Topic: The smartest article on why Bitcoin won't become the next currency - page 4. (Read 7044 times)

The Internet is a Bubble!!:
http://www.pewinternet.org/Trend-Data-(Adults)/~/media/Infographics/Trend%20Data/Early%202013/Internet%20adoption%20over%20time%2012.12.jpg

Web Browsers are a Bubble!:
http://media.netmagazine.futurecdn.net/files/imagecache/featured_main/articles/features/2011/10/platforms.jpg

In an inflative fiat currency world, people need a currency that can hold value

Really?  I have to wait 136 years before I can expect BTC to stabilize?  I was really hoping it would happen in my lifetime.

Gold isn't exactly a stable day to day price against USD either. Go on goldprice.org and click on '30 days'.
When all the bitcoins have been mined, and buying/selling bitcoins is 100% decentralized so one exchange doesn't rule the market value BTC will be pretty stable

You really have to be careful about using absolutes in conversations.  It is rare that the resulting statement is accurate.  This would be one of those inaccurate statements.

Even in Roman days, when coins were minted in gold, silver, copper, etc. and even bronze, the value of the coins generally exceeded the value of the precious metals.  People didn't melt down the coins and just sell bullion, because the coins, themselves, were worth more than their value as precious metals.

There was an element of fiat even then.  Part of the value of the coins, rather like the U.S. dollar, was that someone would come and whip your ass if you didn't accept it.  The ability to unleash violence is largely why fiat money has any value.

Gold was money for millenia and could certainly become money again.. well, if there wasn't a better alternative right here. ;-)


Concerning price fluctuations, it's only so wild because the demand fluctuations for bitcoin are wild, because new people "enter and leave" daily. The day that the number of people entering and leaving Bitcoin-world is small compared to number of people already in, you'll have the price stability you want.

People must understand that their is a fundamental difference between using something as a currency (which is a unit-of-account and in which prices are defined) and using something as a mere PAYMENT VEHICLE.  Nothing and I mean nothing any ware on earth is being sold FOR BTC right now, their are merchants that take BTC AS A PAYMENT VEHICLE FOR A PRICE SET IN NATIONAL FIAT CURRENCY, that is all.

A merchant can not allow the price they charge for goods to violently shift up (which would drive away customers) or down (which would eliminate their profit margin), thus a merchant sets prices in the most stable thing they can find.  That's why we see people using cigarettes as money in a hyper-inflationary environment, but you can get the same thing if money is so deflationary that it becomes useless as a unit-of-account.  People say "oh that will cost ya 3 packs of cigarettes worth of money, lets see a pack of cigarettes is 15 cents today (was 20 yesterday) so that will be 45 cents, thank you come-again".  The only difference is that in a deflationary environment the merchant would immediately run out and buy cigarettes with any money they get before it loses value, in a deflationary environment the merchant instead hoards the money and converts them to cigarettes when he needs to make a wholesale purchases.  That is basically the BTC economy today.

I agree in some general (very general) respects with the OP, but some of the generalizations are outright absurd.  

I agree in general that BTC has a lot of the attributes of a commodity, but it SPENDS like currency.  I disagree that it is like gold, because one generally can't convert gold instantly into fiat.  It has a lot more in common with gold-backed currency, but lacks some of the attributes traditionally associated with currency.  People do tend to hoard it, just like they did old-fashioned gold-backed currency, but they also spend it, just like they also spent old-fashioned gold-backed currency.

I find the constant messianic bullshit about BTC imminently replacing fiat currency annoying.  But I also find the dismissive bullshit that BTC is basically play money even more annoying.  Obviously BTC has value.  I can and have been selling off some of mine as the price continues shooting up.  Why?  I need money and am broke, but have BTC that is suddenly worth a fuckton more than it was when I got it.

I also don't buy BTC to hoard.  I win them gambling, mostly poker but also via a few other opportunities that present themselves, which I obviously won't discuss.  Added fun comes from the fact that not only do I win BTC, but the BTC I already have appreciates in value while I have it.  It's like gambling on two things at once.  Gambler crack!  "Yo Dawg, I heard you like gambling, so I put a gamble in your gamble, so you can gamble while you gamble."  It's nice to make money on a monthly basis even when you lose.

Also, to be a little more serious, most of the gambling-related businesses out there routinely cash out BTC to fiat to cover their cost of operation, putting it back into circulation.  Since their income is almost entirely BTC, and they need to keep their business operating, including by doing things like getting DDoS mitigation and other net services, that money is always going to be flowing.

Finally, the idea that currency has to be at equilibrium to be currency is nonsense.  Ask the Germans in WW II who had to roll up a grocery cart full of Reichsmarks to buy a loaf of bread how stable their currency was.  BTC is volatile, and definitely more volatile than "solid" currencies like the U.S. Dollar, but much less volatile than some of the worst currencies in the world that are subject to hyperinflation.  In those countries, BTC may be a real alternative to their so-called "real" currency.

