Digital currency creation is directly linked to electricity usage. I don't know this as fact but Bitcoins seem to be the oldest and most mined crypto-currency to date. They have used up the most resources (electricity) so far and continue to do so as more miners join the game.
I believe this contributes a lot to their current monetary value. Now with ASICs joining the game which are more energy efficient it might change the current situation.
Topic: Do Bitcoins need something REAL to back them? - page 2. (Read 7695 times)
Yes, metric tons of mining equipment...
Excellent point, since it is the mining network infrastructure that actually backs the securitized network "token" transfers and supports their cryptographic transaction journals. It is actually the vast majority of the "arguably some value" of each Bitcoin token.
Actually bitcoin is much better if electricity goes away
Grab a generator, use a satellite internet connection and ta-dah, it works.
Meanwhile the whole traditional banking system, atm, credit cards and the other electronic idiocies are unable to work due to their fail centralization.
Grab a generator, use a satellite internet connection and ta-dah, it works.
Meanwhile the whole traditional banking system, atm, credit cards and the other electronic idiocies are unable to work due to their fail centralization.
Also most people have no idea that their dry loop (or normal phone) line provides a free [email protected] of battery power (handy for recharging things, especially if you have just dry loop DSL and it never 130V-pulse-"rings") and the phone networks batteries are not only fully UPSed and totally independent of any grid-utility AC power, their internet service continues to work to all major backbones, unlike local cable/fibre which is all local grid-utility AC powered. Telephone systems inherited their ubiquitous battery mode of power operation because despite going tone and digital they've always still needed to ring bells and latch "hook" relays. Even if you have a 1913-15 candlestick phone (I do) it still works just fine.
So if you have even a small UPS, and/or a 12V battery for your DSL modem and/or just a tablet or laptop (not a power hog desktop) you're still pretty well set for a long power outage with internet connectivity, even without any generator.
Yes, metric tons of mining equipment...
I agree that bitcoin needs to be backed by something... an economy.
The definition of a 'fiat' currency is one that can be used to pay taxes.
One day perhaps it could happen (who knows!) but the same principle applies regardless. You have to be able to buy stuff with it. And you can. So that way it is 'backed' by very real capital.
The only thing we need to get the bitcoin economy moving is price stability.
Things that I think would help improve price stability are:
So everything seems on track, it's just going to take time.
The definition of a 'fiat' currency is one that can be used to pay taxes.
One day perhaps it could happen (who knows!) but the same principle applies regardless. You have to be able to buy stuff with it. And you can. So that way it is 'backed' by very real capital.
The only thing we need to get the bitcoin economy moving is price stability.
Things that I think would help improve price stability are:
- Broader distribution of the coins in circulation (more consumers, fewer speculators).
- A higher value in exchange for fiat currencies (harder to move the market).
So everything seems on track, it's just going to take time.
Actually bitcoin is much better if electricity goes away
Grab a generator, use a satellite internet connection and ta-dah, it works.
Meanwhile the whole traditional banking system, atm, credit cards and the other electronic idiocies are unable to work due to their fail centralization.
Grab a generator, use a satellite internet connection and ta-dah, it works.
Meanwhile the whole traditional banking system, atm, credit cards and the other electronic idiocies are unable to work due to their fail centralization.
Gold/fiat do have one advantage over bitcoin... you can still trade with them when the lights go out. Don't get me wrong, I think Bitcoin is superior in many ways... but imagine a world that trades exclusively in Bitcoin, and then imagine an EMP strike anywhere. We are close to this being an issue already with fiat being exchanged almost exclusively electronically, of course. I believe the smart course of action is "diversify".
Close? See what happens when the power is out. People can't user their credit cards, ATMs, etc. Euros and dollars become just as useless in this scenario as Bitcoin. It actually happened a while ago - people getting in tons of trouble cause they couldn't pay for their fuel anymore, had to walk home, etc. Chaos all over the place. So our dependency on electricity and internet is already a fact, regardless of Bitcoin.
There is also nothing that "backs" gold, it can be easily counterfeited (plated tungsten) and it too, even like oil, began it's path to becoming a symbol of wealth as a "pyramid scheme".
Gold was never a pyramid scheme. But it was at the top of the pyramid of acceptable commodity monies. And everybody used and accepted it.
I beg to differ. In fact salt, necessary to preserve meat before refrigeration, was the first "money", and all new markets for a new commodity are trade and distribution "pyramids".
