Why Bitcoin was bought for the first time?

KawalGrover

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I have wondered about this myself. I feel that the early creators and adopters of Bitcoin thought of money or anything that transfers value as a more conceptual concept than most people in the world are taught to believe.

A few weeks ago I attended a local meetup where the CTO of Bitpay said that "money is just a transfer of information". What gives that piece of 'information' any value?. I feel that perhaps Satoshi and most of the early players of this Bitcoin space feel the same way.

For most of us, having grown up with something so intrinsic in our daily lives as money, we forget to ask questions about it. We take it a little too much for granted. Just like the air we breathe I guess. We need it obviously, but where it comes from, why other people accept it, and what gives it value. We have so much faith in our national currencies but we have no idea about the mechanics of where and how it's really coming from.

Here's a bit more on my take on it.

http://swatopia.org/blog/2013/05/22/18/

hmmmstrange

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Quote from: xxjs on June 29, 2013, 06:01:59 AM

I could agree, but the regression theorem is anyway a reason for some austrians to reject bitcoin as money (or may be they say it is like fiat). They don't believe what they see.

It's all about what makes a good money.

The Austrian regression theorem was used as a test to determine the goodness of money where fiat would fail. What you have to consider, the regression theorem was only evaluated on monies in history. Ludwig von Mises did not have bitcoin to consider when developing his theorem, if so he would have found his theory to be void.

I suspect the motivation of finding a theory on the soundness of money was not to validate hard money but to discredit fiat money. Mises stopped developing a theorem when he found logic to discredit fiat.

Bitcoin is fiat money decreed by the people. Mises would be proud to find his theorem void.

Vadimekb

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Quote from: Welsh on June 29, 2013, 05:32:38 AM

More than likely the seller didn't care about losing a pizza. What are they worth? a few £/$ or what ever currency you handle. But, think of it. 10,000 Bitcoins sounds a lot. Even if they weren't worth much back then. It still sounds like a lot. Well let's put it this way. 10,000 sounds like it could be more valuable than a pizza. Also, the pizza seller probably knew that Bitcoin was going to be popular among geeks. Which would make the value of it rise. So he probably knew he had a chance of cashing it out with a little profit. But, obviously Bitcoin has become much more than he hoped for. It is popular among non geeks and high up professions.

At the currency going rate of 10,000 Bitcoins. A pizza sold for $966,000. Is that a world record?

In that case he had to count that he would sell BitCoins or will exchange them for something. What gave to him such grounds? What facts? Prevalence among geeks? But why them to buy his Bitcoins, they can just mine it)

xxjs

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Quote from: FreeMoney on June 29, 2013, 01:00:09 AM

Quote from: xxjs on June 28, 2013, 09:08:33 AM

Quote from: Vadimekb on June 28, 2013, 05:19:19 AM

I am writing a scientific thesis : development of new means of payment.

As with all the money Bitcoin meets several criteria. One of them is the fact that Bitcoin can be exchanged for goods or services.

But there was a question. Who was the first known decided to sell a product or provide a service for Bitcoin? Why he decided then that he would be able to spend the same Bitcoin?

If anyone has a clue, I'll be very grateful.

P.s. sorry for my English!

Good question. The regression theorem states that things can not come into moneyness by itself. There has to be a reference to yesterdays prices, the day before that and so on all the way back in time before money existed. At that time the value would start with intrinsic value, just like in barter.

Bitcoins has no intrinsic value, and thus is at odds with the regression theorem. Personally I think the regression theorem is wrong, or at least you have to modify it. Modern people have no problem accepting that the fiat money has no intrinsic value, and it is quite obvious that bitcoin in the beginning, even if it had no value, could in the future aquire exchange value.

I've not studied the source carefully, but my understanding is that the regression theorem explains a way that a thing(s) have achieved moneyness in the past. If it does claim that bitcoin having value is impossible it is clearly wrong.

I could agree, but the regression theorem is anyway a reason for some austrians to reject bitcoin as money (or may be they say it is like fiat). They don't believe what they see.

Welsh

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More than likely the seller didn't care about losing a pizza. What are they worth? a few £/$ or what ever currency you handle. But, think of it. 10,000 Bitcoins sounds a lot. Even if they weren't worth much back then. It still sounds like a lot. Well let's put it this way. 10,000 sounds like it could be more valuable than a pizza. Also, the pizza seller probably knew that Bitcoin was going to be popular among geeks. Which would make the value of it rise. So he probably knew he had a chance of cashing it out with a little profit. But, obviously Bitcoin has become much more than he hoped for. It is popular among non geeks and high up professions.

At the currency going rate of 10,000 Bitcoins. A pizza sold for $966,000. Is that a world record?

jubalix

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I am offering LTC for Abstract coin, come and ask in that thread!

Vadimekb

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Quote from: ?? on ??

The pizza transaction was an artificial construct where both parties perfectly well understood that at this point in time there was no market for Bitcoin. They have colluded to create an artificial transaction using newborn currency in which they both believed (because anyone with a brain after reading the paper could see that it is and genius and elegant system that could work).

