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Old 2013-11-28, 00:13   #34
ewmayer
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Quote:
Originally Posted by Mini-Geek View Post
Mining is not useless, it is how transactions are verified. So the entity that benefited from the $10 worth of mining that Alice performed is..everyone using Bitcoin. When you make a transaction, you pay a small fee for this. At some point, these fees will be more important than the bitcoin reward (which will dry up eventually, by design).
I didn't say useless, I said economically unproductive. Are those really different? I'm not entirely sure. But just because the setup *requires* a lot of effort/watt-hours/computer-gear to function does not make that a plus, which you seem to believe necessarily follows. Similarly with the "fees" - I hand you $20, no middleman takes a cut, no computer network hums with activity - that is somehow bad?

On a related note, the world already has sophisticated electronic payment networks, which do not require Ghz-hours to verify basic transactions, yet seem to do so with a high degree of reliability. So again, what problem is bitcoin solving?
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Old 2013-11-28, 00:22   #35
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ewmayer:

Every single piece of cash in existence is worthless. It's paper and ink. And they're really hard to separate.

The value of a $1 coin is in the fact that it is accepted as currency nationwide or worldwide (Very few people in Mexico accept Canadian cash: thus, it is worthless in Mexico). "Every dollar" doesn't have to represent squat. However, when the amount of money is relatively fixed to the economic power of whatever is backing it, then this simply makes it a stable currency.

Bitcoin is a real currency because it is:
  • A medium of exchange
  • Has a unit of account
  • Can store value
The last point is a bit questionable, however. Bitcoin is not backed by anything. It used to be that currency was backed by gold. Before then, currency WAS gold. If gold fluctuated in value, so did the currency. This was a problem for the exact reasons you pointed out: the value of gold could plummet while your economy was booming and your money somehow lost its value.

Bitcoin is backed by nothing. This is why its value fluctuates. The only thing keeping it afloat is the fact that people accept it as currency. My view is that this is sufficient.

Last fiddled with by TheMawn on 2013-11-28 at 00:23
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Old 2013-11-28, 00:24   #36
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Quote:
Originally Posted by ewmayer View Post
So again, what problem is bitcoin solving?
It's trying to satisfy people who think that the non-zero-sum nature of bank-mediated transactions in contemporary money is a problem rather than an advantage.

The current spike is caused by people in China who are trying to use bitcoin to solve the problem that you're not allowed to transfer large sums in Chinese currency out of China, and who have not yet discovered that converting large sums in bitcoins back into US currency requires you to find some Americans who have lots of dollars and would rather have bitcoins - a delusion which doesn't appear to be sufficiently common to deal with the amount that people would like to ship out of China.

Last fiddled with by fivemack on 2013-11-28 at 00:26
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Old 2013-11-28, 01:08   #37
Prime95
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Quote:
Originally Posted by TheMawn View Post
The only thing keeping it afloat is the fact that people accept it as currency. My view is that this is sufficient.
IMO, there are 2 things keeping it afloat. One as you correctly point out is I can use it as a currency to buy a few items on the Internet, or I can convert it into a different currency that is accepted in even more places.

The second is that bitcoins are very much like a Ponzi scheme. There is a finite supply, if every bitcoin owner convinces 3 of their friends to invest in bitcoins then the owner's bitcoins quadruple in value.

What portion of a bitcoin's current value is due to its usefullness as a currency? I suspect this is way less than $12 billion (12 million bitcoins * $1000). When the Ponzi balloon pops, I a lot of people will be unhappy with their bitcoins new value.
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Old 2013-11-28, 02:06   #38
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Quote:
Originally Posted by Prime95 View Post
When the Ponzi balloon pops, I a lot of people will be unhappy with their bitcoins new value.
Sorta like the USD....
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Old 2013-11-28, 06:14   #39
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Quote:
Originally Posted by Prime95 View Post
What portion of a bitcoin's current value is due to its usefullness as a currency? I suspect this is way less than $12 billion (12 million bitcoins * $1000).
That is the first true thing said against bitcoins till now, one of the "subtle" disadvantages I was talking about in the former post. Their total market value is actually much higher than the "usefulness" (I didn't know how to put it, but George said it perfectly) as a currency. From fundamental analysis (as opposite to charting/technical analysis), their value must be lower. That is why I didn't buy any after their value went over ~$80 (but didn't sell any either). If you would have all the bitcoins now in your hand, and want to spend them buying goods and services, well... you could not, all the goods and services offered at the moment have a much less value than the 12M times ~$700 (the actual btc value). You can't buy too much with them yet. (well, @ewmayer: is not that I like the alpaca socks, I never bought any, but that was the FIRST real product you could buy for bitcoins, people still associate them with bitcoins in anecdotal stuff, some people even suspect that Satoshi Nakamoto was in fact some guy/team from the ownership/management/entourage of that company - and sorry for not quoting more from your post, but this is the only thing worth quoting it, you just run in circles there, and you did not understand my example with the tomatoes - this is just my opinion )

OTOW, the "limited" supply is 21*10^6*10^8. I think that more than the other, the people on mersenne forums should be able to deal with high numbers... When they will be all out, there will be few satoshi for every US cent (not dollar! we talk about the smallest division here) ever issued by the US. In fact, with ~72 thousand trillions $ for world GDP, there are currencies worthing ~3.5 dollars for each satoshi, EVER issued by ANY of the world nations. Some call this "limited"

Last fiddled with by LaurV on 2013-11-28 at 06:59
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Old 2013-11-28, 06:22   #40
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I did say unstable. It doubled in a week. It was at $10 per something like one year ago.

I don't think of it much as a Ponzi scheme. I don't know how much a recruiter actually gets. The supply IS limited but it's to a decaying growth to 21 million. This will occur in 2140. At 11 million right now.

I think this limit was chosen as sort of an experiment. Because they are "discovered", finding them must be difficult enough to not really justify mining for them. Think of it. If BTC stabilizes at $1000 per, everyone will at least give a quick thought to mining their own. That's a great way to cause your currency to deflate. One can imagine the same thing occurring with gold currency. Everyone mines, gold deflates. The cost of mining bitcoins is probably meant to be roughly the same EDIT: contant.

The next few weeks will be very interesting. I think they're going to crash. Again, I did say I did not see it as a stable currency. It isn't backed by anything other than its own demand. Toss the Ponzi scheme, and think of a company whose value comes from the fact that their shares are in such high demand.

Demand for bitcoin is up, therefore price is up. Once exchange rate gets too high, people stop buying. Bitcoin is a popular currency in criminal transactions. I saw a little presentation about them the other day (which is what renewed my interest) and there is a website (in its second iteration; the FBI shut the first down) where you can buy 50g of cocaine for 5 bitcoin. Since then, however, price has gone up probably 200%-1000%.

Spending your bitcoins right now is stupid, because prices have not adjusted. I don't want to spend $5000 on my coke when two weeks ago I could have spent $1000. If they don't adjust fast enough, they're going to be as useless as retardedly expensive shares in a bad company. They'll get too expensive to buy and to expensive to use, and their price is going to go down.


The question is, what happens after the crash?

Last fiddled with by TheMawn on 2013-11-28 at 06:24
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Old 2013-11-28, 07:23   #41
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Re Ponzi scheme: it escaped me first time, but I don't see how you, getting bitcoins, will increase the value for mine ones. Contrarily, if you get them "for free" (we were talking about mining, and initial distribution, not buying them for real money, which will be equivalent with currency exchange, in fact), you will want to get more, and sell them, therefore decreasing their value. Unless someone is ready to PAY for them, their value won't increase. And here we are already talking "currency", and not "hoax", "fake" blah blah.
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Old 2013-11-28, 17:20   #42
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http://www.bbc.co.uk/news/uk-wales-s...wales-25134289
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Old 2013-11-28, 17:32   #43
Prime95
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Quote:
Originally Posted by LaurV View Post
Re Ponzi scheme: it escaped me
Thanks for correcting me. Bitcoins are not a Ponzi scheme -- a bubble inflated by promising an excellent return, then using money from new investors to pay off earlier investors. Instead, much of the current bitcoin price is due to a classic bubble where the public euphorically chases after fabulous returns disregarding the true underlying value of the item.
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Old 2013-11-28, 17:57   #44
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Quote:
Originally Posted by Flatlander View Post
Cool! I would freaking move all that garbage piece by piece, bare hands, day and night ... Or maybe it is just a story, and those guys need a bunch of workers to sort their garbage? (we had that joke about a son in the city talking to his father from some village, and the father complaining that "farming is hard, and i am getting older", the son says "wait a little" then called his friend "hey jack, you know those 20 kg of heroin, i buried them in my father's garden", etc, then he called back the father "hey father, I sent some guys to dig your land" "who did you send?" "the same guys from nsa who cleaned jack's house last month", hehe, or something like that, one can tell it better than me, in some versions the father complained that "when you come home to help me split some wood for winter, because I am getting older", etc, and the story goes like "I put the drugs in my father's pile of wood", then "hey father, I sent those guys from fbi to split your wood", "who? who did you sent?", "the same guys who dug jack's garden last month", etc)

Last fiddled with by LaurV on 2013-11-28 at 18:03
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