7 ms·

Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC = 1 BTC and who cares about what the dollar equivalent happens to be. Once everyt

by skizm 9y ago

Bitcoin purists will say that, eventually, there is no "cash out" phase. 1 BTC = 1 BTC and who cares about what the dollar equivalent happens to be. Once everything is in BTC you will never exchange it for dollars. Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC? This is long term obviously. The reason the price is "high" now is because there is a finite amount. ~21 million BTC is the max that can ever exist at once. So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy.

baddox 9y ago
But be careful about only mentioning the views of "Bitcoin purists." That sounds like a pretty extreme view, and will be dismissed as a straw man by the Bitcoin fans or optimists, who likely vastly outnumber the "purists."
beaner 9y ago
Not sure why you'd be downvoted. This is what some purists think and it's a popular meme. [1] [1] http://imgur.com/gE8hDnY http://imgur.com/gE8hDnY
droopybuns 9y ago
Is it a big deal that a BTC can never be lost and later found? On a long enough timeline, won't lost credentials result in BTC that are functionally permanently out of circulation?
- droidist2 9y ago
  Interesting question. Since there's a limited supply theoretically on a long enough timeline every BTC will be lost.
  - tlrobinson 9y ago
    Currently Bitcoins can be divided to 8 decimal places, and if eventually that's not enough the protocol can be upgraded.
    - csuwldcat 9y ago
      Correct - you can increase the units in circulation without destroying the purchasing power of those who currently hold the asset, which is a huge advantage over traditional fiat currency.
      - pg314 9y ago
        You can do the same with fiat currencies. It's called redenomination [1]. [1] https://en.wikipedia.org/wiki/Redenomination https://en.wikipedia.org/wiki/Redenomination
mrisoli 9y ago
Can you elaborate on how that is going to happen? Not trying to flame, I can see a world where people use BTC for everything, but I am confused at how that will happen with current valuation. BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket? will there be some adjustment? How will other entities handle conversion and exchange? Will the general population have some compulsatory event to liquidate their own bank accounts into BTC funds? Could this change asset valuation worldwide(Real estate, investment funds, etc)? If no government entity mediates currency value and printing can they tax your earnings if companies pay through some decentralized medium? What happens when nobody is paying taxes? How about other cryptocurrencies, is there some kind of zero-sum game race to the top going on? Can they co-exist in the long term purist scenario? Some of these questions are probably extremely stupid as I have little financial and economics knowledge and I am almost illiterate when it comes to Bitcoin, and I don't know how it works for the average joe if this purist scenario becomes true.
- Empact 9y ago
  Most wallets have started communicating values in "mBTC" - whose price is within an order of magnitude of a dollar.
- azinman2 9y ago
  Bitcoin is deflationary by design. This is problematic for any country to then adopt, as it removes a major economic lever.
- nosuchthing 9y ago
  What is Bitcoin doing? The BTC network is a service. At the time of this writing, there are upwards of 30-100+ functioning cryptocoin networks which offer the same distributed ledger functionality of BTC wallets and a few with more unique features and trustworthy dev teams. The arbitrary supply of and rules which define how minted coins are rewarded is an important aspect of each of these cryptocurrencies, and if the limited edition deflationary aspect was valuable then maybe we should all buy into that BTC clone with 42 coins in "circulation". BTC isn't rare, it's just the AOL of cryptocoins right now. Slow and over priced. There are better alternatives.
nradov 9y ago
Of course that will never happen in our lifetimes because in the real world people and companies have to pay taxes. The larger sovereign states — which exercise effective monopolies on violence over geographic areas — won't agree to accept payments in cryptocurrencies which they can't control. Even if you conduct transactions in BTC or something similar you'll eventually have to exchange it for the local fiat currency to pay taxes.
panarky 9y ago
I'm sure there are some "bitcoin purists" who think someday bitcoin will be used to buy everything, but that's certainly a minority viewpoint. There's a more pragmatic way to think about it. Bitcoin can coexist just fine with national currencies, and with other cryptocurrencies, and with precious metals. Bitcoin doesn't need to "win" by replacing any of these. Bitcoin is valuable because it's a secure way to store and transfer value between people. If bitcoin is never used to buy your morning coffee, that's OK. If only 1% of the population finds bitcoin useful, that's OK, too. Dollars, euros and yen are better than bitcoin in many use cases, and bitcoin can do things that dollars, euros and yen cannot do in other use cases. The simple fact is that many people find bitcoin useful, and that's what makes it valuable.
