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Author Topic: Bitcoin not holding its value?  (Read 2773 times)
miscreanity
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August 07, 2011, 03:27:22 AM
 #21

As mentioned above, a properly-managed currency will create the illusion of value storage and that's a perfectly useful abstraction just as long as you realize that it is an abstraction and not reality.

Then we agree. The subjective reality applied to an item (tangible or otherwise) gives rise to a perception of value.

This is the same dilemma Bitcoin faces. If society were to cease functioning (disease, war, etc. - a complete breakdown of structure somehow), currency (dollars, gold, etc.) loses all value. If the Bitcoin network were to lose all participants, Bitcoin would lose all value.

Everything and nothing.

Here's a question: if society ceases to function, but the infrastructure that supports the internet and thus Bitcoin continues working (hypothetically assuming the infrastructure is sufficiently decentralized so as to provide necessary power for an indefinite span of time), does Bitcoin lose all value as well?
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indio007
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August 07, 2011, 03:30:55 AM
 #22

Promise to pay currency is a claim on future production. Hard currency is not. Hard currency has an intrinsic value and more akin to a barter exchange.

People's ideas of the fundamental functions of money and contracts is really screwed up since we have been using legal tender promises to pay for a generation.

There are 2 types of contracts

Executory and Executed

An executed contract is one the object of which is fully performed. All others are executory.

With bitcoin you are buying data technically.

If I trade a cow for a bitcoin and the transaction happens immediately or has no substantial delay in performance it's an executed contract.
If I trade a bitcoin for a Federal Reserve Note , that is executory because the contract isn't finished until I receive value.


There is another aspect of this that nearly no one knows outside of lawyers and judges.

Entering into an executory contract, like paying with an FRN relieves your personal liability only. The debt "in rem" remains. That is only extinguished when value is received for the note.

If the note is dishonored or not accepted for value you still owe either the object back or the object that the note purports to represent. The party can not sue you personally but he can attach the property and seize it.
CurbsideProphet
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August 07, 2011, 03:43:55 AM
 #23

I seem to recall having read elsewhere stuff about how great it is to have one's money go down in price in terms of  other types of money, it is supposed to stimulate people who have those other kinds of money into spending into your economy, apparently because when they think in terms of their currency instead of yours they perceive your economy as a bargain cornucopia in which they can buy everything your merchants are offering at what to them seems low prices.

Is that whole line of bull just a line of bull that tries to pretend there is no such thing as arbitrage?

Or is it basically saying that people who think in some other currency than yours will see the low price of your currency as an arbitrage opportunity so big and/or lucrative that even they the common folk who are not normally into arbitrage will buy your goods thus acting as arbitragers?

(Maybe we are screwing ourselves by being such efficient arbitragers that the outside world doesn't have time to notice our prices have fallen before our shopkeepers raise them?)

-MarkM-


It's not a line of bull, it's actually basic economics.  Having a weak currency in comparison to another currency allows you to manufacture and export more goods.  It's the reason why China has been devaluing the Renminbi versus the dollar for so long.  The Swiss Franc is at a historic high compared to almost every currency in the world.  What is the government doing?  Everything in its power to devalue the Franc. 

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August 07, 2011, 03:48:25 AM
 #24

Hard currency has an intrinsic value
That's an interesting theory yet I've haven't met a lot of people who consume gold or silver on a daily basis.
mizike29
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August 07, 2011, 03:52:09 AM
 #25

I think its still just balancing out, its new, its had some hits, people mining who spent money, like me, are getting there money back, I looked at the offers for sales now, those low 7 dollar marks are only for like 3 bitcoins, so the overall price is really a little higher, it has dropped every weeekend for awhile now, and I think it has been overpriced and might balance around 9 and 10 again as usual during the next week, might be its final value unless a AMAZON or NEW EGG starts accepting them, then price will rocket up.  And yes buyihng them is much tougher unless you just have cash to keep in MTGOX.  It takes me 4 days to get my cash in, I finally got some in, was at hershey park so not following it, and had a buy order in for 9 bux, so it spent all my money at 9 bucx a coins, sucks,. cause if I could have watched it, Like I do everyday, I would have cencelled it and got them at 7 bux.  ANd if you didnt have cash there already, you cant capitalize on the low prices which sucks too.

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August 07, 2011, 04:33:46 AM
 #26

I think its still just balancing out, its new, its had some hits, people mining who spent money, like me, are getting there money back, I looked at the offers for sales now, those low 7 dollar marks are only for like 3 bitcoins, so the overall price is really a little higher, it has dropped every weeekend for awhile now, and I think it has been overpriced and might balance around 9 and 10 again as usual during the next week, might be its final value unless a AMAZON or NEW EGG starts accepting them, then price will rocket up.  And yes buyihng them is much tougher unless you just have cash to keep in MTGOX.  It takes me 4 days to get my cash in, I finally got some in, was at hershey park so not following it, and had a buy order in for 9 bux, so it spent all my money at 9 bucx a coins, sucks,. cause if I could have watched it, Like I do everyday, I would have cencelled it and got them at 7 bux.  ANd if you didnt have cash there already, you cant capitalize on the low prices which sucks too.
Honestly the best thing for any miner to do right now is to hoard them... Hoard till they are worth something, cause selling them to speculator clowns is only going to make matters worse.

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miscreanity
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August 07, 2011, 07:07:58 AM
 #27

Promise to pay currency is a claim on future production. Hard currency is not. Hard currency has an intrinsic value and more akin to a barter exchange.

They all still require subjective valuation in order to attach any value whatsoever.

Quote
People's ideas of the fundamental functions of money and contracts is really screwed up since we have been using legal tender promises to pay for a generation.

There are 2 types of contracts

Executory and Executed

I think "really screwed up" is an understatement Smiley

Which of those contracts currently have any legal applicability to the Bitcoin economy? I have difficulty believing any court would even acknowledge the legitimacy of Bitcoin. If it were acknowledged, that action would very likely provide an unbelievable boost in interest and value. Can you imagine official channels effectively stating that Bitcoin is money?
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