Bitcoins

paddyrg

It's clever for sure. Does it have a future as a currency? I don't think so personally. The price is highly volatile making it great for speculation and bubble-ness. Being strongly associated with money laundering and illegal drugs isn't in its favour for being a respectable currency TBH.

The FBI impounded tens of millions of dollars worth of bitcoins when they closed silk road - what they do with them will affect the price short term, there might be some speculation cash to be made there. If they dump them on the market, prices will drop either for a short or long time. If they destroy them, prices need not be affected, may even rise seeing as their entire value is based on faith alone.

Would I invest? Not a chance. They're great if that faith remains, and just a long number if it doesn't. Unlike government-backed currencies, there's very little incentive if there's a run on the currency to keep holding it. Government-backed currencies are crudely based on the value of the national assets and votes of the populations. Most of the UK don't want the pound to collapse, so an elected government will back its value as best they can, with armies and nuclear submarines if necessary (we have one - it helps remind other nations not to invade us, in theory at least). If bitcoins start heading down in value, maybe with another scare, then there is little incentive to keep holding them - best bet is to sell them fast at any price. That means they can crash from $200 to $2 within a day.

Silk Road has gone, so one of the major markets for real-world (if illicit) goods and services has gone. Others will come in its place, however who's to know which are FBI-backed/infiltrated already? They're not stupid, they may well have set up the alternative sites before killing Silk Road. This could knock out another chunk of bitcoins, or make people wary of using them when local drug dealers take dollars instead of bitcoins.

What happens if confidence is knocked in bitcoins then transfers to MSEcoins? Could happen. A bitcoin clone, there are several already. Why is one worth more than any other? They're just numbers. If they had a unique attribute then that may have some kind of value, but as it is, there's nothing to prevent that body of faith from shifting. Especially as a lot of holders are speculating on a bubble. Remember Beenz? Exactly. It was a web currency from the first dotcom boom and bust. It was quite different but the point is that intangible webthings can have their day and be gone the next. Would I want to be the one holding a pile of $200 numbers if things went pearshaped?

Just my 2p.

sabretoothtigger

Beenz was a points scheme where the company produced all the money itself, so it related to no trade directly. I guess thats comparable to Tesco points, thats not about to become a currency.
Theres no free exchange rate or independent means of production

Would I want to be the one holding a pile of $200 numbers if things went pearshaped?

This can also apply to real dollars and sterling. It should move slower because its more widely used but it can also be nobody wants to own any.
I could write you a cheque for 200 and maybe thats just fine or it could be worthless, this problem applies to lots of things used as money.

Even a solid object of proper worth can spoil or be damaged. If they wanted to issue actual BTC coins, it could be done and we'd swap them like real coins but its not really making a difference to how it works.

Our British coins are not actually worth much, its value is arbitrary and invented just like the virtual BTC. Government and tons of companies back/use this currency but I dont think its as different as you imagine

Linton

sabretoothtigger wrote: »

......

This can also apply to real dollars and sterling. It should move slower because its more widely used but it can also be nobody wants to own any

It could but real dollars and sterling are backed by the current considerable economic power of the US and the UK. Bitcoin is backed by a belief, nothing more.

At some time in the future sterling and the dollar could become worthless but in the economic and social mayhem that would cause do you believe a virtual Bitcoin would mean anything? Even assuming the infrastructure continued to exist to support a virtual currency would that virtual currency be Bitcoin?

More likely I would have thought the gold bugs would finally be proved right.

paddyrg

sabretoothtigger wrote: »

Government and tons of companies back/use this currency but I dont think its as different as you imagine

That's the bit that makes it different. Fiat currencies (including gold itself) are faith-based. A few billion peoples worth of faith is more stable than a few tens of thousands worth. Totally agree currencies can run - I have a few 100 trillion dollar notes from Zimbabwe for instance, but it ran because nobody had any faith in it thanks to the governance of the country. BTC doesn't even have that governance, and no assets that can be liquidated to prop it up. I reckon that makes it flakier than USD, EUR, or GBP say.

I mentioned how beenz was different, but highlights the fact today's big thing (and that was started by a load of big names with 9-figures of cash) can be 'eh?' tomorrow. Beenz in itself wasn't a bad idea, neither is BTC, doesn't mean it'll last come the apocalypse.

What shape apocalypse could knock out BTC? More scandals probably won't help it, and a bubble-burst run on it would pretty much destroy any confidence. Is it a bubble that's going to burst? I can't help but think it is - people on this site were tellimg me to pile into gold a year or so ago, and being snarky that of course it wasn't overvalued. Turns out it was. I personally feel BTC is clever but insanely overvalued.

