Topic: What can I do with a bitcoin? (Read 4193 times)

Also ATMs have just started to appear all around the world. Once the news that they are highly successful will spread, their adoption will rise exponential. Same as with shops. I hope we will have a text book snowball effect.

I think nowadays you can easily use bitcoin as digital currency as it is underpinned by people's trust to it.

Once you have bitcoin, you can purchase it with anything you want in any shop that accepts bitcoin. It is just the same as the real money that circulates today, though bitcoin is transferred digitally.

Intrinsic value is nothing more than a figment of your imagination.  It may be important to you that your money possess this so-called intrinsic value, but you do not and can not make that decision for anyone else on this planet other than yourself.

Furthermore, when three or more people agree to use something to facilitate the exchange of goods and services, then that something is money, even if you conclude that what they are using is not a very good form of money.

I think this is the problem, that you have a position. You're here to defend your position, not to arrive at the truth via logical argumentation.


How exactly would that be useful? By that logic you should be stocking up on cacao beans. They're much more useful than jewelry or decoration. Jewelry and decoration is only slightly more than "absolutely nothing"... while cacao beans are a superfood. You can almost survive on cacao beans alone.

You haven't made the case for why something must have intrinsic value to be valuable, or why Bitcoin must have intrinsic value to be valuable. You're operating on outdated assumptions, just like good old Greenspan (Bitcoin and Intrinsic Value: a Layman’s Response to Alan Greenspan, 11 Dec 2013), former head honcho of the central banking cartel and arguably the guy most responsible for the "financial crisis" that the Genesis Block refers to.


It's not just to reduce transaction costs... I don't need to list the many other reasons why Bitcoin is superior to other digital payment systems; you should know. Practically perhaps not quite yet, but technically, privacy-wise, morally, ethically, evolutionarily, the emergence of decentralized cryptocurrencies represent the beginning of the end for the central banksters, the parasites who play a depraved game of musical chairs with the entire planet.

You are looking at this from an outdated Austrian economics box, ignoring the actual technological advancements that make new systems possible. You're thinking only in narrow economic terms, rather than big-picture human terms. I can't claim to be an expert on the subject, but were von Mises et al alive today, I suspect they'd have to revise much of their writings in light of the Internet.

Also, regarding the anonymity issue, that argument may hold true for Bitcoin, but not for cryptocurrencies in general, which is the real idea we're talking about (Bitcoin being only the first and most successful implementation of double-spending-proof decentralized cryptocurrencies).

The Dollar is forced upon us by government. Before it was backed by gold. Read this (I have posted this in other threads), as I do not believe you have grasped my position:


Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.

Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.

1) Store of value.

 To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved. WIKI

Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.

What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).

Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.

What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.

What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing/trustworthy does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along; technology is not predictable). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses.  In future, government will enforce its capital gains tax laws (thus making bitcoin expensive to transact in and resulting in a collapse of the artificial agreement to exchange something for nothing). In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (THAT IS EXTREMELY VULNERABLE TO FADS AND OUTSIDE PRESSURES giving bitcoin huge counterpary risk) is extremly volatile.

Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future Wink). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor.

So I believe, that bitcoin because it does not have intrinsic value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).

Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.

2) Medium of exchange

Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of utility for something of no utility in order to save transaction costs.

Yes, that's the utility of a troll. As Peter Lambert wrote: We can feed him indefinitely.

I just want to remind to anybody who is taking the time to carefully present arguments in this thread, that even if porc is not listening to you, you are not wasting your time, since other people like me are interested in these arguments. This thread provided me with good insights about the viability of bitcoin, and as a result I'm more convinced than ever of its great future.

porc,

Your definitions of "something" and "nothing" are your own. (Notice you used the term "basically" in your definition.)

Take several steps back and look at the big picture here. You clearly have a good understanding of money, but you're not seeing the whole picture.

You can argue that Bitcoin has no intrinsic value, but Bitcoin isn't "nothing"... It is a digital token in the same way that a dollar (or gold) is a physical token.

