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The value of a currency lies entirely in the perception of that value. I don't consider bitcoin different from a traditional currency, except that its rate of p

by Joeri 13y ago

The value of a currency lies entirely in the perception of that value. I don't consider bitcoin different from a traditional currency, except that its rate of production is known in advance. It will keep having value because by now enough people think it does.

fragsworth 13y ago
It's in a strange position right now, though. Its value is not based on anything that makes any sense. Public perception - yes - but public perception of what? Nothing is priced in bitcoin. Once things begin to be priced in bitcoin, proponents hope its value will stabilize. This might happen. It did with fiat, but fiat had the advantage of a stable start and slow detachment from gold. The real funny thing to me is, I believe the currency could do its job just as well no matter what the value per bitcoin. And I don't think volatility matters at all, because companies like BitPay assume the volatility risk for you (both the merchant and the consumer) I don't know that bitcoin can be used as a store of value, especially for future adopters. But it is definitely a great method for real transactions of wealth.
- dasil003 13y ago
  > I don't know that bitcoin can be used as a store of value, especially for future adopters. All else being equal, it seems to be designed to be a perfect store of value because it is deflationary by design. Obviously it is far more volatile and risky than something backed by major world governments at this stage, however it does come with certain guarantees that no central bank could credibly make (if the crypto holds). For people who have had their wealth stolen by governments this could prove a very attractive pull.
this_user 13y ago
Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever. Traditional currencies, on the other hand, are at least fractionally backed by (usually) gold and government bonds which in itself are backed by a government's ability to tax its citizens. There is also a second problem in that BTC is deflationary by design. Deflation leads to hoarding of currency units while reducing the velocity of money and suffocating the economy. Most people will agree that deflation is the worst thing that can happen to an economy which is why central banks will do everything in their power to avert it. It is hard to imagine how a stable Bitcoin economy could develop under these inherently flawed circumstances.
- dragonwriter 13y ago
  > Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever. Well, no, its not; the purest form of fiat currency is a currency backed purely by government fiat (hence the name). Bitcoin is one of the purest forms of speculative "currency".
- ericb 13y ago
  You could argue that deflation is the cure to consumerism, and the start of environmentalism. HDTV's have had strong deflation for years, but I still have one.
  - dasil003 13y ago
    I like your first point, but your second point makes no sense. Products are not currency, and talking about inflation/deflation in products does not make sense, unless people buy them as a long-term value-store in which case "assets" might be more appropriate. Except they're still not fungible so they can appreciate or depreciate, but that's not inflation or deflation.
    - ericb 13y ago
      To explain: The fear that often is associated with deflationary currency (like bitcoin) is that no one will spend it, because waiting always gets you a slightly better deal. And if that happens the economy will grind to a halt with everyone waiting to spend. The point of my second statement is that we have examples of cases where even though every month your money buys more, people still do buy things.
      - fiesycal 13y ago
        There may be specific examples (HDTV) where waiting means your money buys more, but overall the more you wait the less your money is worth in the economy due to inflation. Technology making products cheaper is not an example of deflation. Inflation and deflation pertain only to currency not products. If however you hold your currency and everyday its worth more, besides the bare essentials there is barely an incentive to spend it. Also there is no guarantee that the HDTV will become cheaper, however it is guaranteed that a deflationary currency will gain value the more you hold on to it.
jaxn 13y ago
This is where the bitcoin boosters start to seem a little looney to me. 99% of my experience with currency has been with USD, which have been relatively stable from month to month. It is a difficult situation because it appears that when people take the time to learn about it, they become big fans of bitcoin but also start worrying about the total collapse of the fed and the USD. I am trying to understand the argument, but I remain skeptical. It is very interesting to watch and play with though.
- notahacker 13y ago
  People who take the time to learn about "alternative medicine" usually end up (or start off) sceptical about evidence-based medicine...
  - yankoff 13y ago
    And your claim, of course, is not based on any evidence.
    - notahacker 13y ago
      If you actually think there is any possibility that my unsupported assertion that people committed to therapies like homeopathy or reiki are generally a bit less enthused with medical testing and conventional medicine than the general population is incorrect, please feel free to make that argument...
- vkou 13y ago
  I can say, with 100% that the USD, and the fed will collapse. Nothing lasts forever - and if anyone argues otherwise, I've got some Roman Denarius to sell them (At twice the price of their gold content). Whether or not this happens in my lifetime, and whether BTC is worth speculating on is another question altogether.
  - saalweachter 13y ago
    I will happily buy all of them at those terms. (Denarii was a silver currency.)
Pitarou 13y ago
No. If somebody sues me, and I offer to pay my debt in bitcoins, the court may refuse to recognise this payment. But if I pay in the national currency, the court is required to recognise this payment. This is part of the legal system in every country. It's one of the mechanisms governments use to force citizens to use the national currency.
- yen223 13y ago
  Sounds like a sensible notion too, otherwise I'd be paying all my fines with Reddit karma.

