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Right, question time: Market cap is now $5 billion. Wealth can't be created, so where has that money come from? Have other currencies fractionally devalued?

Right, question time: Market cap is now $5 billion. Wealth can't be created, so where has that money come from? Have other currencies fractionally devalued? The cost of mining has been negligible until recently.

javert 13y ago
Other currencies are fractionally devalued, because the total money supply in the world (across all currencies, including Bitcoin) has increased, and because money is just a demand on all non-money products and services. More money demanded against the same amount of global products and services==devalued money. Other currencies are proportionally less useful and demanded and bitcoin becomes proportionally more useful and demanded. Minor nitpick: > Wealth can't be created Yes, it can. Since money is just a demand on all other kinds of value, printing money or creating a new currency redistributes the ability to claim those other values. But if you actually create those other values---e.g., if you invent a Cyclotron or Google or are the next Bill Gates or you grow fruit or catch fish or cut hair---wealth is being created. EDIT: I should be clear that I think that wealth redistribution via creating a new currency is completely just and proper. It is an implicit reward for creating a better way to trade, and it can only be obtained if you actually do create a better way to trade (and this is what Bitcoin speculators are, hopefully, doing). Wealth redistribution by printing money (a la the Fed) is evil.
dgreensp 13y ago
Wealth can certainly be created; that's HN 101 if there is such a thing. See http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html, especially "Money is Not Wealth."
jeremysmyth 13y ago
Why can't wealth be created? Value (of which wealth is a store) is entirely subjective, and is not at all a zero-sum game. If John Lennon wrote a poem on a sheet of paper just before he died, that paper would now be worth a vast amount of money. Considerably more than the 1c value of the sheet of paper alone. Nobody had to pay anything to create that poem. Bitcoins are currently valuable, precisely because (and frankly, only because) people put a value on them. That means that if I'm willing to spend $400 on a Bitcoin, and someone is willing to give one to me at that price, that is how much it's worth. That single transaction may be zero-sum, in dollar terms, but next week I might sell the same Bitcoin for $500 or $300 in another (dollar-terms) zero-sum transaction. The Bitcoin is the same. The price (value) is all that's changed. Just like the price of the sheet of paper containing John Lennon's last poem after he wrote on it.

javert 13y ago

Other currencies are fractionally devalued, because the total money supply in the world (across all currencies, including Bitcoin) has increased, and because money is just a demand on all non-money products and services. More money demanded against the same amount of global products and services==devalued money. Other currencies are proportionally less useful and demanded and bitcoin becomes proportionally more useful and demanded. Minor nitpick: > Wealth can't be created Yes, it can. Since money is just a demand on all other kinds of value, printing money or creating a new currency redistributes the ability to claim those other values. But if you actually create those other values---e.g., if you invent a Cyclotron or Google or are the next Bill Gates or you grow fruit or catch fish or cut hair---wealth is being created. EDIT: I should be clear that I think that wealth redistribution via creating a new currency is completely just and proper. It is an implicit reward for creating a better way to trade, and it can only be obtained if you actually do create a better way to trade (and this is what Bitcoin speculators are, hopefully, doing). Wealth redistribution by printing money (a la the Fed) is evil.

dgreensp 13y ago

Wealth can certainly be created; that's HN 101 if there is such a thing. See http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html, especially "Money is Not Wealth."

jeremysmyth 13y ago

Why can't wealth be created? Value (of which wealth is a store) is entirely subjective, and is not at all a zero-sum game. If John Lennon wrote a poem on a sheet of paper just before he died, that paper would now be worth a vast amount of money. Considerably more than the 1c value of the sheet of paper alone. Nobody had to pay anything to create that poem. Bitcoins are currently valuable, precisely because (and frankly, only because) people put a value on them. That means that if I'm willing to spend $400 on a Bitcoin, and someone is willing to give one to me at that price, that is how much it's worth. That single transaction may be zero-sum, in dollar terms, but next week I might sell the same Bitcoin for $500 or $300 in another (dollar-terms) zero-sum transaction. The Bitcoin is the same. The price (value) is all that's changed. Just like the price of the sheet of paper containing John Lennon's last poem after he wrote on it.