I think it can be simply put this way:

Intrinsic value of a dollar: the paper it's printed on
Intrinsic value of a piece of gold: some industrial uses ("oh look, it shines, how cute!" is not intrinsic but an abstract subjective notion)
Intrinsic value of a bitcoin: none

Abstract value of a dollar: what people believe it is useful for
Abstract value of a piece of gold: what people believe it is useful for
Abstract value of a bitcoin: what people believe it is useful for

Money/currency is an abstract idea, hence the token's intrinsic value is irrelevant. Gold has no true intrinsic value as currency, it just has a longer history than other forms of currency. It appears more likely that it will be exchangeable in the long-term, but that's not an intrinsic quality. The value we give it is just a token, an abstraction, a symbol.


It's an artificial (i.e. non-intrinsic) agreement based on shared beliefs about the past (history, tradition) and the understanding/belief of its scarcity (scarcity being an intrinsic quality). Your argument seems to be that gold has this magical appeal to it for some unknown reason. Your argument reduces to a reductio ad absurdum ("Gold is valuable because it is." ... "Bitcoin has no value because it has no value").

porc, ask yourself this: If Bitcoin had a history going back 10,000 years, while it would still be "nothing" (according to your definition), would you still say it's worthless/useless? And if gold had been used as a currency for only the last 5 years, would you say its value does not derive from an "artificial agreement"?

When you see the full picture, the inescapable conclusion is that cryptocurrency is the greatest innovation in media of exchange. It is to money what the Internet is to communication. It renders the central banking cartel's scam obsolete and irrelevant. It's revolutionary.

So when I send 1btc to you, what would you do with it? -> that is your answer.

 Why is Bitcoin valuable?

This is perhaps the most important topic to address, as nothing else matters if Bitcoin has no value. What makes Bitcoin worth anything? Isn't it just "fake"? Isn't it just a made-up pretend virtual currency? Many say, "I can't hold it, I can't see it, and thus it's artificial and not worth my time." Let's challenge this understandable initial reaction. Let's demonstrate why Bitcoin is valuable, and very much worth one's time.

Financial privacy has long been symbolized by the notorious "Swiss bank account." Yet, anyone with a Swiss bank account has to trust that bank, and as we've seen in the last couple years, "bank privacy" even in Switzerland is a myth - banks there have been bending over for the US government and divulging customer information. So imagine having a private, numbered Swiss bank account, but without having to bother with the Swiss bank itself. That is Bitcoin. Instead of placing your trust in a regulated bank governed by fallible humans, Bitcoin enables you to place your trust in an unregulated cryptographic environment governed by infallible mathematics. 2+2 will always equal 4, no matter how many guns the government points at the equation.

 Bitcoin is thus the only currency and money system in the world which has no counter-party risk to hold and to transfer. This is absolutely revolutionary and you should read the preceding sentence again. Gold advocates will point out that physical gold bullion has no counter-party risk, but that is only true for storage in your own home. Store it in a vault or bank and you have counter-party risk. And sending gold? You have to trust all sorts of people if you wish to transfer your gold somewhere else or spend it across distance.

Bitcoin means complete ownership of money both in storage and transfer. Nobody can prevent you from having it. Nobody can prevent you from spending it. Even if one's home is broken into, or even if the government issues a "confiscation order" (as they did with gold in 1933), one's Bitcoins are perfectly safe. Try fleeing a country with $1,000,000 in bullion without the government knowing about it. Easier said than done. With Bitcoin, it's almost easier done than said - you could put $1,000,000 of Bitcoin on a USB drive, or even write the private key on a piece of paper, or just email the wallet file to yourself to be retrieved outside the country.

Starting to see the value? Never in the history of the world has an individual had this ability. It is unprecedented.

 No really, WHY is Bitcoin valuable???

At this point, skeptics should say, "okay fine, you can store and spend Bitcoins without interference, but what gives them initial value? Why do they have a price?" It's a very good question, and even expert economists have struggled with the answer.

