Bitcoin does not need to be spent constantly to maintain its value

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Quote from: johnyj on December 12, 2015, 08:31:04 PM

Quote from: jaysabi on December 12, 2015, 06:23:52 PM

Inflation is not high, so your comment about that doesn't provide anything useful. And you completely missed the point since I wasn't speaking about specifics, but illustrating the difference between investment income and capital appreciation.

USD is not depreciating at an amazing speed. Current inflation is around 1%, which is historically very low. Compare a very low depreciation rate to bitcoin, which can't hold stable value hour to hour, and there's no question as to which of the two is better suited to store value.

Inflation is not high? Look how many times those stocks and housing price has been rising. Do you know why all those things that bankers buy are not included in inflation index?

All the capital goods are not included in the inflation index. The house price is not included. The house rent and house repair is included.

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Quote from: johnyj on December 12, 2015, 08:31:04 PM

Quote from: jaysabi on December 12, 2015, 06:23:52 PM

Inflation is not high, so your comment about that doesn't provide anything useful. And you completely missed the point since I wasn't speaking about specifics, but illustrating the difference between investment income and capital appreciation.

USD is not depreciating at an amazing speed. Current inflation is around 1%, which is historically very low. Compare a very low depreciation rate to bitcoin, which can't hold stable value hour to hour, and there's no question as to which of the two is better suited to store value.

Inflation is not high? Look how many times those stocks and housing price has been rising. Do you know why all those things that bankers buy are not included in inflation index?

Of course inflation isn't a good thing and our current currency system with the federal reserve and Washington spending continental GDPs worth of money in a matter of months. The dollar in the long term is fucked.

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Quote from: RealBitcoin on December 12, 2015, 07:28:26 PM

Quote from: johnyj on December 10, 2015, 03:43:34 PM

Bitcoin does not need to be spent constantly to maintain its value

Actually you are the one who is wrong.

It's not spending that gives value to something, but demand. Your argument is just a Keynesian lie.

It doesnt matter if you spend bitcoins or store it, BUYING BITCOIN is what gives it value.

Why BUY IT? Thats another question. Buying bitcoin gives bitcoin value, and why does one person buy bitcoin, thats his choice?

You can buy bitcoin to: store, buy items with, donate, invest,transact, etc....

The spending-only argument is a Keynesian bullshit

Did you read my post or just say no to every thing you see Wink

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Quote from: jaysabi on December 12, 2015, 06:23:52 PM

Inflation is not high, so your comment about that doesn't provide anything useful. And you completely missed the point since I wasn't speaking about specifics, but illustrating the difference between investment income and capital appreciation.

USD is not depreciating at an amazing speed. Current inflation is around 1%, which is historically very low. Compare a very low depreciation rate to bitcoin, which can't hold stable value hour to hour, and there's no question as to which of the two is better suited to store value.

Inflation is not high? Look how many times those stocks and housing price has been rising. Do you know why all those things that bankers buy are not included in inflation index?

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Quote from: johnyj on December 10, 2015, 03:43:34 PM

Bitcoin does not need to be spent constantly to maintain its value

Actually you are the one who is wrong.

It's not spending that gives value to something, but demand. Your argument is just a Keynesian lie.

It doesnt matter if you spend bitcoins or store it, BUYING BITCOIN is what gives it value.

Why BUY IT? Thats another question. Buying bitcoin gives bitcoin value, and why does one person buy bitcoin, thats his choice?

You can buy bitcoin to: store, buy items with, donate, invest,transact, etc....

The spending-only argument is a Keynesian bullshit

jaysabi

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Quote from: johnyj on December 11, 2015, 01:42:29 PM

Quote from: jaysabi on December 11, 2015, 01:12:00 PM

First, income on an investment means return on capital. If you buy a bitcoin, 100 years later, you still have a bitcoin. There's been no income, and there will never be any income associated with owning a bitcoin.

