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Central banks are losing credibility, fueling the market for Bitcoins. http://www.bloomberg.com/news/2013-03-20/fleeing-the-euro-for-bitcoins-.html http://www.

Central banks are losing credibility, fueling the market for Bitcoins. http://www.bloomberg.com/news/2013-03-20/fleeing-the-euro-for-bitcoins-.html http://www.bloomberg.com/news/2013-03-20/fleeing-the-euro-fo...

slg 14y ago
Just like anarchy isn't the answer to a poorly run government, I don't think the answer to a poorly run central bank is to go to a currency which isn't supported by any central bank.
- dmm 14y ago
  Markets are good at finding prices. Why not use a market to find the price of a currency?
  - uvdiv 14y ago
    Markets aren't good at finding prices for pseudo-"assets" that have no value. A bitcoin price of $0 is a valid market equilibrium, and a stable one. Your argument is a rationale for a commodity currency. Markets are good at finding prices for high-volume competitive commodities such as wheat [0]. No one will ever turn down a wheat dollar: you can eat it. [0] http://www.google.com/finance?q=WEAT http://www.google.com/finance?q=WEAT.
    - dmm 14y ago
      Gold can't be eaten. Why is it so expensive?
      - uvdiv 14y ago
        Psychology. It could crash tomorrow: industrial gold consumption isn't driving the price.
      - dualogy 14y ago
        A bitcoin can't be eaten, why is it worth $70? Maybe... BECAUSE it can't be eaten and has "no (economic) use". Think about it. You save your excess production for future consumption (your retirement and/or your offspring) -- in apples and burritos?
        dmm 14y ago
        ;)
    - icebraining 14y ago
      Bitcoin has value as a cheap and censorship-resistant way of transferring funds.
      - uvdiv 14y ago
        When people stop using bitcoin, this value will disappear. It is not intrinsic value. It is value assigned by group psychology, like a bubble.
        icebraining 14y ago
        When people stop using bitcoin, this value will disappear. That's true for everything. Whale oil was extremely popular for more than a century, now it's barely used. That doesn't mean it wasn't an useful thing at the time. It is not intrinsic value. There's no such thing. Value (market or use) is always relative to someone or some group of people. And even if the item is still useful in itself, the existence of better and/or cheaper alternatives may still drive its market value to zero. It is value assigned by group psychology, like a bubble. I think you're just not seeing Bitcoin with the right point of view. Instead of thinking of the speculators trading it like a commodity, think of it as a service, like Paypal. When I want to send money to someone else online, how can I do it? I have to use it some kind of service (bank transfer, Paypal, etc), and those services can be "convinced" to prevent my transaction (like when the CC companies prevented WIkileaks donations), or it can freeze my funds (see Paypal again), etc. Now, if people are willing to pay Paypal some percentage for that transfer, it means the service has some value. If Bitcoin can do the same, it stands to reason that it must have at the least some value as well. Now, this is different from the (real or not) value one gets by trading and holding Bitcoins, but that's just part of the whole system. For the record, I have zero bitcoins.
        uvdiv 14y ago
        There's no such thing. Value (market or use) is always relative to someone or some group of people. Yes, but there's an important and qualitative difference between valuing something because it's useful, and only valuing something because a crowd of people value it, only because they know everyone else values it, only because... recursively. This is what I mean by "intrinsic value": it has a utility value independent of pure psychological value. Useful things like oil or wheat won't suddenly become useless. (They could be obsoleted, but that's not sudden or unexpected). But it's not that easy to reason about group psychology. Empirically, we know there have been many bubbles where everyone suddenly "agreed" something was actually worth much less than the going price and crashed it. We know psychologically can do that.
  - willholloway 14y ago
    Markets are used to find the price of major currencies, they are the foreign exchange markets.
- anonfunction 14y ago
  Your analogy doesn't ring true to me. Anarchy isn't an answer to a poorly run government, but open elections and transparency may be. Poorly run central banks are notoriously secretive and corrupt, Bitcoin is just the opposite.
  - slg 14y ago
    Your analogy would only be true if Bitcoin had an open and transparent central bank. Instead it has a set of rules that were established with the currency. It is true that this makes the monetary policy more predictable and less corrupt, but it is also less intelligent. There is no independent entity that can take an active role to help stabilize the wild swings in value that Bitcoin has and will continue to experience.
    - anonfunction 14y ago
      That's the point.
- slapresta 14y ago
  I feel like that metaphor is kind of broken. One could argue that anarchy isn't the answer to a poorly run government because the benefits of governamental regulation and control outweigh those of anarchy (a position I disagree with, but that's just my opinion). What kind of benefits do central banks provide?
  - slg 14y ago
    The most important function in this context is controlling the money supply and providing stability. If inflation or deflation of the US dollar gets too extreme, the Federal Reserve will adjust the money supply in order to prevent the problem from snowballing. There is no such entity that can serve that purpose for Bitcoin. This increases the odds for both runaway inflation or deflation (deflation is seemingly more like for Bitcoin). If either of those happen, the currency has the potential to collapse.

