Whether deflationary is good or bad is not something I am too knowledgeable on. By what few things I have read and talks I have listened too I lean towards it is good but that is just opinion. If you really read into it is really a difference in economic theories such as Keynesian and "Austrian" economics. On the bitcoin wikipedia, they have a explanation here.
Typically, its bad for currency.
Humans have been doing different types and forms of currency for a very long time and bitcoin is no different. Just because its a series of 1s and 0s instead of a shiny metal doesn't change anything.
{Economics Mumbojumbo}
I believe that it would be almost inconceivable for a non-government (almost)Non-Fiat currency to gain traction without major deflation....
But currencies with major deflation almost always f*ck there parent economy (Parent economy = Where the currency derives its trading value, basically the web of people that accept and/or use the bitcoin in this instance)
At this point it seems that the bitcoin is acting a lot more like a *Share* or *Stock* without any divided then a *Currency* ....
Basically my point is that Non-Fiat Currency's offer a lot of promise, but are very new.... It will likely take a lot of time for the substantial issues to be worked out enough to be treated as a competitor to other currency's in the conventional sense. So for now, enjoy the ride!
Whether deflationary is good or bad is not something I am too knowledgeable on. By what few things I have read and talks I have listened too I lean towards it is good but that is just opinion. If you really read into it is really a difference in economic theories such as Keynesian and "Austrian" economics. On the bitcoin wikipedia, they have a explanation here.
Typically, its bad for currency.
Humans have been doing different types and forms of currency for a very long time and bitcoin is no different. Just because its a series of 1s and 0s instead of a shiny metal doesn't change anything.
{Economics Mumbojumbo}
I believe that it would be almost inconceivable for a non-government (almost)Non-Fiat currency to gain traction without major deflation....
But currencies with major deflation almost always f*ck there parent economy (Parent economy = Where the currency derives its trading value, basically the web of people that accept and/or use the bitcoin in this instance)
At this point it seems that the bitcoin is acting a lot more like a *Share* or *Stock* without any divided then a *Currency* ....
Basically my point is that Non-Fiat Currency's offer a lot of promise, but are very new.... It will likely take a lot of time for the substantial issues to be worked out enough to be treated as a competitor to other currency's in the conventional sense. So for now, enjoy the ride!
We had a non-fiat currency in the form of a shiny metal for a long time. Thankfully, most rational countries abandoned it in the 1930s. I don't see a return to that form of a currency working out any better than the last time.
Whether deflationary is good or bad is not something I am too knowledgeable on. By what few things I have read and talks I have listened too I lean towards it is good but that is just opinion. If you really read into it is really a difference in economic theories such as Keynesian and "Austrian" economics. On the bitcoin wikipedia, they have a explanation here.
Typically, its bad for currency.
Humans have been doing different types and forms of currency for a very long time and bitcoin is no different. Just because its a series of 1s and 0s instead of a shiny metal doesn't change anything.
{Economics Mumbojumbo}
I believe that it would be almost inconceivable for a non-government (almost)Non-Fiat currency to gain traction without major deflation....
But currencies with major deflation almost always f*ck there parent economy (Parent economy = Where the currency derives its trading value, basically the web of people that accept and/or use the bitcoin in this instance)
At this point it seems that the bitcoin is acting a lot more like a *Share* or *Stock* without any divided then a *Currency* ....
Basically my point is that Non-Fiat Currency's offer a lot of promise, but are very new.... It will likely take a lot of time for the substantial issues to be worked out enough to be treated as a competitor to other currency's in the conventional sense. So for now, enjoy the ride!
We had a non-fiat currency in the form of a shiny metal for a long time. Thankfully, most rational countries abandoned it in the 1930s. I don't see a return to that form of a currency working out any better than the last time.
There has not been any major form of non-fiat currency's to date (To my knowledge) : Gold In the middle ages might pass for a non-fiat currency's...... But it was closer to a commodity or recourse then currency. (Currencies imply a consistent rate of exchange, and outside of west europe gold could have huge value - or be worthless to trading webs)
For those that don't know, or that have heard some of the tremendous bull**** surrounding the topic. Fiat currency is some THING that has trading value because some Power has said so (IE: Government, or a KING, and so on).
