How to fix bitcoin

[MoonShadow]

Funny!  Imagine how old this kind of stuff gets to those of us who have been here a long time.

Being here a long time and seeing the same questions over is not an answer.  Mob rule is not reality they still burned witches in Salem.  I realize it all depends on merchants, if merchants leave bitcoin is done and there is no intrinsic value thus you have nothing.  So technically if the number of total merchants is rising so can bitcoin.

The answers that you seek are written in the forum's archives, as well as several different wiki's, at least one FAQ, and the technical white paper.  I'm more than happy to point you in the right direction if you are confused, and answer questions that arise from reading those documents.  However, neither myself nor anyone else who can answer those questions have the time to repeat ourselves for each newbie who misunderstands how the system works.  If you really wish to know and/or have this debate, then at least attempt to educate yourself on the details before you come to the table.

[NghtRppr]

What is to prevent someone making a clone of bitcoin and calling it bbitcoin.

First-mover advantage.

[steelhouse]

I am not here to be a troll.  Has there ever been a currency that was not commodity based or fiat?  Shells were fiat based.  You have to admit, coins decreed as valuable, with nothing behind them seem to be what they are intrinsically nothing.

Ah, I see the problem. You misunderstand the word fiat.

Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.
Today, all national currencies are fiat currencies, including the US dollar, the euro, and all other reserve currencies. This trend began with the Nixon Shock of 1971, which ended the backing by precious metal of the U.S. dollar.

Shells, gold, and Bitcoin are not fiat because they are not declared valuable by a government. What would happen to the U.S. dollar if it wasn't backed by the "full faith and credit" (as if that is worth something) of the U.S. government? It would become worthless. What would happen to gold if the U.S. government stopped accepting it as payment? I bet practically nothing.

You can go on youtube and watch "The Money Masters" and "The Secret of Oz".  If you ask Bill Still if gold based money is fiat he will say yes.  It only has value by government regulation or law.  Gold is just a yellow metal.  Bitcoin is not fiat, in fact it may be the only non fiat currency other than commodities.  You can take an ounce of silver go to Austrailia and get money for it.  Due to the demand for silver alone.  

Shells were declared valuable by the tribe - the government - fiat.

[steelhouse]

Funny!  Imagine how old this kind of stuff gets to those of us who have been here a long time.

Being here a long time and seeing the same questions over is not an answer.  Mob rule is not reality they still burned witches in Salem.  I realize it all depends on merchants, if merchants leave bitcoin is done and there is no intrinsic value thus you have nothing.  So technically if the number of total merchants is rising so can bitcoin.

The answers that you seek are written in the forum's archives, as well as several different wiki's, at least one FAQ, and the technical white paper.  I'm more than happy to point you in the right direction if you are confused, and answer questions that arise from reading those documents.  However, neither myself nor anyone else who can answer those questions have the time to repeat ourselves for each newbie who misunderstands how the system works.  If you really wish to know and/or have this debate, then at least attempt to educate yourself on the details before you come to the table.

I would really appreciate if you send me to the best source.

[em3rgentOrdr]

OMG, this has already been hashed out bazillion times...

Funny!

Imagine how old this kind of stuff gets to those of us who have been here a long time.

Time to get used to it.  There are ~8 billion people in this world who haven't heard of bitcoin yet.  And bitcoin's exponential growth rate is just beginning.  Some will embrace it without question.  Some will reject it outright.  But most people (myself included) will be curious, and start asking questions about it, and will point out what they think are fundamental flaws, and will post what they think are necessary modifications to improve the protocol.  We will learn to be patient and helpful, and alleviate their concerns by calmly explaining how the network and market are incentivized.  But yes...be prepared for the much anticipated hordes of steelhouses that will come.

BTW, we I suggest we augment the simple machine forum's source code to allow for the [facepalm] and [/facepalm] text modifiers... 

[BitterTea]

You can go on youtube and watch "The Money Masters" and "The Secret of Oz".  If you ask Bill Still if gold based money is fiat he will say yes.  It only has value by government regulation or law.

Fallacy: argument from authority. Whoever this Bill Still guy is, he is wrong. Gold has value as money despite governments, not because of them.

Gold is just a yellow metal.  Bitcoin is not fiat, in fact it may be the only non fiat currency other than commodities.  You can take an ounce of silver go to Austrailia and get money for it.  Due to the demand for silver alone.

You just contradicted yourself. Silver = gold = Bitcoin = commodity money.

Shells were declared valuable by the tribe - the government - fiat.

Again, you misunderstand the normal meaning of the word fiat. You can't just redefine it to mean whatever you want and argue you are correct. Unless there was a state (an entity with a monopoly on the use of violence in a specific geographic area) that declared shells to have value, and backed those shells with its full faith and credit, then they were not a fiat currency, they were a commodity.