slg 14y ago

Just like anarchy isn't the answer to a poorly run government, I don't think the answer to a poorly run central bank is to go to a currency which isn't supported by any central bank.

dmm 14y ago
Markets are good at finding prices. Why not use a market to find the price of a currency?
- uvdiv 14y ago
  Markets aren't good at finding prices for pseudo-"assets" that have no value. A bitcoin price of $0 is a valid market equilibrium, and a stable one. Your argument is a rationale for a commodity currency. Markets are good at finding prices for high-volume competitive commodities such as wheat [0]. No one will ever turn down a wheat dollar: you can eat it. [0] http://www.google.com/finance?q=WEAT http://www.google.com/finance?q=WEAT.
  - dmm 14y ago
    Gold can't be eaten. Why is it so expensive?
    - uvdiv 14y ago
      Psychology. It could crash tomorrow: industrial gold consumption isn't driving the price.
    - dualogy 14y ago
      A bitcoin can't be eaten, why is it worth $70? Maybe... BECAUSE it can't be eaten and has "no (economic) use". Think about it. You save your excess production for future consumption (your retirement and/or your offspring) -- in apples and burritos?
      - dmm 14y ago
        ;)
  - icebraining 14y ago
    Bitcoin has value as a cheap and censorship-resistant way of transferring funds.
    - uvdiv 14y ago
      When people stop using bitcoin, this value will disappear. It is not intrinsic value. It is value assigned by group psychology, like a bubble.
      - icebraining 14y ago
        When people stop using bitcoin, this value will disappear. That's true for everything. Whale oil was extremely popular for more than a century, now it's barely used. That doesn't mean it wasn't an useful thing at the time. It is not intrinsic value. There's no such thing. Value (market or use) is always relative to someone or some group of people. And even if the item is still useful in itself, the existence of better and/or cheaper alternatives may still drive its market value to zero. It is value assigned by group psychology, like a bubble. I think you're just not seeing Bitcoin with the right point of view. Instead of thinking of the speculators trading it like a commodity, think of it as a service, like Paypal. When I want to send money to someone else online, how can I do it? I have to use it some kind of service (bank transfer, Paypal, etc), and those services can be "convinced" to prevent my transaction (like when the CC companies prevented WIkileaks donations), or it can freeze my funds (see Paypal again), etc. Now, if people are willing to pay Paypal some percentage for that transfer, it means the service has some value. If Bitcoin can do the same, it stands to reason that it must have at the least some value as well. Now, this is different from the (real or not) value one gets by trading and holding Bitcoins, but that's just part of the whole system. For the record, I have zero bitcoins.
        uvdiv 14y ago
        There's no such thing. Value (market or use) is always relative to someone or some group of people. Yes, but there's an important and qualitative difference between valuing something because it's useful, and only valuing something because a crowd of people value it, only because they know everyone else values it, only because... recursively. This is what I mean by "intrinsic value": it has a utility value independent of pure psychological value. Useful things like oil or wheat won't suddenly become useless. (They could be obsoleted, but that's not sudden or unexpected). But it's not that easy to reason about group psychology. Empirically, we know there have been many bubbles where everyone suddenly "agreed" something was actually worth much less than the going price and crashed it. We know psychologically can do that.
- willholloway 14y ago
  Markets are used to find the price of major currencies, they are the foreign exchange markets.
anonfunction 14y ago
Your analogy doesn't ring true to me. Anarchy isn't an answer to a poorly run government, but open elections and transparency may be. Poorly run central banks are notoriously secretive and corrupt, Bitcoin is just the opposite.
- slg 14y ago
  Your analogy would only be true if Bitcoin had an open and transparent central bank. Instead it has a set of rules that were established with the currency. It is true that this makes the monetary policy more predictable and less corrupt, but it is also less intelligent. There is no independent entity that can take an active role to help stabilize the wild swings in value that Bitcoin has and will continue to experience.
  - anonfunction 14y ago
    That's the point.
slapresta 14y ago
I feel like that metaphor is kind of broken. One could argue that anarchy isn't the answer to a poorly run government because the benefits of governamental regulation and control outweigh those of anarchy (a position I disagree with, but that's just my opinion). What kind of benefits do central banks provide?
- slg 14y ago
  The most important function in this context is controlling the money supply and providing stability. If inflation or deflation of the US dollar gets too extreme, the Federal Reserve will adjust the money supply in order to prevent the problem from snowballing. There is no such entity that can serve that purpose for Bitcoin. This increases the odds for both runaway inflation or deflation (deflation is seemingly more like for Bitcoin). If either of those happen, the currency has the potential to collapse.