Gold can at least be turned into shiny things and is quite useful in engineering terms as it is pretty corrosion resistant and a fair conductor of electricity. With BTC I don't even have a pretty Z$100Tn banknote for posterity, just a long number whose use of within the BTC universe I have use of. I guess I could copyright the number for use within the BTC universe and flog some T-Shirts. Might have some retro appeal amongst the hipsters of the 2030's

dryhat

paddyrg wrote: »

Remember Beenz? Exactly. It was a web currency from the first dotcom boom and bust. It was quite different but the point is that intangible webthings can have their day and be gone the next. Would I want to be the one holding a pile of $200 numbers if things went pearshaped?

Just my 2p.

I've never heard of "beenz" but I am aware of other similar digital currencies (I believe amozon, apple and loads of gaming sites have their own, similar version) and they all share a similar, common theme ... they need a central "authority" to administer the system.

What makes Bitcoin different and unique is that it allows ( for the first time in history) a secure, fast and virtually free payment system (and lots more) which does not need a central authority.

It can do so many mnore things that weren't possible before.

It is a fantastic invention and on those grounds alone it should celebrated for the great innovation that it is.

sabretoothtigger

Im willing to argue everything is faith based. Science is faith based, even that sacred grail economic practise Nothing is absolute in its correctness as there is always an opposing view, theory or practise to achieve similar results.

If you are viewing this alternative as if it cant possibly be valid I disagree but it can fail like anything.

Gold I guess is faith but its worth is its simplicity and unchanging nature. Even a steel rule as a unit of measurement will change with temperature, everything has doubt in its nature

backed by the current considerable economic power of the US and the UK. Bitcoin is backed by a belief

BTC is backed by people who use it. Dollars and sterling similarly, its clear that dollars are used by many who need not.
Saudi Arabia sells its Oil in dolllars, why should that be. If that ever changes, just like BTC would decline, dollars will also.
You say its backed by government but the strength of that government to balance its books, is questionable.
BTC just has to ensure enough trade and use to continue where as dollars as I said above are highly unbalanced, trade deficits and with trillions created but held 'unspent', a clear oversupply vs actual trade is apparent.
Much trade is done outside those government borders and by historic agreement more then necessity or utility

The world will be richer when we favour that which works with least cost

bubble-burst run on it would pretty much destroy any confidence.

I believe it already rose and fell enough to qualify for that. I did think it'd fail myself from being tied to nothing but bottom line is people find this global product useful so they keep coming back

paddyrg

What makes Bitcoin different and unique is that it allows ( for the first time in history) a secure, fast and virtually free payment system (and lots more) which does not need a central authority

I'm missing something here. I get that it's clever, what I don't get is what it can do that's so different from any other currency or token of value? Marginal money laundering advantages over gold and diamonds (both also hugely overvalued and based on scarcity and faith) as you still have to turn them into money at some point. Are they a safe haven from low interest rates? Not really, anything whose value fluctuates by 20% ($180-220) in 24h isn't a safe anything, it's a gambling token. Some people will make money whilst the hype carries on, some will lose their shirts by gambling.

144000 bitcoins likely to be dumped on the market by the FBI presently if anyone wants to buy some. Currently that's $27M worth, roughly. That's a lot - remember the Winkelvoss brothers went all public and hype when thanks to bubble style inflation they owned $1M worth. If there isn't $27M of currency wanting to speculate in bitcoins, I can see it affecting the price people are prepared to pay.

padington

paddyrg wrote: »

I'm missing something here. I get that it's clever, what I don't get is what it can do that's so different from any other currency or token of value? Marginal money laundering advantages over gold and diamonds (both also hugely overvalued and based on scarcity and faith) as you still have to turn them into money at some point. Are they a safe haven from low interest rates? Not really, anything whose value fluctuates by 20% ($180-220) in 24h isn't a safe anything, it's a gambling token. Some people will make money whilst the hype carries on, some will lose their shirts by gambling.

144000 bitcoins likely to be dumped on the market by the FBI presently if anyone wants to buy some. Currently that's $27M worth, roughly. That's a lot - remember the Winkelvoss brothers went all public and hype when thanks to bubble style inflation they owned $1M worth. If there isn't $27M of currency wanting to speculate in bitcoins, I can see it affecting the price people are prepared to pay.

Have the FBI managed to crack the code to be able to access these coins they found ? The price went shooting up the moment it was declared they couldn't crack them and never came back down from what I saw, so I presumed they effectively have the map with no X marking the spot ... Yet.

JohnRo

I'm missing something here. I get that it's clever, what I don't get is what it can do that's so different from any other currency or token of value?

Transcend national boundaries, parasitic middle men, exchange rates, politically motivated and centrally controlled manipulation, counterfeiting and wealth transfer theft.

144000 bitcoins likely to be dumped on the market by the FBI presently

It's incorruptible and very unlikely the FBI will be releasing anything until they've had time to apply some extensive enhanced interrogation techniques and obtain the key to their swag.

** perhaps worth pointing out, if there's a copy of the SR wallet elsewhere and the key holder decides to empty it then the FBI won't be holding anything but a copy of an empty wallet.

dealer_wins

JohnRo have invested your last £10 in bitcoins, you are coming across as desperate and dare I say it "scammy"!!!