But really, the answer is simple. Bitcoins have value because A) they are useful and B) they are scarce. Combine those two attributes in any asset and you will discover it has a price. The moment the first Bitcoin was traded to someone in exchange for something else, an exchange rate (market price) was established. Subsequent exchangers agreed or disagreed with that rate, and made further trades accordingly. Bitcoin thus spontaneously developed a price, as do all things in an open market if they are sufficiently useful and sufficiently scarce.

Let's look at value a little further, because it's a contentious issue with Bitcoin. There are many (including Paul Krugman) who believe Bitcoin isn't worth anything and is no more than a speculative bubble fad.

I wouldn't expect Krugman to "get it," but wiser/real economists need only observe metals to start understanding why Bitcoins have value. After all, any strong advocate of gold or silver as money should hopefully understand why these metals should be money. The answer is that these metals tend to be chosen in an open marketplace as money, because their specific properties make them useful as a means of exchange. It is the properties of gold and silver—unique to these metals—which make them excellent money. They are scarce, fungible, uniform, transportable, have a high value-to-weight ratio, are easily identifiable, are highly durable, and their supplies are relatively steady and predictable. Contrast other goods like chickens, or seashells, or sand, and you discover that none of them are as good on the above attributes as precious metals. Chickens can't well be cut in half or recombined, seashells are not uniform, and sand is too plentiful to be used as money. Why not other metals... why don't we use iron as money? It's not scarce enough - you'd need carts of it at the store to go shopping.

 As any Austrian economist can tell you, money is merely that commodity in an open market which best satisfies the properties necessary for useful exchange. Gold and silver take the cake every time a violent government doesn't get in the way... or at least, this is true historically. But, this doesn't mean that gold and silver are "perfect, infallible money." Indeed, there are practical problems. One can't easily divide and combine silver coins to make change. One can't easily send large values of gold across distance without hiring security and waiting for transport. One must pay storage fees, or risk theft at home. And, while difficult, it is possible to make fake gold and silver ingots and pass them off in trade as real.

So then it follows that if gold and silver are not perfect money (though admittedly the best we've had), perhaps mankind could discover or invent something that was even better. This is the Bitcoin experiment - the question of whether Bitcoin, with its specific attributes, is an even better form of money than what the marketplace currently enjoys (or in the case of state fiat, is forced to use). If the Austrians are right, and a marketplace tends to chose the medium of exchange which best works as money, and Bitcoin's specific attributes make it excellent money, then perhaps the marketplace will, over time, increasingly use it for such.

The answer so far, is yes. Bitcoin is finding more and more niches for early adoption, which further supports its market price, providing confidence to holders that it will retain value, and this further lends Bitcoin to be used for still more purposes. It's an organic and messy process, full of trial and error, potholes, brilliant innovations and terrible failures. But that's what an open marketplace is, no? Every day a more resilient economy is being built, and not at the point of a gun, but voluntarily - not by decree of Bernanke, but by spontaneous, self-interested private order.

Many have made the argument that "nothing backs Bitcoin." And this is true. Bitcoin cannot be redeemed for any fixed value, nor is it tied to any existing currency or commodity. But, neither is gold. Gold is not backed by anything - it is valuable because it's useful and scarce. Cars are not backed by anything, they are merely useful as cars and thus have value. Food is not backed, nor are computers. All these goods have value in proportion to their usefulness and scarcity, and one merely needs to see the usefulness of Bitcoin to understand why, without backing from any government nor corporation, without being tied to any fiat currency or existing commodity, it commands a price on the market and rightly so.

http://evoorhees.blogspot.com/2012/04/bitcoin-libertarian-introduction.html

I guess this is the view of a typical gold hoarder.

Well, money must be a store of value. How can gold be a predictable store of value, when it's a technology that can be outcompeted by other technologies and when gold's value itself is based on an artificial agreement, that might collapse. Today you might accept my gold for something, but who knows about tomorrow (historically, in times of strife gold is pretty useless).

I will leave now, as I have expressed my viewpoint.

in that case, why would anyone spend money (a real thing according to you) for say, a digital copy of a game or paypal, why would you spend your precious USD on paypal money, paypal money doesnt exist right? but merchants accept it so its "worth" something, you can use it to buy stuff online without a bank account.

