"Backing" - what does this actually MEAN?

[Ibian]

That is paramount to saying that because you doubt the bravery of a nations army that the nation is undefended.

You could totally say that. Reasonably so. And people have, countless times throughout history.

[1714855502]

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[1714855502]

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[teukon]

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.  The mining pools and exchanges have not chosen to edit that line of code on their software, but that choice is all to is guaranteeing BTC rarity, you can argue about how hard/unlikely/self-defeating it would be for them to do that, but it is NOT a cryptographically secured part of the Protocol.

Agreed!  Indeed, we could all decide to redifine the word "bitcoin" to mean 1 ounce of cheese.  As cheese is not limited to 21 million ounces we must conclude the possibility of inflating the supply of bitcoin without defeating any cryptography whatsoever.

JoelKatz is usually pretty sharp but can't always be expected to keep pace with the likes of us.  Fortunately, he's not in charge of anything of tantamount importance.

[teukon]

The problem with this thread, and the many others like it, is that definitions get pulled out of asses, and it turns into a fight over which rectal definition is right.

I agree. Rather than arguing over whether Bitcoin is "backed", when we all agree on its properties, let's instead talk about what the consequences of those properties are.

I'm with both of you in spirit but have a fondness for trolling trolls that all too often bests me.  Does that make me a bad person?

[deisik]

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.  The mining pools and exchanges have not chosen to edit that line of code on their software, but that choice is all to is guaranteeing BTC rarity, you can argue about how hard/unlikely/self-defeating it would be for them to do that, but it is NOT a cryptographically secured part of the Protocol.

Though I agree on the point that cryptography has nothing to do with keeping bitcoin scarce, but are matters with fiat currency much different from that? Isn't what sets apart a limited supply of fiat from unlimited debasement of that fiat even more arbitrary than that?

[Erdogan]

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.  The mining pools and exchanges have not chosen to edit that line of code on their software, but that choice is all to is guaranteeing BTC rarity, you can argue about how hard/unlikely/self-defeating it would be for them to do that, but it is NOT a cryptographically secured part of the Protocol.

Though I agree on the point that cryptography has nothing to do with keeping bitcoin scarce, but are matters with fiat currency much different from that? Isn't what sets apart a limited supply of fiat from unlimited debasement of that fiat even more arbitrary than that?

In fiat, there is no if statement.

[deisik]

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.  The mining pools and exchanges have not chosen to edit that line of code on their software, but that choice is all to is guaranteeing BTC rarity, you can argue about how hard/unlikely/self-defeating it would be for them to do that, but it is NOT a cryptographically secured part of the Protocol.

Though I agree on the point that cryptography has nothing to do with keeping bitcoin scarce, but are matters with fiat currency much different from that? Isn't what sets apart a limited supply of fiat from unlimited debasement of that fiat even more arbitrary than that?

In fiat, there is no if statement.

But this by no means makes it less arbitrary, right? Nothing that could ultimately prevent a fiat currency turning into a Zimbabwean dollar (unlike gold backed money)... Oh, wait, Zimbabwean dollar is just a fiat currency themselves!

[Erdogan]

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.  The mining pools and exchanges have not chosen to edit that line of code on their software, but that choice is all to is guaranteeing BTC rarity, you can argue about how hard/unlikely/self-defeating it would be for them to do that, but it is NOT a cryptographically secured part of the Protocol.

Though I agree on the point that cryptography has nothing to do with keeping bitcoin scarce, but are matters with fiat currency much different from that? Isn't what sets apart a limited supply of fiat from unlimited debasement of that fiat even more arbitrary than that?

In fiat, there is no if statement.

But this by no means makes it less arbitrary, right? Nothing that could ultimately prevent a fiat currency turning into a Zimbabwean dollar... Oh, wait, Zimbabwean dollar is just a fiat currency themselves!

Hehe. The question to the coming expansion of QE is: Will they tell us before it happens this time?

[cczarek123]

The only thing backing any currency system is faith. Gold is just a shinny rock, fiat is just fancy paper. Bitcoin has more faith behind it than ever, and perhaps the opposite could be said of fiat.

[pjviitas]

The only thing backing any currency system is faith. Gold is just a shinny rock, fiat is just fancy paper. Bitcoin has more faith behind it than ever, and perhaps the opposite could be said of fiat.

+1

[deisik]

The only thing backing any currency system is faith. Gold is just a shinny rock, fiat is just fancy paper. Bitcoin has more faith behind it than ever, and perhaps the opposite could be said of fiat.

What you refer to as faith is called subjective value in economics, lol

[porc]

Backing= guarantee of future exchange value

BC, needs a guarantee of its future exchange value.

