Etlase2
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November 05, 2011, 05:11:37 AM |
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Now, just to keep us all intellectually honest, it is probable that Bitcoin would prevail over an improved crypto-currency simply because of its momentum and first mover advantage.
That said, the limit on BTC is one of its big advantages. Even Krugman can see that.
How is the limit one of its big advantages? A deflationary spiral isn't possible because early adopters will step in and take a good chunk of the value away? Even if the coins were distributed in a more realistic fashion such as for real work performed, what measures are there to stop what happened during the great depression from happening with bitcoin? Is there going to be some measure to prevent bad investments? Are we to just hope that bitcoin never becomes large enough compared to the world economy? I mean for crying out loud, bitcoin has already experienced a deflationary spiral, and early adopter money was released from the hoards to resolve it. Demand far outstripped supply, though in this case it was due to the supply being held back by a select few rather than bank failures and what not. Imagine if there was actual investment going on in bitcoin and the price rose from $2 to $30. How in the ever-loving FUCK would someone pay back a loan? "uhhh, hey bro I can't pay you back for that snickers bar because that amount of money would now buy microsoft, sorry dude"
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FreeTrade
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November 05, 2011, 05:33:15 AM |
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How is the limit one of its big advantages? A deflationary spiral isn't possible because early adopters will step in and take a good chunk of the value away? Even if the coins were distributed in a more realistic fashion such as for real work performed, what measures are there to stop what happened during the great depression from happening with bitcoin? Is there going to be some measure to prevent bad investments? Are we to just hope that bitcoin never becomes large enough compared to the world economy? I mean for crying out loud, bitcoin has already experienced a deflationary spiral, and early adopter money was released from the hoards to resolve it. Demand far outstripped supply, though in this case it was due to the supply being held back by a select few rather than bank failures and what not.
Imagine if there was actual investment going on in bitcoin and the price rose from $2 to $30. How in the ever-loving FUCK would someone pay back a loan? "uhhh, hey bro I can't pay you back for that snickers bar because that amount of money would now buy microsoft, sorry dude"
The problems mentioned stem from a confusion about what Bitcoin is. There is a naive idea that world governments might adopt Bitcoin, and it might become the worldwide currency and so it might impact the economy because of problems associated with inflation and deflation of the money supply and such. Don't worry, that's not going to happen. USGov will stick with the USD whatever happens - and so it is only inflation/deflation in the USD that you need to worry about if you're a USian. Bitcoin increasing or decreasing in value doesn't matter in the same way that gold increasing or decreasing in value doesn't matter (unless you're holding it, or have borrowed it, or are backing your currency with it). You might agree to repay someone 10 ounces of gold. The gold price might go parabolic and you'd be stuffed. So what. Not gold's fault. Not bitcoin's fault. Your fault! If you take a position in Bitcoin, either short or long, it is a speculative one and you should be prepared to lose your shirt. Price your goods in USD. Denominate your loans in USD. Let the USGov keep the USD stable. Make and receive your payments in Bitcoin. Cash in, cash out. Let the speculators and hoarders worry about the day-to-day value. It doesn't matter to anyone else.
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Etlase2
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November 05, 2011, 06:39:21 AM |
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You didn't answer the question of "how is the limit one of its big advantages?"
If there are a billion bitcoins worth a penny each, that is no different from 21 million bitcoins being worth a few dollars each if all it is is a payment processor.
All this deflationary economy bullshit goes out the window because there is, in fact, no economy. Now we go back to the game of hot potato and wonder not if but when someone decides to sell an early hoard of coins and causes anyone stuck with bitcoins to lose all kinds of wealth for the sake of this payment processor. Anyone who invests in the "currency" plays a game of "when can I predict that the early adopters will be too greedy to keep hoarding," and what you have is a bona-fide pyramid scheme and/or greater fool scheme.
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FreeTrade
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November 05, 2011, 07:08:22 AM |
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You didn't answer the question of "how is the limit one of its big advantages?"
Oh I'm sorry - the limit, or scarcity, gives speculators and hoarders confidence that an issuer can't steal their wealth through printing. (See Weimar Republic, Zimbabwe, Sterling, USD). It makes the game a bit fairer! If there are a billion bitcoins worth a penny each, that is no different from 21 million bitcoins being worth a few dollars each if all it is is a payment processor.