And I believe what you speak of that was abandoned in the "1930's" was the gold standard, this had very little to do with trade of "shiny metal" in the conventional sense. The gold exchange standard was used as an exchange rate of money to gold: (IE: $6 = 1 ounce of gold) and provided a way to insure the worth of your currency. It worked great for a long time, whenever a country wanted to print more money it would claim more gold, buy more gold, or dig up more gold. And allowed for great trust in currencies because everyone agreed on the worth of gold! The major downfall of this was, come WW1 gold mines started to run dry, and currency's started to deflate, and do so fast! And who wants to spend money thats going to be worth more the next day?
This is one of my major issues with Bitcoin, seeing as it runs on a suto gold standard. Is that Deflation will mostlikely always follow it!
@xyth, Beany baies and furbies have a lot less utility, as in near none, compared to bitcoins. Not a valid comparison.
Bitcoins can be spent on things... unlike furbies. This here is just a small organized list. It has everything from bars to doctors all willing to accept bitcoins. This is just the beginning. These people accepting bitcoins are some of the pioneers I mentioned.
Bitcoins have no utility, they don't do anything, they're a counting chip. Their value is entirely created because people choose to believe they are valuable.
The question he's asking is why aren't furbies, which were percieved as valuable and are slowly deflating over time as no more are produced, also a very good basis for a currency?
The only difference between a bitcoin and a furby is that a bitcoin can be transferred electronically.
@xyth, Beany baies and furbies have a lot less utility, as in near none, compared to bitcoins. Not a valid comparison.
Bitcoins can be spent on things... unlike furbies. This here is just a small organized list. It has everything from bars to doctors all willing to accept bitcoins. This is just the beginning. These people accepting bitcoins are some of the pioneers I mentioned.
Bitcoins have no utility, they don't do anything, they're a counting chip. Their value is entirely created because people choose to believe they are valuable.
The question he's asking is why aren't furbies, which were percieved as valuable and are slowly deflating over time as no more are produced, also a very good basis for a currency?
The only difference between a bitcoin and a furby is that a bitcoin can be transferred electronically.
I know what he asked. Bitcoins do have far far more utility than a furby. They are a counting chip but they are a really fantastic way to do it. They are electronic. That means they are easily transferred. They are easy to store. They don't break, like a furby can. I bet that more places accept bitcoins as payment than people use furbies which is proof they have more utility. Still not a valid comparison. Its like comparing hamsters and horses for which one is better for traveling on.
MonkfishSonic-boom-inducing buttcheeks of terrifying speed!Join Date: 2003-06-03Member: 16972Members
The difference between bitcoins and real money is that a dollar isn't suddenly worth 50 cents after someone hacks the government and puts bill cosby's face on all the money in the world.
In my opinion I can have much more fun with a Furby than with a Bitcoin, and way more fun with a butt than either of those two. That's beside the point.
The life cycle of the beany-baby craze is way more applicable to Bitcoins anyway. Massive inflation of worth caused by explosion of popularity followed by a period of sustained worth/speculation. At the height of the craze they were even accepted as currency at small retailers (usually the same ones that sold them, I'm not even making this up). The inertia eventually runs out and people realize that all they've got are little stuffed animals. BBs were supposed to be the next great collectible but now they are nothing. There are people sitting around with their american-flag limited-edition bear they paid $10000 for on auction wondering why it's no longer worth more than a few dollars. There were only a few hundred made, why is it not inflating in value? The answer to this question is fleeting and valuable.
Beany Babies were engineered to be a collectible and failed. Bitcoin is engineered to be a currency, so lets see how it's doing at that task so far.
You can go ahead and just scroll past the enormous number of freelance programmers/webhosts/gambling services (bitcoin gambling services, seems redundant).
The real gold is in the physical items categories. I'm not even going to spoil it for you, just go click around. Okay I'll spoil one of them for you
Also take careful note of how many of the websites are defunct (about 1 in 9 from my brief survey) *foreshadowing*
Next time, thoughts on what makes a currency useful other than its ability to proxy a fiat-currency and hide your illegal drug purchases.
The difference between bitcoins and real money is that a dollar isn't suddenly worth 50 cents after someone hacks the government and puts bill cosby's face on all the money in the world.
A bitcoin is worth a bitcoin and a dollar is worth a dollar.
