7 ms·

The value of bitcoins goes up because the entire system is a store of value. When bitcions are bought, people are transfering "real" value (USD or any other gov

by kruhft 14y ago

The value of bitcoins goes up because the entire system is a store of value. When bitcions are bought, people are transfering "real" value (USD or any other government backed currency) into the Bitcoin system where the value is being held. When they sell Bitcoins they are removing value from the system. Due to supply (limited) and demand (increasing), the amount real currency needed to purchase a unit of Bitcoin is going up. This transfer of value can be due to hopes of appreciation (speculative investment, possibly causing a bubble) or lack of faith in a base currency (hedging wealth, as is happening in Europe). Since our monetary systems are now based on little more than unbacked faith and look to be failing in various ways, people are looking to put their wealth into something they feel they can trust and that might have more of a future than current fiat systems. Given the decentralized lack of control of Bitcoin and the rise in the current lack of trust in the offical financial systems, the rise of Bitcoin makes as much sense as the present rise in the value of gold, a traditional hedge of value and original currency backer. Now that people are now used to storing value in non-backed, faith based monetary systems, Bitcoin is the first fiat monetary system that has no ruler, and people are transfering their government backed faith based store of value into it. It can be thought of a democratic store of value, and as more people believe in it the more value it will have.

tptacek 14y ago
Yes. Bitcoin is the first fiat monetary system that has no ruler. Also, it has repealed the law of parsimony (haven't you heard, on the Internet, there are no laws). So it's totally not the case that Bitcoin is going up because Bitcoin is going up, and people are bidding up its price on the expectation that the peak is nowhere in sight, and they'll make a tidy profit off later speculators. Because the Internet has upended all the normal ways of doing things, just like it did for Sealand (remember those message board threads?), it doesn't matter that economists look at the price chart for Bitcoin and say "uh, that is a bubble", and then "also, bubble or not, that is not productive behavior for a currency". Nor does it matter that Bitcoin mostly buys you donations to extremely independent bands, tips for blog tip jars, "Avalanche Spa Powder Not For Human Consumption", and highly marginal web hosting. No, the price makes perfect sense: people can't trust the US dollar, which reliably purchases cars, air travel, thai food, houses, Macbooks, chest freezers, pork chops, chlorinated trisphosphate, tuition at Stanford, roofing shingles, dirt, methamphetamine, hookers, and guns. Not just here, but pretty much everywhere in the world. It's definitely not because if the current price for Bitcoin makes no sense, it's not going to matter whether your online wallet gets hacked and all the Bitcoin stolen, because you've already lost 80-90% of your investment anyways.
- kruhft 14y ago
  The original bailout plan, announced last Saturday, would have raised €5.8bn by skimming nearly 7% off all bank deposits of less than €100,000, and 9.9% of bigger bank accounts. Source: http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-tax-russia-back http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-t... Tell that to those in Cyprus how well the official system is doing at storing their value. Edit: I'm sure you would call those people 'currency hoarders' since storing money in the bank means it's not flowing in the economy.
  - danielweber 14y ago
    storing money in the bank means it's not flowing in the economy Money in the bank is flowing through the economy, since the bank has lent it out to others. You can have issues with partial-reserve banking, or not. But keeping a bunch of dollars or Euros in the bank is not hoarding them. They are active in the economy.
    - kruhft 14y ago
      That edit was meant to be a joke based on the type of typical, echo chamber, limited knowledge response the s/he gave. And since the repeal of Glass-Steagall who knows where the money in bank deposits goes.
danielweber 14y ago
When bitcions are bought, people are transfering "real" value (USD or any other government backed currency) into the Bitcoin system where the value is being held. When they sell Bitcoins they are removing value from the system. These two sentences may be the perfect summary of how misguided the Bitcoin community is. There is no value transferred into or out of the Bitcoin system when people buy or sell Bitcoins from each other. AAPL doesn't get money when I buy 1 share of AAPL from someone and they don't lose money when I sell 1 share of APPL to somebody. Because every purchase of AAPL is also a sale and every sale is also a purchase.
- kruhft 14y ago
  Try buying something with your APPL stock before converting it back to USD at the current market rate and tell me where your value went, especially when your probably don't even hold the paper the stock was printed on, if it ever was. Maybe you put your money into a Stock Market system (buying stock), increasing its value, meaning that taking money out (selling your stock) would reduce the overall value of the system. Maybe the Stock Market is just as misguided?
  - danielweber 14y ago
    Try buying something with your APPL stock before converting it back to USD at the current market rate and tell me where your value went Why would I do such a thing? It sounds like a giant waste of time. Even if I were to, say, buy a Microsoft Tablet for 1 share of AAPL stock, no wealth has been transferred into or out of Apple Computer. Instead, the vendor now has 1 more share of AAPL and 1 less Surface, and I have 1 more Surface and 1 less share of AAPL.
    - kruhft 14y ago
      And you have set the last sale price of APPL at 1 Tablet. If the current price of APPL was higher than the sticker price of a Tablet you have just gotten ripped off and vice versa. Some of the value just evaporated until the next sale, AKA arbitrage. The point was that you can't do that even if you wanted to as the 'stock' is completely electronic without a way for you to transfer it's value to your seller of Tablets without first converting it to USD. The current system has no convenient general way to transfer their wealth in AAPL stocks from yourself to any person without going through an intermediary, which is the USD and the stock market itself. When you actually held the paper stocks you could give them to someone, now that value is stored in bits in a trading system. I think your are confating my argument with 'giving' money to Bitcoin, which is a bit odd since nobody controls Bitcoin. Buying Bitcoin mean you are putting faith into the system, much like buying AAPL means you are putting faith into AAPL in hopes that the value of that stock with increase or at least not fall. If a large shareholder lost faith in AAPL and sold all their shares, the flux of money out of the system would devastate the investors, not APPL. Or at least not financially...the lack of faith might be quite devastating for APPL though.

by kruhft 14y ago

tptacek 14y ago

Yes. Bitcoin is the first fiat monetary system that has no ruler. Also, it has repealed the law of parsimony (haven't you heard, on the Internet, there are no laws). So it's totally not the case that Bitcoin is going up because Bitcoin is going up, and people are bidding up its price on the expectation that the peak is nowhere in sight, and they'll make a tidy profit off later speculators. Because the Internet has upended all the normal ways of doing things, just like it did for Sealand (remember those message board threads?), it doesn't matter that economists look at the price chart for Bitcoin and say "uh, that is a bubble", and then "also, bubble or not, that is not productive behavior for a currency". Nor does it matter that Bitcoin mostly buys you donations to extremely independent bands, tips for blog tip jars, "Avalanche Spa Powder Not For Human Consumption", and highly marginal web hosting. No, the price makes perfect sense: people can't trust the US dollar, which reliably purchases cars, air travel, thai food, houses, Macbooks, chest freezers, pork chops, chlorinated trisphosphate, tuition at Stanford, roofing shingles, dirt, methamphetamine, hookers, and guns. Not just here, but pretty much everywhere in the world. It's definitely not because if the current price for Bitcoin makes no sense, it's not going to matter whether your online wallet gets hacked and all the Bitcoin stolen, because you've already lost 80-90% of your investment anyways.

kruhft 14y ago
The original bailout plan, announced last Saturday, would have raised €5.8bn by skimming nearly 7% off all bank deposits of less than €100,000, and 9.9% of bigger bank accounts. Source: http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-tax-russia-back http://www.guardian.co.uk/world/2013/mar/22/cyprus-savings-t... Tell that to those in Cyprus how well the official system is doing at storing their value. Edit: I'm sure you would call those people 'currency hoarders' since storing money in the bank means it's not flowing in the economy.
- danielweber 14y ago
  storing money in the bank means it's not flowing in the economy Money in the bank is flowing through the economy, since the bank has lent it out to others. You can have issues with partial-reserve banking, or not. But keeping a bunch of dollars or Euros in the bank is not hoarding them. They are active in the economy.
  - kruhft 14y ago
    That edit was meant to be a joke based on the type of typical, echo chamber, limited knowledge response the s/he gave. And since the repeal of Glass-Steagall who knows where the money in bank deposits goes.

danielweber 14y ago

When bitcions are bought, people are transfering "real" value (USD or any other government backed currency) into the Bitcoin system where the value is being held. When they sell Bitcoins they are removing value from the system. These two sentences may be the perfect summary of how misguided the Bitcoin community is. There is no value transferred into or out of the Bitcoin system when people buy or sell Bitcoins from each other. AAPL doesn't get money when I buy 1 share of AAPL from someone and they don't lose money when I sell 1 share of APPL to somebody. Because every purchase of AAPL is also a sale and every sale is also a purchase.

kruhft 14y ago
Try buying something with your APPL stock before converting it back to USD at the current market rate and tell me where your value went, especially when your probably don't even hold the paper the stock was printed on, if it ever was. Maybe you put your money into a Stock Market system (buying stock), increasing its value, meaning that taking money out (selling your stock) would reduce the overall value of the system. Maybe the Stock Market is just as misguided?
- danielweber 14y ago
  Try buying something with your APPL stock before converting it back to USD at the current market rate and tell me where your value went Why would I do such a thing? It sounds like a giant waste of time. Even if I were to, say, buy a Microsoft Tablet for 1 share of AAPL stock, no wealth has been transferred into or out of Apple Computer. Instead, the vendor now has 1 more share of AAPL and 1 less Surface, and I have 1 more Surface and 1 less share of AAPL.
  - kruhft 14y ago
    And you have set the last sale price of APPL at 1 Tablet. If the current price of APPL was higher than the sticker price of a Tablet you have just gotten ripped off and vice versa. Some of the value just evaporated until the next sale, AKA arbitrage. The point was that you can't do that even if you wanted to as the 'stock' is completely electronic without a way for you to transfer it's value to your seller of Tablets without first converting it to USD. The current system has no convenient general way to transfer their wealth in AAPL stocks from yourself to any person without going through an intermediary, which is the USD and the stock market itself. When you actually held the paper stocks you could give them to someone, now that value is stored in bits in a trading system. I think your are confating my argument with 'giving' money to Bitcoin, which is a bit odd since nobody controls Bitcoin. Buying Bitcoin mean you are putting faith into the system, much like buying AAPL means you are putting faith into AAPL in hopes that the value of that stock with increase or at least not fall. If a large shareholder lost faith in AAPL and sold all their shares, the flux of money out of the system would devastate the investors, not APPL. Or at least not financially...the lack of faith might be quite devastating for APPL though.