As it has none, it cant be money.

Obviously you mean guarantee by a central authority. That's not going to happen ever because bitcoin don't wants that to happen.
You see bitcoin with fiat currency standards thats why you can't understand basic things.

No. Thats one form of backing (dollar).

Gold/Silver have backing (inherent).

Bitcoin has NO backing.

[Rassah]

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.

That actually won't change the scarcity, as there are two things standing between finite supply and unlimited debasement. First one is that IF statement, second one is people's personal choice. If other people and exchanges choose to change that IF statement, and I along with a few of my friends choose not to, then we will still continue to use Bitcoin, along with its finite supply, while those other people and exchanges will be effectively creating an alt-coin through a hard fork. As long as there are enough people that refuse to change the IF statement, and enough miners to support their refusal to change, bitcoin will remain scarse.

If their were even something like a group of people with large wealth that were publicly pledging they wouldn't let BTC drop below some floor price that would be a backing but we don't even have that.

Dollars don't have such a group of people, either. Both bitcoin and USD have wealthy people, who are essentially backers, who support the currency through various legal and technical means, but those wealthy people would not be stupid enough to start buying up a crashing currency just to prop up its price, if they see it doesn't have a future.

Actually yes it dose have thouse people in the Treasury department and the Federal Reserve, the former collects taxes in the Dollar and the later holds bonds and other assets.

I think you may be confusing backing and propping up. How does collecting taxes support a price floor? If USD price drops, they would just collect a larger amount of dollars to collect the same value. As for bonds, they could only continue propping up USD price (by buying USD in exchange for bonds) as long as people are willing to buy their bonds. At this point, these bonds pay almost no interest, and with a high national debt are getting riskier, which is a contradiction (higher risk should pay more interest) that is making them extremely unattractive. So we may have reached the end of being able to prop up USD with bonds. (USA can raise interest on bonds, but it is so deep in debt that it may not be able to afford paying interest, either).

The problem with this thread, and the many others like it, is that definitions get pulled out of asses, and it turns into a fight over which rectal definition is right.

Is this where the expression "shit storm" comes from? Because that would seem really apt.

[Rassah]

Backing= guarantee of future exchange value

BC, needs a guarantee of its future exchange value.

As it has none, it cant be money.

Obviously you mean guarantee by a central authority. That's not going to happen ever because bitcoin don't wants that to happen.
You see bitcoin with fiat currency standards thats why you can't understand basic things.

What would porc say to a central authority issuing a currency backed by bitcoin, where the central authority makes a guarantee that you can exchange their currency for a BTC in the future?

[Impaler]

A number of replies are coming from people who feel the need to disprove something I'm not arguing.  I pointed out that their is NO CRYPTOGRAPHIC SECURITY FEATURE that controls the scarcity of BTC, THAT IS ALL!  Joel was spouting BS when he implied their was and while peons on this forum will say that blithely a hundred times a day I find it detestable that someone who knows how to program makes the same mistake.

JK you of all people are not allowed to repeat such idiocy, YOU KNOW THE CODE, Cryptography has ZERO do do we keeping BTC scarce, their is only a simple IF statement in a line of code that either accepts or rejects a block as valid based on the mining quantity that is standing between a finite supply of BTC and unlimited debasement.

That actually won't change the scarcity, as there are two things standing between finite supply and unlimited debasement. First one is that IF statement, second one is people's personal choice. If other people and exchanges choose to change that IF statement, and I along with a few of my friends choose not to, then we will still continue to use Bitcoin, along with its finite supply, while those other people and exchanges will be effectively creating an alt-coin through a hard fork. As long as there are enough people that refuse to change the IF statement, and enough miners to support their refusal to change, bitcoin will remain scarse.

As for what would actually happen in a fork, it has nothing to do with what a 'majority' dose.  It will come down to what the Exchanges Do, if they act in concert and choose one chain as the one which will be exchanged for all the USD they hold then that chain will live and the others will die as miners will move to mine coins that can be exchanged for money to pay for their overhead costs.  Sure some die-hard loyalists might keep 'original' BTC limping along with a pittance of the hash-power it once had but if that chain isn't showing a rising value because their are no exchanges for it or what exchanges do exist don't have the millions to create a high price then their would be zero interests, and the 'new' BTC network would have EVERY incentive to making denial of service attack on the old network to remove competition.

The point is BTC scarcity is supported only because the controlling entities of BTC wish it to stay with the original protocol, it is basically under human control, no different from any Fiat currency.  When the people in control want scarcity to end it will, yes their will be much wailing and gnashing of teeth just as when Fiat currency is debased but it's not got some magical cryptography guaranteeing scarcity, just people.