Quite right! It is the manner of distribution that is important. All this deflationary economy bullshit goes out the window because there is, in fact, no economy. Now we go back to the game of hot potato and wonder not if but when someone decides to sell an early hoard of coins and causes anyone stuck with bitcoins to lose all kinds of wealth for the sake of this payment processor. Anyone who invests in the "currency" plays a game of "when can I predict that the early adopters will be too greedy to keep hoarding," and what you have is a bona-fide pyramid scheme and/or greater fool scheme.
"anyone stuck with bitcoins" = hoarder / speculator "Anyone who invests" = hoarder / speculator "greater fool scheme" = speculative mania / bubble
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Etlase2
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November 05, 2011, 07:47:01 AM |
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Oh I'm sorry - the limit, or scarcity, gives speculators and hoarders confidence that an issuer can't steal their wealth through printing. (See Weimar Republic, Zimbabwe, Sterling, USD). It makes the game a bit fairer! But they have confidence that early adopters won't steal their wealth through selling? They'd rather rely on a bunch of anonymouses with no one to hold them accountable other than themselves? "anyone stuck with bitcoins" = hoarder / speculator This will definitely not be true for those transacting in bitcoins. Cash->BTC->cash will *never* be an instantaneous process. And if that process is all bitcoin is eventually relegated to doing, the early adopters are encouraged to sell whenever they believe pending transaction volume is at a high. Will real businesses ever accept BTC knowing they could lose 50% or more of all REVENUE (not profit) for a day or even a few hours? Or will they just accept that they will occasionally lose value as a cost of doing business in BTC, much like visa/mc? "Anyone who invests" = hoarder / speculator Bitcoin has been touted again and again as an answer to the ills of "fiat" currency. People will be duped into thinking this is some kind of good investment and the pyramid propagates. Is it at all ethical to promote such a system? Doesn't it eventually just boil down to how much value the earliest adopters can siphon from the network before it *might* be stable? With a limited supply, isn't it likely that some new business will eventually control a large percentage of the supply again, and be able to pull off the same stunts, again?
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FreeTrade
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November 05, 2011, 08:49:18 AM |
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But they have confidence that early adopters won't steal their wealth through selling? They'd rather rely on a bunch of anonymouses with no one to hold them accountable other than themselves?
Indeed some people trust the mechanisms of a free market over the machinations of government. This will definitely not be true for those transacting in bitcoins. Cash->BTC->cash will *never* be an instantaneous process.
As Bitcoin is adopted, services will be offered to entirely insulate users from the volatility. Wallet services will allow users to hold their balances in USD, converting to BTC only for transactions. Merchant services will allow retailers to accept BTC without ever holding a BTC. (See Bit-Pay). Bitcoin has been touted again and again as an answer to the ills of "fiat" currency.
Some idealists do. Bitcoin is an answer to some of the ills of government fiat currency. The USD etc has its value and its place.
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November 05, 2011, 08:55:07 AM |
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Bitcoin has been touted again and again as an answer to the ills of "fiat" currency.
An answer to some of the ills, certainly not to all of them. No matter how you design a new currency - the wealthy will always end up with a big chunk of the pie (my personal conviction, I'd be happy to be proven wrong on this). Bitcoin will not make the disparity of wealth on this world go away but it might help to lessen it. The current mechanism of fiat money generation inherently siphons wealth from the bottom to the top - Bitcoin simply doesn't have such a mechanism built in. People will be duped into thinking this is some kind of good investment and the pyramid propagates. Is it at all ethical to promote such a system?
As for Bitcoin being a good investment - it sure is a high-risk investment from a financial standpoint. From an ideological point of view one might argue differently. Doesn't it eventually just boil down to how much value the earliest adopters can siphon from the network before it *might* be stable?
Where do you see the earliest adopters siphoning value from the network? The only way holders of large sums of Bitcoin can profit is by making Bitcoin more valuable to all, which is a nice incentive IMHO and in stark contrast to the traditional money system where the top directly profits from making everybody else lose. With a limited supply, isn't it likely that some new business will eventually control a large percentage of the supply again, and be able to pull off the same stunts, again?