The first cave guy who stumbled upon shiny yellow stones he couldn't eat or kill anything with in a pile of rocks at the bottom of some stream was exactly like Sitoshi. He picked them all up and went "kool" to himself, went back to the campground. probably pounded them into ear rings and pawned some of them off on some pals. Immediately these guys noticed that their shorties were fascinated by and thrilled with them. Soon other guys also came across chicks with them and also noticed they could also make rings and bangles out of them that really drove the chicks crazy and they all went back to Sitoshi to get some more.
Soon Sitoshi was fat, buried in other valuables and out of places to find more gold just laying around, so still having a bunch of gold that cost him nearly nothing, he decided he had to get guys to pan or mine for him around where he'd got the first batches. Also some dudes named litecoin also got hired by mistake and also figured out exactly what was going on with these ugly dudes getting action with all the hot chicks with this junk. Once Sitoshi's mine was sold out he was fixed for life, still selling it now for many hundreds of times more than he first did and out off the top of his 1st sales pyramid with a fortune. (and probably all the hottest babes in the region)
Meanwhile everybody else was left to either holding on to them as long a they could, and flipping bits for more stuff to new horny dudes or selling their hoards for similar fortunes of value to other tribal warlords etc. using bits of it for barter, whacking one another or "getting their sins forgiven" for some.
This of course prompted other gold mining and gold panning "pyramids" to be started as get rich schemes for their bankrollers. The story of oil is little different.
What actually increases the marginal value of gold and oil is the fact they are relatively scarce, lots of work to get, of marginal utility and are thus always worth bidding-up and fighting over.
The Bilderberg Gold Pharaohs of Liechtenstein still wield their monopoly over it as their fiat authority to own and enslave us all and our nations though the mechanisms of their exclusive proprietary ownerships of our national mediums of labour exchange currencies today.
Translation: Central bankers control the world because they control the money supply.
No, they ENSLAVE the world's people and their nations because they OWN it's people's Labour Exchange "money" supply, being it's rentiers, it's usurers for power and influence, it's fiat counterfeiters and the fiat devaluers of all labours.
In the Economics 101 lesson in Genesis of the famine in Egypt, Joseph, conveniently (greedily) sells Pharaoh’s stored grain until Pharaoh accrues all of the rare gold which was then the only form of "money" in the first year of famine. In the second year, the people were then forced to barter their animals and other holdings for the grain and then, thereafter, they end up bartering themselves as slaves for grain merely to survive the famine as they are all then finally left gold-rent debt-enslaved and bonded in indenture to Pharaoh for eternity. The famine was prepared for but the preparers sought only to enslave by it.
Finite gold or any "finite something" like DaVinci paintings or '57 Chevy Bel Airs could not ever be used as a Free Market "labor exchange currency" in any growing freed market economic system. A finite and privately hoarded “old money” (gold, silver, Quagga-skins etc) public Labor Exchange Currency supply system is prescription for slavery.
In any commercial system by means fair or foul a "commercial" winner (or winners) will always eventually emerge to own nearly all of the available, finite dual-use Labor Exchanging "currency" resource (all the gold or DaVinci paintings) after which point the rest of the economy (all property) becomes their private chattel, and all of it's participants become their rent-debt-slaves. In a private, finite currency system after that point everyone else has to go to them, cap in hand, to rent some piece of one of their loaned-out DaVinci paintings or a fiat token of their wealth derived from it (gold) even just to use a pay-toilet!
Even if everyone had some tiny reserve of gold or DaVinci painting scraps set aside as savings the debt enslavers could drive prices up by raising token-rent-debt-prices (tax-interest usury) or printing-dilution money-supply (monetization) inflation and thus force all the small gold holders to be forced to exchange their paltry holdings to eat or heat their homes or fuel their cars. (hoarded false-scarcities, engineered famines or pandemics).
One "winning" consumer (Gold Pharaoh), no matter how audacious his corruptly consumptive lifestyle cannot "urinate down" a "Free Market" economy getting his yards cut, building his pyramids or renovating his palaces. The power to counterfeit, loan and issue (from nothing) a fiat Labor Exchange Currency token is the power to corrupt. The Wealth of Nations is their public property expressed and represented by the foreign-export fruits of all labors value of their publicly owned and issued "Medium of Labor Exchange Currency". Defending, maintaining and growing the ongoing utility and labour-exchange value of its own citizens economic "currency" is the public work of a nation, it is not ever to be regarded as the private toy-hobby of some "beneficent" private Tory-Bilderberg Trotskyite Menshevik gang of wealthy boardroom(or stock market)-socialist Pharaohs.