In my opinion I can have much more fun with a Furby than with a Bitcoin, and way more fun with a butt than either of those two. That's beside the point.
The life cycle of the beany-baby craze is way more applicable to Bitcoins anyway. Massive inflation of worth caused by explosion of popularity followed by a period of sustained worth/speculation. At the height of the craze they were even accepted as currency at small retailers (usually the same ones that sold them, I'm not even making this up). The inertia eventually runs out and people realize that all they've got are little stuffed animals. BBs were supposed to be the next great collectible but now they are nothing. There are people sitting around with their american-flag limited-edition bear they paid $10000 for on auction wondering why it's no longer worth more than a few dollars. There were only a few hundred made, why is it not inflating in value? The answer to this question is fleeting and valuable.
Beany Babies were engineered to be a collectible and failed. Bitcoin is engineered to be a currency, so lets see how it's doing at that task so far.
You can go ahead and just scroll past the enormous number of freelance programmers/webhosts/gambling services (bitcoin gambling services, seems redundant).
The real gold is in the physical items categories. I'm not even going to spoil it for you, just go click around. Okay I'll spoil one of them for you
Also take careful note of how many of the websites are defunct (about 1 in 9 from my brief survey) *foreshadowing*
Next time, thoughts on what makes a currency useful other than its ability to proxy a fiat-currency and hide your illegal drug purchases.
Bitcoin sits in this wierd position of having traits of both a commodity and currency. It is hard to say which it is.
The whole point you seem to be trying to say is that bitcoins will fail. Yes they might.
puzlThe Old FirmJoin Date: 2003-02-26Member: 14029Retired Developer, NS1 Playtester, Forum Moderators, Constellation
Monkfish, I think you have it the wrong way around. You can not make money speculating on something stable.. it has to fluctuate for you to be able to buy for less than what it is worth, and sell for more than what you paid.
The value of an item often has nothing to do with either its utility or real scarcity. I suggest you take your advice to the diamond markets in Amsterdam and tell them that, yes, Carbon is one of the most common elements on earth, and that their Diamonds are actually worth nothing and anyone investing in them is a huge idiot.
If I offered you €10,000 for your toenail clippings, would you refuse to take my money because they aren't actually worth anything?
@xyth, Beany baies and furbies have a lot less utility, as in near none, compared to bitcoins. Not a valid comparison.
Bitcoins can be spent on things... unlike furbies. This here is just a small organized list. It has everything from bars to doctors all willing to accept bitcoins. This is just the beginning. These people accepting bitcoins are some of the pioneers I mentioned.
Bitcoins have no utility, they don't do anything, they're a counting chip. Their value is entirely created because people choose to believe they are valuable.
The question he's asking is why aren't furbies, which were percieved as valuable and are slowly deflating over time as no more are produced, also a very good basis for a currency?
The only difference between a bitcoin and a furby is that a bitcoin can be transferred electronically.
I know what he asked. Bitcoins do have far far more utility than a furby. They are a counting chip but they are a really fantastic way to do it. They are electronic. That means they are easily transferred. They are easy to store. They don't break, like a furby can. I bet that more places accept bitcoins as payment than people use furbies which is proof they have more utility. Still not a valid comparison. Its like comparing hamsters and horses for which one is better for traveling on.
The question is one of intrinsic value/utility. Bitcoins have no intrinsic utility or value, because they aren't actually things, and they don't actually do anything.
That they can be transferred electronically is... well frankly not very impressive, most currency can, because currency is, almost by definition, just an idea in your head. It's something that can't be useful and therefore can't be used up, which is why it's only use is as a counting chip. The value of it is therefore entirely subjective.
Basically bitcoins aren't good, they aren't any better or really any different than any other form of currency, their value comes purely from people's belief that they are worth something. It's not that they're better than furbies as currency, it's that people don't believe furby's are a good currency. Frankly most people don't believe bitcoins are a good currency which is probably why they are possibly the only currency in the world less reliable than the Zimbabwe dollar.
The difference between bitcoins and real money
is that a dollar isn't suddenly worth 50 cents after someone hacks the
government and puts bill cosby's face on all the money in the world.
A bitcoin is worth a bitcoin and a dollar is worth a dollar.