Again, Bitcoin will not magically solve the disparity issue of the world but there simply is no equivalent in Bitcoin to the "stunts" of the fiat money system.
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Etlase2
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November 05, 2011, 09:29:14 AM |
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Indeed some people trust the mechanisms of a free market over the machinations of government. What basis is there for trust? That satoshi went through great lengths to remain anonymous and then disappeared? This is rhetorical though, I don't want to get into a debate on that topic. As Bitcoin is adopted, services will be offered to entirely insulate users from the volatility. Wallet services will allow users to hold their balances in USD, converting to BTC only for transactions. Merchant services will allow retailers to accept BTC without ever holding a BTC. (See Bit-Pay). "Fees The automated solution and shopping cart is available for all merchants for a fee of 0.99% of the value of the sale. If the merchant wants to receive a currency other than bitcoins, (e.g. US Dollars) bit-pay can trade the coins for dollars, and send a direct deposit to the merchant's bank account. Merchants have no currency risk of bitcoins at all. The fee for this service is 2.99% of the value of the sale." Wow, pretty much the same or more fees than a credit card transaction, and much more than a debit transaction (though that gap is closing). And the risk that bit-pay becomes insolvent if the BTC value plummets quickly. Cool service though. Bitcoin will not make the disparity of wealth on this world go away but it might help to lessen it. The current mechanism of fiat money generation inherently siphons wealth from the bottom to the top - Bitcoin simply doesn't have such a mechanism built in. The reason fiat currency inflation siphons wealth from the bottom to the top is because the top gets access to new money first. Banks are the first to receive new cash. How is who got access to bitcoin first any different? Those who possess lots of coins siphon wealth from those who don't, because they fight over a ridiculously limited supply which is set to become more limited. Those who have coins can decide to take that wealth at any time. It would take around 60-70k coins to drop the "value" in half right now. That is less than 1% of the coins in existence, and satoshi & friends mined at least 1.6 million at a difficulty of 1. Where do you see the earliest adopters siphoning value from the network? The only way holders of large sums of Bitcoin can profit is by making Bitcoin more valuable to all, which is a nice incentive IMHO and in stark contrast to the traditional money system where the top directly profits from making everybody else lose. Everybody else does not necessarily lose. Any debt they have is now worth less. And I saw earlier adopters siphoning value by a ridiculously obvious pump n dump from 2->30->2. They regulate the huge majority of the supply, thus ultimately the value of any given BTC as their value is based 100% on supply and demand. Again, Bitcoin will not magically solve the disparity issue of the world but there simply is no equivalent in Bitcoin to the "stunts" of the fiat money system.
Then please explain how it is possible to see the price swings we have seen. A couple thousand trades on the black market meant that the 6.5 million BTC at the time was worth $200+ million USD?
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FreeTrade
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November 05, 2011, 09:43:37 AM |
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What basis is there for trust? That satoshi went through great lengths to remain anonymous and then disappeared? This is rhetorical though, I don't want to get into a debate on that topic.
One trusts that it is very difficult to move the goalposts if they are driven into the ground. Also don't make controversial statements if you don't want to get into a debate! Wow, pretty much the same or more fees than a credit card transaction, and much more than a debit transaction (though that gap is closing). And the risk that bit-pay becomes insolvent if the BTC value plummets quickly. Cool service though.
You're right - those are crazy fees! If only the free market had some kind of solution for high prices and supernormal profit. Oh, come to think of it - there is. Competition will drive those prices down to commodity levels. Then please explain how it is possible to see the price swings we have seen. A couple thousand trades on the black market meant that the 6.5 million BTC at the time was worth $200+ million USD?
You misunderstand the nature of price. Price implies amount. You might be able to sell 1 Bitcoin for $3 right now, but not 1 million Bitcoin at the same rate.
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cbeast
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November 05, 2011, 10:21:58 AM |
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Imagine if Borders bookstore told Amazon that they cannot compete with brick and mortar stores because customers can't send cash through the mail? Would it now be Amazon that is bankrupt instead of Borders? Whodathunk it?