When the "lights go out" fuels, ammunition, weapons and food will all have far more value than gold.
True that.A Bitcoin is simply a derivative that only represents the LOOT or SERVICES that the guy that you got it off, got out of you for it, and made off with. It is a fiat "futures derivative contract" that arguably has some but really has no certain inherent added-value, other than as a virtual digital sort of a much fancier kind of an encrypted GM ignition key, that you can move, swap and store electronically.
Bitcoin is not a derivative of anything. Neither is gold. And neither has any inherent value.
Legally speaking a "bitcoin" is a "Crypto-chain-securitized future-derivative-exchange token" contract, (just like a gold futures contract, a corn futures contract or a mortgage backed securities[gotta love that last word] futures contract) and this is why (loophole) it is NOT lawfully a Ponzi or Pyramid scheme. It is an exchange traded contract on the current value a (bull) speculator or (bear) thrift seeker places on the future value of some commodity.
In this case a Bitcoin-Securitized Token itself is the commodity the "futures derivative-value contract" is about.
Like a "gold contract' or "mortgage backed security' (I love that last word) derivative it is a "BTC -securitized Future Derivative Contract" that merely allows you to keep, transfer it around or transfer it somewhere else to resell it there for whatever it may seem to be worth to the next guy, a minimum of an hour from now.
Securitized Future Derivative Contract. Really? What are the terms of this contract? What is "securing" this contract? Are you just trying to say that holding Bitcoins is bit of a gamble? That is exactly all that it is. The terms are you pay it's holder what you think it is/will be worth to you in the future in order to possess it. It is "secured" by the encryption chain that guarantees and certifies it's provenance and makes it unforgeable.
It is almost all a gamble, except it undeniably has value and utility of it's own, and is therefore not legally a "nothing for a something", the risk is in it's market valuation.
And, it is "backed" by the good faith and trust of all in the fruits of the labours of it's owners who are the economic "Nation of Bitcoin". It is also the first Global-Economic "nation" of digitally productive citizens.
The suicidal crisis with Fiat Bitcoins is that there is no convention nor systematic mechanism of well-regulation to stabilize nor assure users the stable Fiat "value" of them, relative to anything else practical. This means that they are doomed to being totally unsuitable, unreliable, non dependable and useless as a Medium of Labour Exchange Currency.
Translation: Bitcoins will never be good money because their value will never be dependable. Maybe, but not for lack of convention, systematic mechanism or well-regulation.I enjoy parsing circumlocutory prose as much as the next guy, but seriously, that was a lot of work.
I have proposed a solution
See this proposal/explanation
Re: stable bitcoin pricing...The "Bubbles with Bitcoins" nightmare
https://bitcointalksearch.org/topic/m.1832923
I would like to reverse the question: Does fiat need to be backed by Bitcoin instead of "full faith and credit of the State"? I would say, wholeheartedly YES. I doubt this would happen... but if we could get governments to be open again about how much money they have in circulation, and this was tied to the balance a specific Bitcoin address, this would solve the single problem I have with Bitcoin (how difficult it is to trade, especially with no power), and ALL the problems of government-issued currencies. Or am I completely wrong?
Backing fiat money with bitcoin (or gold or anything else) would convert the fiat money into an honest money substitute (and no longer fiat) again. Fiat money is "money by decree". It is in a very real sense fake. The only things which gives it value are the cultural memory of "dollar-ness" coupled with the legal tender laws which make it illegal to issue private competing currency.
Bitcoin has most of the properties necessary to make it money. If and when it is widely considered to be money, then it could conceivably be "kept" in a safe place (e.g. the distributed network in which it currently exists) as backing for some unspecified, more transportable surrogate. In the heyday of private and state banking, the checks cross-written against groups of banks were cleared every day at a clearing house. The differences at the end of the clearing calculations were then settled between the banks by physical gold transfers. This was done continually all over the world in a local, regional, national layered fashion with the final clearing done in London. Only the interbank differences were settled in gold.
