Topic: The Great Bitcoin Collapse of 10/17/11 (Read 3719 times)

This "familiarity" is really important. It's about trust in its store of value being stable compared to the goods people buy with it.


It doesn't "act" like a good proxy because it's not a good proxy. I can't rely on it as an exchange medium because it doesn't allow me purchase goods with any kind of regularity (it can't purchase anything I truly value, like my tax obligation, my groceries, and my rent). The one time I suggested an exchange of goods with Bitcoin, the seller told me that he would not, in fact, actually accept bitcoin because its value is changing too rapidly. For the undereducated: "I can't accept bitcoin because what you pay me with tomorrow has the potential to be worth way less than I am willing to accept for these goods today." This is the problem.


I recognize that government backed currencies are very much manufactured in the sense that their value is based on policy, powerful individual decision-making, taxation-backed, etc. And centralized fiat currency definitely has the potential to be manipulated in a way that ruins life. See Zimbabwe inflation. But the fact is, USD has not done this. It's very well understood in the US elite Fed crowd that a reliable store of value (read: stable in terms of the goods it can buy), plus wide adoption (salaries and taxes paid in USD) matters enormously. Trust, based on stable currency-to-good exchange  is paramount.

I like the idea of an unmanipulatable currency. This really is Bitcoin's strong point. But you need much, much more than this. You need stability in terms of goods, you need predictable access (regulation and assurance that you get what you pay for), and you need reduced barriers to entry to make any exchange medium useful. Bitcoin has none of this compared to USD, and there's nothing inherent in Bitcoin to ursurp a well-established system that just works, on a day-to-day level.

This isn't some grand conspiracy. Bitcoin sucks as a way to pay for things. And for this reason, it will either remain a speculative toy, or die out like many, many attempted stores of value.

Basic point: the most reliable, safe, and easily accessible currency will win out in exchange. Anything else is a pure commodity rife with speculative prices.

I believe that this has been more or less my sense from early in my exposure to Bitcoin (which was delayed until post-peak due to some other financial adventures), but it's hard to remember exactly.  I do believe that Bitcoin could function servicably in this role, for a time at least, but likely only if a void opens up due to some financial calamity.

A more recent epiphany (for me) is that currency generally is not a logical store of value.  It's value lies in how it moves things around, and that value is what I would like to see be more equitably distributed.  (It's also during this motion that it is most easy for third-party actors to reach out and grab a chunk, and Bitcoin is unusually good at avoiding this misfortune.)


(Forgive me if you've seen my elaboration on this before, or if I otherwise bore you, but...) I have had a vision about what I call 'block chain zero' serving as something of a backing store for a multitude of similar currencies each with it's own inflationary properties, transaction fees, etc.

Holders of 'block chain zero' value could choose which 'sub-currency' to support based on their reward (or politics or whatever) and similarly, users of the sub-currencies could choose which ones to use base on the benefit which it provides them relative to other sub-currencies.  Exchanges could value all of the currencies with probably more accuracy than any other form of rating organ.

In this way I believe that the holders of currency and the users of it would both have a pretty powerful hand and thus a fairly equitable solution would fall out.  In fact, it would not surprise me if the holders got a pretty raw deal as they would need to compete with their most altruistic of their peers.  That would be fine with me

My concerns are along the lines of whether coalitions would form and destabilize things, or whether natural oscillations in such a system would render it unworkable.  My current sense is actually that my concerns here, and other issues I've not dreamed up, would be terminal for an end-game such as I've described.

You seem to be implying in this and other threads that Bitcoin will turn into something which is used by a different class of users, and in different ways, than is commonly assumed.  I'm fascinated because fairly early in my studies I theorized about this (and it bothered me.)

I sort of gave up on the line of thought because it seemed like a good part of the strength of Bitcoin would be lost if it were not in fairly widespread use among numerous people with a good understanding of things and with conflicting interests.  Any one faction gaining significant advantage would destroy the whole thing.  I assumed that if Bitcoin were deemed to be of high value to wealthy individuals or intelligence agencies or whatever, it's use would need to be fostered amongst the general population.  One of me 'evil self-interested' thoughts was to hope for this and ride such a wave, but it seemed like such a long shot that it fell off my list of plausible end-games.  I see no real evidence of it other than possibly some surprisingly positive mainstream press.  The market is so small now that anyone with any power would have to be trying pretty hard not to destroy the system or demoralize the participants.

I wasn't wrong. I just know you, in particular, can't read right. I said it just fine, but I knew you would probably misinterpret the demonstrative as well as tell me that the "uniqueness" of the last remaining bitcoin transaction holds more value than any single barter with any two items.

I know you really, really want to be right. I'm sorry, old_engineer.

The Bitcoin That Claims It Isn't: Who's that then?
The Debt Collector: I dunno, must be a king.
The Bitcoin That Claims It Isn't: Why?
The Debt Collector: He hasn't got shit all over him.