by Joeri 13y ago

fragsworth 13y ago

It's in a strange position right now, though. Its value is not based on anything that makes any sense. Public perception - yes - but public perception of what? Nothing is priced in bitcoin. Once things begin to be priced in bitcoin, proponents hope its value will stabilize. This might happen. It did with fiat, but fiat had the advantage of a stable start and slow detachment from gold. The real funny thing to me is, I believe the currency could do its job just as well no matter what the value per bitcoin. And I don't think volatility matters at all, because companies like BitPay assume the volatility risk for you (both the merchant and the consumer) I don't know that bitcoin can be used as a store of value, especially for future adopters. But it is definitely a great method for real transactions of wealth.

dasil003 13y ago
> I don't know that bitcoin can be used as a store of value, especially for future adopters. All else being equal, it seems to be designed to be a perfect store of value because it is deflationary by design. Obviously it is far more volatile and risky than something backed by major world governments at this stage, however it does come with certain guarantees that no central bank could credibly make (if the crypto holds). For people who have had their wealth stolen by governments this could prove a very attractive pull.

this_user 13y ago

Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever. Traditional currencies, on the other hand, are at least fractionally backed by (usually) gold and government bonds which in itself are backed by a government's ability to tax its citizens. There is also a second problem in that BTC is deflationary by design. Deflation leads to hoarding of currency units while reducing the velocity of money and suffocating the economy. Most people will agree that deflation is the worst thing that can happen to an economy which is why central banks will do everything in their power to avert it. It is hard to imagine how a stable Bitcoin economy could develop under these inherently flawed circumstances.

dragonwriter 13y ago
> Bitcoin is different in that is the purest form of a fiat currency in the sense that it is backed by nothing and thus has no intrinsic value whatsoever. Well, no, its not; the purest form of fiat currency is a currency backed purely by government fiat (hence the name). Bitcoin is one of the purest forms of speculative "currency".
ericb 13y ago
You could argue that deflation is the cure to consumerism, and the start of environmentalism. HDTV's have had strong deflation for years, but I still have one.
- dasil003 13y ago
  I like your first point, but your second point makes no sense. Products are not currency, and talking about inflation/deflation in products does not make sense, unless people buy them as a long-term value-store in which case "assets" might be more appropriate. Except they're still not fungible so they can appreciate or depreciate, but that's not inflation or deflation.
  - ericb 13y ago
    To explain: The fear that often is associated with deflationary currency (like bitcoin) is that no one will spend it, because waiting always gets you a slightly better deal. And if that happens the economy will grind to a halt with everyone waiting to spend. The point of my second statement is that we have examples of cases where even though every month your money buys more, people still do buy things.
    - fiesycal 13y ago
      There may be specific examples (HDTV) where waiting means your money buys more, but overall the more you wait the less your money is worth in the economy due to inflation. Technology making products cheaper is not an example of deflation. Inflation and deflation pertain only to currency not products. If however you hold your currency and everyday its worth more, besides the bare essentials there is barely an incentive to spend it. Also there is no guarantee that the HDTV will become cheaper, however it is guaranteed that a deflationary currency will gain value the more you hold on to it.

jaxn 13y ago

This is where the bitcoin boosters start to seem a little looney to me. 99% of my experience with currency has been with USD, which have been relatively stable from month to month. It is a difficult situation because it appears that when people take the time to learn about it, they become big fans of bitcoin but also start worrying about the total collapse of the fed and the USD. I am trying to understand the argument, but I remain skeptical. It is very interesting to watch and play with though.

notahacker 13y ago
People who take the time to learn about "alternative medicine" usually end up (or start off) sceptical about evidence-based medicine...
- yankoff 13y ago
  And your claim, of course, is not based on any evidence.
  - notahacker 13y ago
    If you actually think there is any possibility that my unsupported assertion that people committed to therapies like homeopathy or reiki are generally a bit less enthused with medical testing and conventional medicine than the general population is incorrect, please feel free to make that argument...
vkou 13y ago
I can say, with 100% that the USD, and the fed will collapse. Nothing lasts forever - and if anyone argues otherwise, I've got some Roman Denarius to sell them (At twice the price of their gold content). Whether or not this happens in my lifetime, and whether BTC is worth speculating on is another question altogether.
- saalweachter 13y ago
  I will happily buy all of them at those terms. (Denarii was a silver currency.)

Pitarou 13y ago

No. If somebody sues me, and I offer to pay my debt in bitcoins, the court may refuse to recognise this payment. But if I pay in the national currency, the court is required to recognise this payment. This is part of the legal system in every country. It's one of the mechanisms governments use to force citizens to use the national currency.

yen223 13y ago
Sounds like a sensible notion too, otherwise I'd be paying all my fines with Reddit karma.