Topic: ECB paper on Bitcoin and virtual currencies - page 2. (Read 16899 times)

I disagree. If you have bitcoins, that shows that you did give value to society either by securing the Bitcoin network or by exchanging other goods and services for coins. I think your issue is whether you gave "enough" value to justify the potentially-huge appreciation in value you may reap if your coins become more valuable. I think so. We're taking a big risk on an untested but potentially world changing technology. If there were no chance of a big payoff, there'd be no way to bootstrap Bitcoin to the level it needs to be successful.

But no, the fiat printers didn't give value. And that's why the system is breaking down. They're only able to receive value because of a government granted monopoly backed by the threat of force. Bitcoin is voluntary and that's why the information it provides about value is more reliable.

I've never understood the notion of bitcoin as a commodity.

Money, in the abstract sense, is value that you have given to society, that you have not yet redeemed.  It is a token of a half-completed trade.  Bitcoin is an excellent implementation of that abstract idea.

The more specific meaning of the term commodity is applied to goods only. It is used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market.[3] A commodity has full or partial fungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them. "From the taste of wheat it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist."[4] Petroleum and copper are examples of such commodities.[5] The price of copper is universal, and fluctuates daily based on global supply and demand. Items such as stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface, the perceived quality etc. And, the more valuable a stereo is perceived to be, the more it will cost.

In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, salt, sugar, coffee beans, soybeans, aluminum, copper, rice, wheat, gold, silver, palladium, and platinum. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.

I will be interested to know more about it, please explain

Just a random thought.  As others have pointed out, the three categories of "virtual currency" the ECB identifies in its paper are interesting in an academic sense, but from a practical perspective, it almost seems silly to talk about them together.  It's sort of like doing a report on the threat posed by various lizards and discussing the following:

1. pet iguanas (like WoW gold and other "Type 1" currencies, these guys are cute and essentially harmless);
2. pet crocodiles (like Linden dollars and other "Type 2" currencies, these guys could be dangerous if you let them grow large enough and didn't keep them contained, but the threat is certainly a manageable one);
3. Godzilla (Japanese-in-origin Godzilla is the "King of Monsters" and Japanese-in-origin Bitcoin is the King of Cryptocurrencies; Godzilla had the power to destroy entire cities and Bitcoin has the power to destroy an entire financial system; Godzilla started out as a villain -- and that's certainly how the establishment views Bitcoin now -- but he became a hero and defender of the people; Bitcoin is the people's currency and a powerful tool for protecting their freedom, and I think it will become increasingly recognized as such as time passes)

...

Right now it's possible to get bitcoins without adding trade value, but only because it's necessary to create the initial supply somehow. Even now, though, the amount of coins being traded on a regular basis is many times the supply of new coins being minted, and mining is only going to get less signifigant over time.

I don't see how bitcoin fulfills this. Not that the early adopters and inventors of bitcoin don't "deserve" the many coins they have, but they have not received that as compensation for having given anything to society.

I don't see how bitcoin fulfills this. Not that the early adopters and inventors of bitcoin don't "deserve" the many coins they have, but they have not received that as compensation for having given anything to society. The same goes for fiat: what value has the ECB/FED/govt given to society that justifies them being able to redeem the enormous sums they print up?

With fiat, money is debt. With bitcoin it's a commodity ("some finitely available thing", at least). Your abstract idea of bookkeeping who owes what or is owed by "society" is pretty,.. well: abstract and not very applicable anywhere I'm looking. Bitcoin is an excellent implementation of something different. It can't be an implementation of what you talk about, because bitcoin has no concept of "value being give to society".

I think you might be talking about karma. :-)

"Bitcoin can be a real danger if it grows and we don't really know what to do about it once it does."

"Bitcoin community at large is still oblivious of the fact they are actualy testing and improving our proposed one world currency system."  

I've never understood the notion of bitcoin as a commodity.

Money, in the abstract sense, is value that you have given to society, that you have not yet redeemed.  It is a token of a half-completed trade.  Bitcoin is an excellent implementation of that abstract idea.

I've never understood the notion of bitcoin as a commodity.

Money, in the abstract sense, is value that you have given to society, that you have not yet redeemed.  It is a token of a half-completed trade.  Bitcoin is an excellent implementation of that abstract idea.

I noticed that the ECB never referred to Bitcoin as a commodity or as commodity money.  I think that is significant, legally.

They acknowledge the philosophy was inspired by the gold standard but their charts exclude gold. If you put gold in the charts and remove SLL it would provide a more constructive comparison (USD vs BTC vs GOLD)

It's interesting how zerohedge says these are incomparably bigger problems for the ECB than bitcoin. I think they might blow up for them sooner than bitcoin, but it's entirely possible that these will be dwarfed by the problem bitcoin will create for the ECB and fiat currencies (mainly: death) and the greek and spanish bond market troubles might turn out to be mere footnotes in the history books.

Bitcoin poses a unique threat to this old system, and governments may need to be reminded that they must behave democratically and co-operate with Joe Public to avoid a crisis.

I really do get the feeling that the report is a message from "a higher class of government", and it's implied that the various national governments (in the EU at least) are indeed "middle management" bureaucrats.

We have a general morality gap, we are over-leveraged, we have neglected to invest in the future, we have undermined social coherence, and we are in danger of completely losing the confidence of future generations. Solving problems in the context of outdated and crumbling models will only dig us deeper into the hole. We are in an era of profound change that urgently requires new ways of thinking instead of more business-as-usual". [emphasis added]

ECB will need to print trillions of euros to save Spain and Greece - of course they are afraid of crypto currencies that CANT be printed to infinity.

Wow.

http://www.libertariannews.org/2012/11/04/bitcoin-fear-mongering-by-an-mba-school-ranking-website/