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ShadowOfHarbringer
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February 27, 2011, 12:52:53 PM
 #81

Please define "stable prices" and then prove that "stable prices" are even possible when there is more than one person and more than two goods in existence.

There is another name for "price stability", it is called "price controls".  If prices are stable, it is a coincidence and only possible of there are no new developments in any industry, people are born and die at the same rate, and do the same thing tomorrow that they did today and yesterday.

I do not care what you do with a currency it is not possible to maintain stable prices between any other pair of goods.  And if you accept that principle, then trying to maintain a price ratio between the currency and the average of all other goods is down right foolish!  

Ok, then I should define price stability as "abscence of inflation and deflation".

Hm. Not possible AFAIK.
At least it probably haven't happened in history in population larger than a village without any government-enforced regulation.

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February 27, 2011, 01:19:44 PM
 #82

I'm sorry but bitcoin has zero intrinsic value. Just like fiat. The only thing that makes it valuable is the supporting economy of goods and services that can be traded for bitcoin. Growing a bubble is not going to strengthen it. And there is a lot of bubble mentality on this forum. Like this post:
http://bitcointalk.org/index.php?topic=3713.msg52668#msg52668

If bitcoin continues to go up in value without the bitcoin economy following, it will finally crash. And if the mass market learns that bitcoin is another "beanie babies", it will never become a global medium of exchange. It will remain a toy for geeks.

Agreed.  And that's almost become one of my mantras:  it's not about mining.

This most recent wave of slashdotting (and Security Now'ing) has brought a lot of mining activity and interest in mining, but I've been disappointed that forum posts about interesting new bitcoin businesses were notably absent.  In the past, we would see a flurry of new posts to the We Accept Bitcoins thread (now en.bitcoin.it/wiki/Trade) and the Marketplace forum.  Not as much activity.

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.



As a new bitcoiner today one of the first mystery's for me was...why is a bitcoin worth so much when there is very little commerce to back it up?, where is the demand coming from? and how is that demand sustainable when the bitcoin economy has so very little need of bitcoins to function...as a fundamental investor and keen chart watcher i just cant see the current exchange rate as being sustainable, the bitcoin economy needs some substance..needs some fundamental drivers.
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February 27, 2011, 01:56:41 PM
 #83

...why is a bitcoin worth so much when there is very little commerce to back it up?

The price is partly driven by future expectations.

Every month the amount of bitcoin-denominated commerce has increased. It's a simple extrapolation to see that the limited supply of bitcoins will need to be worth much more in the future to support the ever-growing amount of bitcoin-denominated commerce.

People aren't buying a bitcoin today so that they can buy a loaf of bread today, but many people are buying a bitcoin today because they might be able to buy ten loaves of bread next year.

Or maybe none, if Bitcoin fails, because it's highly speculative for sure. If, like me, you think the fundamentals are sound, it's not such a big risk.
ShadowOfHarbringer
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February 27, 2011, 02:57:51 PM
 #84

As a new bitcoiner today one of the first mystery's for me was...why is a bitcoin worth so much when there is very little commerce to back it up?

1. I think that the early adopters of gold were also thinking that way. But then, there rose more and more markets for gold-to-goods and backwards exchanges.
Once people start believing that something is valuable, it is only matter of time before others will want to trade stuff for that thing.

2. More markets are being created as we speak. Just look at the "Market" section. They probably need time to unfold wings.

3. Due to the nature of Bitcoin, big, "traditional" financial institutions will be very suspicious & careful when trying to invest in it. So mainstream adoption will probably take some time.

...why is a bitcoin worth so much when there is very little commerce to back it up?
The price is partly driven by future expectations.

Hmmm....

Aren't expectations enough ? After all, price of dollar is driven by expectations only.
People expect that it will be stable & have value, because other people think so, because government said so in the past.

This is pure psychology. No "inherent value" at all.

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February 27, 2011, 03:58:53 PM
 #85

I have read many times that bitcoin needs more goods and services offered in return for bitcoins, but...

I think it might also be, well, let's say "nice for those who do make such offers" if there were also more actual taking up of such offers.

My landlord put is as "show me that someone actually bought something from you using bitcoin".

Mind you he also wanted to see me actually sell a bitcoin, dumurred at me doing it via IRC, and even seemed to somehow construe my response that I'd have to sell ten rather than one due to mtgox's minimum transaction size as somehow also indicating some kind of scam.

(I suspect though that this was partly an entanglement between his offer to give me a loony on the spot he held it out offering it to see me actually sell a bitcoin. I am thinking he kind of took me as indicating he should give me ten loonies. We'd both been at better off going to bed part of our wakecycles.)