[rezin777]

http://en.wikipedia.org/wiki/Subjective_theory_of_value

[steelhouse]

You just contradicted yourself. Silver = gold = Bitcoin = commodity money.

silver = commodity
gold = commodity
wood = commodity
bitcoin = nada
Federal reserve notes = nada

[BitterTea]

Oh my god, you're right, Bitcoins have no value at all! That TV I just bought with them is worthless!!!

To be serious, Bitcoins are a commodity money.

Examples of commodities that have been used as mediums of exchange include gold, silver, copper, peppercorns, large stones (such as Rai stones), decorated belts, shells, alcohol, cigarettes, cannabis, candy, barley etc.

A key feature of commodity money is that the value is directly perceived by the users of this money, who recognize the utility or beauty of the tokens as they would recognize the goods themselves. That is, the effect of holding a token for a barrel of oil must be the same economically as actually having the barrel at hand.

There is no reason I can think of that a commodity money must be a physical object. Bitcoins otherwise fit the description.

[rezin777]

Lets get down to basics.

Anyone can assign value to anything.

If someone else also assigns value to the same thing, they can trade it for whatever else they assign value to.

It's simply a matter of scale as to how far this can go.

You do not need to add force (state) to the equation to make it true.

You do not need additional people (merchants) to assign value to the item to make it true.

Two people can create a system of money out of anything they desire. They are both happy and their system doesn't need to be fixed!

Sheesh...

[em3rgentOrdr]

You just contradicted yourself. Silver = gold = Bitcoin = commodity money.

silver = commodity
gold = commodity
wood = commodity
bitcoin = nada
Federal reserve notes = nada

Knowledge is Power. (K=P)
Time is Money. (T=M)
Power is Work over Time. (P=W/T)

Basic algebra tells us:
K = W/T
K = W/M
or Knowledge equals Work over Money.

Therefore:

The More You Know, the More Work You Do, and
The More You Know, the Less Money You Make.

(sorry, this doesn't relate to the current discussion, but while we're using equal signs to equate complex subjective ideas, I thought I would share this joke for a laugh.)

[deadlizard]

The More You Know, the Less Money You Make.

I AM THE SMARTEST MAN ALIVE 

[markm]

There already are several alternate currencies built using Bitcoin's code, each using a separate blockchain. So alternate bitcoin-type currencies are not hypothetical, they already exist.

For example in the bitcoin IRC channels I have a sample IRC bot that supports a number of these alternate currencies.

The way the bot currently works is each currency has an account with each of the other currencies. For example the Brits have a Botcoin account and a Canadian Digital Notes account and a General Retirement Fund shares account and so on.

This has the effect of each currency having balances of various other currencies it can use to "buy itself back" aka to redeem its coins.

If for example someone (such as the Canucks for example) had bought some Britcoins using Canadian Digital Notes then Britcoins would have a balance of 100 Canadian Digital Notes available to be used as "backing" for Britcoins, that is, available to be used for the purpose of buying Britcoins by spending Canadian Digital Notes, much as the Canucks already did to cause the Brits to have that 100 CDN on hand.

The bot keeps these backing balances separate. That is, it will not spend any more than the Brits actually have of each other currency/commodity on buying back Britcoins.

This is looking to be an interesting market, because of course once someone has managed to buy those (for example) CDN from the Brits in return for Britcoins, then that is it, the Brits have no more CDN left with which to "back" aka "redeem" Britcoins.

In other words the bot does not lump all CDN together, it tracks separate balances per each other currency, so CDN it obtained by selling Britcoins will only be used to buy Britcoins, not to buy for example Martian BotCoins. Martian Botcoins would have their own distinct CDN balance, consisting of CDN that had been used to buy Martian BotCoins, and only those CDN would be used to buy Martian BotCoins.

That simple mechanism makes the bot in effect act on behalf of each currency as an administrator of a "backing facility" providing "backing" individually for each currency.

These currencies seem especially well suited to situations in which moving of hard goods is awkward, such as when remote operators operate robotic/waldo facilities in remote galaxies so far away that only consciousness/telepresence/data can reasonably be shipped.

Instead of trying to ship you a hundred thousand tonnes of deuterium from, say, a galaxy in the http://galaxies.mygamesonline.org/ group of galaxies to, for example (though maybe forbidden by Zorg's terms?) a galaxy in the Zorg Empires group of galaxies, I could sell deuterium in one group of galaxies for digital coins then use those digital coins to buy deuterium in your local galaxy to ship to you, thereby saving shipping costs and thus maybe provide you with deuterium cheaper than if I shipped it from a galaxy far far away...

-MarkM-

[no to the gold cult]

I am not here to be a troll.  Has there ever been a currency that was not commodity based or fiat?  Shells were fiat based.  You have to admit, coins decreed as valuable, with nothing behind them seem to be what they are intrinsically nothing.

Ah, I see the problem. You misunderstand the word fiat.

Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.
Today, all national currencies are fiat currencies, including the US dollar, the euro, and all other reserve currencies. This trend began with the Nixon Shock of 1971, which ended the backing by precious metal of the U.S. dollar.