The days of the gold standard did not mean that everybody carried gold around in their pockets. It only meant that their "paper money" was fully backed by gold. And "at the end of the day", all accounts were settled. It worked beautifully. This may be a good model to think about with respect to Bitcoins. We don't all have to deal directly with Bitcoins, as long as the accounts are settled in Bitcoin periodically. This leaves us free to invent an honest bitcoin substitute that may be more convenient to use, but is backed by Bitcoin (like gold used to back bank drafts).
Right, that's exactly what I was getting at, and why I thought it would solve all the issues of "fiat money", and also my single issue with Bitcoin. The advantage of turning fiat money into representative money backed by Bitcoin (over, say... gold or oil) being that if I own a large store BTC, I can (presumably) convert it instantly to the local Bitcoin-backed currency no matter where I've traveled without carrying it with me.
Backing fiat money with bitcoin (or gold or anything else) would convert the fiat money into an honest money substitute (and no longer fiat) again. Fiat money is "money by decree". It is in a very real sense fake. The only things which gives it value are the cultural memory of "dollar-ness" coupled with the legal tender laws which make it illegal to issue private competing currency.
Bitcoin has most of the properties necessary to make it money. If and when it is widely considered to be money, then it could conceivably be "kept" in a safe place (e.g. the distributed network in which it currently exists) as backing for some unspecified, more transportable surrogate. In the heyday of private and state banking, the checks cross-written against groups of banks were cleared every day at a clearing house. The differences at the end of the clearing calculations were then settled between the banks by physical gold transfers. This was done continually all over the world in a local, regional, national layered fashion with the final clearing done in London. Only the interbank differences were settled in gold.
The days of the gold standard did not mean that everybody carried gold around in their pockets. It only meant that their "paper money" was fully backed by gold. And "at the end of the day", all accounts were settled. It worked beautifully. This may be a good model to think about with respect to Bitcoins. We don't all have to deal directly with Bitcoins, as long as the accounts are settled in Bitcoin periodically. This leaves us free to invent an honest bitcoin substitute that may be more convenient to use, but is backed by Bitcoin (like gold used to back bank drafts).
The problem with that is the same as whast the creator of the liberty dollar came up against; when you create currency to be used to pay debts, the government tends to frown upon that. As long as bit coin stays in the realm of the virtual, I believe it will be able to survive long enough to gain the traction it needs to survive the direct pressure a government can bring to bear. Plus with it being internationally traded as long as one coumtry gives it Safe harbor if it comes under regulation we should see a long term sustainable sitation.
Yes. They should have something of economic value (besides their own utility) on deposit. It needs to be difficult to produce (like mining gold or bitcoins), but able to expand dynamically (unlike gold or bitcoins), and able to shrink rather than hang around in surplus (unlike gold or bitcoins), and completely liquid (unlike gold).
That's why the professor's idea of Capital as Money has potential.
A person should have to put a share of an Exchange Traded Fund that represents all publicly traded stocks of a certain size. The shares (not the price of the shares) represent true value with a limited ability to be created (starting a profitable company of that size is much harder than mining for bitcoins). Their appearance and disappearance is not magic (like fiat money and fractional reserve banking) but it is not contrived either (like Bitcoins).
The rest of the process of creating more stable money should evolve along a natural path in the open source manner that Bitcoin is.
That's why the professor's idea of Capital as Money has potential.
A person should have to put a share of an Exchange Traded Fund that represents all publicly traded stocks of a certain size. The shares (not the price of the shares) represent true value with a limited ability to be created (starting a profitable company of that size is much harder than mining for bitcoins). Their appearance and disappearance is not magic (like fiat money and fractional reserve banking) but it is not contrived either (like Bitcoins).
The rest of the process of creating more stable money should evolve along a natural path in the open source manner that Bitcoin is.
I would like to reverse the question: Does fiat need to be backed by Bitcoin instead of "full faith and credit of the State"? I would say, wholeheartedly YES. I doubt this would happen... but if we could get governments to be open again about how much money they have in circulation, and this was tied to the balance a specific Bitcoin address, this would solve the single problem I have with Bitcoin (how difficult it is to trade, especially with no power), and ALL the problems of government-issued currencies. Or am I completely wrong?
Backing fiat money with bitcoin (or gold or anything else) would convert the fiat money into an honest money substitute (and no longer fiat) again. Fiat money is "money by decree". It is in a very real sense fake. The only things which gives it value are the cultural memory of "dollar-ness" coupled with the legal tender laws which make it illegal to issue private competing currency.