- AgentME 9y ago
  Yeah, I think there's a strange amount of both fans and people who dislike bitcoin that think bitcoin can only be valuable if it's on a path to complete adoption, replacing other currencies. I see it more like a decentralized PayPal alternative, and I keep seeing it pop up in more places that I buy stuff online and I've made personal transactions with it to other people, so it's providing value to me and seems to be on a reasonably successful path.
  - thanksgiving 9y ago
    I know miners will hate me for saying this it will bring up the lightning network but I think the transaction costs are too high. They have to come down (close to zero if not zero) even if it means miners and node operators are working for no gain. I don't understand why it means that Bitcoin is insecure for people to be able to mine in their gpu. Maybe we need to leave Bitcoin alone and come up with another currency for low value transactions that happen frequently? I'm thinking like buying coffee or groceries.
    - AgentME 9y ago
      >I don't understand why it means that Bitcoin is insecure for people to be able to mine in their gpu. What do you mean? People can mine with a gpu, but they won't make much because of the many miners using much faster ASICs. If you think Bitcoin should have been made so that ASICs weren't possible: a number of altcoins agree with that idea, but there's an argument to be made that optimized hardware is always possible, and by making it hard to make, it makes it more likely that a single small group who manages to make optimized hardware will be the only one to do so for a large time period, will be able to make huge amounts of profits funding more hardware, and at that point will easily be able to get up to >50% of the network hash rate (which breaks Bitcoin's decentralization and allows rewriting the blockchain). By using a proof-of-work that's relatively straight-forward to optimize means that when the possible mining rewards eventually incentivize development of ASICs, it's likely that multiple groups will be able to build them.
nugget 9y ago
If/when the limit of 21 million is reached, the miners would/will increase the limit. Over time the incentives of BTC holders and BTC miners diverge. One of the many reasons a viable PoS is important, as it merges these two groups into one.
cesarb 9y ago
> Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC? Moving the analogy a bit: everything we buy is priced in Reais. However, we still care if tomorrow the Dollar is worth more or less, since it does impact the price of several kinds of goods. For instance, the Dollar increasing in value will lead to computers getting more expensive. In the same way, even if everything were to be priced in Bitcoins, the exchange rate between Bitcoin and USD would still be significant, unless and until the USD ceased to exist.
- semi-extrinsic 9y ago
  But this is exactly the point - in countries where the local currency versus USD has had volatility comparable to BTC, it's been a big problem. E.g. in South Korea, where the volatility (and general upwards trend) in the Won last year was an order of magnitude less than BTC, the currency fluctuations have caused major losses and uncertainty for exporters. If you walk around Seoul, there are signs everywhere showing the current exchange rate.
Diederich 9y ago
> ~21 million BTC is the max that can ever exist at once Just to clarify: it's not that there can only be 21 million BTC 'at once'...unless there's a big change in its design that the majority support. There will only be 21 million BTC ever. If the keys for 1 million of them are lost, then those will never be replaced.
cma 9y ago
> So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy. The rules can and have changed with just majority (of compute power) consensus through forks. They could be changed to make it inflationary.
1_2__4 9y ago
I think traditional currency can remain solvent longer than cryptocurrency can remain irrational.
Cthulhu_ 9y ago
> Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No Actually, yes; there's plenty of countries where they use the USD or Euro instead of their local currency because the local currency suffers from high inflation or instability. There's other countries where the currency is tightly linked to the dollar. Both because the dollar is a stable currency, one that isn't influenced by supply / demand like BTC is - BTC is a finite resource, dollars are theoretically infinite.