So I don't believe BTC is going to become an index currency like the dollar, but it will provide a lot of competitive pressure to force governments to behave themselves, because if they rob their citizens too much and render their own currencies increasingly worthless, people will have incentives to switch to BTC.  

I don't buy the messianic bullshit that BTC, or crypto in general, is going to "overthrow" governments.  However, what it does do, and what is almost more subversive, is that it makes badly behaving governments IRRELEVANT.  You don't overthrow the government, you just treat its ill-informed activities as damage, and bypass them.

Didn't read the article but I agree that as of right now BTC doesn't have much value as a currency and is instead a commodity to invest in.

Something that changes so quickly and so drastically isn't a good thing to use a currency.

In the future if bitcoin becomes more stable then it could be a great currency.  So far though in the past 3+ years that hasn't really been the case.

I mean think about the guy who bought a pizza a couple years back and it now would've been worth 1million dollars...... that's not how a day to day currency should work. You want/need currency to be stable. You need to know that those btc's you spent for a pizza a couple years ago would still buy you the same pizza today in order for it to be a realistic currency.

Silly question deserved a silly question ... hint: i'm not 12.

Edit: and you are all being trolled for your testosterone, lol.

I would be more concerned if the Bitcoin was stable right now.

Think how word of mouth works. I tell 5 people about Bitcoin, they then tell 5 people each, and then each of them tell 5 people etc... This leads to wild growth with the occasional dump and mini-panic until the majority of people have heard about Bitcoin and have made up their mind about it. Then, we have stability, and then we have a strong currency.

This applies for business adoption too, which adds to the short-term volatility.

Mind you there are a million other factors involved, but from a helicopter's perspective, I'd say the price is moving how it should.

Why does it need to be "stable" beyond a reasonable degree? Like we can determine it's not going to likely crash below a certain point beyond a certain market cap. Sure it can, but the dollar could crash too. Right now there is a lot of uncertainty because it just launched. Also not enough people are using it for us to know what it's worth yet, but we will know in a few years and then these sorts of discussions make more sense.

Why would you ask that, and why should it matter?  Are you twelve?

Silly question.

 
Let me stop you right there.  Around these forums, you can hardly swing a cat without someone arguing their own personal definitions.  It doesn't help that money is a strange and complicated subject, where no definitions seem to actually fit reality.

Currency is "that which circulates".  A commodity is a fungible thing.  An investment is something that you have a rational basis for thinking that will increase in value or provide a productive return.

Bitcoin is all of those things.  The only way to claim that bitcoin is NOT a currency is to get into a quibble about fractions.  I have a jar of pennies.  They don't circulate.  I haven't seen figures, but I wouldn't be surprised to learn that most pennies are similarly in jars instead of pockets.  Is a penny not currency because not enough of them move?

The truth is that there are no fixed values.  There is no frame of reference.  The world is a sea of floating relative values.  This includes all forms of money.  The dollar is stable because the dollar market is friggin huge.  The bitcoin market is volatile because it is small.  Volatility isn't a weakness of bitcoin, it is the natural consequence of smallness.

The increase in value is EXACTLY why I do not ever buy a computer knowing I could buy a faster computer at a lower price a month down the road.


I am still kicking myself for paying $3,000 for a 66MHz computer back in 1995.

If only I had kept that investment I would have a much faster machine today.

Everyone else believes the same thing since nobody ever buys computers.

are you really a girl? i think you would be the second one we've seen around here ... no wait maybe the third ... or are your just trolling to get a rise?

Volatility maybe an issue now, but it is improving (note you need to consider daily swings not weekly or monthly for what people are using bitcoin for is relative). Also you are discounting the other desirable monetary properties, privacy, censorship resistant that outweigh the volatility for the target market to bootstrap it to those sunlit stable greener uplands of monetary nirvana.

Yes, plenty are spending them... Everywhere you look, market data shows that Bitcoin spending has increased significantly in the recent past:

BitPay alone recorded a merchant transaction volume increasing by 7.6x between February ($687k) and March ($5.2M): http://www.marketwatch.com/story/bitpay-eclipses-silk-road-i... (sure $3M or it was Avalon, but that is still a nice increase from $687k to $2M)

The estimated volume of USD transactions is increasing: http://blockchain.info/charts/estimated-transaction-volume-usd

Silk Road going over 2 years from zero to $2 million/month of Bitcoin revenues: http://arstechnica.com/tech-policy/2012/08/study-estimates-2-million-a-month-in-bitcoin-drug-sales/

Bitcoin casinos reporting lots of profits: http://arstechnica.com/business/2013/01/bitcoin-based-casino-rakes-in-over-500000-profit-in-six-months/

Etc.