Bitcoin has most of the properties necessary to make it money. If and when it is widely considered to be money, then it could conceivably be "kept" in a safe place (e.g. the distributed network in which it currently exists) as backing for some unspecified, more transportable surrogate. In the heyday of private and state banking, the checks cross-written against groups of banks were cleared every day at a clearing house. The differences at the end of the clearing calculations were then settled between the banks by physical gold transfers. This was done continually all over the world in a local, regional, national layered fashion with the final clearing done in London. Only the interbank differences were settled in gold.
The days of the gold standard did not mean that everybody carried gold around in their pockets. It only meant that their "paper money" was fully backed by gold. And "at the end of the day", all accounts were settled. It worked beautifully. This may be a good model to think about with respect to Bitcoins. We don't all have to deal directly with Bitcoins, as long as the accounts are settled in Bitcoin periodically. This leaves us free to invent an honest bitcoin substitute that may be more convenient to use, but is backed by Bitcoin (like gold used to back bank drafts).
"The bitcoin is backed by math argument" is kinda silly if you ask me. It´s backed by people who belive in it, but it have no other use than a medium of exchange, therefor it will fail.. In the long run, or short run. It could even be tommorow who knows. The problem is that the source code of bitcoin can be copied to infinity and create infinite new eCoins, you cant do that with physical things like gold.
You can also do something else with physical things like gold rather than use it as a medium of exchange, you cant do that with bitcoin.
You can also do something else with physical things like gold rather than use it as a medium of exchange, you cant do that with bitcoin.
What can you personaly do with gold besides trade it for money? The answer for someone without a smelter is not much. Most money today is fiat currency and backed by the economy it represnts. In other words currency is moving in the bit coin direction.
Very interesting question. The answer is no. Bitcoin does not need and should not be "backed" by anything. To really understand the issue, however, we need a little history lesson. Gold used to "back" paper money because everyone knew that gold was money and paper money was just a money substitute. Gold was perfectly good money for thousands of years. Paper money was originally (starting in the middle ages for the sake of argument) just a warehouse receipt given to the owner of gold who chose to store his gold in the goldsmith's safe. The goldsmith gave the customer a receipt. That was the first paper money. That receipt was redeemable on demand for the quantity of gold printed on the receipt. In other words - gold backed the paper.
Over the years, people got used to carrying around and trading paper receipts (which were more convenient than gold) and would use them as a substitute for actual gold. But everyone was acutely aware that the paper was not the money. The gold that backed it was the money. In those days (and before that as well), gold's value was overwhelmingly based on its ability to be money. See my post https://bitcointalksearch.org/topic/m.1871316 on inflation and the properties of money. As time went on, people started to forget about gold and started to believe that the paper receipts were money. The problem with paper money is that it is much easier to debase (inflate) than gold. Governments hate gold (as they will hate bitcoin) because then cannot simple "print it" to fund their welfare/warfare states. There are numerous examples in history of governments (in bed with the goldsmiths) creating paper currency (out of thin air) divorced from any real gold and thereby destroying their own economies. (I include all modern electronic versions of official currency when I say "paper money".)
The reason history and common sense says that paper money needs to be backed by gold is that gold is the market winner (over thousands of years) in the contest of what is the best money. Its money properties were almost single-handedly responsible for the advancement of civilization from barbarism to the modern world.
So, when x backs y, x is money and y is the money substitute. As long as people honor the one-to-one relationship between x and y, it's perfectly ok for gold to back paper money or even for bitcoins to back paper money. So, nothing should back gold because gold is (or was) money. Sadly, society has been so far removed from gold for so long, that gold no longer really qualifies as money. And while Bitcoin doesn't quite qualify as money yet, it may someday, and as such it might back something else (even informally). Something as simple as an IOU on the back of an envelope that says IOU 4BTC qualifies as paper money backed by bitcoin.
Final thought on gold. I read a few years ago that if gold were still commonly understood to be money it would be worth over $20,000 per ounce. The reason for this is that the nominal value of all the goods and services in the world divided by the weight of all the gold in the world comes out to about $20K. I could be way off here, but you get the point.