That is not to be confused with capital appreciation. If you buy a bitcoin for 100 dollars, and later sell it for 200 dollars, you have realized capital appreciation. Bitcoin only affects your wealth through capital appreciation or depreciation. There is no underlying business that creates profit, like with stocks and bonds. A stock can affect your wealth through capital appreciation and through income distribution, where it pays a portion of current profits to the owners.

So no, the income from bitcoin is not much higher than any kind of stocks and bonds, because there is no income associated with bitcoin. And you can't make that argument for capital appreciation either, because bitcoin is down 67% from it's high price in 2013. Odds are that anyone who bought bitcoins any time in 2014 is still sitting on a loss.

You did not count in the purchasing power loss of fiat money, which makes all the calculations here irrelevant. I get double amount of dollars, that does not mean the purchasing power is higher than the time I purchased bitcoin, since everything else's price could have also risen against dollar by 100%

All the current business calculation is based on a hidden indication that fiat money have a fixed value, which is definitely not true for anyone can see the whole picture. USD has lost most of its value in the past century and even now it is depreciating against all capital goods at an amazing speed

Unless you bought exact in the bubble top, if you calculate the price of bitcoin with Ruble, you will easily see that everyone who bought bitcoin with Ruble has already returned to profit, early investors have gained hundreds of times in terms of Ruble

Inflation is not high, so your comment about that doesn't provide anything useful. And you completely missed the point since I wasn't speaking about specifics, but illustrating the difference between investment income and capital appreciation.

USD is not depreciating at an amazing speed. Current inflation is around 1%, which is historically very low. Compare a very low depreciation rate to bitcoin, which can't hold stable value hour to hour, and there's no question as to which of the two is better suited to store value.

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This problem has its interpretations to be made in order to tell all the possible scenarios. In the first view the title of the thread is true. Because more is used a currency in the market more was the overall supply of it in a given time. This for sure can push in its decrease of price compared to the currencies existing or used legally in the same area. For example if we take the euro and us dollar and make us dollar circulate 3 or 4 time (in the area USA-Europe) while the euro only one time, the market will be always full of us dollars and this could decrease its price compared with euro. But in the other hand if a currency (with the aim to increase its value) is taken under the mattress that currency maybe can be forgotten that exist (only to make an extreme example). So needed to be used

The conclusion: use with caution and when have need. Then are the owners of the currency (the State) which think for the other things. Through their Central Banks. Our problem remain bitcoin which have not owner. "He" will be always owner of itself and as such will act at the market following only one law: the law of supply/demand. As such, always unpredictable in short time and maybe (because of other its characteristics) a few in long term.

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Quote from: johnyj on December 10, 2015, 03:43:34 PM

There is a common misleading concept: Money's value comes from its transaction demand, without transaction demand money worth nothing
-snip-

Since when was that a popular concept? Money does not work like that. Something is worth as much as the next dumb person of is willing to buy it for.

This is why no one is telling people to spend their coins. Some people even encourage hodling. If there is the same amount of demand but less supply, prices go up.

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Quote from: odolvlobo on December 11, 2015, 07:25:51 PM

In the future when bitcoin is fully adopted, the value of a bitcoin will flatten out and the return from investment will go to 0, so nobody will invest. What will support the price then?

Even bitcoin is fully adopted by existing working people, there are still 370K new baby born every day, and every day similar amount of young people enter the labor market and begin to save for future spending or retirement, some of them will purchase bitcoin, so you will never run out of new buyers

So, the exchange rate of bitcoin against fiat money will keep rising due to that these new people will have higher and higher total fiat money income each year because of inflationary monetary policy. If one day fiat money stopped printing, then bitcoin's price will stop advancing, but it is almost impossible since that means the economy must stop growing

Of course the price does not develop like a clock, there will be waves of large rally and crash, even driven by credit money. But eventually bitcoin on market will become less and less and new people's fiat money income will just get more and more, so the trend is clear long term wise. The only question is why should every one purchase bitcoin instead of other capital goods, I think at least some part of the portfolio will contain bitcoin, because it has some unique properties that all the other investments do not have

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In the future when bitcoin is fully adopted, the value of a bitcoin will flatten out and the return from investment will go to 0, so nobody will invest. What will support the price then?

johnyj

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Quote from: jaysabi on December 11, 2015, 01:15:35 PM

Don't agree here. Bitcoin is a terrible choice for holding long term value due to it's historic and extreme volatility. The USD is far superior in every aspect for saving, and USD will continue to be fine for saving for the foreseeable future.