You know this is pretty much word salad, right? This isn't about one business telling another that it can't work for some made-up reason, this is about a real, fundamental disadvantage one payment method has over another that isn't going to go away just because you want it to. Businesses criticize each other all the time. You said so yourself. Imagine Amazon started offering 5% off with Bitcoin. Visa tells them to stop it or they'll lose their account. What do you think comes next?
It's called competition. Amazon will choose bitcoin because it's cheaper. That is unless there are no anti-monopoly laws in which case we are all screwed and will end up paying whatever the banks will force us to pay. If that happens, then a bitcoin based online bookstore will be able to out-compete Amazon for prices.
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wareen
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November 05, 2011, 10:28:14 AM |
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The reason fiat currency inflation siphons wealth from the bottom to the top is because the top gets access to new money first. Banks are the first to receive new cash. How is who got access to bitcoin first any different?
New Bitcoins are created by miners at a cost that is usually very little below the current market price of Bitcoin. The miners are the ones who provide the service that makes Bitcoin a secure medium of exchange for everyone. That's the mechanism of Bitcoin money creation and it does not siphon any value from the bottom to the top. If you refer to people who mined back in 2009 and did not sell until now - those are speculators and there's not much difference to somebody spending a few hundred USD back then to buy tens of thousands of BTC. Bitcoin is not backed by anything and not pegged to anything so it is bound to be extremely volatile as long as it is not widely used as a currency. If you bought AAPL or GLD in 2003 you'd have had similar returns - does this make Apple or Gold a pyramid scheme? Those who possess lots of coins siphon wealth from those who don't, because they fight over a ridiculously limited supply which is set to become more limited.
I don't see anybody fighting - besides, this is a one time issue: as soon as somebody spends their coins, they're gone. There is no mechanism in Bitcoin that replenishes their supply. Those who have coins can decide to take that wealth at any time. It would take around 60-70k coins to drop the "value" in half right now.
It is a very young and shallow market - nobody can just drop 100k coins without enormous slippage. Everybody else does not necessarily lose. Any debt they have is now worth less.
Sounds like we should all take on some more debt to not be on the losing side then, right? And I saw earlier adopters siphoning value by a ridiculously obvious pump n dump from 2->30->2.
How do you know it was the early adopters? The majority of coins from 2009 did not get moved once and might as well be in lost wallets for all we know. The pump and dump was from speculators who might as well have bought all their coins in April. This has absolutely nothing to do with Bitcoin's design of money creation - any asset can be pumped and dumped by somebody with enough money. And especially the pump simply cannot have originated from some big coin holders - it needed big USD holders. Those were pretty much also the ones selling on the way down, but that's the free market at work - nothing Bitcoin could/should do anything about.
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Etlase2
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November 05, 2011, 11:10:59 AM |
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Also don't make controversial statements if you don't want to get into a debate! You are probably the most level-headed bitcoin proponent I've ever talked with on these boards, so I wasn't expecting you to really respond to the thing about satoshi anyway. The rhetorical part was more to fend off the masses from attacking with the same old, rehashed fallacies. You're right - those are crazy fees! If only the free market had some kind of solution for high prices and supernormal profit. Oh, come to think of it - there is. Competition will drive those prices down to commodity levels. I think you're fairly wrong here. Setting up this kind of infrastructure is incredibly difficult. There are only 2 major CC providers. There is only 1 major internet payment service. All these services charge around 3%. What makes you think that competitors to bit-pay will pop up all over the place and bring this fee down? Bit-pay is going to need all kinds of BTC and USD capital on demand. You misunderstand the nature of price. Price implies amount. You might be able to sell 1 Bitcoin for $3 right now, but not 1 million Bitcoin at the same rate.