Over the years, people got used to carrying around and trading paper receipts (which were more convenient than gold) and would use them as a substitute for actual gold. But everyone was acutely aware that the paper was not the money. The gold that backed it was the money. In those days (and before that as well), gold's value was overwhelmingly based on its ability to be money. See my post https://bitcointalksearch.org/topic/m.1871316 on inflation and the properties of money. As time went on, people started to forget about gold and started to believe that the paper receipts were money. The problem with paper money is that it is much easier to debase (inflate) than gold. Governments hate gold (as they will hate bitcoin) because then cannot simple "print it" to fund their welfare/warfare states. There are numerous examples in history of governments (in bed with the goldsmiths) creating paper currency (out of thin air) divorced from any real gold and thereby destroying their own economies. (I include all modern electronic versions of official currency when I say "paper money".)
The reason history and common sense says that paper money needs to be backed by gold is that gold is the market winner (over thousands of years) in the contest of what is the best money. Its money properties were almost single-handedly responsible for the advancement of civilization from barbarism to the modern world.
So, when x backs y, x is money and y is the money substitute. As long as people honor the one-to-one relationship between x and y, it's perfectly ok for gold to back paper money or even for bitcoins to back paper money. So, nothing should back gold because gold is (or was) money. Sadly, society has been so far removed from gold for so long, that gold no longer really qualifies as money. And while Bitcoin doesn't quite qualify as money yet, it may someday, and as such it might back something else (even informally). Something as simple as an IOU on the back of an envelope that says IOU 4BTC qualifies as paper money backed by bitcoin.
Final thought on gold. I read a few years ago that if gold were still commonly understood to be money it would be worth over $20,000 per ounce. The reason for this is that the nominal value of all the goods and services in the world divided by the weight of all the gold in the world comes out to about $20K. I could be way off here, but you get the point.
I think you might find the professor's book http://www.amazon.com/Capital-As-Money-ebook/dp/B009AP9ZG6 interesting. The Kindle version is free right now. He proposes the idea that money is better when backed, but that how it's backed is tricky. It SHOULD be backed by the value of the economy. A reasonable approximation of 'the economy' is the largest publicly traded corporations....using something like S&P500 ETF shares. To purchase Bitcoin, for example, you should have to put 1 or 10 shares of SPY on deposit.
I think it has potential.
The rest of my "ramblings" were with regard to the subject of this discussion:
Do Bitcoins need something REAL to back them?
not to do with the "ramblings" of yours.
Fair enough. I just assume people are talking to me when they start by quoting me. Sorry for the misunderstanding Do Bitcoins need something REAL to back them?
not to do with the "ramblings" of yours.
I would like to reverse the question: Does fiat need to be backed by Bitcoin instead of "full faith and credit of the State"? I would say, wholeheartedly YES. I doubt this would happen... but if we could get governments to be open again about how much money they have in circulation, and this was tied to the balance a specific Bitcoin address, this would solve the single problem I have with Bitcoin (how difficult it is to trade, especially with no power), and ALL the problems of government-issued currencies. Or am I completely wrong?
There is also nothing that "backs" gold, it can be easily counterfeited (plated tungsten) and it too, even like oil, began it's path to becoming a symbol of wealth as a "pyramid scheme".
Gold was never a pyramid scheme. But it was at the top of the pyramid of acceptable commodity monies. And everybody used and accepted it. The Bilderberg Gold Pharaohs of Liechtenstein still wield their monopoly over it as their fiat authority to own and enslave us all and our nations though the mechanisms of their exclusive proprietary ownerships of our national mediums of labour exchange currencies today.
Translation: Central bankers control the world because they control the money supply.When the "lights go out" fuels, ammunition, weapons and food will all have far more value than gold.
True that.A Bitcoin is simply a derivative that only represents the LOOT or SERVICES that the guy that you got it off, got out of you for it, and made off with. It is a fiat "futures derivative contract" that arguably has some but really has no certain inherent added-value, other than as a virtual digital sort of a much fancier kind of an encrypted GM ignition key, that you can move, swap and store electronically.
Bitcoin is not a derivative of anything. Neither is gold. And neither has any inherent value. Like a "gold contract' or "mortgage backed security' (I love that last word) derivative it is a "BTC -securitized Future Derivative Contract" that merely allows you to keep, transfer it around or transfer it somewhere else to resell it there for whatever it may seem to be worth to the next guy, a minimum of an hour from now.
Securitized Future Derivative Contract. Really? What are the terms of this contract? What is "securing" this contract? Are you just trying to say that holding Bitcoins is bit of a gamble? The suicidal crisis with Fiat Bitcoins is that there is no convention nor systematic mechanism of well-regulation to stabilize nor assure users the stable Fiat "value" of them, relative to anything else practical. This means that they are doomed to being totally unsuitable, unreliable, non dependable and useless as a Medium of Labour Exchange Currency.
