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They are applying old-world money ideas to something that is so new that we don't have useful models yet for deciding how it will behave, thinking that they do
by Aqueous 13y ago
They are applying old-world money ideas to something that is so new that we don't have useful models yet for deciding how it will behave, thinking that they do apply without loss of content. The rules of supply and demand apply, sure, but none of the other common-sense intuitions about how money works.
BitCoins don't have any resistance to movement, or very little. Physical money does. This means the difference between BitCoins and physical money is perhaps comparable to the difference between massive particles like atoms and massless particles like photons, or to the difference between a classical conductor and a superconductor. Which is only to say that the same rules don't apply - new behaviors are observed.
We are in a new world and the study of economics is about to take a huge left-turn.
- brador 13y agoThat's because Bitcoins are relatively easy to buy and very difficult to cash out into real currency. Once enough people see how hard it is to liquidate their Bitcoins back to USD the realization will follow.
- kdeforche 13y agoSounds like nonsense to me: if you buy 1 BTC from me, then at the same time I've sold 1 BTC? That makes it by definition as equally hard (or easy) to buy as to sell?
- conanbatt 13y agoDepends on who is in the middle of that transaction and how long that one takes to fullfill that operation, in this case, exchanges.
- dinkumthinkum 13y agoAre you all really having trouble understanding how instability in currency makes it difficult to trade in a currency? Also there is some basic lapse in logic here. Just because a WoW nerd can trace the currency on a technical level, does not mean it is "easy."
- jasonwocky 13y agoNo. Try buying an iPhone 3g right now on Craigslist. I bet it takes you all of two minutes. Then try selling it. I bet it takes quite a bit more time. Asymmetry.
- kdeforche 13y agoThat would imply there are currently more people wanting to sell an IPhone 3G than people want to buy it. Certainly the price of IPhone 3G's isn't rising. And that makes sense. Currently (and for the last years), the price of BTC has been rising implying that's actually easier to sell BTC than to buy? Moreover there are exchanges that are entirely symmetric (when opening accounts you do not need to qualify as a buyer or seller). Asymmetry is a nice word but I don't see what's asymmetric here?
- jasonwocky 13y agoI'm not familiar enough with Bitcoin to engage in dialogue about its market dynamics specifically. I only wanted to point out that the mere fact that all sales involve both a buyer and a seller doesn't make it "by definition as equally hard (or easy) to buy as to sell".
- GhotiFish 13y ago?? Bitcoins are a currency, there's no need to convert them. It's just happening now because some people want into this environment.
- coldtea 13y ago>Bitcoins are a currency, there's no need to convert them Yes, unless you want to, you know, buy something...
- thret 13y agohttps://en.bitcoin.it/wiki/Trade https://en.bitcoin.it/wiki/Trade
- smsm42 13y agoYou realize this list proves the parent's point, not yours? Many categories there have a single provider and none would even breach 1% of providers in your vicinity. I would estimate the probability of not hearing "err... what?" after asking your favorite provider of anything about paying in bitcoins about 1/1000.
- nmarley 13y agoMany businesses accept Bitcoins as payment for physical things. The last Bitcoin meetup that I went to was at a bar/grill that accepts BTC as payment. Most of the attendees paid for their drinks with Bitcoin. You don't need to convert to cash in order to buy things with Bitcoin.
- chockablock 13y agoHowso? If it's easy to buy BTC with USD, doesnt't that imply successful liquidation of BTC?
- JumpCrisscross 13y agoIf it's easy to buy subprime mortgages with cash does that imply it's just as easy to sell said subprime mortgages for cash? Substitute any illiquid asset(relative to U.S. dollars) if you wish and the statement holds true.
- tedunangst 13y agoI think the asymmetry revolves around the ease/difficulty in getting USD in and out of an exchange like mtgox. You can take physical paper money to the bank and transfer to an exchange, no problem. You can buy BTC at the exchange, no problem. You can sell your BTC at the exchange, no problem. You can transfer USD from the exchange to your bank and withdraw physical paper money, maybe a problem. Perhaps a slight delay.
- jafaku 13y agoNews flash: A transaction requires a buyer and a seller. If you bought Bitcoin, someone else sold Bitcoin.
- JumpCrisscross 13y agoThere is no balanced ledger - Bitcoins can be spun into existence through mining, i.e. without the transfer of hard currency.
- oleganza 13y agoMining is strictly planned, everyone knows how much and when will be produced. New bitcoins are already accounted for in the price.