This HAS to be one of the main advantages. Sending currency over the intertubes with minimal fuss and no fees. Its next to impossible otherwise.

Is that how you spend your time? Looking and touching gold. No wonder you are asking weird questions on a bitcoin forum when you clearly hate bitcoins.

You know, from certain countries, its almost impossible to send money abroad. You can use Western Union in almost any country, but (a) its very expensive, and (b) limited to $2000 per day. With bitcoin, you can send money to anyone on the planet, no limits on amount. If that isn't utility, I don't know what is ......

Yes we know: YOU can't, because you are only a troll who is unloading the same BS again and again and therefore without any coin of Gold 2.0.
You missed this paradigm change because you are blind.
But WE can: store, barter, transfer, divide, donate, create, etc. etc.

To transfer Gold 2.0 out of Argentina or Cyprus is much easyer than to escape with Money and Gold.
There is a causal reason why the value of Gold 2.0 is rising against Gold.

I guess this is the view of a typical bitcoiner.

Well money must be a store of value. How can BTC be a predictable store of value, when its a technology that can be outcompeted by other technologies and when BTCs value itself is based on an artificial agreement, that might collapse. Today you might accept my BTC for something, but who knows about tomorrow (again tullips where also once thought after and then crashed back down to earth, which in BTC case might be 0).

I will leave now, as I have expressed my viewpoint. I dont want to ruin the party. Have fun.

Porc, you are an idiot and a troll. The point of money is that it is nothing by itself but that it can be passed on to the next person. Bitcoin is closer to the perfect money than anything we have ever used before.

We keep refuting your statements but you keep saying the same stupid stuff over and over again. We get it, you don't like bitcoin. Now go away.

A. something is basically anything that has UTILITY on its own. (Food (hunger), water (thirst), house (shelter))
B. Nothing is something that does not have UTILITY on it own. BTC is a great example, as I cant do anything with it except dump it on the next guy.

1. Because it has UTILITY on its own. I can make jewelry out of it, humans love to look it at it and touch it. That not every human loves it, does not distract from that. The great majority loves it since dawn of man. Its burnt into the brain of most of us I guess.
2. BTC will not be accepted in exchange for goods by the great majority, because the great majority does not like to trade something for nothing or store value in nothing just to save some transaction costs.
3. Things either have utility or they dont.

Edit: yes but the service is transferring nothing at a cost. Now if everybody will accept nothing (bitcoin) for something than it might work. However I dont think that humanity will want to store and trade something for nothing. The reason is that such an agreement would be artificial and as soon as something changes (better technology, higher transfer costs for bitcoin, another coin, amazon only accepting its coin whatever it might be) this agreement collapses, and the one holding onto nothing will be screwed. Imagine tying the worth of your bank account to an artificial agreement. Thats what you get when you invest in BTC. Gold is not dependent on artificial agreements because it has value OF ITS OWN. Thus it is suitable money.

Now I dont believe for one second, that humanity will conduct trade and store value in BTC. You can call me an idiot, and think that I dont appreciate the value of transferring nothing from peer to peer without a bank at lower cost. Well I will gladly pay more and transfer digital gold (backed up by real gold) as I actually receive something. I will not be vulnerable to an artificial agreement collapsing due to any factor (like somebody suddenly not accepting nothing anymore, a new technology, a new coin, amazon coin whatever). Golds value is REALITY, not an artificial AGREEMENT. Now I might have to wait 1 day for my digital gold to arrive, it will not be an instant transfer, and I will have to find a  trustee for it. However I dont care if it takes 1 day. Its not like information that I want now. I have gold in my bank account (its fungible), and can use that in the meanwhile.

Again I dont believe for one second that the majority rather have BTC (nothing) than digital gold (backed by real gold). They will gladly pay the storage costs, if it means their wealth is safe and not endangered by an artificial agreement collapsing.

What can I do with a dollar? Why would anybody trade anything for my dollar? If I hold onto a dollar, it will steadily go down in value, why would anybody want one of those? Since nobody wants my dollar, surely it is worthless?