You can always deleverage if you think the risk is too high, but if you deleverage the risk of bitcoin to the same level of other financial products, you will clearly see that the return would be magnitudes higher than any other investments on this planet

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Quote from: jaysabi on December 11, 2015, 01:12:00 PM

First, income on an investment means return on capital. If you buy a bitcoin, 100 years later, you still have a bitcoin. There's been no income, and there will never be any income associated with owning a bitcoin.

That is not to be confused with capital appreciation. If you buy a bitcoin for 100 dollars, and later sell it for 200 dollars, you have realized capital appreciation. Bitcoin only affects your wealth through capital appreciation or depreciation. There is no underlying business that creates profit, like with stocks and bonds. A stock can affect your wealth through capital appreciation and through income distribution, where it pays a portion of current profits to the owners.

So no, the income from bitcoin is not much higher than any kind of stocks and bonds, because there is no income associated with bitcoin. And you can't make that argument for capital appreciation either, because bitcoin is down 67% from it's high price in 2013. Odds are that anyone who bought bitcoins any time in 2014 is still sitting on a loss.

You did not count in the purchasing power loss of fiat money, which makes all the calculations here irrelevant. I get double amount of dollars, that does not mean the purchasing power is higher than the time I purchased bitcoin, since everything else's price could have also risen against dollar by 100%

All the current business calculation is based on a hidden indication that fiat money have a fixed value, which is definitely not true for anyone can see the whole picture. USD has lost most of its value in the past century and even now it is depreciating against all capital goods at an amazing speed

Unless you bought exact in the bubble top, if you calculate the price of bitcoin with Ruble, you will easily see that everyone who bought bitcoin with Ruble has already returned to profit, early investors have gained hundreds of times in terms of Ruble

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Quote from: johnyj on December 11, 2015, 01:10:33 PM

Quote from: jaysabi on December 11, 2015, 12:48:20 PM

On the other hand, there aren't many merchants who accept it presently who actually hold bitcoin. Rather, they use payment processors who accept payment in bitcoin on their behalf and immediately convert the transaction into USD. The value of bitcoin is not stable enough to let businesses use it with any confidence that they won't lose money on their transactions, so it is far safer to immediately convert to fiat and pay a small fee in order to serve a niche market that wants to pay in bitcoin.

Exactly, that's the reason merchant acceptance does not affect bitcoin's value, it is mainly decided by the capital inflow, which comes from people's demand for saving.

For the most part, we agree here. Merchants have a negligible effect on bitcoin's price.

Quote

Current gentle inflation monetary policy already removed the possibility to use fiat money for saving, then this demand must find a suitable currency, which is bitcoin

Don't agree here. Bitcoin is a terrible choice for holding long term value due to it's historic and extreme volatility. The USD is far superior in every aspect for saving, and USD will continue to be fine for saving for the foreseeable future.

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Quote from: johnyj on December 11, 2015, 01:04:01 PM

Quote from: jaysabi on December 11, 2015, 12:54:01 PM

An investment in stocks and bonds (which represent an ownership stake in a business) is not comparable to bitcoin, which has no potential to create income. It is the ownership stake in a business which gives stocks and bonds their value. Anything can have value, yes, we agree on this. But I wasn't disputing this. My point was that utility gives value, and altcoins have no utility, which is why they only go down in value. It doesn't take much to accept an altcoin as a merchant, literally just an address which you can set up in less than a minute. The reason they don't is because it's not even worth that little effort.

