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Bitcoins are just special numbers--there's no inherent value in them. If everybody decides tomorrow to use a different blockchain they will become completely wo

by necubi 14y ago

Bitcoins are just special numbers--there's no inherent value in them. If everybody decides tomorrow to use a different blockchain they will become completely worthless numbers. A tulip looks pretty in your garden, (many) internet companies make money, and houses are a basic necessity. Bitcoin, on the other hand, is a purely social phenomenon. It has value only because other people think it has value. The argument trotted out at this point is some variation of "but there is value in having an anonymous, decentralized currency." And that may well be true. But the high valuation and extreme volatility of bitcoin (not to mention its inherent deflationary character) is actually a hindrance to its use in that manner. Who will accept bitcoin if its value can fluctuate 100% in an hour, and who will spend them if their price just keeps going up?

ef4 14y ago
Your argument applies equally well to any form of money. Money is a purely social phenomenon. It has value only because other people think it has value. There's no "inherent" value in any form of money. Whenever you hear someone say "inherent" or "intrinsic" when talking about money, run the other way. (Yes, even commodity money. It may have direct-use value in addition to exchange value, but both kinds of value are market phenomena, and totally dependent on the surrounding society and capital structure.)
- betterunix 14y ago
  Fiat currencies have value because of the law, not some wishy-washy magic agreement that people wake up with. Tax laws, debt laws, torts, fees, fines, etc. are what create the demand for fiat currencies. Bitcoin does not have such a source of demand. It has no particular utility at all; nobody will ever suffer for lack of Bitcoin money.
  - _red 14y ago
    Bitcoin has plenty of utility. In fact lots of it is directly related to your little list above.
  - vbuterin 14y ago
    You'll be surprised: http://www2.egovlink.com/press-release-bitcoin.cfm http://www2.egovlink.com/press-release-bitcoin.cfm
  - smokeyj 14y ago
    > Fiat currencies have value because of the law The law is simply the threat of violence, which is what makes it so distasteful. http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102 > not some wishy-washy magic agreement that people wake up with Agreements are voluntary and magical, what's not to like? It's the other stuff that's wishy-washy (involuntary arrangements). > Tax laws, debt laws, torts, fees, fines, etc. are what create the demand for fiat currencies. There's no reasons these same things won't work for bitcoin. Private mediation and arbitration already exist that support bitcoin. Things like contracts are built into the bitcoin protocol and will facilitate many of the things you list. > Bitcoin does not have such a source of demand. It has no particular utility at all; nobody will ever suffer for lack of Bitcoin money. Pretend the bitcoin market is only used for black market activity, it would still have a large utility. Plenty of people on the market would see one less revenue stream.
  - ef4 14y ago
    > Fiat currencies have value because of the law. So when the value of the Euro swings 30%, it's because somebody passed a law changing its value? Zimbabwe's government wrote a law saying its currency's value was now zero? No. Any money has value because there's a market for it. Legal tender status helps by guaranteeing certain markets, but even that is no guarantee.
dllthomas 14y ago
> Who will accept bitcoin if its value can fluctuate 100% in an hour[?] If it can be cashed out immediately into another currency, that's not too big a problem, I think. Note that there's a huge difference between accepting bitcoins and listing prices in bitcoins, though.
lwat 14y ago
It's pretty simple to work around the price fluctuations. You keep your money in a USD denominated account in a bitcoin exchange (MtGox or whatever) and convert just what you want to spend whenever you need to pay for something in bitcoin. It's instantaneous and easy.

by necubi 14y ago

ef4 14y ago

Your argument applies equally well to any form of money. Money is a purely social phenomenon. It has value only because other people think it has value. There's no "inherent" value in any form of money. Whenever you hear someone say "inherent" or "intrinsic" when talking about money, run the other way. (Yes, even commodity money. It may have direct-use value in addition to exchange value, but both kinds of value are market phenomena, and totally dependent on the surrounding society and capital structure.)

betterunix 14y ago
Fiat currencies have value because of the law, not some wishy-washy magic agreement that people wake up with. Tax laws, debt laws, torts, fees, fines, etc. are what create the demand for fiat currencies. Bitcoin does not have such a source of demand. It has no particular utility at all; nobody will ever suffer for lack of Bitcoin money.
- _red 14y ago
  Bitcoin has plenty of utility. In fact lots of it is directly related to your little list above.
- vbuterin 14y ago
  You'll be surprised: http://www2.egovlink.com/press-release-bitcoin.cfm http://www2.egovlink.com/press-release-bitcoin.cfm
- smokeyj 14y ago
  > Fiat currencies have value because of the law The law is simply the threat of violence, which is what makes it so distasteful. http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102 > not some wishy-washy magic agreement that people wake up with Agreements are voluntary and magical, what's not to like? It's the other stuff that's wishy-washy (involuntary arrangements). > Tax laws, debt laws, torts, fees, fines, etc. are what create the demand for fiat currencies. There's no reasons these same things won't work for bitcoin. Private mediation and arbitration already exist that support bitcoin. Things like contracts are built into the bitcoin protocol and will facilitate many of the things you list. > Bitcoin does not have such a source of demand. It has no particular utility at all; nobody will ever suffer for lack of Bitcoin money. Pretend the bitcoin market is only used for black market activity, it would still have a large utility. Plenty of people on the market would see one less revenue stream.
- ef4 14y ago
  > Fiat currencies have value because of the law. So when the value of the Euro swings 30%, it's because somebody passed a law changing its value? Zimbabwe's government wrote a law saying its currency's value was now zero? No. Any money has value because there's a market for it. Legal tender status helps by guaranteeing certain markets, but even that is no guarantee.

dllthomas 14y ago

> Who will accept bitcoin if its value can fluctuate 100% in an hour[?] If it can be cashed out immediately into another currency, that's not too big a problem, I think. Note that there's a huge difference between accepting bitcoins and listing prices in bitcoins, though.

lwat 14y ago

It's pretty simple to work around the price fluctuations. You keep your money in a USD denominated account in a bitcoin exchange (MtGox or whatever) and convert just what you want to spend whenever you need to pay for something in bitcoin. It's instantaneous and easy.