Bitcoins

grifferz

merlingrey wrote: »

"rather than give you £500 i am going to send you 252 shares of vodafone"

Now you might agree to that since vodafone is fairly stable, but bit coin? come on it can move 10% the wrong way in seconds, this promotes hoarding, companies will want to hold on to coins they made losses on and then dump them for a profit if they see a spike.

That really depends on what level of risk you are comfortable with, which is different for everyone.

I personally probably wouldn't convert £500 of my money to bitcoins in this way, for the reasons you state, because at the moment £500 is quite a big deal to me.

I did allow a friend to settle a debt of around £150 to me in bitcoins but was so paranoid about sudden crashes that I converted it back to GBP almost immediately for only a trivial gain. I was just trying to ensure I got the £150 worth back. If I had held onto it for 6 months it would have gone for more like £1500, but I made my choice based on my aversion to risk.

There's going to be some people that would consider £500 play money and some that would consider £150 a matter of life and death.

I agree with you that if the exchange rate never settles down then it's always going to be tempting people to hoard and sell high. Though on the other hand, it's the massive growth that is keeping bitcoin in the headlines and getting it known to people, thus promoting its acceptance by more and more services that are not based around anonymously buying drugs.

I'm not sure that any of this proves that it will or will not become mainstream or that it will or will not settle down..

grey_gym_sock

yes, the current price instability is a problem. it's less realistic to use it as a medium of exchange while that continues.

it's also about the network effect. it isn't a convenient medium of exchange until enough ppl use it; and they won't use it until it's convenient. it remains to be seen whether there is a way out of that dilemma. if there is, it presumably involves first capturing niche markets, and then expanding.

merlingrey

grey_gym_sock wrote: »

yes, the current price instability is a problem. it's less realistic to use it as a medium of exchange while that continues.

it's also about the network effect. it isn't a convenient medium of exchange until enough ppl use it; and they won't use it until it's convenient. it remains to be seen whether there is a way out of that dilemma. if there is, it presumably involves first capturing niche markets, and then expanding.

I told you, the only way round that is for it to be price fixed like gold, gold was £4.25 an ounce for 300 years flat, because it was the currency, it was £1 an ounce in 1275 i believe, so it only inflated 425% between 1275-1939.

War caused us to go off that and it got reset from £4.25 to $35 (£8.75) where it stayed relatively flat until 1971. But by then the exchange between pound-dollar was different so it was about £14.

So gold went from £1- £14 from 1275-1971

But £14-£930 from 1971-now


Are you seeing the issue here?

merlingrey

Oh i should include references to any data i use:

In terms of gold data i use this site (1000 year detailed history):

http://info.goldavenue.com/info_site/in_arts/in_mill/11thcentury.htm

You can click through the centuries on your top left corner.

And measuring worth:
http://www.measuringworth.com/

Which also covers relative values, exchange rates, cpi, lots of historical data.

Both very interesting sites i urge people to look through them.

More recent history specific to sovereigns i refer to the book by Micheal A marsh:
http://www.goldsovereigns.co.uk/bookthegoldsovereign.html

padington

Some things, in some ways, just can't be bought by anything else other than by bitcoins.

It's now the defacto online black market medium of exchange.

grey_gym_sock

merlingrey wrote: »

I told you, the only way round that is for it to be price fixed like gold

you told me, and you were wrong. reasonable stability does not require a price fix. GBP/USD is a reasonably stable exchange rate, with no attempt to make it a fixed rate. and that is despite there being lots of speculation on the GBP/USD exchange rate. the key is surely that the non-speculative use of GBP, USD, and exchange between them is big enough.

when looking at really long-term gold price history, a lot of what you're seeing is that, before the twentieth century, there was approximately zero net inflation - periods of inflation were countered by periods of deflation; but since then, it's been inflation (at varying speeds) with no intervening deflation. keeping the gold price fixed became unrealistic due to persistent inflation.

thelawnet

merlingrey wrote: »

So gold went from £1- £14 from 1275-1971

But £14-£930 from 1971-now

Are you seeing the issue here?

Gold was $20 an ounce in 1900.

The US government confiscated gold in 1933

http://en.wikipedia.org/wiki/Executive_Order_6102

at $20.67/ounce.

In 1934 gold was revalued at $35/ounce.

In 1971 the gold standard was dropped by Nixon and prices rose to $850/ounce by 1980, losing half that value within a year.

Nominal values were steady or falling until the Brown Bottom, when Gordon Brown sold the UK's gold as low as $250/ounce in 1999, a fraction of its 1980 peak in real terms. It then rose steadily from mid-2001 to reach a peak of $1889 in August 2011, and has declined since then, though not dramatically, now around $1450/ounce.

Gold today is still worth less than in 1980 in real terms.

IronWolf

The phrase 'Brown bottom' never fails to make me chuckle

sabretoothtigger

Gold today is still worth less than in 1980 in real terms.

In 1980 people queued round the block in order to buy gold. More in the USA where they actually had money to spend I think

http://www.youtube.com/watch?v=umSZOKNHY-M&list=PLH7qwlg3K28S0DbR6Neu6R4xbIjYghZMr&index=7

Are you seeing the issue here?

The issue is judging the world by face value, lost in price tags we could have gold rise to a million dollars an ounce and still be cheaper then now. Why does that need to be said more then once, it underlies the ongoing problem with finance in general
This thinking will be corrected towards reality is a fair idea and it supports gold and similar real dynamics over politics

padington

Looks like the bitcoin is copying gold, just 1000 times faster ..

http://bitcoincharts.com/charts/mtgoxUSD#rg180ztgMzm1g10zm2g25