They have artificiality bootstrapped market for trading goods and services for Bitcoin by demonstratively performing the first public transaction of this kind. The rest is history.

So why did they think that this artificial transaction will be important?

A we can see here http://newlibertystandard.wetpaint.com/page/2009+Exchange+Rate ... befor the pizza BitCoin alredy had price. So why some one started to give money for bitcoin?)

Vadimekb

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Quote from: trasla on June 29, 2013, 02:24:36 AM

It was not "trading electricity cost for BTC". It was scientific research, trying whether the system works.
Probably on computers running anyway. They just generated BTC while doing what they _wanted_ to do anyway, building and using and testing the system, out of curiosity and believing in the idea, not because they thought "that BTC gonna be worth my power cost". They just generated BTC in the process of figuring it all out, and afterwards, they had something other could not copy without at least a little effort.

But there is still no answer.
Okay if we think that they did not spend electricity why someone started to BUY those bitcoins?) And then gave something real for bitcoins?

trasla

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It was not "trading electricity cost for BTC". It was scientific research, trying whether the system works.
Probably on computers running anyway. They just generated BTC while doing what they _wanted_ to do anyway, building and using and testing the system, out of curiosity and believing in the idea, not because they thought "that BTC gonna be worth my power cost". They just generated BTC in the process of figuring it all out, and afterwards, they had something other could not copy without at least a little effort.

Vadimekb

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Quote from: Inedible on June 28, 2013, 10:22:00 PM

Right now I feel like I'm writing your paper for you Undecided

Oh no ) While those who participated in early transactions won't tell the word, it is difficult to make it.

Vadimekb

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Quote from: n8rwJeTt8TrrLKPa55eU on June 28, 2013, 12:29:39 PM

The pizza purchase was not the first transaction to assign monetary value to BTC, by the time that happened (2010) it was already well established that BTC had monetary value.

People were already buying/selling for nonzero dollar values in 2009; lacking a true exchange with order book, the bid/ask was usually based (rightly or wrongly, you decide) around the marginal cost of generating new coins via mining.

2009 pricing history:
http://newlibertystandard.wetpaint.com/page/2009+Exchange+Rate

Thank you!

Unfortunately I couldn't find participants of the earliest transactions with bitkoin yet. (bitcoin for dollars, bitcoin for goods and services).

But it is tiny nuance.

Why the first miners decided to spend electricity and to get bitcoin? There has to be a reason why they decided that these expenditure are justified... that is a question

FreeMoney

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Quote from: xxjs on June 28, 2013, 09:08:33 AM

Quote from: Vadimekb on June 28, 2013, 05:19:19 AM

I am writing a scientific thesis : development of new means of payment.

As with all the money Bitcoin meets several criteria. One of them is the fact that Bitcoin can be exchanged for goods or services.

But there was a question. Who was the first known decided to sell a product or provide a service for Bitcoin? Why he decided then that he would be able to spend the same Bitcoin?

If anyone has a clue, I'll be very grateful.

P.s. sorry for my English!

Good question. The regression theorem states that things can not come into moneyness by itself. There has to be a reference to yesterdays prices, the day before that and so on all the way back in time before money existed. At that time the value would start with intrinsic value, just like in barter.

Bitcoins has no intrinsic value, and thus is at odds with the regression theorem. Personally I think the regression theorem is wrong, or at least you have to modify it. Modern people have no problem accepting that the fiat money has no intrinsic value, and it is quite obvious that bitcoin in the beginning, even if it had no value, could in the future aquire exchange value.

I've not studied the source carefully, but my understanding is that the regression theorem explains a way that a thing(s) have achieved moneyness in the past. If it does claim that bitcoin having value is impossible it is clearly wrong.

Inedible

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What doesn't kill you only makes you sicker!

Right now I feel like I'm writing your paper for you Undecided

n8rwJeTt8TrrLKPa55eU

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The pizza purchase was not the first transaction to assign monetary value to BTC, by the time that happened (2010) it was already well established that BTC had monetary value.

People were already buying/selling for nonzero dollar values in 2009; lacking a true exchange with order book, the bid/ask was usually based (rightly or wrongly, you decide) around the marginal cost of generating new coins via mining.

2009 pricing history:
http://newlibertystandard.wetpaint.com/page/2009+Exchange+Rate

johnyj

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Beyond Imagination

Quote from: Vadimekb on June 28, 2013, 05:19:19 AM

I am writing a scientific thesis : development of new means of payment.

As with all the money Bitcoin meets several criteria. One of them is the fact that Bitcoin can be exchanged for goods or services.

But there was a question. Who was the first known decided to sell a product or provide a service for Bitcoin? Why he decided then that he would be able to spend the same Bitcoin?

If anyone has a clue, I'll be very grateful.

P.s. sorry for my English!