I was not the one going around claiming that BTC had 200 million in market depth, quite the opposite... If you refer to people who mined back in 2009 and did not sell until now - those are speculators and there's not much difference to somebody spending a few hundred USD back then to buy tens of thousands of BTC. And how are these "speculators" not siphoning wealth off the economy again? Bitcoin is not backed by anything and not pegged to anything so it is bound to be extremely volatile as long as it is not widely used as a currency. If you bought AAPL or GLD in 2003 you'd have had similar returns - does this make Apple or Gold a pyramid scheme? Oh hey look, bitcoin wiki 101 fallacies. Can you show me the product of BTC? Can you show me the corporation that I control a stake in by owning BTC? It is a very young and shallow market - nobody can just drop 100k coins without enormous slippage. Then why are there 7.5 million coins? Why does it cost about $3 to produce 1 coin now if the amount of fiat available to buy those coins can't even handle a 1% increase in the supply? How do you know it was the early adopters? The majority of coins from 2009 did not get moved once and might as well be in lost wallets for all we know. Yes, for all we know. We know absolutely nothing, and it is a fantastic opportunity to be an early adopter in an anonymous pyramid. In a time (now) where price is relatively stable yet still takes only 1% of the coins in existence to drop the price by half, how many coins do you think it took to actually sell-through to take the price from $30->$15 when there were over a million coins less produced? good luck with your investockurrencommodity
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cbeast
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November 05, 2011, 11:18:07 AM |
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investockurrencommodity = anonymous pyramid ![Grin](https://bitcointalk.org/Smileys/default/grin.gif)
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Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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FreeTrade
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November 05, 2011, 11:25:32 AM |
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I think you're fairly wrong here. Setting up this kind of infrastructure is incredibly difficult. There are only 2 major CC providers. There is only 1 major internet payment service. All these services charge around 3%. What makes you think that competitors to bit-pay will pop up all over the place and bring this fee down? Bit-pay is going to need all kinds of BTC and USD capital on demand.
Good question - the answer is to do with barriers to entry and the network effect these services currently enjoy. To launch a new CC or Paypal, you're faced with a chicken and egg situation. No-one will use it because no-one accepts it and vice-versa. Bitcoin adoption faces the same problem, but once it is overcome, no player can erect a barrier to entry in the new marketplace - it will always be easy to enter the market offering the same commodity service because it is based on open money. Setting up a new Bit-pay is trivial compared to setting up a new Visa.
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Etlase2
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November 05, 2011, 11:48:09 AM |
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Good question - the answer is to do with barriers to entry and the network effect these services currently enjoy. To launch a new CC or Paypal, you're faced with a chicken and egg situation. No-one will use it because no-one accepts it and vice-versa. This is not exactly true for paypal. I could send money with an email! ![Tongue](https://bitcointalk.org/Smileys/default/tongue.gif) Bitcoin adoption faces the same problem, but once it is overcome, no player can erect a barrier to entry in the new marketplace - it will always be easy to enter the market offering the same commodity service because it is based on open money. Setting up a new Bit-pay is trivial compared to setting up a new Visa. This is probably true. But I would imagine the much higher fee involved for USD includes a premium for exposing themselves to BTC price volatility. So while bitpay2.0s may pop up over night with 2% USD fees, they may also crash just as quickly, taking any pending transactions with them. It isn't instant, after all, they pay out USD once a day. Payment processor trust is not an easy thing to gain and it is very easy to lose.
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November 05, 2011, 12:10:49 PM |
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If you refer to people who mined back in 2009 and did not sell until now - those are speculators and there's not much difference to somebody spending a few hundred USD back then to buy tens of thousands of BTC. And how are these "speculators" not siphoning wealth off the economy again? It seems we have a misunderstanding about the concept of siphoning wealth - I was talking about the inherent process of money generation with fiat currencies which constantly siphons wealth from the bottom to the top. Speculative gains on a volatile asset are not siphoning in my book. Can you show me the product of BTC? Can you show me the corporation that I control a stake in by owning BTC?
I'm sorry, but gold prices and to a large degree stock prices don't reflect any other "true value" either - they are just a measure of trust and belief that others value them as well - and this measure is their value for all practical purposes. Apple stocks would be pretty much worthless if they couldn't be exchanged for something else. This wouldn't be the case if they had any fundamental value. Yes sure, in theory you own one half of a brick of some Apple store but in practice you don't. The question boils down to what does ultimately have value? I was not arguing that Bitcoin is a stock, but that the speculative gains from Bitcoin holders are similar to those of stock-holders. Gold didn't gain in value because it was suddenly much more needed in the industry and if it was not valued for anything else it would be pretty much worthless. Show me what I can do with my Apple shares without exchanging them for something else and I will agree that they are fundamentally more useful than Bitcoin. Just as an additional info: I don't own more than 1% of Apple ![Wink](https://bitcointalk.org/Smileys/default/wink.gif) Yes, for all we know. We know absolutely nothing, and it is a fantastic opportunity to be an early adopter in an anonymous pyramid.