[kjj]

A number of replies are coming from people who feel the need to disprove something I'm not arguing.  I pointed out that their is NO CRYPTOGRAPHIC SECURITY FEATURE that controls the scarcity of BTC, THAT IS ALL!  Joel was spouting BS when he implied their was and while peons on this forum will say that blithely a hundred times a day I find it detestable that someone who knows how to program makes the same mistake.

You go off your meds again?  He implied no such thing, no matter how many times you repeat it.

Bitcoin's scarcity is guaranteed by mathematics.

Which math?

int64 static GetBlockValue(int nHeight, int64 nFees)
{
    int64 nSubsidy = 50 * COIN;

    // Subsidy is cut in half every 210000 blocks, which will occur approximately every 4 years
    nSubsidy >>= (nHeight / 210000);

    return nSubsidy + nFees;
}

[pand70]

Backing= guarantee of future exchange value

BC, needs a guarantee of its future exchange value.

As it has none, it cant be money.

Obviously you mean guarantee by a central authority. That's not going to happen ever because bitcoin don't wants that to happen.
You see bitcoin with fiat currency standards thats why you can't understand basic things.

No. Thats one form of backing (dollar).

Gold/Silver have backing (inherent).

Bitcoin has NO backing.

Bitcoin has that other backing that you talk about. It's the massive value of it's network and the thousands of people's that are strengthen that network.

[porc]

Backing= guarantee of future exchange value

BC, needs a guarantee of its future exchange value.

As it has none, it cant be money.

Obviously you mean guarantee by a central authority. That's not going to happen ever because bitcoin don't wants that to happen.
You see bitcoin with fiat currency standards thats why you can't understand basic things.

No. Thats one form of backing (dollar).

Gold/Silver have backing (inherent).

Bitcoin has NO backing.

Bitcoin has that other backing that you talk about. It's the massive value of it's network and the thousands of people's that are strengthen that network.

Thats not backing.

[deisik]

Obviously you mean guarantee by a central authority. That's not going to happen ever because bitcoin don't wants that to happen.
You see bitcoin with fiat currency standards thats why you can't understand basic things.

No. Thats one form of backing (dollar).

Gold/Silver have backing (inherent).

Bitcoin has NO backing.

Bitcoin has that other backing that you talk about. It's the massive value of it's network and the thousands of people's that are strengthen that network.

Thats not backing.

Backing for you is something that you redeem dollars (or any other currency) for? I remember you saying that gold doesn't need backing since it has real value by itself (nice to look at and so forth). Could we then proceed to the assumption that its inherent properties are what gives it value (nice look, indestructibility, heaviness, etc)?

[Erdogan]

Obviously you mean guarantee by a central authority. That's not going to happen ever because bitcoin don't wants that to happen.
You see bitcoin with fiat currency standards thats why you can't understand basic things.

No. Thats one form of backing (dollar).

Gold/Silver have backing (inherent).

Bitcoin has NO backing.

Bitcoin has that other backing that you talk about. It's the massive value of it's network and the thousands of people's that are strengthen that network.

Thats not backing.

Backing for you is something that you redeem dollars (or any other currency) for? I remember you saying that gold doesn't need backing since it has real value by itself (nice to look at and so forth). Could we then proceed to the assumption that its inherent properties is what gives it value (nice look, indestructibility, heaviness, etc)?

Partly yes, that is the intrinsic value, same as value for direct use. Most of the value of gold is the exchange value, value that comes from people who want to hold it for shorter or longer time. When you want to use something as money, you need to hold some sometimes. It is not the instant moving of the stuff from one person to another that gives it value, but the fact that you sometimes need to hold it. It is also called reservation demand.

Gold has some direct use value, but mostly exchange value. Bitcoin has only exchange value, which, for money, is ideal.

[deisik]

Backing for you is something that you redeem dollars (or any other currency) for? I remember you saying that gold doesn't need backing since it has real value by itself (nice to look at and so forth). Could we then proceed to the assumption that its inherent properties is what gives it value (nice look, indestructibility, heaviness, etc)?

Partly yes, that is the intrinsic value, same as value for direct use. Most of the value of gold is the exchange value, value that comes from people who want to hold it for shorter or longer time. When you want to use something as money, you need to hold some sometimes. It is not the instant moving of the stuff from one person to another that gives it value, but the fact that you sometimes need to hold it. It is also called reservation demand.

Gold has some direct use value, but mostly exchange value. Bitcoin has only exchange value, which, for money, is ideal.

Do you count as direct use (and thus the basis for deriving value) such property of gold as prettiness to the eye (as porc would say)? In other words, do you think that this quality contributes anything to gold's value, even if you personally don't find gold attractive or pleasant to look at?