by skizm 9y ago

baddox 9y ago

But be careful about only mentioning the views of "Bitcoin purists." That sounds like a pretty extreme view, and will be dismissed as a straw man by the Bitcoin fans or optimists, who likely vastly outnumber the "purists."

beaner 9y ago

Not sure why you'd be downvoted. This is what some purists think and it's a popular meme. [1] [1] http://imgur.com/gE8hDnY http://imgur.com/gE8hDnY

droopybuns 9y ago

Is it a big deal that a BTC can never be lost and later found? On a long enough timeline, won't lost credentials result in BTC that are functionally permanently out of circulation?

droidist2 9y ago
Interesting question. Since there's a limited supply theoretically on a long enough timeline every BTC will be lost.
- tlrobinson 9y ago
  Currently Bitcoins can be divided to 8 decimal places, and if eventually that's not enough the protocol can be upgraded.
  - csuwldcat 9y ago
    Correct - you can increase the units in circulation without destroying the purchasing power of those who currently hold the asset, which is a huge advantage over traditional fiat currency.
    - pg314 9y ago
      You can do the same with fiat currencies. It's called redenomination [1]. [1] https://en.wikipedia.org/wiki/Redenomination https://en.wikipedia.org/wiki/Redenomination

mrisoli 9y ago

Can you elaborate on how that is going to happen? Not trying to flame, I can see a world where people use BTC for everything, but I am confused at how that will happen with current valuation. BTC is worth thousands of dollars, so if everyone starts using BTC will people pay irrational fractions of BTC for bread and milk at the supermarket? will there be some adjustment? How will other entities handle conversion and exchange? Will the general population have some compulsatory event to liquidate their own bank accounts into BTC funds? Could this change asset valuation worldwide(Real estate, investment funds, etc)? If no government entity mediates currency value and printing can they tax your earnings if companies pay through some decentralized medium? What happens when nobody is paying taxes? How about other cryptocurrencies, is there some kind of zero-sum game race to the top going on? Can they co-exist in the long term purist scenario? Some of these questions are probably extremely stupid as I have little financial and economics knowledge and I am almost illiterate when it comes to Bitcoin, and I don't know how it works for the average joe if this purist scenario becomes true.

Empact 9y ago
Most wallets have started communicating values in "mBTC" - whose price is within an order of magnitude of a dollar.
azinman2 9y ago
Bitcoin is deflationary by design. This is problematic for any country to then adopt, as it removes a major economic lever.
nosuchthing 9y ago
What is Bitcoin doing? The BTC network is a service. At the time of this writing, there are upwards of 30-100+ functioning cryptocoin networks which offer the same distributed ledger functionality of BTC wallets and a few with more unique features and trustworthy dev teams. The arbitrary supply of and rules which define how minted coins are rewarded is an important aspect of each of these cryptocurrencies, and if the limited edition deflationary aspect was valuable then maybe we should all buy into that BTC clone with 42 coins in "circulation". BTC isn't rare, it's just the AOL of cryptocoins right now. Slow and over priced. There are better alternatives.

nradov 9y ago

Of course that will never happen in our lifetimes because in the real world people and companies have to pay taxes. The larger sovereign states — which exercise effective monopolies on violence over geographic areas — won't agree to accept payments in cryptocurrencies which they can't control. Even if you conduct transactions in BTC or something similar you'll eventually have to exchange it for the local fiat currency to pay taxes.

panarky 9y ago

I'm sure there are some "bitcoin purists" who think someday bitcoin will be used to buy everything, but that's certainly a minority viewpoint. There's a more pragmatic way to think about it. Bitcoin can coexist just fine with national currencies, and with other cryptocurrencies, and with precious metals. Bitcoin doesn't need to "win" by replacing any of these. Bitcoin is valuable because it's a secure way to store and transfer value between people. If bitcoin is never used to buy your morning coffee, that's OK. If only 1% of the population finds bitcoin useful, that's OK, too. Dollars, euros and yen are better than bitcoin in many use cases, and bitcoin can do things that dollars, euros and yen cannot do in other use cases. The simple fact is that many people find bitcoin useful, and that's what makes it valuable.