But his basic argument is that like any other ponzi of course the people who got in early and profit{|ed} the most from it want it to *look* like people are really using it for real but fact is, go try offering things in return for bitcoin and does it turn out yes there is in fact plenty of people eager to spend their bitcoins? If it is a ponzi of course there won't be, because no-one is in it to buy stuff with it, they are there to play the ponzi game...

-MarkM- (Yeah I sell stuff, even give discounts if you buy using bitcoins. So join the game, there are real merchants to make it look legit...)


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February 27, 2011, 05:44:53 PM
 #86

I have read many times that bitcoin needs more goods and services offered in return for bitcoins, but...

I think it might also be, well, let's say "nice for those who do make such offers" if there were also more actual taking up of such offers.

My landlord put is as "show me that someone actually bought something from you using bitcoin".

Mind you he also wanted to see me actually sell a bitcoin, dumurred at me doing it via IRC, and even seemed to somehow construe my response that I'd have to sell ten rather than one due to mtgox's minimum transaction size as somehow also indicating some kind of scam.

(I suspect though that this was partly an entanglement between his offer to give me a loony on the spot he held it out offering it to see me actually sell a bitcoin. I am thinking he kind of took me as indicating he should give me ten loonies. We'd both been at better off going to bed part of our wakecycles.)

But his basic argument is that like any other ponzi of course the people who got in early and profit{|ed} the most from it want it to *look* like people are really using it for real but fact is, go try offering things in return for bitcoin and does it turn out yes there is in fact plenty of people eager to spend their bitcoins? If it is a ponzi of course there won't be, because no-one is in it to buy stuff with it, they are there to play the ponzi game...

-MarkM- (Yeah I sell stuff, even give discounts if you buy using bitcoins. So join the game, there are real merchants to make it look legit...)



Offer food, and I will (not just diet shakes and snack bars).  Food is the only thing besides bills I spend money on regularly, BTC or otherwise.  Blowing all my bitcoins on pizza doesn't seem wise, but if I could get good prices with reasonable delivery on bulk items I probably would spend a few BTC.  Amway just doesn't have much to offer that I want.

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February 27, 2011, 07:12:43 PM
 #87

Offer food, and I will (not just diet shakes and snack bars).  Food is the only thing besides bills I spend money on regularly, BTC or otherwise.  Blowing all my bitcoins on pizza doesn't seem wise, but if I could get good prices with reasonable delivery on bulk items I probably would spend a few BTC.  Amway just doesn't have much to offer that I want.

I think most of us are the same way. At least I am.
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February 28, 2011, 12:45:22 AM
 #88

Well yeah, typical people probably don't typically buy their fresh groceries, maybe not even their frozen groceries, maybe in general their groceries of any kind, online. (I can buy lots of kinds of shippable food via Amway, but not cheaper than pre-shipped stuff already sitting in a nearby Walmart or Sobeys or Superstore or Sainsbury's or Marks&Sparks...)

It also would not surprise me, though I have not actually checked, to find that buying one's books at a discount from Barnes and Noble by going to Barnes and Noble via the Amway site, might not beat Amazon's prices. Barnes and Noble never struck me as being a "low price is our selling proposition" kind of place. But as I said I have not actually compared their prices to Amazon's. Typical people maybe don't read anyway so typically don't buy books anywhere, online or off.

If you want to buy stuff offline using bitcoin having more online businesses accept it isn't really a whole lot of help probably. Most offline businesses probably don't accept any online payment systems, they accept offline payment systems that most online payment systems have pretty much been forced to have to also accept, such as credit cards and fiat currencies...

So don't bother telling we netizens that more of the grocery shops you shop at need to accept bitcoin to make bitcoin more acceptable, instead go tell more of the grocery shops you shop at that they need to accept bitcoin to make themselves acceptable!

-MarkM- (What, you don't take bitcoin? Darn, can't buy these cartloads of groceries here then sorry. Be a good clerk and re-shelve it, thanks...)

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February 28, 2011, 01:05:19 AM
 #89

Too much emotional investment here. Try to be more objective.

+1

Also selling contracts to mine should not be looked at as anti-bitcoin.  There are MANY reasons to structure a business that way. One of them is the up front capital, which could be used to expand business, mine more BTC or just for the money now aspect.  For every market niche there is a potential business opportunity. 

Shorting bitcoin would be not possible without some kind of deposit or collateral otherwise the person offering the market to short could be on the hook to back up the possible increase in value of BTC. I could without a deposit or collateral short BTC and only take my winnings if I win, I could walk away otherwise if I am on the loosing side.


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February 28, 2011, 04:30:37 AM
 #90

Well yeah, typical people probably don't typically buy their fresh groceries, maybe not even their frozen groceries, maybe in general their groceries of any kind, online. (I can buy lots of kinds of shippable food via Amway, but not cheaper than pre-shipped stuff already sitting in a nearby Walmart or Sobeys or Superstore or Sainsbury's or Marks&Sparks...)

