Page 2 of 14 FirstFirst 123412 ... LastLast
Results 11 to 20 of 139

Thread: Bitcoin versus other monies.

  1. #11
    tWebber
    Join Date
    Jan 2014
    Faith
    Christian
    Gender
    Male
    Posts
    3,319
    Amen (Given)
    145
    Amen (Received)
    631
    Quote Originally Posted by Truthseeker View Post
    It's always theoretically possible for people to disdain any given thing. Hence, the theoretical floor for any given thing is zero. I don't think that saying that the floor for Bitcoin is zero, is saying anything worth paying much attention to. I do realize that I should warn putting your dollars in Bitcoins is quite risky. Risk only what you can afford to lose.
    The theoretical floor for gold isn't zero — even if no one wants it, you still have this shiny metal you can use for decoration or electrical work. Likewise for a "basket of commodities." And while fiat currency is somewhat less tangible, it's still backed by very tangible resources and assets — and thus pretty hard to manipulate significantly through speculation.

    Bitcoin, in contrast, isn't backed by resources or even standing governments. It's market value is driven purely by the willingness of a small group of people to treat Bitcoins as valuable. It has, in other words, no floor. And that is the primary element in assessing Bitcoin's risk factor. You can't say Bitcoin is risky without acknowledging the wild and unpredictable swings in its value. And you can't understand those swings without acknowledging the lack of anything tangible backing the real value of Bitcoin. Unless the group of people willing to treat Bitcoins as inherently valuable is very, very large, its lack of tangible value works as a severe disadvantage.

    I'm not opposed to digital currencies, by any means. Just noting that Bitcoin has some specific flaws that should keep most people from putting money into that market right now.

    —Sam

  2. #12
    tWebber
    Join Date
    Jan 2014
    Location
    North Pacific Coast USA
    Faith
    Christian
    Gender
    Male
    Posts
    3,146
    Amen (Given)
    100
    Amen (Received)
    142
    Quote Originally Posted by Sam View Post
    The theoretical floor for gold isn't zero — even if no one wants it, you still have this shiny metal you can use for decoration or electrical work. Likewise for a "basket of commodities."
    The value of any given thing, like its beauty, is in the eye of the user or beholder. IOW, value is never more than subjective. I may value an apple more than you do in certain circumstances, while you value an orange more than I do.

    Bitcoin, in contrast, isn't backed by resources or even standing governments. It's market value is driven purely by the willingness of a small group of people to treat Bitcoins as valuable.
    But don't forget the expanding network of computers that the Bitcoin community has forged. That is a more-or-less tangible resource.
    It has, in other words, no floor.
    Once again, true but essentially immaterial.
    And that is the primary element in assessing Bitcoin's risk factor.
    No. I'm not sure I can explain why its exchange rates are so volatile, but that's not the reason--it can't be.
    You can't say Bitcoin is risky without acknowledging the wild and unpredictable swings in its value.
    But you can say the same about speculating in the financial markets.
    And you can't understand those swings
    Who could explain why the Dow is up and the Nasdaq is down on a given day?

    OK, so you think Bitcoin will turn out to be just a fad. OK.

    Just noting that Bitcoin has some specific flaws that should keep most people from putting money into that market right now.
    Pray tell what those flaws are.

  3. #13
    tWebber
    Join Date
    Jan 2014
    Faith
    Christian
    Gender
    Male
    Posts
    3,319
    Amen (Given)
    145
    Amen (Received)
    631
    Quote Originally Posted by Truthseeker View Post
    The value of any given thing, like its beauty, is in the eye of the user or beholder. IOW, value is never more than subjective. I may value an apple more than you do in certain circumstances, while you value an orange more than I do.
    No, that's not true. The value of a hammer is primarily to drive nails into hard surfaces. This is true regardless of the beholder's valuation. Hammers have a functional purpose in the world. Gold, likewise, has functional purpose — its decorative purpose might be pretty relative to a given person — though most everyone likes the look, if not the feel, of gold — but it's a very valuable component in electronics. In this sense, gold is very unlike beauty; its scarcity combined with its utility makes up a certain economic floor — at the very least, gold will not be less valuable than the demand for its use in the electronics sector.

    Quote Originally Posted by Truthseeker View Post
    But don't forget the expanding network of computers that the Bitcoin community has forged. That is a more-or-less tangible resource.
    It's not a resource for Bitcoin, at least not one inherent to Bitcoin. Nearly all of those computers have been repurposed to mine Bitcoins and they can, with little or no change, be used for other purposes.

    Quote Originally Posted by Truthseeker View Post
    Once again, true but essentially immaterial.
    No, it's quite material. Understanding that Bitcoin lacks any inherent value and is backed by no indirect resources other than a consensus of opinion among a small set of investors is crucial to understanding the risks involved with the currency. Again, you can't agree that investment in Bitcoin is risky without understanding this fact. Otherwise, what makes it a risky investment? It's not like a company's stock, which is linked to how well the company performs. Bitcoins can't underperform or overperform.