Translation: Bitcoins will never be good money because their value will never be dependable. Maybe, but not for lack of convention, systematic mechanism or well-regulation.I enjoy parsing circumlocutory prose as much as the next guy, but seriously, that was a lot of work.
Gold/fiat do have one advantage over bitcoin... you can still trade with them when the lights go out. Don't get me wrong, I think Bitcoin is superior in many ways... but imagine a world that trades exclusively in Bitcoin, and then imagine an EMP strike anywhere. We are close to this being an issue already with fiat being exchanged almost exclusively electronically, of course. I believe the smart course of action is "diversify".
There is also nothing that "backs" gold, it can be easily counterfeited (plated tungsten) and it too, even like oil, began it's path to becoming a symbol of wealth as a "pyramid scheme". The Bilderberg Gold Pharaohs of Liechtenstein still wield their monopoly over it as their fiat authority to own and enslave us all and our nations though the mechanisms of their exclusive proprietary ownerships of our national mediums of labour exchange currencies today. When the "lights go out" fuels, ammunition, weapons and food will all have far more value than gold.
A Bitcoin is simply a derivative that only represents the LOOT or SERVICES that the guy that you got it off, got out of you for it, and made off with. It is a fiat "futures derivative contract" that arguably has some but really has no certain inherent added-value, other than as a virtual digital sort of an encrypted GM ignition key, that you can move, swap and store electronically.
Like a "gold contract' or "mortgage backed security' (I love that last word) derivative it is a "BTC -securitized Future Derivative Contract" that merely allows you to keep, transfer it around or transfer it somewhere else to resell it there for whatever it may seem to be worth to the next guy, a minimum of an hour from now.
The suicidal crisis with Fiat Bitcoins is that there is no convention nor systematic mechanism of well-regulation to stabilize nor assure users the stable Fiat "value" of them, relative to anything else practical. These means that they are doomed to being a totally unsuitable, unreliable, non dependable and useless Medium of Labour Exchange Currency.
I said nothing about gold being "backed" or that it couldn't be counterfeited. I said it had one advantage over Bitcoin (no more, no less)... It can be traded when there is no power. No power doesn't have to equate to anarchy or some post-apocalyptic world you saw in a movie. It can be simply "the power went out, and will be out for the next X days". Even in your post-apocalyptic world, people will still want to trade in a currency -- the relative value of that currency to other commodities is irrelevant. So what if gold is less valuable than food? If I have food to trade, and you have fuel that I don't need, then we're going to have a tough time trading. I can carry more "value" of gold than I can gallons of fuel... unless fuel *becomes* the new "gold" (it's value "density" being quite high). That's the problem that currency solves. That is not a problem that Bitcoin can currently solve unless one has both electricity and working connection to the network. The rest of your ramblings are irrelevant.
The rest of my "ramblings" were with regard to the subject of this discussion:
Do Bitcoins need something REAL to back them?
not to do with the "ramblings" of yours.
The relatively assured stable value over time of a Medium of Labour Exchange Currency is it's most critically important and indispensable feature, eclipsing even it's portability and immunity to counterfeiting!
In Economics, Labour alone is the Prime Commodity-Resource, without it, nothing happens, period!
It doesn't matter if it's scratching a nose at an auction, hitting a key, doing a heart transplant, changing a tire, wiring a house, curing a disease, buying or selling a share, paying a bill, inventing a Bitcoin or taking out the garbage.
The Prime Commodity Resource of the Fruits of all Labours is the hopefully ever-expanding (growing) Wealths of all Nations. The wealth of a nation's exports is what "backs" the "relative to other currencies" day to day value of it's people's Labour Exchange "currency" in the global marketplace.
Finite, precious resources like fine art, antiques, collectables and to a lesser extent second rate finite commodity resources like platinum, gold, gems and other generic junk are "deflationary" Mediums of Savings simply because they are finite as the fruits of all labours cannot be.
All other commodity resources are mere Mediums of Investment that can go up or down like toilet seats depending on a myriad of esoteric elements of technological chance, adaptations or happenstance.
No contractor, entrepreneur not merchant can price a contract to do anything or hire others to do them in an unstable supposed "Medium of Labour Exchange Currency" that may be $80 one day $100 the next, $260 the next and then $50 two hours after that, nor one that changes 15%-70% of it's value any time of any day like a toilet seat.
