Topic: Bitcoin is not scarce. (Read 4573 times)

To say bitcoin has no value, is an obvious inaccurate statement and very short sighted imo. That's the equivalent of saying when email came around that it had no value. Heck even sticks were used for currency at one point and time, and since everyone was using it at that time it had value to the people who used it. This article from coin desk pretty much emphasizes my point as to the value of btc. Also just because other coins do the exact same thing as btc, does not put them on btc's level, or allow you to assume they ever will be. There are tons of tissue brands that have been out forever and serve the same purpose, yet people put more faith, money, and trust in a kleenex brand than all other brands, thereby increasing its value as it continues to hold the lions share of that industry. Why do people pay an extra $500 dollars for a sony tv when an emerson tv with the exact same specs does the exact same thing?


BTC Value Coindesk Article-

I’m not an economist, and I can’t speak to you as one. I do have some experience with virtual currencies though, and think I have a handle on why Bitcoin is so potentially revolutionary.

When you tell us that Bitcoin has no intrinsic value, I can’t disagree, but I also don’t think that’s relevant.

Houses don’t have any (or very minimal) intrinsic value either, and one only has to tour Detroit, with its legions of abandoned houses, to see that that’s the case.

Does that mean houses generally don’t have any value? I don’t think so, and as a homeowner, I sure hope not. Indeed, I’m sure that my house has value, because I’m sure someone else will be willing to buy it from me if I choose to sell it.

But why would someone buy the house if it has no intrinsic value? As we know from places like Detroit, it’s possible for the value of a house to simply disappear, or come very close to it (pipes can be stripped for copper, and a few other things may be worth salvaging, but that’s fractions of a penny on the dollar).

So where does that value come from if it isn’t intrinsic to the house itself?

I’ll come back to that question, and explain how it’s related to bitcoin’s value. But first, I want to tell you a story. I’ll try to keep it brief.
Virtual Swords

Once upon a time, at the end of the last millennium, I founded and led the first games company to sell virtual goods or virtual currency for real money.

We sold (and still sell) ‘credits’ – virtual currency that is bought for real money, which players can use to buy other things in our games. Players can buy virtual weapons, new abilities for characters, virtual pets, virtual gold, virtual housing, upgrades to ships, or even custom work from the development team. What they can’t do is sell those credits back to us for real money.

When I first started selling credits, a lot of people, including almost everyone in the games industry who was aware of what we were doing (not a huge number of people as we were operating at the periphery of the industry), thought it was ridiculous. The general criticism was along the lines of: “Why would someone pay real money for a fake sword?”

I mean, they have a point right? Why would you give up real money to get this fake currency – credits  –  which you could only use to buy other fake things? How could the credits possibly have value?

Here’s the thing though. We started selling credits in 1997. The only way to pay was via check or cash, mailed to us (though that changed quickly). Players had to go through the hassle, in other words, of actually sending us a letter and waiting for it to arrive to buy credits. This was days in most cases. Even with that amount of hassle, they wanted to buy these virtual things.
Farmville 2, by Zynga.The Farmville 2 game, by Zynga.

16 years later, people are still buying these credits, and they’re even used to pay other people for third-party services around our games in a couple of cases.

Other companies, like Electronic Arts and Zynga, have collectively sold billions of dollars worth of their equivalent of credits in the last decade. The idea that these ‘fake’ currencies and ‘fake’ items have real value is pretty difficult to dispute given the amount of money consumers have poured into them.

Even in games that don’t directly sell the currency, there’s often a robust business being done by third parties in obtaining and re-selling currencies that must be earned by playing the game.

Why do these virtual currencies, which are often hard to convert back to cash, if at all, continue to have value?

It’s their context. In this case, the context is our games. Although they’re free to play forever without paying, a percentage of players (a high % in our case) eventually buy credits. Those credits can get them something they want, and whether you want to classify a virtual sword as a ‘good’ or a ‘service’ doesn’t matter  –  it allows a player to achieve a desired result within a context that matters to that player.

And that’s the point I’m making here  – a virtual sword has value because of the context in which it exists.

A virtual sword on a game you don’t play is more or less worthless to you. A print-out of the data that makes up that virtual sword is worthless to you. The item only has value because of the context the game service provides.