It also would not surprise me, though I have not actually checked, to find that buying one's books at a discount from Barnes and Noble by going to Barnes and Noble via the Amway site, might not beat Amazon's prices. Barnes and Noble never struck me as being a "low price is our selling proposition" kind of place. But as I said I have not actually compared their prices to Amazon's. Typical people maybe don't read anyway so typically don't buy books anywhere, online or off.

If you want to buy stuff offline using bitcoin having more online businesses accept it isn't really a whole lot of help probably. Most offline businesses probably don't accept any online payment systems, they accept offline payment systems that most online payment systems have pretty much been forced to have to also accept, such as credit cards and fiat currencies...

So don't bother telling we netizens that more of the grocery shops you shop at need to accept bitcoin to make bitcoin more acceptable, instead go tell more of the grocery shops you shop at that they need to accept bitcoin to make themselves acceptable!

-MarkM- (What, you don't take bitcoin? Darn, can't buy these cartloads of groceries here then sorry. Be a good clerk and re-shelve it, thanks...)


I disagree, but then again, my eating patterns are very different than most Americans.  I generally buy bulk grains, beans, nuts, and other items to supplement the food from the garden and the meat (raised and hunted).  The prices are good and the shipping isn't reasonable.  For example, bulkfoods.com offers $5 shipping on any order over $75, and they have some really great deals.  Also, their ORAC Chocolate Berry trail mix is fantastic.  I'd donate 50 BTC if anyone gets them to accept bitcoins.

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February 28, 2011, 10:25:16 AM
 #91

Shorting bitcoin would be not possible without some kind of deposit or collateral otherwise the person offering the market to short could be on the hook to back up the possible increase in value of BTC. I could without a deposit or collateral short BTC and only take my winnings if I win, I could walk away otherwise if I am on the loosing side.

Its only a matter of time until someone sets up shop as a market maker (type) CFD provider here, potentially good BC in it if the clients and spread are managed well...i keep thinking this just cant be legal? it will take me weeks to get my head properly around all this.
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February 28, 2011, 11:04:45 AM
 #92

AFAIK in UK, for example, it would require a budget of at least half a million £ to set up an organisation which can legally trade as a BTC exchange or BTC options market maker, clearing house etc... ( i.e. when you take someone's money as deposit or collateral). Requirements to qualify for FSA license are not easy to meet.

I would bet that for this reason (in UK) before a new company formed to act as a securities broker in bitcoins an established broker will add some bitcoin based instrument to the market.

On the other hand, there should be no problems if someone just sells his BTC's, even as futures or option contracts i.e. otc trade. BTC is not much different from let's say wheat in this regard. These are just regular contracts.

I looked into this too, and I found the same as Vladimir, although I think you could meet FSA requirements for a bit less, maybe £200,000.

The UK does not have the same "bottom-up" entrepreneurial environment that, say, the US does. So new technologies are most often introduced by some existing big company deciding to branch out into the new field. And often they need to get the regulations rewritten to make it possible. The BBC and PayPal, amongst others, did this but it's not possible for the "little guy" to do the same.

For this reason, none of the big internet technologies were developed in the UK. None the new business models (as exemplified by eBay, Amazon, CraigsList, PayPal, Google, YouTube, Flickr, etc) originated in the UK, even though the UK makes up a large percentage of internet users.

The best we did in the UK was a couple of websites that started selling last minute holidays, or listing real estate online. And all of today's big UK internet sites are divisions of pre-internet businesses (e.g. the BBC, or newspapers, or bricks-and-mortar retailers).
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February 28, 2011, 11:57:51 AM
 #93

I'd love to participate in creation of such a VCT

That's an interesting thought. A bitcoin-oriented VCT would be a great vehicle for investors to use, because there are substantial tax breaks.

But I don't think it's so interesting to actually create and operate the VCT, because what you earn is the percentage that you collect as trust manager (ballpark 2% to 5% a year, I think), from which must be deducted the administrative and compliance costs.

Operating a VCT is, I think, a reasonably profitable occupation. But if Bitcoin grows as rapidly as we think it will, it will be more profitable to be investing into the Bitcoin businesses, than to be operating the investment vehicle.
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February 28, 2011, 12:24:36 PM
 #94

Sorry guys...i meant setting up shop as a CFD (or similar) provider in the BC world, offering a way for BC speculators and investors to hedge or simply punt on BTC/USD movements....no FSA requirements would be relevant i would think as all transactions would be in BTC.

Or am i missing something  Huh
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February 28, 2011, 02:01:33 PM
 #95

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.

It needs miners too though doesn't it? 

not really. miners are needed only to finalzie a block and publish transactions that occured since the last block was finished.
this way confirmations are created.