The income brought by bitcoin is already much higher than any kind of stocks and bonds. If the stock/bond price fall 20% while you get a 2% dividend/interest, that is a loss not income

Bitcoin's biggest utility is to bring you income long term wise. Altcoin is much more risky because their function can all be done in bitcoin, and to concentrate the effect of investment, capital usually goes to the strongest network

First, income on an investment means return on capital. If you buy a bitcoin, 100 years later, you still have a bitcoin. There's been no income, and there will never be any income associated with owning a bitcoin.

That is not to be confused with capital appreciation. If you buy a bitcoin for 100 dollars, and later sell it for 200 dollars, you have realized capital appreciation. Bitcoin only affects your wealth through capital appreciation or depreciation. There is no underlying business that creates profit, like with stocks and bonds. A stock can affect your wealth through capital appreciation and through income distribution, where it pays a portion of current profits to the owners.

So no, the income from bitcoin is not much higher than any kind of stocks and bonds, because there is no income associated with bitcoin. And you can't make that argument for capital appreciation either, because bitcoin is down 67% from it's high price in 2013. Odds are that anyone who bought bitcoins any time in 2014 is still sitting on a loss.

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Quote from: jaysabi on December 11, 2015, 12:48:20 PM

On the other hand, there aren't many merchants who accept it presently who actually hold bitcoin. Rather, they use payment processors who accept payment in bitcoin on their behalf and immediately convert the transaction into USD. The value of bitcoin is not stable enough to let businesses use it with any confidence that they won't lose money on their transactions, so it is far safer to immediately convert to fiat and pay a small fee in order to serve a niche market that wants to pay in bitcoin.

Exactly, that's the reason merchant acceptance does not affect bitcoin's value, it is mainly decided by the capital inflow, which comes from people's demand for saving. Current gentle inflation monetary policy already removed the possibility to use fiat money for saving, then this demand must find a suitable currency, which is bitcoin

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Quote from: jaysabi on December 11, 2015, 12:54:01 PM

An investment in stocks and bonds (which represent an ownership stake in a business) is not comparable to bitcoin, which has no potential to create income. It is the ownership stake in a business which gives stocks and bonds their value. Anything can have value, yes, we agree on this. But I wasn't disputing this. My point was that utility gives value, and altcoins have no utility, which is why they only go down in value. It doesn't take much to accept an altcoin as a merchant, literally just an address which you can set up in less than a minute. The reason they don't is because it's not even worth that little effort.

The income brought by bitcoin is already much higher than any kind of stocks and bonds. If the stock/bond price fall 20% while you get a 2% dividend/interest, that is a loss not income

Bitcoin's biggest utility is to bring you income long term wise. Altcoin is much more risky because their function can all be done in bitcoin, and to concentrate the effect of investment, capital usually goes to the strongest network

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Quote from: johnyj on December 11, 2015, 12:47:26 PM

Quote from: jaysabi on December 11, 2015, 12:30:18 PM

Quote from: johnyj on December 10, 2015, 03:43:34 PM

For traditional money, you need merchant acceptance to be useful, so it never goes beyond boarder of a country. But bitcoin is more universal form of money, you don't really need merchants to accept the payment, you can easily exchange to what ever currency they accept. It is amazing that you can exchange it to any currency on localbitcoins, no other currency in the world have this kind of worldwide exchangeability

This isn't entirely accurate. If you could do nothing with bitcoin but convert it to fiat, then it would have low utility and low value. It is only because you can purchase things with bitcoin that it has value. Look at all the altcoins that serve no market function: they're all virtually worthless because the only thing you can do with them is exchange them from bitcoin to the altcoin and back. No one accepts them for any goods and services, so they have no value because they don't serve a function. There's no point to them.

There are many financial products that you can not find any merchant accepting them for goods and services: Bonds, stocks, options, futures, gold etc... But they usually worth a lot. From a pure financial point of view, as long as there is exchange, anything that have value is interchangeable. Similarly, those altcoins also have value if you can sell them for bitcoin and then sell bitcoin for fiat money. The reason that merchants do not accept altcoin is because their infrastructure is magnitudes weaker than bitcoin, and it is enough to have one cryptocurrency in merchants many different payment options

An investment in stocks and bonds (which represent an ownership stake in a business) is not comparable to bitcoin, which has no potential to create income. It is the ownership stake in a business which gives stocks and bonds their value. Anything can have value, yes, we agree on this. But I wasn't disputing this. My point was that utility gives value, and altcoins have no utility, which is why they only go down in value. It doesn't take much to accept an altcoin as a merchant, literally just an address which you can set up in less than a minute. The reason they don't is because it's not even worth that little effort.