AgentME 9y ago
Yeah, I think there's a strange amount of both fans and people who dislike bitcoin that think bitcoin can only be valuable if it's on a path to complete adoption, replacing other currencies. I see it more like a decentralized PayPal alternative, and I keep seeing it pop up in more places that I buy stuff online and I've made personal transactions with it to other people, so it's providing value to me and seems to be on a reasonably successful path.
- thanksgiving 9y ago
  I know miners will hate me for saying this it will bring up the lightning network but I think the transaction costs are too high. They have to come down (close to zero if not zero) even if it means miners and node operators are working for no gain. I don't understand why it means that Bitcoin is insecure for people to be able to mine in their gpu. Maybe we need to leave Bitcoin alone and come up with another currency for low value transactions that happen frequently? I'm thinking like buying coffee or groceries.
  - AgentME 9y ago
    >I don't understand why it means that Bitcoin is insecure for people to be able to mine in their gpu. What do you mean? People can mine with a gpu, but they won't make much because of the many miners using much faster ASICs. If you think Bitcoin should have been made so that ASICs weren't possible: a number of altcoins agree with that idea, but there's an argument to be made that optimized hardware is always possible, and by making it hard to make, it makes it more likely that a single small group who manages to make optimized hardware will be the only one to do so for a large time period, will be able to make huge amounts of profits funding more hardware, and at that point will easily be able to get up to >50% of the network hash rate (which breaks Bitcoin's decentralization and allows rewriting the blockchain). By using a proof-of-work that's relatively straight-forward to optimize means that when the possible mining rewards eventually incentivize development of ASICs, it's likely that multiple groups will be able to build them.

nugget 9y ago

If/when the limit of 21 million is reached, the miners would/will increase the limit. Over time the incentives of BTC holders and BTC miners diverge. One of the many reasons a viable PoS is important, as it merges these two groups into one.

cesarb 9y ago

> Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No, so why would you care what the dollar equivalent to a BTC is when everything you buy is priced in BTC? Moving the analogy a bit: everything we buy is priced in Reais. However, we still care if tomorrow the Dollar is worth more or less, since it does impact the price of several kinds of goods. For instance, the Dollar increasing in value will lead to computers getting more expensive. In the same way, even if everything were to be priced in Bitcoins, the exchange rate between Bitcoin and USD would still be significant, unless and until the USD ceased to exist.

semi-extrinsic 9y ago
But this is exactly the point - in countries where the local currency versus USD has had volatility comparable to BTC, it's been a big problem. E.g. in South Korea, where the volatility (and general upwards trend) in the Won last year was an order of magnitude less than BTC, the currency fluctuations have caused major losses and uncertainty for exporters. If you walk around Seoul, there are signs everywhere showing the current exchange rate.

Diederich 9y ago

> ~21 million BTC is the max that can ever exist at once Just to clarify: it's not that there can only be 21 million BTC 'at once'...unless there's a big change in its design that the majority support. There will only be 21 million BTC ever. If the keys for 1 million of them are lost, then those will never be replaced.

cma 9y ago

> So, theoretically if you replaced the world's currencies with BTC, having a single BTC would make you incredibly wealthy. The rules can and have changed with just majority (of compute power) consensus through forks. They could be changed to make it inflationary.

1_2__4 9y ago

I think traditional currency can remain solvent longer than cryptocurrency can remain irrational.

Cthulhu_ 9y ago

> Do you spend dollars today wondering if tomorrow the Euro will be worth more or less? No Actually, yes; there's plenty of countries where they use the USD or Euro instead of their local currency because the local currency suffers from high inflation or instability. There's other countries where the currency is tightly linked to the dollar. Both because the dollar is a stable currency, one that isn't influenced by supply / demand like BTC is - BTC is a finite resource, dollars are theoretically infinite.