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February 28, 2011, 02:03:26 PM
 #96

Dollar/Euro has value ONLY because government says so.
Bitcoin/gold/silver etc have value, because people believe so.

That is nothing like fiat.
No. US government can claim anything about US dollar in the USA. They can force you to anything. But abroad, US dollar is valuable because there is an economy that supports it and indeed people believe it's valuable.

what about "US can ivade your country (alone or with allies) if you have something they want and you refuse to trade with them in us $"


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February 28, 2011, 02:05:33 PM
 #97

I'm sorry but bitcoin has zero intrinsic value. Just like fiat. The only thing that makes it valuable is the supporting economy of goods and services that can be traded for bitcoin. Growing a bubble is not going to strengthen it. And there is a lot of bubble mentality on this forum. Like this post:
http://bitcointalk.org/index.php?topic=3713.msg52668#msg52668

If bitcoin continues to go up in value without the bitcoin economy following, it will finally crash. And if the mass market learns that bitcoin is another "beanie babies", it will never become a global medium of exchange. It will remain a toy for geeks.

Agreed.  And that's almost become one of my mantras:  it's not about mining.

This most recent wave of slashdotting (and Security Now'ing) has brought a lot of mining activity and interest in mining, but I've been disappointed that forum posts about interesting new bitcoin businesses were notably absent.  In the past, we would see a flurry of new posts to the We Accept Bitcoins thread (now en.bitcoin.it/wiki/Trade) and the Marketplace forum.  Not as much activity.

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.



As a new bitcoiner today one of the first mystery's for me was...why is a bitcoin worth so much when there is very little commerce to back it up?, where is the demand coming from? and how is that demand sustainable when the bitcoin economy has so very little need of bitcoins to function...as a fundamental investor and keen chart watcher i just cant see the current exchange rate as being sustainable, the bitcoin economy needs some substance..needs some fundamental drivers.

i'm asking this question since i came here
it's not about expectations, it's plain speculation.
inviting new "miners" just like low credit rates fuelled the real estate market
something went wrong a month ago.

You can't build a reputation on what you are going to do.
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February 28, 2011, 02:15:44 PM
 #98

it's not about expectations, it's plain speculation.
inviting new "miners" just like low credit rates fuelled the real estate market
something went wrong a month ago.

Even if the current pricing does reflect a "speculative gold rush", it's inevitably self-correcting so it's nothing to worry about.

Personally, I think the speculative bubbles are yet to come. They will happen, and a lot of people will get rich, and a lot of people will get poor as a result. But the bubbles will be driven by large numbers of people (e.g. after Oprah mentions Bitcoin on her show, or Bart Simpson gets into Bitcoin).

The current market price, being determined by a few thousand early adopters who are mostly of above-average intelligence, isn't a bubble as far as I'm concerned.
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February 28, 2011, 04:59:00 PM
 #99

wait for shoe-shine boy to tell you to buy bitcoins, than yes that would be a bubble.

Unless the shoe-shine boy wants the bitcoin so he can pay his rent...

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March 01, 2011, 08:36:07 AM
 #100

I'm sorry but bitcoin has zero intrinsic value. Just like fiat. The only thing that makes it valuable is the supporting economy of goods and services that can be traded for bitcoin. Growing a bubble is not going to strengthen it. And there is a lot of bubble mentality on this forum. Like this post:
http://bitcointalk.org/index.php?topic=3713.msg52668#msg52668

If bitcoin continues to go up in value without the bitcoin economy following, it will finally crash. And if the mass market learns that bitcoin is another "beanie babies", it will never become a global medium of exchange. It will remain a toy for geeks.

Agreed.  And that's almost become one of my mantras:  it's not about mining.

This most recent wave of slashdotting (and Security Now'ing) has brought a lot of mining activity and interest in mining, but I've been disappointed that forum posts about interesting new bitcoin businesses were notably absent.  In the past, we would see a flurry of new posts to the We Accept Bitcoins thread (now en.bitcoin.it/wiki/Trade) and the Marketplace forum.  Not as much activity.

If bitcoin is to survive, it needs a wealth of goods and services available, in multiple countries.  Bitcoin cannot exist without the bitcoin economy.



As a new bitcoiner today one of the first mystery's for me was...why is a bitcoin worth so much when there is very little commerce to back it up?, where is the demand coming from? and how is that demand sustainable when the bitcoin economy has so very little need of bitcoins to function...as a fundamental investor and keen chart watcher i just cant see the current exchange rate as being sustainable, the bitcoin economy needs some substance..needs some fundamental drivers.

i'm asking this question since i came here
it's not about expectations, it's plain speculation.
inviting new "miners" just like low credit rates fuelled the real estate market
something went wrong a month ago.

I think that since QE2, many people are trying to protect their wealth by selling dollars. Maybe that's why bitcoins have increased its price so much.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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