Nobody could risk the time it takes to get or spend it.
BTW gold and oil have had a totally consistent relative value to one another for a hundred years, and you cannot really trade gold unless you have a battery operated drill and assaying equipment.
Lol do you seriously dont get my point?
For me to OWN a bitcoin I have to put my faith in it that some other person would value it as much as I did, otherwise I loose. Lets say a bitcoin 2.0 gets online with much better properties making your bitcoin 1.0 worthless. If I own Stored energy, I can USE it to something like powering my computer, TV, cooking plate, powering ASICs performing protein folding, (not useless shit like double SHA-256 hashing
)..
Do you still dont get it??
For me to OWN a bitcoin I have to put my faith in it that some other person would value it as much as I did, otherwise I loose. Lets say a bitcoin 2.0 gets online with much better properties making your bitcoin 1.0 worthless. If I own Stored energy, I can USE it to something like powering my computer, TV, cooking plate, powering ASICs performing protein folding, (not useless shit like double SHA-256 hashing
).. Do you still dont get it??
So for me own a dollar the same would have to be true, that is true in any currency. Your energy currency theory is still under the same law. What if one computer requires X energy to be powered. Yet computer 2 requires X+1 energy.
I still want to know who decides to change the mining process!
The people... Gavin would create the software to change the mining process, we would all upgrade to that, and the miners would start using that, and then the blockchain would fork and as the fork gets longer, then that software would be the only one that would be able to create the valid transactions.
The more I read about cryptos I actually starting to feel safer holding crappy currencies like fiat, Swedish Krona to be exact
I´m having really hard deciding what is best to own right now gold, fiat or cryptos they all have their shortfalls. A energybased currency would be one of the best alternatives if you asked me, but thats my point of view.
Fiat could stand this storm and then the gold and cryptos just will be seen as big bubbles, so right now I´m just passively observing. I´m actually still not comfortable putting my savings into a highly speculative currency based on a software that is far from flawless.
If a organization would like to shut down the cryptos they would only have to invest about 20$ millions(this a piss in the sea for a government or bank) into ASICs and then kill it with a 51%-attack. It´s probably not gonna happen, but it isnt totally unlikely either.
Fiat could stand this storm and then the gold and cryptos just will be seen as big bubbles, so right now I´m just passively observing. I´m actually still not comfortable putting my savings into a highly speculative currency based on a software that is far from flawless.
If a organization would like to shut down the cryptos they would only have to invest about 20$ millions(this a piss in the sea for a government or bank) into ASICs and then kill it with a 51%-attack. It´s probably not gonna happen, but it isnt totally unlikely either.
Cryptos will always be see a bubble cause that what people want to believe. It is young it is going to move up and down fast.
The software has yet to be hacked so to say it is far from flawless is not correct. You do know most software ship with ~ 50,000 Bugs known. Bitcoin software is probably one of the most well written pieces of software I have seen.
It would be a lot more than $20 million, if that was true then NSA would have done it a long time ago. NSA does know about bitcoin, the CIA invited Gavin to talk about it so it is on there radar.
The total tH/s of the bitcoin network is 64 terahashes/s right now. And a minirig from BFL costed $30 000 and produced 1,5 tH/s so to get up over 64 tH/s I would have to get 43 minirigs and that would cost me about 1.3$ million so I was being generous when I said 20$ million, calculating that the hashrate would increase a lot and that goverments usually are cost ineffective.
I could make alot of money if I had the capital to perform a 51 %-attack because I could short the bitcoin-market before, Actually a big organization dont really have anything to loose in a investment like that. Because they could make a lot of money shorting the market and in the same way getting rid of competition, and if they failed a 51%-attack they still would control a huge amount of the bitcoin market.
I think the bitcoin far from flawless, but that´s just me and I like you to prove me wrong.
That isn't how it works, but ok, you also didn't take into account the difficultly rising there so many variables, that $20 million is not equal to a 51%.
I have proved you wrong and answer everyone of your questions so I am guessing your cult mind will not change. But I think you will never see the light of bitcoin and that is ok. I hope you stick around and helps us to move bitcoin into a places where we have a lot of criticism, I feel too safe on this forum.
Explain.
If a 51% attack was actually to happen, where it is on purpose, we would probably fork to a new mining process that rendered those ASIC machines out.
No, they already have the drug trade behind them.
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