    Quote Originally Posted by Truthseeker View Post
    No. I'm not sure I can explain why its exchange rates are so volatile, but that's not the reason--it can't be.
    It certainly can be and, apart from more compelling explanations, I'm inclined to believe it is the primary explanation. Gold's turbulent market swings can be similarly explained: when fear rules the market, gold develops a bubble. When the market stabilizes, the bubble bursts. Gold prices correct to more closely match its actual utility.

    Quote Originally Posted by Truthseeker View Post
    But you can say the same about speculating in the financial markets. Who could explain why the Dow is up and the Nasdaq is down on a given day?
    Well, a good many people make very good livings explaining why the Dow goes up or Nasdaq goes down on a given day. Indeed, just listening to "Marketplace" on NPR will give the layperson a quick rundown of market forces driving the exchanges.

    But, yes — speculating on the financial markets (especially the futures market) and speculating on Bitcoin are loosely similar. And I would advise the majority of people to stay away from investing in both unless they have specific interests in those areas.

    Quote Originally Posted by Truthseeker View Post
    OK, so you think Bitcoin will turn out to be just a fad. OK.

    Pray tell what those flaws are.
    I didn't call Bitcoin a fad.

    I've gone to some length already describing the flaws. I see no need to repeat them.

    —Sam

  4. #14
    tWebber
    Join Date
    Jan 2014
    Location
    North Pacific Coast USA
    Faith
    Christian
    Gender
    Male
    Posts
    3,146
    Amen (Given)
    100
    Amen (Received)
    142
    Quote Originally Posted by Sam View Post
    No, that's not true. The value of a hammer is primarily to drive nails into hard surfaces. This is true regardless of the beholder's valuation. Hammers have a functional purpose in the world. Gold, likewise, has functional purpose — its decorative purpose might be pretty relative to a given person — though most everyone likes the look, if not the feel, of gold — but it's a very valuable component in electronics. In this sense, gold is very unlike beauty; its scarcity combined with its utility makes up a certain economic floor — at the very least, gold will not be less valuable than the demand for its use in the electronics sector.
    But for a hammer to have value to someone, in his mind there must be an idea of what the hammer can be used for, to begin with. Even so, the hammer may have no value to him, unless he wants what can be built with the hammer.

    I'm quite sure many people don't own anything like hammers. It's not unreasonable to say that all the hammers in the world are worth nothing to those people. At least they would not pay anything for even a low-price hammer, unless they have the idea of selling it for a marked-up price later.

    Let's imagine a child playing with his toys and none of these can be used for hammering purposes. I can say that the child values his toys, and does not value any hammer even if his dad happens to own one and leaves it on the floor near the toys.
    It's not a resource for Bitcoin, at least not one inherent to Bitcoin. Nearly all of those computers have been repurposed to mine Bitcoins and they can, with little or no change, be used for other purposes.
    No, those are not components of the Bitcoin network of computers, at least in that when the day of the 21 million bitcoins arrive, the mining devices become useless for mining purposes and the network can continue to function as now.
    No, it's quite material. Understanding that Bitcoin lacks any inherent value and is backed by no indirect resources other than a consensus of opinion among a small set of investors is crucial to understanding the risks involved with the currency. Again, you can't agree that investment in Bitcoin is risky without understanding this fact. Otherwise, what makes it a risky investment? It's not like a company's stock, which is linked to how well the company performs. Bitcoins can't underperform or overperform.
    I will not argue any more the point that any investment theoretically has no floor--you can lose all your investment or speculation funds. And again yes Bitcoin is rather risky.
    It certainly can be and, apart from more compelling explanations, I'm inclined to believe it is the primary explanation.
    Let's quit this point here, I do not want to argue that any more.
    Gold's turbulent market swings can be similarly explained: when fear rules the market, gold develops a bubble.
    No, a bubble starts when people get greedy. To be sure, there is the fear that the train is leaving the station without you. Hmmm maybe that's what you meant? I don't think so.
    When the market stabilizes, the bubble bursts.
    No, it's the beginning of when people are made to see they have gotten greedy.
    Well, a good many people make very good livings explaining why the Dow goes up or Nasdaq goes down on a given day. Indeed, just listening to "Marketplace" on NPR will give the layperson a quick rundown of market forces driving the exchanges.
    All too true. Let me warn you, you're wasting time listening to such trivia.

    But, yes — speculating on the financial markets (especially the futures market) and speculating on Bitcoin are loosely similar. And I would advise the majority of people to stay away from investing in both unless they have specific interests in those areas.
    I don't understand, they would not speculate in them unless they WERE interested? I would advise that the more experience in speculation coupled with reading the best art-of-speculation books, the better.

  5. #15
    tWebber
    Join Date
    Jan 2014
    Faith
    Christian
    Gender
    Male
    Posts
    115
    Amen (Given)
    12
    Amen (Received)
    44
    I have mixed feelings about bitcoin. First, it is now showing signs of a serious bubble. You can deny it all you want but there is a huge bitcoin frenzy going on right now. Have you seen the prices of the HD 7950? I bought one for $160 after $20 rebate in August of last year. Now they're over $450.00. The bitcoin mining market has exploded and many individuals have invested in ridiculously huge operations to get in on the cash flow. I'd be more inclined to take part of the prices weren't so high and wildly erratic. Many developers are in a race to create the best number crunching machine used solely for the purpose of hashing. I think it's a false gold rush.