So you propose Bitcoin should require its users to list the identity of every coin holder and the purpose for every transaction? good luck with your investockurrencommodity
Thank you!
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FreeTrade
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November 05, 2011, 12:15:32 PM |
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This is probably true. But I would imagine the much higher fee involved for USD includes a premium for exposing themselves to BTC price volatility. So while bitpay2.0s may pop up over night with 2% USD fees, they may also crash just as quickly, taking any pending transactions with them. It isn't instant, after all, they pay out USD once a day. Payment processor trust is not an easy thing to gain and it is very easy to lose.
There's a lot of things a processor can do to eliminate their exposure to volatility. Hedging or simply having an equal volume of transactions in both directions. The high charges on CC's are to pay for fraud and cartel profits. Bitcoin eliminates the cartel profits. I'm not sure who pays for the fraud - I'm pretty sure it won't be socialized though.
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Etlase2
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November 05, 2011, 12:50:40 PM |
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It seems we have a misunderstanding about the concept of siphoning wealth - I was talking about the inherent process of money generation with fiat currencies which constantly siphons wealth from the bottom to the top. Speculative gains on a volatile asset are not siphoning in my book. It is not siphoning in your book because that doesn't fit your view of bitcoin. But the fact remains that bitcoin is designed to make later adopters pay more value to acquire coins. I'm pretty sure I said, in this thread, that a (relatively) fixed supply of money was a big part of causing the great depression because of a deflationary spiral. Bitcoin can do absolutely nothing to fix a deflationary spiral except have early adopters release the hoards. So you can trust the wiki that's written as if an 18-year-old fresh out of econ 101 wrote it, or you can at least wonder why all modern economists (even those who are not, believe it or not, connected to the federal reserve) believe that deflation is bad for growth. And that deflation immensely benefits the holders of a currency over the spenders of a currency. Which, by and large, means those who already have a lot of the currency. If the threat of supply inflation exists this would reduce the value of their holdings, so they are encouraged to spend and invest. The question boils down to what does ultimately have value? I was not arguing that Bitcoin is a stock, but that the speculative gains from Bitcoin holders are similar to those of stock-holders. Gold didn't gain in value because it was suddenly much more needed in the industry and if it was not valued for anything else it would be pretty much worthless. Stocks get dividends for one. They gain value independently of the demand for those stocks. And each share is still a share of the company whether or not you want to believe it. And gold failed as a currency. If bitcoin is a stock and not a currency, what exactly are we investing in? That's what I want to know. And why is bitcoin touted as a replacement currency when it obviously is not? It can't be both a stock and a currency. If it acts similarly to both, don't you think that's a little fishy? Like, greater fool-like fishy? Show me what I can do with my Apple shares without exchanging them for something else and I will agree that they are fundamentally more useful than Bitcoin. Just as an additional info: I don't own more than 1% of Apple ![Wink](https://bitcointalk.org/Smileys/default/wink.gif) If people stopped calling bitcoin a store of value and instead said "it's a stock-like thing that gains or lowers in value purely based on supply or demand but has no backing of any kind," what do you think people would think of it? Do you think they'd be clamoring to buy in? Sure gold is *somewhat* similar, but there is no yet known finite supply of gold, and if the price of gold increases excessively, more people will effort mining gold. And nobody was handed 10% of all the gold in existence for a few pennies. ![Undecided](https://bitcointalk.org/Smileys/default/undecided.gif) So you propose Bitcoin should require its users to list the identity of every coin holder and the purpose for every transaction? No, I propose telling everybody who thinks of putting a penny into bitcoin that they are competing for a market of 10% of the total digital trash tokens in existence while a few people (who are anonymous and untraceable) control the rest and could sell at any time. So bear that in mind when you think the price has nowhere to go but up.