Further, we’ve found that the stronger we make that context  –  the more engrossing and all-encompassing the game world becomes  – the more people want to buy things within it.

The stronger the context, the more potential value things that are part of that context can have.
Motor City
An abandoned house in Detroit.An abandoned house in Detroit. (Credit: Reuters/Rebecca Cook)

Let’s go back to Detroit. Why does my house in the Bay Area hold value far above what it could be salvaged for, while hundreds of houses in Detroit were simply abandoned as valueless?

Once again, the context. Detroit is a large part of the context that informs the value of houses in it, and it’s grown vastly weaker than when it reigned as one of America’s premiere cities. As a result, the houses in it have lost value, and some have become worthless.

The Bay Area, on the other hand, is having an extended tech-driven renaissance that’s created enormous wealth and buoyed demand for real estate. It’s context is strong.

Of course, context is not simply local. It’s simultaneously local, regional, national, global and more.

The entire housing market in the US took a dive, as you well know, Mr Greenspan, a few years ago. There, the national context was so strongly affected that it overrode almost any positive influence from regional or local contexts within the US  –  if you owned a house anywhere in the US, it probably lost value in 2008 and 2009.

Thus, we can see that the value of a house is not really intrinsic, but is largely dependent on the context within which it exists.

What’s all this have to do with Bitcoin?
The Currency and the network

Confusingly, when the anonymous creator of the Bitcoin protocol named it, he chose to use the same word to refer both to the unit of value that is traded (bitcoin, with a lower-case b) and the payment network over which bitcoin travels and the way in which it’s stored, referred to as Bitcoin (with a capital B).

A good analogy is email: Without a network to carry email over, there’d be no value in composing an email  –  it wouldn’t have anywhere to go when you hit ‘send’.

Similarly, bitcoin would be worth nothing without the payment network that it sits on. You could have all the bitcoin in the world and if there wasn’t a network behind it, nobody would care. There’d be no context  –  just meaningless digital bits sitting on a hard drive.

Now, we know that payment networks are valuable. Just ask Visa, Mastercard, Paypal, Western Union, and Moneygram.

We also know that methods of storing value persistently are valuable. Most of the world’s governments have a gold reserve. The US government alone holds over 8,000 tons of it.

But what a hassle! Someone has to actually store that gold, which weighs 8,000 tons, and selling it means physically transporting it.

Still, gold is valuable and commands the price it does mainly because people have agreed it’s valuable, even though it experiences wide volatility in value over time, and even though it’s fairly inconvenient.
gold-volatilityPrice of gold, adjusted for inflation, 1915-today. Look at that volatility!

Bitcoin is both of these things — a payment network and a way of storing value. You could transfer a million dollars for the cost of a few cents, on a holiday.

Paypal won’t let you do that, and even if you could transfer that much at once, they’d charge you multiple percentage points for it.

Visa/Mastercard certainly won’t let you do it, as they’re built on credit, and if Western Union would let you, they’d charge you even more than Paypal would.

You could send a bank wire, but that’ll cost you $25 or more, and if sent after the wire cut-off time, you’re out of luck until the next day. And, of course, that assumes you even have a bank account to begin with, a service that only about half of adults worldwide have access to.

And unlike gold, bitcoin is practically free to store (though like any other asset, security precautions need to be taken).

What we have, then, is a nearly frictionless way to send and store value of virtually any magnitude. I don’t think it takes a lot of imagination to understand why that might be a context that’s strong enough to create substantial value within it.

As Erik Voorhees (a prominent early adopter of Bitcoin) recently wrote:

    Because the Bitcoin network is useful, and because only scarce bitcoin currency units are permitted on this network, the bitcoins themselves have a price. Indeed, they must have a price until the network is no longer useful, or the coins are no longer scarce.

    This is not magic. It is not a Ponzi scheme or elaborate fraud. It’s just the market pricing something that it finds useful. As the network grows in usage, its utility subsequently grows, and thus scarce bitcoins appreciate further.

You see, Mr. Greenspan, it all comes back to context. The lower-case bitcoin has value because it is scarce (limited to 21 million) and because the context of the Bitcoin payment network creates the opportunity for things within that context to have value.

Better still for Bitcoin is that Metcalfe’s Law is likely to be partly relevant at least. It states that the value of a telecommunications network is proportional to the square of the number of users connected to it. As Bitcoin grows, its utility as a network grows, and the unit of currency (bitcoin) in that network is likely to be even more valued as a result.
Bitcoin in Context

I believe, Mr. Greenspan, that the context (the payment/storage network) within which bitcoin (currency) exists grants it indisputable value, whether that value is ‘less than’ or ‘greater than’ is represented by the price of a bitcoin today. I think you’d have a difficult time disputing that.

Beyond that though, I also believe that the context within which Bitcoin (the payment/storage network) exists grants it value, and that whether it’s Bitcoin or another digital currency, the context of the modern world grants the Bitcoin payment/storage network increasingly large potential value.

There is a real demand for a digital, supra-national currency, and bitcoin is the current most likely contender to take that position. It’s not going to replace fiat currency, but it is going to sit alongside it.

 
Increasing the money supply is a hidden tax on everyone who holds that currencyIncreasing the money supply is a hidden tax on everyone who holds that currency (Credit: iStockPhoto)

The US and Chinese governments are engaged in unprecedented hidden taxation of anyone holding the US dollar or the Chinese yuan in reserve by simply issuing more of them (many, many more).

That’s not possible with Bitcoin, and whether or not one believes that a deflationary or inflationary currency is preferable, it’s certainly easy to see why some people like having a store of value that cannot be devalued unilaterally by a government (though as the recent drop in price in reaction to China’s official position on financial institutions trading bitcoin shows, governments certainly have a voice in Bitcoin’s future).

The hundreds of billions of dollars remitted back to home countries by (generally) poor immigrants grows every year. They pay an average of over 9% to transfer that money. That’s highway robbery on the backs of the people who can least afford it. Bitcoin can solve that long-term.

    “Bitcoin can revolutionize the relationship between content publishers and consumers”

It’s currently difficult to pay a few cents for, say, reading an online article from the NY Times  –  the transaction costs via traditional payment transfer networks are prohibitive at that small scale.

Bitcoin can revolutionize the relationship between content publishers and consumers by reducing the friction that stops both parties from micro-transacting on a scale appropriate for that moment, vs. asking the consumer to subscribe for $10/month, or asking the consumer to front-load an online wallet with $5 and then spend it in increments.

In short, Mr Greenspan, there are a lot of reasons why Bitcoin is here to stay at one level or another. The bitcoin currency has value because the network has value. The network has value because it is and will be used to solve actual problems that actual people and institutions experience.

Is that intrinsic value? Beats me  –  as I said, I’m not an economist.

It’s certainly value though, and as long as that’s true  –  as long as the context makes it so  –  bitcoin will continue to be worth something no different from gold, houses in Detroit, or virtual swords in video games.

original article- http://www.coindesk.com/bitcoin-intrinsic-value-alan-greenspan/

OK, so you have silver and gold, fine, but zero bitcoins. Why don't you spend your time analzying gold / silver technicals rather than ranting on about something you don't own. It would be like me pouring all the over the latest gold news without owning any or ever intending to own any. Beyond pointless ..........

You said gold have value because it was "pretty" - what about silver - most people think it looks incredibly boring.

Most of the time, the price is limited by the mining cost projection, which is the lowest possible cost to acquire bitcoin, even there is a strong demand, the price will never be too far from the mining cost

The underlying value, can be derived from its ability to be used as money. The formula about money supply from modern economics:

MV=PY

M = Money supply
V = Money flow speed
P = Price level
Y = GDP

Suppose that 100 dollar could buy certain amount of goods, central banks adjust the money supply so that 100 dollar could always buy roughly the same amount of goods over time. Although dollar itself is not backed by anything, there is a transaction demand for dollar, dollar worth something just because people need a medium of transaction. Supply and demand combined together can keep dollar's value relatively stable

The same formula could also be applied to bitcoin. In this case, money supply is a fixed constant, and suppose that money flow speed is also a constant, if GDP increased, then price level will fall, means bitcoin's price will rise

Put in some real numbers: World GDP is about 70 trillion dollars, suppose that money flow speed is 1, means every bitcoin change hands only once per year, money supply is 21 million bitcoin, you get a price level of $3.3 million per bitcoin

Of course this suppose that all the transactions in the world will be carried out using bitcoin, which is impossible. If bitcoin take only 1% of those transaction, and money flow speed increase by 1 magnitude, $3K per coin is still quite reasonable

Another way to compare: FED is printing 2.8 billion dollars every day, and bitcoin generation speed is 4000 coin per day, each coin will corresponding to $707K dollar if they were used equally

"Tally sticks have no value and are not scarce. Anyone can go out in the woods and pick up a stick. Actually, because you carve pieces of it off they lose part of what little utility they have. I'd use them as firewood before trying to pay my taxes with them." - Tally stick bear, England, circa 1100 A.D.

You missed the bit about "subjective theory of value" did you?

btw, I'm happy to admit Bitcoin's price may be far different from its actual value at the moment, I only say that utility and intrinsic value are subjective, a result of belief.

Anyway, let's just agree to disagree, as I spent too much time today arguing on forums

No, price comes from what someone is willing to pay. Value comes from the underlying utility or productive value of something.

Take Beanie Babies for instance. There was a time when some of them sold for hundreds of dollars. In other words, the price for a particular Beanie Baby was, say $300, because someone was willing to pay $300 for it. But that wasn't the value. Eventually the market corrected and the price came back into equilibrium with the actual underlying value (close to zero), and now Beanie Babies are worthless.

On the flip side, take 100 shares of stock in Chevron. That has a price, but it also has an underlying value. We can look and see that Chevron has paid a roughly 3% dividend on shares every year for the last 40 years. We can also look at the value of underlying company owned assets, equipment, land etc. and we can come up with an estimated value of each share of stock based on what we know the company is worth and will produce in the near future. Now, news may come out that influences the price one way or the other, and speculators will move the price one way or the other, but eventually the price will always find equilibrium with the underlying value.

So the price of Bitcoin only tells us what someone is willing to pay for bitcoin right now (like a Beanie Baby, for instance), but it doesn't tell us anything about the underlying value. That requires a much deeper analysis.

Sometimes we don't see the forest for the trees.

I don't have the time nor inclination to engage in textual battle with you. I don't know what you're own personal misunderstanding is and frankly I couldn't give less of a shit.   

That being said best of luck to you porc.  I think you're gonna need it to make it thru this life.

Very excellent presentation.
[/quote]

Erik Voorheis is the brilliant mind behind that piece.  His username here is evoorheis I believe.
and I agree, he produced an excellent work here.
I am merely intelligent enough to comprehend his work and pass it on when necessary.

I don't understand why you're ignoring my offer. I am incredibly happy to offer you my useful, valuable sheets of cotton paper in exchange for your worthless Bitcoins, simply because I am so appalled as to how I could be as blind as I was to trust this made-on-a-whim "currency" with no value.

Think of it as a donation.

You'll thank me later.

EDIT: If you would instead like pretty, shiney gold of equal value to the useful, valuable sheets of cotton paper, that'd be fine, too.

No. Even if you transfer nothing from peer to peer, anonymously (not possibly with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy.

However I do find it interesting, that you you try SO HARD rationalizing the fact that you are transferring NOTHING. You yourself know deep down, that accepting NOTHING for SOMETHING is unacceptable and that NOTHING cant be money.
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I can only refer to my post again:


Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.

Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.

1) Store of value.

 To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved.

Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.

What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).

Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.

What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.

What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses. In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that its bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (with huge counterpary risk) is extremly volatile.

Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future Wink). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor.

So I believe, that bitcoin because it has no intrinsic value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).

Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.

2) Medium of exchange

Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of no utility for something of utility in order to save transaction costs."

 Why is Bitcoin valuable?

This is perhaps the most important topic to address, as nothing else matters if Bitcoin has no value. What makes Bitcoin worth anything? Isn't it just "fake"? Isn't it just a made-up pretend virtual currency? Many say, "I can't hold it, I can't see it, and thus it's artificial and not worth my time." Let's challenge this understandable initial reaction. Let's demonstrate why Bitcoin is valuable, and very much worth one's time.

Financial privacy has long been symbolized by the notorious "Swiss bank account." Yet, anyone with a Swiss bank account has to trust that bank, and as we've seen in the last couple years, "bank privacy" even in Switzerland is a myth - banks there have been bending over for the US government and divulging customer information. So imagine having a private, numbered Swiss bank account, but without having to bother with the Swiss bank itself. That is Bitcoin. Instead of placing your trust in a regulated bank governed by fallible humans, Bitcoin enables you to place your trust in an unregulated cryptographic environment governed by infallible mathematics. 2+2 will always equal 4, no matter how many guns the government points at the equation.

Bitcoin is thus the only currency and money system in the world which has no counter-party risk to hold and to transfer. This is absolutely revolutionary and you should read the preceding sentence again. Gold advocates will point out that physical gold bullion has no counter-party risk, but that is only true for storage in your own home. Store it in a vault or bank and you have counter-party risk. And sending gold? You have to trust all sorts of people if you wish to transfer your gold somewhere else or spend it across distance.

Bitcoin means complete ownership of money both in storage and transfer. Nobody can prevent you from having it. Nobody can prevent you from spending it. Even if one's home is broken into, or even if the government issues a "confiscation order" (as they did with gold in 1933), one's Bitcoins are perfectly safe. Try fleeing a country with $1,000,000 in bullion without the government knowing about it. Easier said than done. With Bitcoin, it's almost easier done than said - you could put $1,000,000 of Bitcoin on a USB drive, or even write the private key on a piece of paper, or just email the wallet file to yourself to be retrieved outside the country.

Starting to see the value? Never in the history of the world has an individual had this ability. It is unprecedented.

No really, WHY is Bitcoin valuable???

At this point, skeptics should say, "okay fine, you can store and spend Bitcoins without interference, but what gives them initial value? Why do they have a price?" It's a very good question, and even expert economists have struggled with the answer.

But really, the answer is simple. Bitcoins have value because A) they are useful and B) they are scarce. Combine those two attributes in any asset and you will discover it has a price. The moment the first Bitcoin was traded to someone in exchange for something else, an exchange rate (market price) was established. Subsequent exchangers agreed or disagreed with that rate, and made further trades accordingly. Bitcoin thus spontaneously developed a price, as do all things in an open market if they are sufficiently useful and sufficiently scarce.

Let's look at value a little further, because it's a contentious issue with Bitcoin. There are many (including Paul Krugman) who believe Bitcoin isn't worth anything and is no more than a speculative bubble fad.

I wouldn't expect Krugman to "get it," but wiser/real economists need only observe metals to start understanding why Bitcoins have value. After all, any strong advocate of gold or silver as money should hopefully understand why these metals should be money. The answer is that these metals tend to be chosen in an open marketplace as money, because their specific properties make them useful as a means of exchange. It is the properties of gold and silver—unique to these metals—which make them excellent money. They are scarce, fungible, uniform, transportable, have a high value-to-weight ratio, are easily identifiable, are highly durable, and their supplies are relatively steady and predictable. Contrast other goods like chickens, or seashells, or sand, and you discover that none of them are as good on the above attributes as precious metals. Chickens can't well be cut in half or recombined, seashells are not uniform, and sand is too plentiful to be used as money. Why not other metals... why don't we use iron as money? It's not scarce enough - you'd need carts of it at the store to go shopping.

As any Austrian economist can tell you, money is merely that commodity in an open market which best satisfies the properties necessary for useful exchange. Gold and silver take the cake every time a violent government doesn't get in the way... or at least, this is true historically. But, this doesn't mean that gold and silver are "perfect, infallible money." Indeed, there are practical problems. One can't easily divide and combine silver coins to make change. One can't easily send large values of gold across distance without hiring security and waiting for transport. One must pay storage fees, or risk theft at home. And, while difficult, it is possible to make fake gold and silver ingots and pass them off in trade as real.

So then it follows that if gold and silver are not perfect money (though admittedly the best we've had), perhaps mankind could discover or invent something that was even better. This is the Bitcoin experiment - the question of whether Bitcoin, with its specific attributes, is an even better form of money than what the marketplace currently enjoys (or in the case of state fiat, is forced to use). If the Austrians are right, and a marketplace tends to chose the medium of exchange which best works as money, and Bitcoin's specific attributes make it excellent money, then perhaps the marketplace will, over time, increasingly use it for such.

The answer so far, is yes. Bitcoin is finding more and more niches for early adoption, which further supports its market price, providing confidence to holders that it will retain value, and this further lends Bitcoin to be used for still more purposes. It's an organic and messy process, full of trial and error, potholes, brilliant innovations and terrible failures. But that's what an open marketplace is, no? Every day a more resilient economy is being built, and not at the point of a gun, but voluntarily - not by decree of Bernanke, but by spontaneous, self-interested private order.

Many have made the argument that "nothing backs Bitcoin." And this is true. Bitcoin cannot be redeemed for any fixed value, nor is it tied to any existing currency or commodity. But, neither is gold. Gold is not backed by anything - it is valuable because it's useful and scarce. Cars are not backed by anything, they are merely useful as cars and thus have value. Food is not backed, nor are computers. All these goods have value in proportion to their usefulness and scarcity, and one merely needs to see the usefulness of Bitcoin to understand why, without backing from any government nor corporation, without being tied to any fiat currency or existing commodity, it commands a price on the market and rightly so.

http://evoorhees.blogspot.com/2012/04/bitcoin-libertarian-introduction.html

OP you say we humans value Gold because it's pretty? I'm not so sure about that. See:

http://www.bbc.co.uk/news/magazine-25255957

It is pretty evident really. Because he has a big stake in gold and silver (as he himself admitted), but money flows from those shiny metals into Bitcoin (and would flow even faster if Bitcoin persists). Bitcoin competes with precious metals as a store of value, so he is very well motivated to post his garbage here...

It's easily defined, but "value" still ultimately comes from what a person is willing to pay, and that is a human opinion/belief.

I think I may be trying to say I adhere to the "subjective theory of value".

to 2: because they speculate, that the price will raise. To 10 000$ one coin. That is no good argument against his case. The point is: Imagine it is early 2010 and you got 1mio. btc for virtually 0$ and you are sure, that it is a Ponzi Game. To what price will you dump?
.1$? Hey, this would be 100 000$.
1$ -> wow 1 000 000$.
10$?
100$?
1000$?
What does change, if you are a string believer? I think you would have already cashed out a good share already. Just to be sure. I am a strong believer and I did (but with only 15btc starting 8 months ago^^).

Anyway: http://www.reddit.com/r/Bitcoin/comments/1rxmk3/my
-> Bitcoin has intrinsic value. You can do something with it. Would it have no single advantage against fiat, it would be a bubble and no intrinsic value.

 

That is an entirely inaccurate understanding of the economic definition of value. Value is very real and easily defined. Perhaps you're thinking of price, which is certainly a human construct and can change with the whims popular beliefs and opinions. But price and value are two very different things.

Bitcoin (or the belief in Bitcoin) is a complex phenomena, that cannot be defined precisely or mathematically. "Value" is not something scientific that can be proved, it is a human construct, and depends entirely on opinion/belief, which in turn do not necessarily depend on any kind of cold hard facts.

You are like a scientist looking at the chaos of a storm and trying to come up with a single theory or equation that describes it all... You can keep at it all day, but the storm don't care and gonna keep on blowing.

Keep on trollin', porcy.

I suspect the OP is either using multiple usernames and posting under multiple names or is in league with some of the other posters. The uniformity between them is striking.

If Bitcoin is not your cup of tea and you think the technology is without value, why post on this forum?

Why are you so concerned for our well being? If we lose all of our money, why do you care?

This explains a lot. So you've been watching the rise of Bitcoin all that time (while gold and silver were heading down in scaringly wide strides) and kept on persuading yourself that it had no value... Now I understand you and the fact that you came here screaming aloud and blaming Bitcoin for your pains!

As I said: I hold a substantial position in silver (and some gold). I also hold a lot of gold and especially silver miners. Now obviously if you are invested in gold/silver, you better know and understand the alternatives. I wanted to share my thoughts, so you guys can appreciate the position of a extreme bear. Again I believe it is a pyramid scheme.

And now you came here to share with us the intimate knowledge revealed to you of how things actually stand with bitcoin? What is the real purpose of spouting all this drivel on us? Why the heck do you care? Are you scared by the fact that your shiny metals and miners are falling head to the ground and will ever continue to do so for the reason of bitcoin?

Yes that was my first post after I heard about bitcoin. I didnt think much about it and already had concerns. Now that I have informed myself I hold the position that bitcoin is a pyramid with 0 value that cant be money.

Yes I do hold gold and silver as well as gold and silver miner, BECAUSE i think gold and silver is real money.

OK gotcha. In that case, more likely hacked than purchased. Nobody would purchase an account just to write that drivel.

Usually this means that the account has been taken over. Why would anyone want to break into someone else's account?

I'm intrigued. What does it mean, somebody bought his acccount? He lost all his bitcoins when his hard drive crashed and went postal? He got abducted by aliens and replaced by a different entity? Please enlighten me 

This guy has been registered since April 13, 2013, and became active only a few days ago. His only post on his first day here is quite different in spirit and style from what we see right now (you can judge for yourself in his profile). He has written some valuable piece of information at the end of that post which I cite below


No follower of the Austrian school of economics could produce these piles of garbage he spouts out now. And in his second post more than half a year later he writes that he is "new to Bitcoin" (note the case of the first letter here and in the quote). You guess what this all means...

As Peter Lambert wrote, we can keep feeding the troll indefinitely.

porc is the most long-winded troll I have ever seen.

https://bitcointalksearch.org/topic/m.3894141

You are a troll because you keep asking the same questions and ignoring the answers you get. You are a troll because you ask questions not to get the answer, but to get other people worked up. That is pretty much the definition of trolling.

https://bitcointalksearch.org/topic/m.3906944

Oh so you've read his other posts, and agree with him, that's good. The one where he says gold has value because "its pretty" and therefore bitcoin has no value because its "not pretty". Since litecoin is also "not pretty", we must therefore assume you must agree litecoin has no value either.

"Way too complex for the layperson", LMAO. No, its just "way too long and full of trollspeak". Very nice of you to condescend though. I'm sure litecoin is capable of many things, as are a dozen other "wanna be" altcoins, and a hundred yet to be invented that will also fail.

OP you're technically correct and another bright post. However, i think your explanation would be way too complex for the layperson.

A less complicated and more effective way to debunk the scarcity BS is to point out how you can pick up other digital coins that serve the exact same purpose. Peer-to-peer. Same properties. Same technology. Except you only have to pay 30 bucks, not a thousand. There is nothing bitcoin can do that litecoin cant.

You're already starting to see on the alternate coin board the bitcoin cultists panicking to discredit alt-coins. They know this a huge threat. Shall be interesting...

There is a difference between intrinsic value and utility. Fiat money does indeed have utility because it is the required form of payment of taxes. Try paying your taxes with anything other than fiat and see what happens. That's a significant utility since it keeps you out of prison.


Everybody that is speculating on bitcoin holds it for the same reason - greed. Why sell at $900 if I think I can hold just a bit longer till it hits $1,000, or $1,200 or maybe even $10,000.


Precious metals like gold and silver have an economic utility, so there will always be underlying value beneath and speculatory price. If you read something like Security Analysis or Intelligent Investor by Benjamin Graham (Warren Buffets mentor) you'll see they do a good job of explaining the difference between price and value, and how the markets will often have the price of something wrong in relation to its actual value. When something is underpriced (the price is less than the underlying value, you should buy). When something is overpriced, you should sell. However, you will never be able to successfully time the markets so it's wise to avoid speculating.


Again, fiat currency is the only accepted method of paying your taxes and if you don't pay your taxes guys with guns will try to take you away. There is a lot of value in that.

Some people do want bitcoin for itself -- e.g. some people purchase Casascius bitcoins for a premium over the going rate and some of the rarer Casascius bitcoins carry even larger premiums.

Bitcoin isn't just a cryptocurrency. Owning a bitcoin is, for some people, a statement of who they are and what they stand for, as Impaler made mention of.

Price != Value   

Markets only discover and assign prices to things, they can not create or assign value, that is left to the individual.  The individual who substitutes the market price for his own due-diligence at value assessment is a fool, the individual who can not understand the difference is an idiot.

porc:  I feel your pain debating these morons, though I may not agree with all that you have to say it has got to be depressing for you.