    Next, precious metals will always have high barter value. However, we and every other developed country in the world runs on fiat currency. Our fake dollars are supported entirely on faith in the American economy. The whole point of bitcoin is to stick it to the man and operate contrary to our centralized currency which the Fed dictates without law and without congressional oversight. It's decentralized and governed by pure capitalism. Zero regulation, all market currency as opposed to the Fed's complete regulation, manipulative market currency.

    I like the idea of bitcoin because I don't like the Fed. But I think that might be the only reason, really.

  6. #16
    tWebber
    Join Date
    Jan 2014
    Location
    North Pacific Coast USA
    Faith
    Christian
    Gender
    Male
    Posts
    3,146
    Amen (Given)
    100
    Amen (Received)
    142
    HD 7950 is mining device?

    Warren Buffett — "Be fearful when others are greedy and greedy when others are fearful." A bubble begins when the mob begins to turn from fear to greed. I don't think people in general are getting serious about buying some bitcoins.

    If Bitcoin ever gains acceptance by the whole world even in Samoa, that would mean colossal purchasing power for just 21 million units or less, something like 60 trillion dollars equivalent, or more than 2 million dollars per bitcoin.

  7. #17
    tWebber
    Join Date
    Jan 2014
    Location
    North Pacific Coast USA
    Faith
    Christian
    Gender
    Male
    Posts
    3,146
    Amen (Given)
    100
    Amen (Received)
    142
    Quote Originally Posted by Truthseeker View Post
    that would mean colossal purchasing power for just 21 million units or less, something like 60 trillion dollars equivalent, or more than 2 million dollars per bitcoin.
    Second thought: I should not have used "colossal" in the phrase quoted above; the dollars in the world in toto would also be colossal as well. Sorry about trying too much to impress you.

  8. #18
    tWebber
    Join Date
    Jan 2014
    Location
    North Pacific Coast USA
    Faith
    Christian
    Gender
    Male
    Posts
    3,146
    Amen (Given)
    100
    Amen (Received)
    142
    A guy who's been a successful investor-speculator advisor for decades and got a Ph.D. in the Forex arena blasted Bitcoin. He said a sound currency needs two things: 1) acceptance by many people and 2) stable value. He himself mentioned that it's "the talk of cocktail parties." I think that is evidence of acceptance. In any case, I'm "betting" Bitcoin will be even more accepted than now. Now, the second criterion. Contra the good doctor, the criterion is better defined as, the purchasing power of Bitcoin should not be too unpredictable. I will have to concede that it is quite unpredictable. What would its purchasing power be like in December 2014? December 2016? It might be defunct then.

    He then assayed Bitcoin as an "investment." Actually he should have said, "speculation." One criterion is that Bitcoin is in an uptrend. He showed a chart of Bitcoin priced in U.S. dollars and declared that it was in a downtrend. Yes, it's down since peaking in December. But he should have taken a long-term view, not a few months, not with a speculation that's as volatile as Bitcoin. He is a contrarian: His other criteria for a good speculation is that it's "cheap" and "hated." He cited the cocktail-party chatter as evidence Bitcoin is not hated. But he's wrong, it does not mean people are pouring money into Bitcoin. I think most people who know about Bitcoin are still fearful. As for cheapness, we just don't have enough history or experience to judge.

    I do concede that it's a bit of a wild-eye speculation.

  9. #19
    Troll Magnet Sparko's Avatar
    Join Date
    Jan 2014
    Faith
    Christian
    Gender
    Male
    Posts
    49,940
    Amen (Given)
    4999
    Amen (Received)
    22170
    Bitcoins are like stock. You either earn or purchase them like you would shares in a company. The value of the bitcoin (or shares) fluctuates wildly with the market.

    The difference is that there is nothing backing bitcoin values. If the bubble bursts, like when the stock market bubble burst back in the 90's, there is nothing to stop the value of bitcoins from crashing to nothing. At least with stock, their are stopgaps built in that prevent the whole market from crashing like it did in 1929.

    So unless you are prepared to lose everything you have invested in bitcoins, don't use your hard earned cash to buy them.

  10. #20
    tWebber
    Join Date
    Jan 2014
    Location
    North Pacific Coast USA
    Faith
    Christian
    Gender
    Male
    Posts
    3,146
    Amen (Given)
    100
    Amen (Received)
    142
    Quote Originally Posted by Sparko View Post
    The value of the bitcoin (or shares) fluctuates wildly with the market.
    You see a cause-effect relationship? Explain and justify, please.

    The difference is that there is nothing backing bitcoin values. If the bubble bursts, like when the stock market bubble burst back in the 90's, there is nothing to stop the value of bitcoins from crashing to nothing. At least with stock, their are stopgaps built in that prevent the whole market from crashing like it did in 1929.
    .
    No, as long as people use bitcoins for trading frequently enough compared to alternatives, bitcoins will have value. IOW people find bitcoins useful, indeed advantageous, for making trades.

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •