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Author Topic: Why Bitcoin is not a currency and has no backing (yet?)  (Read 2239 times)
hugolp
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September 19, 2011, 08:35:32 AM
 #21

From what I know there is no currencies in the world with any "backing".  All are fiat currencies, not much different from Bitcoin.  At least bitcoin has the backing of "electricity and CPU cycles".  The rest of the currencies are just pieces of papers which depend on the confidence of the investors in them.

Bitcoin is not a fiat currency, is the opposite, a voluntary currency.

Fiat does not mean without backing.
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September 19, 2011, 08:50:08 AM
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There can be no talk about stabilization until the recent speculative bubble defuses. Stabilisation could happen in the less than 1$ range. A functional bitcoin ecosystem will bring about much higher velocity of money that, counterintuitively, will further depress prices. If 5 million bitcoins worth 1$ each change hands once every week, the annual GDP of the bitcoin economy will be 250 million $. We're far, far from that.
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September 19, 2011, 10:42:17 AM
 #23

There can be no talk about stabilization until the recent speculative bubble defuses. Stabilisation could happen in the less than 1$ range. A functional bitcoin ecosystem will bring about much higher velocity of money that, counterintuitively, will further depress prices. If 5 million bitcoins worth 1$ each change hands once every week, the annual GDP of the bitcoin economy will be 250 million $. We're far, far from that.
So when has the bubble begun in your opinion? February? Or at the first price spike to 50 cents?

Is it not possible that Bitcoin can simply evolve into a long term store of value, given its pre-defined, decreasing inflation rates?

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
cbeast
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September 19, 2011, 11:39:07 AM
 #24

Bitcoin Bubblegum - endless bubbles in many exciting flavors with lasting chewy satisfaction, from ponzi to troll.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
Sultan
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September 19, 2011, 12:03:49 PM
 #25

From what I know there is no currencies in the world with any "backing".  All are fiat currencies, not much different from Bitcoin.  At least bitcoin has the backing of "electricity and CPU cycles".  The rest of the currencies are just pieces of papers which depend on the confidence of the investors in them.

What do you believe the word "backed" means? As far as I know it means something thats supports it, like a back-up plan. You can back a currency by allowing it to be redeemed for something else, or by forcing other people to see the value you have assigned to it. It makes it nothing more than a promise. The assumption that Bitcoin is backed by CPU Cycles is incorrect. Can I redeem the Bitcoins for CPU cycles to devote to my supercomputer? Are CPU Cycles seen as a sacred thing that we should be forced to value anything that takes CPU cycles to achieve?

If anything, what makes BTC valuable is what you can do with it or what you believe you will be able to do with it in the future.

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I then use the money to buy BitCoins. You can too!
hugolp
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September 19, 2011, 01:31:17 PM
 #26

Bitcoin Bubblegum - endless bubbles in many exciting flavors with lasting chewy satisfaction, from ponzi to troll.

Well, Bubbleboy has changed his mind. First Bitcoin was going to crash into nothing and disappear. Now he is saying that it will crash into $1. Who knows what he will be saying in 3 months.
BubbleBoy
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September 19, 2011, 03:06:56 PM
 #27

In fact I still maintain that the current blockchain is flawed and will eventually fade away into obscurity - as all human endeavours do. Surely you don't believe that Bitcoin is immortal ? Given the overall rate of innovation in the technical field, I would expect a worthy Bitcoin successor sooner rather than later.

That being said, I can approach the price issue on the economic fundamentals, just as you can take an economic approach to the supply of prostitution in 3rd world countries. I don't own significant amounts of bitcoins nor do I rent child prostitutes, but I will not deny their reality.

And the fundamentals say that a price in the 10 - 20$ within a functional economy is a pure fantasy - it requires an equivalent GDP in the billions of dollars.
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September 19, 2011, 03:12:13 PM
 #28

And the fundamentals say that a price in the 10 - 20$ within a functional economy is a pure fantasy - it requires an equivalent GDP in the billions of dollars.
Ah, so how’s the gold economy doing?

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
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September 19, 2011, 03:16:48 PM
 #29

And the fundamentals say that a price in the 10 - 20$ within a functional economy is a pure fantasy - it requires an equivalent GDP in the billions of dollars.
I don't think you can talk about "GDP" at all, as bitcoin is not a country. Also the volume of transactions does not really seem linked to the trading price in dollars in practice.

Bitcoin Core developer [PGP] Warning: For most, coin loss is a larger risk than coin theft. A disk can die any time. Regularly back up your wallet through FileBackup Wallet to an external storage or the (encrypted!) cloud. Use a separate offline wallet for storing larger amounts.
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