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Quote from: johnyj on December 11, 2015, 12:37:46 PM

Quote from: Naficopa on December 11, 2015, 06:46:00 AM

Quote from: johnyj on December 10, 2015, 03:43:34 PM

The reality is, throughout human history, money's value has never come from transaction demand, be it grain, gold, or fiat money. It comes mainly from the property that it can be trusted to hold value in a relatively long time, and secondly it can be accepted widely

The grain is useful in feeding us, so it has value. The fiat money has no value if it is not used in transaction, or if it cannot be used to buy things. The value of bitcoin is from the trust we can use it to buy things.

If your fiat money lose half of its value every day (e.g. everything's price doubles every day), then even every merchant accept it as payment, you will get rid of it as quick as possible. To be able to store value over a long time is the most import prerequisite for any kind of money. You can observe that when bitcoin price rises, merchant acceptance are higher, since it can hold value very well. When the price falls, more merchant will refuse to accept it

On the other hand, there aren't many merchants who accept it presently who actually hold bitcoin. Rather, they use payment processors who accept payment in bitcoin on their behalf and immediately convert the transaction into USD. The value of bitcoin is not stable enough to let businesses use it with any confidence that they won't lose money on their transactions, so it is far safer to immediately convert to fiat and pay a small fee in order to serve a niche market that wants to pay in bitcoin.

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Quote from: jaysabi on December 11, 2015, 12:30:18 PM

Quote from: johnyj on December 10, 2015, 03:43:34 PM

For traditional money, you need merchant acceptance to be useful, so it never goes beyond boarder of a country. But bitcoin is more universal form of money, you don't really need merchants to accept the payment, you can easily exchange to what ever currency they accept. It is amazing that you can exchange it to any currency on localbitcoins, no other currency in the world have this kind of worldwide exchangeability

This isn't entirely accurate. If you could do nothing with bitcoin but convert it to fiat, then it would have low utility and low value. It is only because you can purchase things with bitcoin that it has value. Look at all the altcoins that serve no market function: they're all virtually worthless because the only thing you can do with them is exchange them from bitcoin to the altcoin and back. No one accepts them for any goods and services, so they have no value because they don't serve a function. There's no point to them.

There are many financial products that you can not find any merchant accepting them for goods and services: Bonds, stocks, options, futures, gold etc... But they usually worth a lot. From a pure financial point of view, as long as there is exchange, anything that have value is interchangeable. Similarly, those altcoins also have value if you can sell them for bitcoin and then sell bitcoin for fiat money. The reason that merchants do not accept altcoin is because their infrastructure is magnitudes weaker than bitcoin, and it is enough to have one cryptocurrency in merchants many different payment options

johnyj

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Quote from: Naficopa on December 11, 2015, 06:46:00 AM

Quote from: johnyj on December 10, 2015, 03:43:34 PM

The reality is, throughout human history, money's value has never come from transaction demand, be it grain, gold, or fiat money. It comes mainly from the property that it can be trusted to hold value in a relatively long time, and secondly it can be accepted widely

The grain is useful in feeding us, so it has value. The fiat money has no value if it is not used in transaction, or if it cannot be used to buy things. The value of bitcoin is from the trust we can use it to buy things.

If your fiat money lose half of its value every day (e.g. everything's price doubles every day), then even every merchant accept it as payment, you will get rid of it as quick as possible. To be able to store value over a long time is the most import prerequisite for any kind of money. You can observe that when bitcoin price rises, merchant acceptance are higher, since it can hold value very well. When the price falls, more merchant will refuse to accept it

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