- tedunangst 13y agoThat doesn't account for an imbalance in the number of potential buyers and sellers. It's very easy to buy a house for $100 million. Go to your real estate agent and say "Here's a $100 million. Buy me a house." It is, however, considerably harder to sell a house for $100 million.
- gjm11 13y agoI'm not convinced. It's only easy to buy a house for $100M if you have $100M you can spare for house-buying. And then you only get to choose from the rather limited range of $100M houses that are available for sale. Similarly, you only get to sell a house for $100M if you have a house that nice to sell. And then you only get to sell to the rather limited range of people willing to buy a house for $100M. But perhaps I've misunderstood. If you happen to have $100M burning a hole in your pocket, it's easy to buy a house that would normally cost $1M with it, because most people with $1M houses will happily sell them for $100M. But the parallel to that is that if you happen to have a house that would normally cost $100M, it's easy to sell it for $1M. Which it would be.
- crististm 13y ago
- waterlesscloud 13y agoI'm sorry, but this is simply not true. It's plain wrong.
- dllthomas 13y agoI'll happily cash your bitcoins out into real currency at ten cents a bitcoin.
- jnbiche 13y agoWrong. Have you actually tried to buy a Bitcoin? If not, ask someone who has. At the moment, it's hard for Bitcoin novices to buy Bitcoins, and much less hard to sell them. Actually, once you've been verified by an exchange (required prior to buying Bitcoins unless you do a private party sale), selling Bitcoins is easy; it's getting your USD wired/ACHed to your bank account that can be time-consuming. This is due to the legacy banking system, and not some problem inherent to Bitcoin. EDIT: By the way, it's not "very difficult" to sell Bitcoins. If I want to sell a Bitcoin, I log onto my Bitstamp account, put in a limit order. When the sale is executed, I submit a short, pre-filled form for a wire transfer to my bank. I then wait a few days and the money is in my bank account, in USD. Not hard.
- jljljl 13y agoI think he's making a liquidity point. It may be easy from a process standpoint to cash out, but the question is how much the value of your bitcoins may change whenever you cash out. http://www.investopedia.com/terms/l/liquidity.asp http://www.investopedia.com/terms/l/liquidity.asp Part of the value of dollars as a medium of exchange is that the value does not fluctuate greatly from day to day or minute to minute. In the short term, you can rely on prices remaining fairly stable.
- jnbiche 13y agoI'm familiar with the term liquidity. However, you seem to be making a point about Bitcoin's volatility, which is completely orthogonal to its liquidity. An asset could have no volatility, but have very poor liquidity (e.g., a house under normal circumstances).
- jljljl 13y agojnbiche, it's not letting me reply to you so I'm doing it here. You make a good point, and my above explanation was a bit confused. I think BTC faces both problems: There's high volatility, driven by the current level of speculation and the fixed quantity of Bitcoins that exist on the market. This makes Bitcoin a fairly poor medium of exchange since it is unlikely to hold a stable value from one day to the next. There's also (I suspect) poor liquidity, driven by the low number of people involved in the exchanges (compared to other assets and currencies). While it may be easy to exchange Bitcoin from a process standpoint, you may not be able to get a price sufficiently close to the last quoted price when you go to exchange for dollars. It may be more liquid than a house, but it is much less liquid than USD, EUR, GBP, etc. Is my liquidity assumption mistaken?
- rimantas 13y agoDid you forget about wire transfers? At least where I live it is possible to live without touching physical money for a long long time, we have pretty advanced e-banking and m-banking (and we never had checkbooks). Yes id does involve the bank, but from the end user perspective it is almost no overhead and sometimes even saves the trouble. Is stuff like direct-debit even possible with bitcoin?
- jpindar 13y agoI haven't heard of any, but AFAIK there's nothing preventing someone from writing a wallet that allows automated payments or the equivalent of direct-debit, with or without the involvement of a bank.
- eru 13y agoDirect-debit is undoable. That's one of its key-features. You can add direct-debit to bitcoint with a trusted third party. (And there might even be clever ways to do direct debit in bitcoin without that third party.)
- cashmonkey85 13y agoThat is true for me locally also but you realise when you travel or do business international the current systems all fail to do their job.
- Ma8ee 13y agoI use my Visa wherever I go in the world without any problem, and for business money transfers are fast and easy. I really fail to see what problem that isn't already solved in this regard.
- highbees 13y agoCoinKite [0] is a new Bitcoin debit/merchant machine company based in Toronto. The key to driving Bitcoin's value is increasing its utility, and this is done by enabling every day transactions. CoinKite will be interesting to watch. [0] https://coinkite.com/ https://coinkite.com/