Shells, gold, and Bitcoin are not fiat because they are not declared valuable by a government. What would happen to the U.S. dollar if it wasn't backed by the "full faith and credit" (as if that is worth something) of the U.S. government? It would become worthless. What would happen to gold if the U.S. government stopped accepting it as payment? I bet practically nothing.

You can go on youtube and watch "The Money Masters" and "The Secret of Oz".  If you ask Bill Still if gold based money is fiat he will say yes.  It only has value by government regulation or law.  Gold is just a yellow metal.  Bitcoin is not fiat, in fact it may be the only non fiat currency other than commodities.  You can take an ounce of silver go to Austrailia and get money for it.  Due to the demand for silver alone.  

Shells were declared valuable by the tribe - the government - fiat.

Actually I agree with Bill on this. A lot of gold bugs fail to realize in the midst of their anti-government/anti-centralist rants, that 'backed by gold' means government decree "This note is worth so-and-so many of an .oz".

Saying that a currency has no intrinsic value and is just created out of thin air is like accusing a clock of making time out of nothing. The value comes from the economy, the dollar lost over 90 percent of its value in the last hundred years because the economy has grown in value by that much in the last hundred years. Are central bankers trying to optimize their advantage at the expense of everyone else? Probably, but they are a monopoly and can expect to behave like a monopoly.

I like bitcoin because it breaks out from the monopoly, not because I am against communities choosing to value something as a means of exchange, be it shells or little pictures of dead presidents. Besides, an economy should be able to grow regardless of who happens to own what shiny metal.

Gold-buggery can fuck off, so can monopoly-moneterism, the democratization of money is what I beleive in, and that's what I see bitcoin as. If the economy needs bitcoin to be worth a widget, good, that's what the economy and all the people in it need. No middle-men, no authorities, no money monopolies. If one day bitcoin is used to pay for hospitals and schools and roads by the communities chosen government made honest by improved democratic information and the rolling back of power monopoly... then I'm all for that.

Gold-fetish sociopaths that despise society can love bitcoin too, I don't care, so can nazi's, fraudsters, drug-dealers and socks sellers.

[cypherdoc]

in the short term, bitcoins success will be pegged to the stock mkt.  if it goes down, as i suspect it soon will, then the value of bitcoins will follow it down.  bitcoin is an inflationary phenomenon.

[BitterTea]

in the short term, bitcoins success will be pegged to the stock mkt.  if it goes down, as i suspect it soon will, then the value of bitcoins will follow it down.  bitcoin is an inflationary phenomenon.

I disagree. Care to argue why you think this is the case?

[memvola]

These discussions seem to boil down to whether there is intrinsic value or not. It's very hard to argue that the concept of intrinsic value has an instance in the human world. Also it's very hard to define philosophically. What is it that you value, for a reason that is in itself not a value?

And there is this, in my opinion, false statement that gold, and "things like gold" have intrinsic value. What's backing that statement? I think the thought comes from the apparent contrast between gold and bitcoin. But bitcoin is a currency (and Bitcoin is a protocol) and gold is a chemical element. Currency of gold on the other hand is not too distinct to bitcoin. Bitcoin is too high tech, but I'm sure we can devise a scenario where Bitcoin has value and gold doesn't.

[cypherdoc]

if you look closely at the MtGox All Time chart, you'll see its value leaps correlate very well to QE2 and the subsequent stock mkt ramp.  this whole drive to develop a new currency, Bitcoin, is by ppl like you and me who are trying to get away from Ben and his devaluation of the dollar.  the stock mkt is a mood indicator reflective of this sentiment (at least for now) of the dollar down, assets up mentality.  if this indicator reverses (i think we are there) and we get deflation with a subsequent rise in the dollar, you will see Bitcoin values crash as ppl scramble for dollars.  you're already seeing today in the drop in Bitcoin as stocks are down.

[cypherdoc]

as a holder of PM bullion, i'll argue that PM's have history behind them as well as a physicality.  ppl like to touch and feel there money.  also the hobo on the street can trade it as well as USD.  these are the advantages of the current system.  having said all that, i do see potential in Bitcoin but it has a long uphill battle to fight.  Steelhouse is right, ultimately you need large merchants who will accept it.  all this talk here about how bitcoin is already a currency is way too premature.  i've looked at many of the transactions and they are way too small in value and volume to be conclusive.  in fact, there is an attempt by the geek community to "prop" transactions and commerce to legitimize the bitcoin concept.  not saying it to criticize, but it is what it is.  its just way too early to tell.

[memvola]

Steelhouse is right, ultimately you need large merchants who will accept it.  all this talk here about how bitcoin is already a currency is way too premature.

I'm sure everyone would accept that Bitcoin is an experiment. It's not about accepting Bitcoin's conclusive victory over gold, but addressing the notions about "backing". Also, stellhouse seemed to say that we need new merchants to fill in for the old ones that stopped accepting bitcoin because it's not backed by anything. If you say that we need services that accept Bitcoin payments, you're preaching to the choir, but I fail to understand the reasoning of steelhouse.

Edited for the obvious typos.