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sure because bitcoin value never went down overnight. Not even 10% like the cypriot savings. Oh wait, never mind. It went down 30% in a single day: http://www.d

by lrei 14y ago

sure because bitcoin value never went down overnight. Not even 10% like the cypriot savings. Oh wait, never mind. It went down 30% in a single day: http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+Depression+Hits/article21877.htm http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+...

icebraining 14y ago
The Cypriot savings didn't lose value, they lost a part. It's not the same thing at all. The proof is that Bitcoin returned to its previous value (and then some) rather quickly, while the savings will never return.
- lrei 14y ago
  Losing value and losing a part is the same thing. Say you have 100 dollars. And with 100 dollars you can buy 100 beans: * The dollar loses 10% value. Now you can only buy 90 beans. * You lose 10% of your 100 dollars. Now you only have 90 dollars. You can only buy 90 beans. Compare that with: * Cyprus banks go bankrupt, the euro loses 10% value - never mind that people actually lose 100% of their money. * Cyprus savings take a 10% cut, Euro keeps 100% of its value. Sure it's a simplification but I think it's a valid point.
  - icebraining 14y ago
    The Euro losing 10% of value in relation to what? USD? Yen? And even if the dollar loses 10% of the value vs every other currency, it's not true that you can only buy 90 beans, because you're not the only one with dollars: there are farmers who sell in dollars, and buy their stuff in dollars, and so will probably keep their prices. When everyone you trade with uses the same currency as you, there's no value to be lost or gained relative to them, and since Cyprus trades in Euros, a loss of 10% versus say, the dollar, wouldn't automatically make everything 10% more expensive.
    - gasull 14y ago
      This is not true. Currency depreciation leads to price inflation. That's why your dollars (or euros) buy less things year over year.
      - icebraining 14y ago
        Currency depreciation by increasing the supply is not the same as losing value relative to other currencies, which was what happened to BItcoins (since the supply is constant). And while both depreciations lead to price inflation, an loss of X% in the latter doesn't lead to an increase of the same amount in price inflation, because not all products completely depend on imports from other economic zones.
- tptacek 14y ago
  They seem like exactly the same thing. Maybe the reason they don't seem that way to you is that you've decided a priori that Bitcoin will inevitably regain its 30% in value, while Cypriot assets will never gain 6% of value. That seems a little silly. If you bought gold in 1980, you'd still be waiting, 33 years later, for it to recover its value. Gold, silver, currency, and truncated SHA2 hashes can lose value and never fully regain it.
  - icebraining 14y ago
    What Cypriot assets? They lost Euros, which happens to be the same currency that their trading partners use, so there's no value to be gained relative to them. And no, I haven't assumed that Bitcoin will regain in its 30% in value - it already has. But that it can gain (or lose!) so much value relative to the common currency is a big difference, since the common currency can't gain or lose value against itself.
    - tptacek 14y ago
      If you believe that, and are given a choice between (a) an asset which is going to lose 30% of its value but then gain it back and (b) a confiscatory 6% tax on cash, you still prefer (b); you eat the tax, wait for the devaluation of bitcoin, buy bitcoin, and enjoy the appreciation. Of course, that's a silly hypothetical, because the reality is that bitcoin (or gold) is just as likely to stay devalued longer than you can remain illiquid. Your logic is based on the idea that Bitcoin must at some point return to some predictable equilibrium valuation, or even that it must appreciate. The point upthread was, no, obviously that's not true. Next week it be worth pennies, or nothing, and stay that way forever. Which is why moving all your money into Bitcoin is not a rational risk management reaction to confiscatory 6% taxes.
      - icebraining 14y ago
        I'm not saying buying Bitcoins is a good move; I myself own none. I'm saying the two situations aren't similar.

by lrei 14y ago

icebraining 14y ago

The Cypriot savings didn't lose value, they lost a part. It's not the same thing at all. The proof is that Bitcoin returned to its previous value (and then some) rather quickly, while the savings will never return.

lrei 14y ago
Losing value and losing a part is the same thing. Say you have 100 dollars. And with 100 dollars you can buy 100 beans: * The dollar loses 10% value. Now you can only buy 90 beans. * You lose 10% of your 100 dollars. Now you only have 90 dollars. You can only buy 90 beans. Compare that with: * Cyprus banks go bankrupt, the euro loses 10% value - never mind that people actually lose 100% of their money. * Cyprus savings take a 10% cut, Euro keeps 100% of its value. Sure it's a simplification but I think it's a valid point.
- icebraining 14y ago
  The Euro losing 10% of value in relation to what? USD? Yen? And even if the dollar loses 10% of the value vs every other currency, it's not true that you can only buy 90 beans, because you're not the only one with dollars: there are farmers who sell in dollars, and buy their stuff in dollars, and so will probably keep their prices. When everyone you trade with uses the same currency as you, there's no value to be lost or gained relative to them, and since Cyprus trades in Euros, a loss of 10% versus say, the dollar, wouldn't automatically make everything 10% more expensive.
  - gasull 14y ago
    This is not true. Currency depreciation leads to price inflation. That's why your dollars (or euros) buy less things year over year.
    - icebraining 14y ago
      Currency depreciation by increasing the supply is not the same as losing value relative to other currencies, which was what happened to BItcoins (since the supply is constant). And while both depreciations lead to price inflation, an loss of X% in the latter doesn't lead to an increase of the same amount in price inflation, because not all products completely depend on imports from other economic zones.
tptacek 14y ago
They seem like exactly the same thing. Maybe the reason they don't seem that way to you is that you've decided a priori that Bitcoin will inevitably regain its 30% in value, while Cypriot assets will never gain 6% of value. That seems a little silly. If you bought gold in 1980, you'd still be waiting, 33 years later, for it to recover its value. Gold, silver, currency, and truncated SHA2 hashes can lose value and never fully regain it.
- icebraining 14y ago
  What Cypriot assets? They lost Euros, which happens to be the same currency that their trading partners use, so there's no value to be gained relative to them. And no, I haven't assumed that Bitcoin will regain in its 30% in value - it already has. But that it can gain (or lose!) so much value relative to the common currency is a big difference, since the common currency can't gain or lose value against itself.
  - tptacek 14y ago
    If you believe that, and are given a choice between (a) an asset which is going to lose 30% of its value but then gain it back and (b) a confiscatory 6% tax on cash, you still prefer (b); you eat the tax, wait for the devaluation of bitcoin, buy bitcoin, and enjoy the appreciation. Of course, that's a silly hypothetical, because the reality is that bitcoin (or gold) is just as likely to stay devalued longer than you can remain illiquid. Your logic is based on the idea that Bitcoin must at some point return to some predictable equilibrium valuation, or even that it must appreciate. The point upthread was, no, obviously that's not true. Next week it be worth pennies, or nothing, and stay that way forever. Which is why moving all your money into Bitcoin is not a rational risk management reaction to confiscatory 6% taxes.
    - icebraining 14y ago
      I'm not saying buying Bitcoins is a good move; I myself own none. I'm saying the two situations aren't similar.