However, a dollar is also almost always worth a loaf of bread. A bitcoin
might be worth a loaf of bread, it might be worth a hundred loaves of
bread, or it might be worth a kick in the nuts.
That's the
problem, the value of currency is arbitrary, it isn't grounded in the
utility of the markers used to denote quantities of currency. You can't
eat bitcoins, you can't build anything out of them, you can't use them
for anything other than exchange, for things which you can eat or build
out of or wear or burn as fuel.
The same is, of course, true of
dollars (although paper dollars can arguably be used as an inefficient
fuel source), but a dollar, for the most part, remains easily
exchangeable for the same amount of functional worth. If value
can be said to be intrinsic of anything, I put it to you that it is best
said of something which has utility to everyone. Food, clothes, fuel,
that sort of thing. So if a currency is stable, it comes closer
to posessing intrinsic value, because it's almost like the currency can
be magically changed into things with intrinsic value. It's not perfect,
it still relies on a good economy and it still fluctuates, but stable
currencies can act, almost, as commodities.
Bitcoins are not
stable, probably because they can't be exchanged for anything of
functional value for the most part. They are hard to spend, easy to
transfer, but you can't buy very much with them, they are not accepted
as a currency, and even where they are, it is impossible to put a fixed
price on things because of how much their value fluctuates.
Which
is why the main utility of bitcoins is to convert between them and
another, stable currency, and attempt to win money out of the deal by
being better at guessing/predicting the changes than other people. Their
function, utility, and vlaue, is as a form of gambling, nothing more.
I would be very interested to know what amount of the bitcoin traffic actually goes into exchanges for real physical goods.
Honestly, Bitcoin works perfectly for the black-market and if it were developed and pushed for that application it could have real staying power.
The rampant ups/downs caused by all the speculating has destroyed any possibility of it being used as an effective currency though.
I can't say that I wouldn't go back in time and sink $1000 into it when they were worth $1 and sell at the top of that $200 bubble. That opportunity will never occur again.
I would be very interested to know what amount of the bitcoin traffic actually goes into exchanges for real physical goods.
Honestly, Bitcoin works perfectly for the black-market and if it were developed and pushed for that application it could have real staying power.
The rampant ups/downs caused by all the speculating has destroyed any possibility of it being used as an effective currency though.
I can't say that I wouldn't go back in time and sink $1000 into it when they were worth $1 and sell at the top of that $200 bubble. That opportunity will never occur again.
Well, yes, and if I knew in advance what the results were going to be I'd go back in time and back some choice horses on the grand national.
It's a wonderful gambling system, frankly anyone who stayed well tuned to the internet grapevine and understood the bitcoin economy could make a killing off it, it's very nearly skill based gambling which is a wonderful thing.
It's just its utility as a currency that really doesn't make sense, other than, as you said, a black market currency. Like conflict diamonds for nerds.
"However, modern textbooks now list only three functions, that of medium of exchange, unit of account, and store of value..."
Right now, people keep trying to treat Bitcoin as a store of value more than a medium of exchange, which is why there is rampant speculation/price fluctuation. The benefit of central authority control over a currency is that when they see something like this happen, they can adjust the amount of currency in circulation to continue to make it viable as a medium of exchange.
but they can adjust the difficulty at which bitcoins are being generated/mined
investing in bitcoins is as stupid as having a reserve of paper US dollar stashed at home.
recently, very effiscient machine to mine bitcoins have been created, they need between 100 and 500 times less electricity per MHS than your average top of the line video card and they are thousands of times more powerful, which is why the bitcoin value difficulty has increased rapidly
I know that bitcoins are very useful to launder money for petty crimes.
For those not aware of how the mining works it's worth a laugh.
Difficulty is fixed such that 7200 BTC is produced per day in total
If there is X total hashing power (aka computing power) across all the mining machines
And your contribution is Y amount of power
Then the amount of BTC you make per day is simply 7200*(Y/X)
So pretty soon ASIC for BTC mining will be released with a per-system hash rate of up to 1Terahash/sec
To put that into perspective, across all mining systems combined there is about 13 Terahash/sec available.
Which means that all those people with those $20,000 GPU mining rigs will be completely stomped out of the mining pool.
The second funny is that, if everybody just agreed to only use single core CPUs to mine BTC then none of this would be necessary!