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FreeTrade
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November 05, 2011, 01:02:38 PM |
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all modern economists (even those who are not, believe it or not, connected to the federal reserve) believe that deflation is bad for growth.
A wise man once said . . . The problems mentioned stem from a confusion about what Bitcoin is. There is a naive idea that world governments might adopt Bitcoin, and it might become the worldwide currency and so it might impact the economy because of problems associated with inflation and deflation of the money supply and such. Don't worry, that's not going to happen. USGov will stick with the USD whatever happens - and so it is only inflation/deflation in the USD that you need to worry about if you're a USian. You should either refute that or stop repeating yourself. And nobody was handed 10% of all the gold in existence for a few pennies. ![Undecided](https://bitcointalk.org/Smileys/default/undecided.gif) Hmm. Maybe the conquistadors. Anyway, Bitcoin holds the promise of removing the 5% transaction tax levied by the CC companies on all of us, making us all wealthier. You shouldn't let your begrudgery towards the prescient early adopters sour your attitude to the greater good of the whole system.
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November 05, 2011, 02:43:03 PM |
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It is not siphoning in your book because that doesn't fit your view of bitcoin. But the fact remains that bitcoin is designed to make later adopters pay more value to acquire coins.
Not at all - there are many who bought coins at higher prices than somebody who gets in on Bitcoin today. The price of Bitcoin depends much more on the rate of adoption, the degree of speculation, the amount of media attention, the state of the global financial system, the growth of the underlying BTC-economy and the expectations about the future development of all these factors. The rate of money generation or the fixed supply has so very little to do with that. Nothing within Bitcoin says the USD price of BTC will continue to rise, so why do you keep worrying about that? I'm pretty sure I said, in this thread, that a (relatively) fixed supply of money was a big part of causing the great depression because of a deflationary spiral.
You do realize that Bitcoin is not legal tender and almost certainly never will be. It is just a digital commodity which happen to work well as money in some applications/markets. Not even I who is pretty enthusiastic about the Bitcoin technology do dream of it replacing some fiat currency. I don't see how Bitcoin could cause a great depression or a deflationary spiral of a whole economy - such speculations are IMHO about as realistic as expecting Bitcoin to one day be worth a million dollars. If bitcoin is a stock and not a currency, what exactly are we investing in? That's what I want to know. And why is bitcoin touted as a replacement currency when it obviously is not? It can't be both a stock and a currency. If it acts similarly to both, don't you think that's a little fishy? Like, greater fool-like fishy?
Bitcoin is certainly sui generis - not everything that doesn't fit into established classification systems has to be fishy but I can understand that this is why there's so much people calling it a scam. The big difference to a greater-fool scheme is, that Bitcoin does not need an ever increasing user base or an ever increasing (fiat) money supply to work as currency within a certain group of people. If people stopped calling bitcoin a store of value and instead said "it's a stock-like thing that gains or lowers in value purely based on supply or demand but has no backing of any kind," what do you think people would think of it? Do you think they'd be clamoring to buy in? I don't think it is a good idea for anybody to buy something they don't understand themselves or at least have somebody they trust who understands it. In the end, Bitcoin doesn't need marketing and it doesn't matter what you call it - the technology speaks for itself. No, I propose telling everybody who thinks of putting a penny into bitcoin that they are competing for a market of 10% of the total digital trash tokens in existence while a few people (who are anonymous and untraceable) control the rest and could sell at any time. So bear that in mind when you think the price has nowhere to go but up.
Good plan, nobody should buy Bitcoins because they think the price has nowhere to go but up! Bitcoin prices could crash for any number of reasons - Satoshi selling his 500k is probably the one I worry least about. A major flaw in the protocol, people losing interest, exchanges getting closed down, a better alternative catching on, Bitcoin becoming illegal, AML regulations for merchants make accepting Bitcoin too big of a hassle, etc... All these are much more imminent dangers for Bitcoin, but if you think Satoshi is the greatest threat for people buying Bitcoins then you are of course free to continue warning the whole wide world about him and his devilish conception ![Wink](https://bitcointalk.org/Smileys/default/wink.gif)
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