable to predict the future so I pass that task onto fortunetellers and meteorologists. 
 
As a 20+ year veteran business consultant, IMHO, if the use of bitcoins grows to the point that Paypal or large players in financial sector experience a substantial revenue reduction, conflict will begin.  Financial leaders maintain lavish lifestyles though collecting their vig (e.g., transaction fees, interest, penalties). Currently, bitcoins are flying under the radar.  Exponential growth will require lots of political and business savvy maneuvers.  There are plenty of sharks with deep pockets and huge business & political networks that can easily sabotage and kill the bitcoin revolution if it cuts into their pocketbooks. 

Greed or mismanagement from within can also cause an early demise.

Most great ideas can’t be brought to fruition.  If you can’t run with the big dogs, stay on the porch.
spruce
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July 20, 2011, 02:55:55 PM
 #26

Exponential growth will require lots of political and business savvy maneuvers.  There are plenty of sharks with deep pockets and huge business & political networks that can easily sabotage and kill the bitcoin revolution if it cuts into their pocketbooks. 

On the other hand, what if some big hitter decides that bitcoin is a very worthwhile investment and plays *with* bitcoin instead of *against* bitcoin?
wormbog
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July 20, 2011, 03:17:42 PM
 #27

Exponential growth will require lots of political and business savvy maneuvers.  There are plenty of sharks with deep pockets and huge business & political networks that can easily sabotage and kill the bitcoin revolution if it cuts into their pocketbooks. 

On the other hand, what if some big hitter decides that bitcoin is a very worthwhile investment and plays *with* bitcoin instead of *against* bitcoin?

Both could happen. A big player could decide to get involved, but start by trashing bitcoin with scandal/legal issues to buy a lot of cheap coin, then start working with the community under another name to drive the price back up.

That would actually make a great story. Powerful businessman assaults the new decentralized currency under the guise of big business protecting its interests, then appears under another name to buy coin and reinvigorate the community in the name of freedom and power to the people. But it's the same guy all along. I call book rights!
wormbog
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July 20, 2011, 04:33:16 PM
 #28

Bravo, BitMole!
nix930
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July 20, 2011, 04:42:56 PM
 #29

Exponential growth will require lots of political and business savvy maneuvers.  There are plenty of sharks with deep pockets and huge business & political networks that can easily sabotage and kill the bitcoin revolution if it cuts into their pocketbooks. 

On the other hand, what if some big hitter decides that bitcoin is a very worthwhile investment and plays *with* bitcoin instead of *against* bitcoin?

Agreed.  That's why it requires lots of political and business savvy maneuvers.  If you don't jump on the steamroller you become part of the pavement.
Desolator
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August 15, 2011, 06:27:30 AM
 #30

The #1 thing that needs to happen is a less sketchy way to get bitcoins.  Using unpopular, basically unheard-of paypal alternatives and giving them your bank account info doesn't sound like a real good idea to most people and right now that's all there is.  MTGox's ridiculous list of ridiculosity that is the "buy bitcoins" page and overly-complicated cash or check systems are just stupid.  It's a huge disincentive for non-miners to use bitcoins.  Even I refuse to fund it with bank transfers through a 3rd party for security and privacy reasons and I support the system heavily.  Someone needs to form a company big enough to basically be a paypal of bitcoins so people can instantly buy them up front and pay later when a bank transfer goes through like Paypal lets you do.  Make it a one way street of USD to BTC and you don't have to deal with non-delivered item and chargeback BS like Paypal does.
peterpiper
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August 15, 2011, 08:02:26 AM
 #31

I think it's totally going to catch on. It may never see huge mainstream acceptance until alot of the things that have already been mentioned are addressed, but I certainly don't think you are going to see it go away any time soon.

It must suck trying to accept payment in BTC as a retailer though with the fluctuation in BTC price on the exchanges...I'm only saying that because I make the assumption that just about anyone who uses them wants to convert them into some form of other paper currency.
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