The value problem - explained - page 3.

wasserman99

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Quote from: shawshankinmate37927 on September 14, 2014, 01:45:59 PM

Quote from: twiifm on September 14, 2014, 03:02:03 AM

Quote from: shawshankinmate37927 on September 13, 2014, 05:21:00 PM

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Umm no. Gold isnt money anymore. Bitcoin was only a money inside silkroad market.

Wrong again. Even central bankers know gold is money...that's why they hoard it.

In order for something to be considered as money it needs to have three qualities:
1 - It needs to be a unit of account
2 - It needs to be a store of value
3 - It needs to be a medium of exchange

Gold would not meet this criteria because people will rarely deal in terms of gold, therefore it is not a medium of exchange. Governments hold gold because of it's large and stable value

twiifm

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Quote from: shawshankinmate37927 on September 14, 2014, 03:07:31 PM

Quote from: twiifm on September 14, 2014, 02:09:47 PM

Quote from: shawshankinmate37927 on September 14, 2014, 01:45:59 PM

Quote from: twiifm on September 14, 2014, 03:02:03 AM

Quote from: shawshankinmate37927 on September 13, 2014, 05:21:00 PM

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Umm no. Gold isnt money anymore. Bitcoin was only a money inside silkroad market.

Wrong again. Even central bankers know gold is money...that's why they hoard it.

They also hoard a greater amount of Mortgage Backed Securities and Treasuries. Its called an asset not money

They hoard the asset-based money to offset the risk of debt-based money.

What are you talking about? All money is credit.

The reasons other Central Banks hold USD because they can use it to settle debts in USD. The reason USD has value because its backed by assets like gold, securities but mistly treasuries. Treasuries are debt of USA (US Treasury)

None of this has to do with hoarding

shawshankinmate37927

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Bitcoin: The People's Bailout

Quote from: twiifm on September 14, 2014, 02:09:47 PM

Quote from: shawshankinmate37927 on September 14, 2014, 01:45:59 PM

Quote from: twiifm on September 14, 2014, 03:02:03 AM

Quote from: shawshankinmate37927 on September 13, 2014, 05:21:00 PM

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Umm no. Gold isnt money anymore. Bitcoin was only a money inside silkroad market.

Wrong again. Even central bankers know gold is money...that's why they hoard it.

They also hoard a greater amount of Mortgage Backed Securities and Treasuries. Its called an asset not money

They hoard the asset-based money to offset the risk of debt-based money.

twiifm

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Activity: 784

Merit: 500

Quote from: shawshankinmate37927 on September 14, 2014, 01:45:59 PM

Quote from: twiifm on September 14, 2014, 03:02:03 AM

Quote from: shawshankinmate37927 on September 13, 2014, 05:21:00 PM

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Umm no. Gold isnt money anymore. Bitcoin was only a money inside silkroad market.

Wrong again. Even central bankers know gold is money...that's why they hoard it.

They also hoard a greater amount of Mortgage Backed Securities and Treasuries. Its called an asset not money

shawshankinmate37927

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Activity: 854

Merit: 1000

Bitcoin: The People's Bailout

Quote from: twiifm on September 14, 2014, 03:02:03 AM

Quote from: shawshankinmate37927 on September 13, 2014, 05:21:00 PM

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Umm no. Gold isnt money anymore. Bitcoin was only a money inside silkroad market.

Wrong again. Even central bankers know gold is money...that's why they hoard it.

twiifm

hero member

Activity: 784

Merit: 500

Quote from: shawshankinmate37927 on September 13, 2014, 05:21:00 PM

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Umm no. Gold isnt money anymore. Bitcoin was only a money inside silkroad market.

shawshankinmate37927

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Activity: 854

Merit: 1000

Bitcoin: The People's Bailout

Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Fiat currencies are essentially IOUs, but not money in general--gold and bitcoins being two examples of money that is not debt-based. If the central banks around the world that are hoarding dollars in the form of reserves were to suddenly decide they don't want to hoard them anymore then the dollar would certainly collapse in value. Has everything to do with hoarding. Hyperinflation is the result of no one willing to hoard the currency. (When I use the term "hoard" I consider it to be synonomous with "hold" or "save".)

Erdogan

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Building on this basic supply and demand function, why do people want to have, or want to have less, and why do they offer the prices for buy and sell that they do?

The reason to have more, is the general saving, and the want to save in bitcoin is the understanding that it is sound money, giving higher value or at least it keeps its value over time (or at least you know that the government is not going to manipulate it).

The urge to sell, is to exchange some of your money value to consumable goods. That is the only point of saving money in the first place, to consume later. (Investments, including deposit in a bank for interest, is for making money, with the prospect of consuming more, later, and in the mean time you do not have the money, but the capital goods in some form).

So what about the reference value? Since money have no direct use value (it is never consumed), you have no individual valuation to rely on, you have only yesterdays value on the market, measured in some fiat or price of some good, plus the anticipation of future value, based on all relevant information you have access to.