A very good question! In the process of answering this question you will realize several unique properties of bitcoin

1. As a type of money it should be able to last for hundreds of years. So your other examples do not qualify as money since they can't last very long, even fiat money are not guaranteed to last hundreds of years due to government can totally disappear given enough long time

2. It should be easy to transfer, bitcoin transfers almost instantly without any intermediary organization, this is a big advantage over gold and silver

3. It should be scarce and difficult to get, this is clearly visible due to limited amount of total supply and continuous rising difficulty

Beyond these, I think the people who accept bitcoin as a payment medium typically have a good understanding of today's monetary system and many of its flaws. If you are a beneficiary of today's monetary system, you might not be that interested in bitcoin. But if you understand that central banks can redistribute wealth to bankers through printing more money, then you will appreciate bitcoin

At first, bitcoin's value is decided by the electricity and hardware cost spent to mine each coin, it is still this method roughly decide the base of average coin price

Vadimekb

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Quote from: Serge on June 28, 2013, 10:17:59 AM

why he believed is the same why anyone else believes it first time. everyone supporting or simply using bitcoin went exactly through the same thing as the first guy. at some point you simply see it as a valuable innovation while no one knows exactly how much single unit values precisely, every single trade is either confirming current 'established' value or rediscovering new one.

Yes, and it is interesting - why it estimated as "a valuable innovation"?

Also someone were ready to give for bitcoins real goods or to render a real services.

Serge

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why he believed is the same why anyone else believes it first time. everyone supporting or simply using bitcoin went exactly through the same thing as the first guy. at some point you simply see it as a valuable innovation while no one knows exactly how much single unit values precisely, every single trade is either confirming current 'established' value or rediscovering new one.

Vadimekb

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Quote from: Inedible on June 28, 2013, 09:40:12 AM

Quote from: Vadimekb on June 28, 2013, 09:24:47 AM

Yes. Everything is right! ... but there are many things become rare on the Earth (Old cans for exaple). But nevertheless, he chooses to receive Bitkoins for the pizza. He could exchange this pizza for a tail of a squirrel, or shit of a whale or images of someones fingerprints (this is also rare things)

But, what attracted in idea of bitcoin not in idea of ... ?

None of these other things are 'scarce'.

The person who accepted the Bitcoin believed that it would become valuable one day.

Yes! were there reasons to trust in it? were there preconditions? Why he belived?)

Vadimekb

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Quote from: trasla on June 28, 2013, 09:35:19 AM

Quote from: Vadimekb on June 28, 2013, 09:24:47 AM

Quote from: trasla on June 28, 2013, 07:51:26 AM

Dont forget that BTC are limited, in a way well known.
By selling the pizza for 10000 BTC, he got somethign which he knew would grow harder and harder to obtain.

And, besides, probably the main reason is, he liked the idea.
You might think a free and unregulated currency is a good idea, and support it by risking the amount of 14$.
Or its just playing with science, like "whoo, how does this work, lets try it, it costs less than an evening in the cinema!!

Yes. Everything is right! ... but there are many things become rare on the Earth (Old cans for exaple). But nevertheless, he chooses to receive Bitkoins for the pizza. He could exchange this pizza for a tail of a squirrel, or shit of a whale or images of someones fingerprints (this is also rare things)

But, what attracted in idea of bitcoin not in idea of ... ?

Yeah, if you are interested in science and crypto and intrigued by the idea of it all, you take BTC.
If your are instead interested in cans, drinks, old drinks etc you might as well trade a pizza for an old can, and it eventually establishes as kind of currency among your fellow can-fascinated friends, before some of those start actually buying old cans for fiat, thus making them valuable for everyone else, too. If instead you are a hunter, and get hot on animal parts, maybe some day one of your fellow hunters is in need of some pizza, but has no money with him, and you offer to buy a pizza if he hands over those couple squirrel tails from todays hunt. It starts as a kind of joke, and you risk not that much at all, its a funny idea, but it evolves, and suddenly more and more stuff is bought via squirrel tails in your group.

As it happened, i really appreciate the guy being a nerd and not a hunter, storage might have become quite an issue with squirrel tails.
Not to talk about the time transaction verification would take for cross-continent payments.

So do you think it was just an interest? he could mine some bitcoins...for free... with out pizza sale. Why he decide to do this? Why firse miners decidet to mine bitcoins?

Inedible

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What doesn't kill you only makes you sicker!

Quote from: Vadimekb on June 28, 2013, 09:24:47 AM

Yes. Everything is right! ... but there are many things become rare on the Earth (Old cans for exaple). But nevertheless, he chooses to receive Bitkoins for the pizza. He could exchange this pizza for a tail of a squirrel, or shit of a whale or images of someones fingerprints (this is also rare things)

But, what attracted in idea of bitcoin not in idea of ... ?

None of these other things are 'scarce'.

The person who accepted the Bitcoin believed that it would become valuable one day.

Topic: Why Bitcoin was bought for the first time? (Read 2685 times)