Bitcoin Rebuttal Part 2 Pipe Transactions
December 8, 2011 by admin · 25 Comments
My quick notes: Nielsio Good guy, stuck in old world thinking, I hear you are blocking commenters on your site, thats a no no Starts out by explaining bartering says gold has unique physical charc. says gold is a commodity Says dollars, just a piece of paper end user are tax payers. Dollars are backed up by government and taxpayers, not great Actually backed by, trust: A) you trust that the government will still be around and honor your money B) Trust the government will not inflate /deflate your money beyond reason, which can be out of their control Bitcoins backed by nothing, not true: I trust bitcoin to do: A) trust that bitcoin will still be around? — Yes, as long as 2 people want to use it, it will be around, and my bitcoins will be honored B)Bitcoin generation is algorithmic. It generates bitcoins at a certain rate until it hits a certain amount, then it stops entirely… not at the whim of a government. MORE STABLE! Says bitcoin is a pipe dream b/c dollars or euros unbacked — BUT dollars have worked even though “unbacked”. Dollars still the currency, just money laundering explain scenario. currency definition Money or other item used to facilitate transactions. Secondly, using your example, Dollars are money laundering too, because technically, you are still exchanging goods and services, you are just using the dollar as an exchange medium.
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@SteamyThePunk Yeah they are somewhat different, but they don’t have a strict 1:1 exchange rate or a central exchange for that matter.
I kinda lost the point of the argument though…
@theeltea haha, okay I don’t know much about these companies you’re citing here… but these companies appears to be more like PayPal than Bitcoin. The monetary units they are trafficking are equivalent to existing currencies and don’t have an independent market value, and an equivalent electronic currency is exchangeable 1:1 with the corresponding real deal at any time. Bitcoin is different, it’s claiming to be a currency which is much different than what Paypal, WebMoney and Yandex Money do.
@SteamyThePunk Well, I live in Russia and there are quite a lot of ‘electronic’ money around, like Webmoney, Yandex Money, etc, etc. The oldest of those have been operating since 98′ and flourish even today.
Among the more familiar ones, I can point out Liberty Reserve, for example.
loved the ludicrous example though!
its 20k bitcoins
@theeltea Of course, this would include crap like video game goods, people selling level 80 characters and what not, and in game currencies for real money, but I REALLY doubt you’ll ever expect to pay for your groceries with your level 80 paladin, 8,000 zenny, or your flaming sword of +4 dragon slay. Of course this is one of the more ludicrous example.
@SteamyThePunk There are quite a lot “currencies” around, really. Much more than you think there are.
@deranjer But you see that’s not right, I value bit coins as nil. I am it’s target demographic, I’m within it’s domain, and I value a bitcoin as nil, hell you probably couldn’t even convince me to buy is BEFORE the recent crash in it’s value. There are company’s within the domain of bitcoin who do not accept them, it’s not a currency, it’s a fad, it’s a pretense, There is no predictable fiscal future in it. It’s white noise. It’s rubbish.
@SteamyThePunk Bitcoin IS valued the same for everyone.. check the market at mtgox and you can see the current value….
@SteamyThePunk Most currencies are centralized because that lends it stability, and then laws are passed that given a business in the currency’s domain, it must be honoured for a specified value. Bitcoins don’t have that, which they say is it’s strength, but I say they’re similar to a stock in stability, but they don’t have any representation in actual positive work done.
@deranjer Bitcoin isn’t trying to pass themselves off as a virtual good, that is worth something to some niche of people, Bitcoin is trying to pass themselves off as currency. Claiming that you are a currency is a big deal these days economically speaking. That is a bitcoin if it’s currency must be valued the same over it’s domain for all people otherwise it’s not really a currency, stable economically speaking. You could say that stocks are currency if bitcoins are, but you wouldn’t.
@SteamyThePunk Maybe some people would love chairs made of cat hair I’ve seen what I considered much stupider things that sold for a bundle as art pieces… are you the final voice about what is valuable? I would never buy a WOW account, but some people pay 100′s of dollars for the account, but you might say… “That’s just a bunch of bits in a virtual world! Worthless!” However, the value is what people are willing to pay, you do not get to arbitrarily decide what is valuable.