Erdogan

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Quote from: jjacob on September 08, 2014, 10:52:42 AM

Quote from: Erdogan on September 07, 2014, 04:43:48 PM

To clarify what supply is - this is somewhat confused because we talk about the M0 supply, the 13 million coins as supply.

Supply in the sense of a market, where the supply (with demand) results in a certain price, the supply is the coins that are on offer on the market at different volume an price pairs. It is not enough to want to sell, you actually have to offer them on the market, to make them a part of the supply.

Edit: So the bitcoin supply is like the ask curves of the exchanges and all corresponding ask curves off exchanges, aggregated.

I would also add that the bitcoins which are ready to spent (in exchange for goods or services) would also form part of the supply.

Correct.

Erdogan

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Quote from: realdope on September 08, 2014, 11:23:53 AM

So how could the value of btc be defiend without any fiats existing?

Whatever it is potentially exchanged for. Gold, beer cases, candles, buck skins. This is a non-problem.

realdope

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So how could the value of btc be defiend without any fiats existing?

jjacob

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Quote from: Erdogan on September 07, 2014, 04:43:48 PM

To clarify what supply is - this is somewhat confused because we talk about the M0 supply, the 13 million coins as supply.

Supply in the sense of a market, where the supply (with demand) results in a certain price, the supply is the coins that are on offer on the market at different volume an price pairs. It is not enough to want to sell, you actually have to offer them on the market, to make them a part of the supply.

Edit: So the bitcoin supply is like the ask curves of the exchanges and all corresponding ask curves off exchanges, aggregated.

I would also add that the bitcoins which are ready to spent (in exchange for goods or services) would also form part of the supply.

snappa4ever

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Quote from: twiifm on September 07, 2014, 08:31:37 PM

Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Quote from: twiifm on September 07, 2014, 03:38:20 PM

Quote from: shawshankinmate37927 on September 06, 2014, 07:40:26 AM

Quote from: Erdogan on September 06, 2014, 06:50:01 AM

If you study the theory behind money velocity, you will see that they try to capture the production, distribution and consumption, not financial transactions. In fact, nobody measures money velocity directly, they derive it from gross domestic product and money volume. It is just another way to express gross domestic product. It is totally irrelevant for bitcoin. You could possibly get something meaningful if you aggregated bitcoin and fiat, and excluded financial transactions. Sending bitcoin to an exchange and convert bitcoin to and from fiat, would not be transactions included in the calculation of money velocity.

That is why I made the original post. The value comes only from the willingness to hold the money, from the peoples minds. When that willingness disappears, the money dies. This can also be seen in the multiple hyperinflation episodes in the past.

Yes, this "willingness to hold the money" is also referred to as "demand". With no demand the price will drop to zero and that is what causes hyperinflation—a collapse in demand for a currency. If no one hoards a currency it is worthless. It is the fact that someone is willing to hoard it that gives currency value.

What? This is wrong.

Money has value because someone can settle debts with it. How many people are hoarding Litecoins or Dogecoins?

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

Money is not an IOU. Money is something that other's feel is valuable. Money in the bank and bonds are IOUs as the bank/issuing company may or may not have the physical assets to back up your claims.

twiifm

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Quote from: shawshankinmate37927 on September 07, 2014, 08:08:28 PM

Quote from: twiifm on September 07, 2014, 03:38:20 PM

Quote from: shawshankinmate37927 on September 06, 2014, 07:40:26 AM

Quote from: Erdogan on September 06, 2014, 06:50:01 AM

If you study the theory behind money velocity, you will see that they try to capture the production, distribution and consumption, not financial transactions. In fact, nobody measures money velocity directly, they derive it from gross domestic product and money volume. It is just another way to express gross domestic product. It is totally irrelevant for bitcoin. You could possibly get something meaningful if you aggregated bitcoin and fiat, and excluded financial transactions. Sending bitcoin to an exchange and convert bitcoin to and from fiat, would not be transactions included in the calculation of money velocity.

That is why I made the original post. The value comes only from the willingness to hold the money, from the peoples minds. When that willingness disappears, the money dies. This can also be seen in the multiple hyperinflation episodes in the past.

Yes, this "willingness to hold the money" is also referred to as "demand". With no demand the price will drop to zero and that is what causes hyperinflation—a collapse in demand for a currency. If no one hoards a currency it is worthless. It is the fact that someone is willing to hoard it that gives currency value.

What? This is wrong.

Money has value because someone can settle debts with it. How many people are hoarding Litecoins or Dogecoins?