Whats wrong with that?
Even litecoin which was built to only be cpu mined, someone found a way to gpu mine it. Right now they say it is impossible to build an asic for litecoin. If litecoin becomes valuable enough it will probably get asics also.
Really it's just schadenfreude at the idea of people spending huge sums of money on GPU mining rigs and getting completely marginalized before they have broken even.
I'll definitely keep an eye out for all those GPU sales though.
Also DHS just seized Magic The Gathering Online Exchange bank account and also shut down Dwolla, the primary way of getting money into and out of Magic The Gathering Online Exchange.
I have much more than broken even and I am only a small miner but I got my gpus a year ago. People buying gpu's to mine right now are silly. I am hoping to pick up some cheap gpu's afterwords myself too.
"As part of the account opening process, Wells Fargo required Karpeles and Mutum Sigillum LLC to complete a "Money Services Business (MSB) Accounts, Identification of an MSB Customer" form. That document was completed on May 20, 2011 and identified Mutum Sigillum LLC as a business not engaged in money services. The application asks several questions; to include, "Do you deal in or exchange currency for your customer?" and "Does your business accept funds from customers and send the funds based on customers' instructions (Money Transmitter)?" Karpeles answered these questions "no," indicating that Mutum Sigillum LLC does not deal in or exchange money, and that it does not send funds based on customer instructions.
Money transmitting businesses are required by 31 USC section 5330 to register as such with FinCEN. According to FinCEN records on May 6, 2013, neither Mt. Gox nor the subsidiary, Mutum Sigillum LLC, is registered as a Money Service Business."
Sorry for the necro, smite me if you must. I'd like to point out a few things about deflation and its effect on digital mathematical currency:
First, bitcoin is infinitely divisible. This means that while a whole bitcoin will increase in value with no limit over time, you can always an exactly small enough percentage of one for any transaction required. While not totally neutralizing the hoarding problem, this greatly mitigates it.
Lastly, as others have mentioned the power of a currency is an established and cooperative faith in its acceptance across consumers and producers; it doesn't really matter who or what provides that faith. So the cost of creating a new math based currency is ridiculously small... Think of how different our problems would be if we could just issue a new double-dollar bill or mega-coin with that kind of ease. You don't even need to establish an initial exchange rate! Since the creation of math based currency is decentralized, nobody has to "sell" bytecoins for some artificially established number of bitcoins. Someone just offers a new currency and people start mining it, and eventually one of the contenders establishes market dominance and then you have a new currency that trades at a few orders of magnitude less than 1 bitcoin. We might as well start calling them platinum, gold, silver, and bronze.
I think what you'll find is that as younger currencies dominate the market, the vast holdings of valuable bitcoins will be offloaded into the new currency by those same speculators; the bitcoin market will atrophy as it should. Nothing lasts forever.
Comments
I believe that it would be almost inconceivable for a non-government (almost)Non-Fiat currency to gain traction without major deflation....
But currencies with major deflation almost always f*ck there parent economy (Parent economy = Where the currency derives its trading value, basically the web of people that accept and/or use the bitcoin in this instance)
At this point it seems that the bitcoin is acting a lot more like a *Share* or *Stock* without any divided then a *Currency* ....
Basically my point is that Non-Fiat Currency's offer a lot of promise, but are very new.... It will likely take a lot of time for the substantial issues to be worked out enough to be treated as a competitor to other currency's in the conventional sense. So for now, enjoy the ride!
For those that don't know, or that have heard some of the tremendous bull**** surrounding the topic. Fiat currency is some THING that has trading value because some Power has said so (IE: Government, or a KING, and so on).
And I believe what you speak of that was abandoned in the "1930's" was the gold standard, this had very little to do with trade of "shiny metal" in the conventional sense. The gold exchange standard was used as an exchange rate of money to gold: (IE: $6 = 1 ounce of gold) and provided a way to insure the worth of your currency. It worked great for a long time, whenever a country wanted to print more money it would claim more gold, buy more gold, or dig up more gold. And allowed for great trust in currencies because everyone agreed on the worth of gold! The major downfall of this was, come WW1 gold mines started to run dry, and currency's started to deflate, and do so fast! And who wants to spend money thats going to be worth more the next day?