@SteamyThePunk I’m busy with a new house I just bought and getting married this week, but Ill be back in two weeks to finish discussing this…
@deranjer The USD would skyrocket if everyone suddenly thought it would increase in value, yes, that is exactly what is going on with the bitcoin, I believe that the majority of bitcoins are held/acquired under the assumption that the bitcoin market will go up, and because of this it will. However as the supply’s growth slows so too will the investment opportunity, and the people holding bitcoins as investments will sell, demand will drop, and the bitcoin market will crash.
@deranjer The production rate wasn’t meant to mimic anything in bitcoin it was made constant to make a point.
@deranjer you’re statements are exactly what I’m talking about, why is a bitcoin worth 15$, because we believe it to be, is there a reason to believe this? NO. We just believe it’s worth that much, and because of the magic of demand it just is. reduce the supply and the value may go up a bit, increase the supply and it may go down a bit, of course fluctuation in overall demand must be considered, but there is NOTHING to baffle these fluctuations, where as in the USD the products of the nation do
@SteamyThePunk Once again, bitcoin is not intended to be an investment, just like the US dollar is not intended to be an investment, but it can be considered one. If everyone went crazy and though the US dollar would skyrocket in value compared to the Euro (or w/e) and everyone bought US dollars demand would skyrocket, the price would skyrocket and viola! the dollar would be entirely fueled by supply and demand.
@SteamyThePunk Everything is worth what people are willing to pay for it, if someone loves cat hair they may value a cat hair chair. The reason 1 bitcoin is worth 15 dollars (or w/e it is currently) is because everyone agrees that they value a bitcoin 15 dollars worth. Everyone agrees a dollar is worth a dollar because it is backed by the US. Everyone agrees a bitcoin is worth X number of dollars because they trust the software to back their coins.
@SteamyThePunk This argument is moot. You posit that the cost is more but the production rate didn’t change… the production rate WILL change in bitcoins case… it will slow down, and bitcoins will split into smaller denominations, but this entire argument is pointless, everything is worth what people are willing to pay… for bitcoins OR dollars, you are just trusting different things.
Saying bitcoins are worth something because of the energy put into them, make them a debt based good… What sense does that make? This is worth $15 because I wasted $15 producing it? really? Is that true of my cat hair chair? or my pile of old computer parts? What about the rocks I collected from the beach? I mean those things were hard to collect, a lot of effort went into that. Must be worth something right?
You also seem to imply that bitcoins are worth something because the amount of energy and time that is used up producing them. Here is a question, if the USD printing operation was made more energy expensive, but the production rate didn’t change, would that make the value go up or down? Answer: it would go down, Energy costs money. More effort without additional product does NOT make something more worthwhile, in fact it makes it LESS worth while. The value should drop as mining gets harder.
@deranjer Furthermore, I would progress logically to the conclusion that the value of bitcoins is entirely fuelled by supply and demand. The demand is high right now because people seem to still think it’s a good investment, when it’s not. The cost of producing coins is rising too fast, eventually it will not be worthwhile to mine anymore, and production will stop, people will sell, the value will drop, demand will drop, and the market will fall out from under it. It’s a bubble not a currency.
@deranjer No, there is a lot of EFFORT behind getting a bitcoin (which is artificially increased the more miners there are), but the effort’s only product is a bitcoin. That doesn’t make it worth anything. That’s like saying I TRIED really hard to make this chair so it’s worth a lot of money, Never mind it’s made out of cat hair, or that it’s not strong enough to carry your weight, or anything like that. Only that’s not even a good analogy because hey at least you have a useless cat hair chair.
@SteamyThePunk Bitcoin is also backed by the work done by computers that are generating bitcoins, and by algorithms protecting transactions, etc. Again, bitcoins main point is as a transaction medium, NOT an investment medium. I agree bitcoins bubbled dramatically, but that is not a fault with bitcoin, as we know almost ANYTHING can bubble.
Saying that the USD is backed by the government is more than just trust that the government will continue to honour it and not fool around with the value too much without reason. The USD also has worth because it represents the US economy, and the work done by the US.
Bitcoins are only backed by supply and demand. If the bitcoin’s value stabalizes the demand for them as a investment will DIE, that demand makes up the majority of bitcoins perceived value. It’s a bubble not a currency.
@JRCrowley That may be true, but I don’t see how you can make that sweeping prediction. But just because a few people use it doesn’t mean it has failed. If there are only 2 users left, bitcoin will still work.