With regard to scarcity, what I think people have generally meant by scarcity is market-scarcity, that their are sufficiently few coins on the market that exchange rates are driven up.  Also I think this is one need that BTC fulfills, much like a lottery ticket it fulfills people psychological greedy desire for fantastic unearned wealth, it's the need to cling on to some tangible object of hope for the future to ease ones present misery, gold has been serving much the same function for sometime now with a dedicated libertarian-goldbug crowd.  Their are also various anti-government anti-banking ideological positions that most BTC holders are trying to affirm.  BTC can essentially be seen as a kind of cult-sacrament by which the members affirm their faith not just in BTC itself but in the 'inevitable downfall' of things like the USD (these forums have been predicting it's imminent demise for years now).

Here are a few problems:

1. Why we all agree on this forum fiat money has no intrinsic value, virtually all economists believe fiat money has value because it is backed by a government. The US dollar is the petrodollar, and is essentially the reserve currency of the world because oil is bought and sold in US dollars. This is coming to an end. You can knock fiat currency as worthless or suggest they only have value at the barrel of a gun, but the fact remains fiat has value because the market assigns to them value.

2. If Bitcoin has no value because it is only bought to be dumped to the next guy, please explain the following:

2a. Why do some people buy Bitcoin and store it, instead of dumping?

2b. If exchangers sell bitcoins for fiat money, because bitcoin is worthless for anything other than dumping, why do these exchangers store thousands and thousands of coins in their wallets and valuts? Why are they buying bitcoins and saving them?

2c. If dumping bitcoins on the next guy is the only reason to buy bitcoins in the first place, and this is a sign that bitcoin has no value, then why do people speculate on precious metals, only to dump them for fiat currency? By your argument, dumping something on others makes is valueless. And yet, precious metals markets are full of the same exact speculation of pumping and dumping and saving.

2d, Why would anyone buy precious metals with intrinsic value and then sell them for worthless fiat currency? Do they have a clue? Or is it because the market assigns to fiat currencies a certain value and gold and silver needs to be liquidated in order to be used?

This is at least your 3rd troll post in 2 days - moron.

No, give me your worthless bitcoins.
I'll send you a loaf of bread.
Good deal, eh? Hurry up before I realize how much you're ripping me off.

Youre an idiot dude. If bitcoin were still 5 dollars a coin, there would be no bitcoin available, and thats why the price keep going up. Thats scarcity dumbass. Because people want bitcoin, they just cant afford it anymore. You sound like an idiot and youre on a Pro bitcoin forum...get a life, youre out of your league

I am absolutely not kidding when I say I'll buy all of your Bitcoins for 20$.

You get something for giving me nothing.

Take it or leave it.

I have just realised that I have made one mistake in my bitcoin cant be money thread. I assumed that bitcoin, despite having no intrinsic value/utility on its own, is scarce. Bitcoin is not scarce as it has no value. To understand this lets look at the term scarcity.

Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. WIKI

Now already we have a problem. Bitcoin is not a resource that fullfills human wants. Dumping it on the next guy is not fullfilling a want if the other guy doesnt want bitcoin for itself but is also looking to dump it on the next fool. I have shown in the other thread that because nobody wants bitcoin for itself as it has no utility/ intrinsic value it cant be money.

Now if bitcoin does no fullfill a want, it cant be a resource. If its not a resource its not scarce.

For example: If we divide one ounce of gold by two we have two 1/2 ounces. Now 1/2 an ounce has half as much intrinsic value, as I can decorate only half as many objects. I can use only half as much for industrial production.

Now if we halve bitcoin the intrinsic value is still 0. 1/2 Bitcoin is as valuable as 1 Bitcoin as both have 0 value.

If I could divide a real resource like bread and the two parts where as valuable/ had as much utility as the whole, I could solve world hunger by dividing bread to infinty. We could say that bread is not scarce in this case.

Thus dividing bitcoin creates more of them from a value perspective.

Now it doesnt matter because infinte nothing is still nothing. The number of bitcoin is totally irrellevant as bitcoin has 0 value. 60 million times 0 is 0. 100 million  times 0 is still 0.