This is one of my major issues with Bitcoin, seeing as it runs on a suto gold standard. Is that Deflation will mostlikely always follow it!
The question he's asking is why aren't furbies, which were percieved as valuable and are slowly deflating over time as no more are produced, also a very good basis for a currency?
The only difference between a bitcoin and a furby is that a bitcoin can be transferred electronically.
Bitcoin sits in this wierd position of having traits of both a commodity and currency. It is hard to say which it is.
That they can be transferred electronically is... well frankly not very impressive, most currency can, because currency is, almost by definition, just an idea in your head. It's something that can't be useful and therefore can't be used up, which is why it's only use is as a counting chip. The value of it is therefore entirely subjective.
Basically bitcoins aren't good, they aren't any better or really any different than any other form of currency, their value comes purely from people's belief that they are worth something. It's not that they're better than furbies as currency, it's that people don't believe furby's are a good currency. Frankly most people don't believe bitcoins are a good currency which is probably why they are possibly the only currency in the world less reliable than the Zimbabwe dollar.
However, a dollar is also almost always worth a loaf of bread. A bitcoin might be worth a loaf of bread, it might be worth a hundred loaves of bread, or it might be worth a kick in the nuts.
That's the problem, the value of currency is arbitrary, it isn't grounded in the utility of the markers used to denote quantities of currency. You can't eat bitcoins, you can't build anything out of them, you can't use them for anything other than exchange, for things which you can eat or build out of or wear or burn as fuel.
The same is, of course, true of dollars (although paper dollars can arguably be used as an inefficient fuel source), but a dollar, for the most part, remains easily exchangeable for the same amount of functional worth. If value can be said to be intrinsic of anything, I put it to you that it is best said of something which has utility to everyone. Food, clothes, fuel, that sort of thing. So if a currency is stable, it comes closer to posessing intrinsic value, because it's almost like the currency can be magically changed into things with intrinsic value. It's not perfect, it still relies on a good economy and it still fluctuates, but stable currencies can act, almost, as commodities.
Bitcoins are not stable, probably because they can't be exchanged for anything of functional value for the most part. They are hard to spend, easy to transfer, but you can't buy very much with them, they are not accepted as a currency, and even where they are, it is impossible to put a fixed price on things because of how much their value fluctuates.
Which is why the main utility of bitcoins is to convert between them and another, stable currency, and attempt to win money out of the deal by being better at guessing/predicting the changes than other people. Their function, utility, and vlaue, is as a form of gambling, nothing more.
Well, yes, and if I knew in advance what the results were going to be I'd go back in time and back some choice horses on the grand national.
It's a wonderful gambling system, frankly anyone who stayed well tuned to the internet grapevine and understood the bitcoin economy could make a killing off it, it's very nearly skill based gambling which is a wonderful thing.
It's just its utility as a currency that really doesn't make sense, other than, as you said, a black market currency. Like conflict diamonds for nerds.
Money transmitting businesses are required by 31 USC section 5330 to register as such with FinCEN. According to FinCEN records on May 6, 2013, neither Mt. Gox nor the subsidiary, Mutum Sigillum LLC, is registered as a Money Service Business."
--Scythe--
First, bitcoin is infinitely divisible. This means that while a whole bitcoin will increase in value with no limit over time, you can always an exactly small enough percentage of one for any transaction required. While not totally neutralizing the hoarding problem, this greatly mitigates it.
Lastly, as others have mentioned the power of a currency is an established and cooperative faith in its acceptance across consumers and producers; it doesn't really matter who or what provides that faith. So the cost of creating a new math based currency is ridiculously small... Think of how different our problems would be if we could just issue a new double-dollar bill or mega-coin with that kind of ease. You don't even need to establish an initial exchange rate! Since the creation of math based currency is decentralized, nobody has to "sell" bytecoins for some artificially established number of bitcoins. Someone just offers a new currency and people start mining it, and eventually one of the contenders establishes market dominance and then you have a new currency that trades at a few orders of magnitude less than 1 bitcoin. We might as well start calling them platinum, gold, silver, and bronze.
I think what you'll find is that as younger currencies dominate the market, the vast holdings of valuable bitcoins will be offloaded into the new currency by those same speculators; the bitcoin market will atrophy as it should. Nothing lasts forever.