The Debt Collector: Bring out yer dead.
[a man puts a bitcoin on the cart]
Large Man with Bitcoin: Here's one.
The Debt Collector: That'll be $2.
The Bitcoin That Claims It Isn't: I'm not dead.
The Debt Collector: What?
Large Man with Bitcoin : Nothing. There's your $2.
The Bitcoin That Claims It Isn't: I'm not dead.
The Debt Collector: 'Ere, he says he's not dead.
Large Man with Bitcoin: Yes he is.
The Bitcoin That Claims It Isn't: I'm not.
The Debt Collector: He isn't.
Large Man with Bitcoin: Well, he will be soon, he's very ill.
The Bitcoin That Claims It Isn't: I'm getting better.
Large Man with Bitcoin: No you're not, you'll be stone dead in a moment.
The Debt Collector: Well, I can't take him like that. It's against regulations.
The Bitcoin That Claims It Isn't: I don't want to go on the cart.
Large Man with Bitcoin: Oh, don't be such a baby.
The Debt Collector: I can't take him.
The Bitcoin That Claims It Isn't: I feel fine.  Look at me! Already up to $2.60 and starting another bull market!
Large Man with Bitcoin: Oh, do me a favor.
The Debt Collector: I can't.
Large Man with Bitcoin: Well, can you hang around for a couple of minutes? He won't be long.
The Debt Collector: I promised I'd be at the Satoshis'. They've lost nine today.
Large Man with Bitcoin: Well, when's your next round?
The Debt Collector: The Weekend.
The Bitcoin That Claims It Isn't: I think I'll rise in value!
Large Man with Bitcoin: You're not fooling anyone, you know. Isn't there anything you could do?
The Bitcoin That Claims It Isn't: I feel happy. I am valuable!
[the Debt Collector glances up and down the street furtively, then silences the Bitcoin with his a whack of his cluestick]
Large Man with Bitcoin: Ah, thank you very much.
The Debt Collector: Not at all. See you on Weekend.
Large Man with Bitcoin: Right.

at this point i would like reaffirm the above.

LOL

No, don't.  Try proofreading next time, then try to say it right without endless do-overs.

Leave your straw men at home next time, too.

Sorry, I should probably clarify. There's nothing of value at the stage where one person is mining, one person is sending, and one person is receiving BTC. At that point, my half-nude Mario Lopez portrait (yes, it's mine!) is just as secure, fast, low-cost, and unregulated.

It's a dumb argument to claim that as long as something can be traded by two people, it's a fantastic libertarian ideal currency.

TIL: Secure, fast, low-cost, unregulated international transactions == bartering your favorite half-nude Mario Lopez portrait for pound of beef jerky.

There is nothing unique to Bitcoin at this stage. It is nothing more than bartering your favorite half-nude Mario Lopez portrait for pound of beef jerky.

Peter, I hope you don't have holdings in BTC.

I'm not suggesting anyone needs to understand everything about how bitcoin works.  I am suggesting that "mainstream-ppl" won't take dollars and convert them to bitcoins without looking at something as simple as the price history of bitcoin.  And given that history, I'm saying that most ordinary people will not put money into the system because most ordinary people want to at least retain the purchasing power they put into the system without using a bot or constantly managing their bitcoin holdings by selling/buying all the time.

There are plenty of people who trade galangals or soybeans and don't even know what they look like.  Your understanding of something has little to do with the public demand for it.

Nope....hoarding bitcoins will never work. All that confidence game does is lower lows and lower highs.
No one should do the work for the hoarders...even at 1 cent.

Lets see what the next group of bag holders has to say...this group was amusing, and people like Immanuel Go never did see that they were the ones duped.

Ah yes. Bitcoins weekly "death".
 

Right, because the "mainstrem-ppl" won't bother looking at price history, or the sentiment on the forums.

Tell that to Myspace.

true - there will be no "bitcoin 2.0 - NOW FOR REAL" or something. it defitelly will be BITCOIN, nothing else.

you are wrong about that. there are only 21 million coins. everyone wants to have at least one, regardless of the value.

when i first heard about bitcoin, about 6 months ago, my friend told me "but i heard it alreads collapsed in worth cause of some hack or something. maybe we should buy some cause they are very cheap now?!" ..so this is rather subjetiv than objectiv.

and that was months ago! ..in fact you are thinking the big attention for bitcoins is already over, when in fact it did not even really start. it is still "underground". why?! cause everyone heard the word bitcoin, but the fewest can explain what it really is.

take 90% of the media articles about bitcoin: they spend on average feeled 70% of the article explaining what bitcoin is, cause nobody yet really knows, exept some 20.000 on this forum and the mining-geeks.

but_never_take_your_subcultures_stream_for_the_mainstream ! (and the stream here is: "glimpse of doom", "destruction" "the end is near"; while the mainstream-ppl just have heared about bitcoin and don't know anything about it's worth. it simply does not matter to them if they are yet worth 3$ and were worth 30$ before! take into account this informationasymetry!!

Oh, it has brand recognition alright.