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Money are essentially IOUs. It has value because someone accepts it as settlement

If nobody accepts it then it worthless. Has nothing to do with hoarding

shawshankinmate37927

hero member

Activity: 854

Merit: 1000

Bitcoin: The People's Bailout

Quote from: twiifm on September 07, 2014, 03:38:20 PM

Quote from: shawshankinmate37927 on September 06, 2014, 07:40:26 AM

Quote from: Erdogan on September 06, 2014, 06:50:01 AM

If you study the theory behind money velocity, you will see that they try to capture the production, distribution and consumption, not financial transactions. In fact, nobody measures money velocity directly, they derive it from gross domestic product and money volume. It is just another way to express gross domestic product. It is totally irrelevant for bitcoin. You could possibly get something meaningful if you aggregated bitcoin and fiat, and excluded financial transactions. Sending bitcoin to an exchange and convert bitcoin to and from fiat, would not be transactions included in the calculation of money velocity.

That is why I made the original post. The value comes only from the willingness to hold the money, from the peoples minds. When that willingness disappears, the money dies. This can also be seen in the multiple hyperinflation episodes in the past.

Yes, this "willingness to hold the money" is also referred to as "demand". With no demand the price will drop to zero and that is what causes hyperinflation—a collapse in demand for a currency. If no one hoards a currency it is worthless. It is the fact that someone is willing to hoard it that gives currency value.

What? This is wrong.

Money has value because someone can settle debts with it. How many people are hoarding Litecoins or Dogecoins?

Nope. If no one is willing to accumulate and hold on to a particular currency then it has no value. Doesn't matter if debt is denominated in it that currency or not. The IOUs become just as worthless as the currency.

Erdogan

legendary

Activity: 1512

Merit: 1005

To clarify what supply is - this is somewhat confused because we talk about the M0 supply, the 13 million coins as supply.

Supply in the sense of a market, where the supply (with demand) results in a certain price, the supply is the coins that are on offer on the market at different volume an price pairs. It is not enough to want to sell, you actually have to offer them on the market, to make them a part of the supply.

Edit: So the bitcoin supply is like the ask curves of the exchanges and all corresponding ask curves off exchanges, aggregated.

twiifm

hero member

Activity: 784

Merit: 500

Quote from: shawshankinmate37927 on September 06, 2014, 07:40:26 AM

Quote from: Erdogan on September 06, 2014, 06:50:01 AM

If you study the theory behind money velocity, you will see that they try to capture the production, distribution and consumption, not financial transactions. In fact, nobody measures money velocity directly, they derive it from gross domestic product and money volume. It is just another way to express gross domestic product. It is totally irrelevant for bitcoin. You could possibly get something meaningful if you aggregated bitcoin and fiat, and excluded financial transactions. Sending bitcoin to an exchange and convert bitcoin to and from fiat, would not be transactions included in the calculation of money velocity.

That is why I made the original post. The value comes only from the willingness to hold the money, from the peoples minds. When that willingness disappears, the money dies. This can also be seen in the multiple hyperinflation episodes in the past.

Yes, this "willingness to hold the money" is also referred to as "demand". With no demand the price will drop to zero and that is what causes hyperinflation—a collapse in demand for a currency. If no one hoards a currency it is worthless. It is the fact that someone is willing to hoard it that gives currency value.

What? This is wrong.

Money has value because someone can settle debts with it. How many people are hoarding Litecoins or Dogecoins?

Nagle

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Quote from: shawshankinmate37927 on September 06, 2014, 01:48:18 PM

Quote from: botany on September 06, 2014, 11:43:46 AM

Interesting post.
But would all this be valid once we have derivatives in the market?

I don't think the market is going to consider a bitcoin derivative to be the equivalent of a bitcoin. Time will tell.

Derivatives require counterparties that reliably pay up when they lose big. That's not something the Bitcoin world does.

shawshankinmate37927

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Bitcoin: The People's Bailout

Quote from: botany on September 06, 2014, 11:43:46 AM

Interesting post.
But would all this be valid once we have derivatives in the market?

I don't think the market is going to consider a bitcoin derivative to be the equivalent of a bitcoin. Time will tell.

Erdogan

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Quote from: botany on September 06, 2014, 11:43:46 AM

Interesting post.
But would all this be valid once we have derivatives in the market?

Quote

Since a seller can not sell more when he is empty, he also has to buy, to continue to be an actor.

Derivatives extend the money supply, so this is a real problem.Still, there is less reason to accept derivatives in bitcoin, since it is straightforward to have the real thing. You could sell a car, and receive a bitcoin deposit in a bank (this is currently what a "cash" transaction is in fiat money), but if there is a risk, any risk perceived at all, the seller would prefer to have the real money. Since that is so easy, it will prevail. That is my anticipation.

Loans and other financial services may have real value to the traders, but not on the scale that is currently the situation in the fiat market.

A government can use the central bank to create bitcoin credit (bitcoin promises) to pay for state consumption, but I think the sellers of goods and services to the state would prefer to convert that credit to real bitcoins. Especially if they make promises that they might not be able to keep.

Anyway, there is a large amount of threads created for that discussion.

Topic: The value problem - explained - page 3. (Read 4738 times)