9 ms·

Speaking as someone who knows a lot about economics, I think PT Barnum put it best...[1] Economics is very clear in predicting how this will end up. Bitcoins h

by cjensen 13y ago

Speaking as someone who knows a lot about economics, I think PT Barnum put it best...[1] Economics is very clear in predicting how this will end up. Bitcoins have no intrinsic value and therefore the long-term price will be precisely zero. Each generation has its tulips [2]; each generation claims that the persistence in tulip price means that there is permanent intrinsic value; each generation is disappointed [3]. The only thing interesting about bitcoins is that this provides an opportunity to watch a bubble: observe the justifications people make, observe how nay-sayers appear to be wrong, and watch the progression. [1] http://en.wikipedia.org/wiki/There%27s_a_sucker_born_every_minute http://en.wikipedia.org/wiki/There%27s_a_sucker_born_every_m... [2] http://en.wikipedia.org/wiki/Tulip_mania http://en.wikipedia.org/wiki/Tulip_mania [3] http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions...

d23 13y ago
> Bitcoins have no intrinsic value Neither does gold, paper money, or diamonds. And yet they've remained valuable for a long time. What gives?
- cjensen 13y ago
  Gold and Diamonds have obvious intrinsic value. Paper money does too, but it's harder to demonstrate.
  - pdeuchler 13y ago
    In all fairness the intrinsic value of Gold and Diamonds has only come about in the past 200-300 years... just about when, globally, we started seriously moving towards a purely fiat system.
    - yapcguy 13y ago
      Gold has been used as a store of value for thousands of years around the world.
      - yebyen 13y ago
        Intrinsic. Those people have not been making use of the intrinsic value of Gold, they have been making the same use as in fiat money and bitcoins today, as a rare commodity considered acceptable as a financial instrument. That's (rarity) not an intrinsic value. That is to say, its intrinsic value includes electrical conductive properties and capacity for use in electrolytic plating. I am ignorant, what are some other intrinsically useful properties of Gold (and Diamonds?)
        zt 13y ago
        Well diamonds actually have a ton of useful properties -- beyond just being pretty to look at -- but that doesn't actually justify the price per se. The problem with Gold is also it's virtue: it's rare. Rarity is good in that it implies value. But let's say you're the American economy and you're growing 2% this year. Should your money supply be governed by how much of it you can dig out of the ground? That is, for example, when South African gold mines were discovered the money supply internationally radically increased, despite having no relationship to economic output. That ends up not working out very well. Bitcoin though could be thought of more like gold and diamonds not because those things are good to think of as currencies -- they really are not good currencies at all-- but because their all commodities with limited supplies that have markets that move on vagaries with little relationship to any economic necessity or output.
        hmsimha 13y ago
        Well diamonds are also valuable because of their use as a coating for cutting instruments. But, much like diamond, your point is solid; gold and diamond have been valuable over the years for the sole reason that people are willing to accept they are valuable.
  - sanderjd 13y ago
    Are you referring to the relatively recent industrial uses of gold and diamonds, or are you counting ornamentation as intrinsic value? Don't see the argument for the intrinsic value of paper money at all, but would love to be enlightened.
    - Locke1689 13y ago
      > Don't see the argument for the intrinsic value of paper money at all, but would love to be enlightened. You can pay your taxes in it.
      - sanderjd 13y ago
        I agree that paper money has value, I'm just not sure that it is intrinsic. I'm also not sure a currency necessarily should have intrinsic value.
      - mrb 13y ago
        You could pay taxes using the German Papiermark or Zimbabwean dollar, and look at what happened to them... Intrinsic value is not determined by the ability to pay taxes. Fiat money has zero intrinsic value (well, beside the value of the paper and metal bills and coins are made of, but this value is negligible - spare the US penny coin).
        Locke1689 13y ago
        Obviously the importance of paying taxes directly depends on the strength and stability of the government collecting them. I am personally sure that 1) the US govt will be here tomorrow to collect and 2) they have enough guns to do so.
        mrb 13y ago
        Your original claim was that fiat currencies had intrinsic value. I don't see how 1) or 2) support the fact a fiat currency has intrinsic value. On the contrary, history shows that fiat currencies always significantly lose value over time. The USD for example has lost 85% of its value over the last 50 years. How is this observation compatible with any sort of intrinsic value? "Guns" and "taxes" did nothing to prevent this loss of value... What you are trying to say, I believe, is that fiat currencies will likely have some value in the future because they are in demand (notably from taxes). That is true, but this is no different from Bitcoin: it has value because it is in demand. I would argue that the potential demand for Bitcoin is higher than the potential demand for USD, if only because there are billion of people across the world from countries with terrible fiscal policies for whom Bitcoin is clearly superior to their local inflation-ridden currencies. Compare this number to the merely 200 million tax payers in the USA.
  - nether 13y ago
    So tying the dollar to the gold standard is meaningless, because paper money is in itself intrinsically valuable? I thought the dollar was fiat [1], i.e. without intrinsic value. Just like bitcoin. [1] https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Fiat_money
  - anonymoushn 13y ago
    The value of paper money is something like "If you want to exchange your work for goods and services, you will need to provide paper money to the local gang, or else." If the gang in power changes, or at the whim of the gang in power, the money can quickly become worthless. For instance, I have not succeeded in trading réis or markka for bread or gasoline recently.
  - tlrobinson 13y ago
    Bitcoins' intrinsic value are as entries in a globally distributed ledger, or timestamps in a globally distributed timestamp server. Of course since 1 bitcoin is divisible into 100,000,000 pieces the value is negligible, but if you want to be pedantic it's there.
  - deleted 13y ago
    [deleted]
richcollins 13y ago
They were initially valued as collectibles (just like gold) and then as a speculative investment. Now that a market exists and there is liquidity, they are valued for other reasons as well (payment system, black market transactions, hide wealth ... etc). Explain how we get to 0 from here since they will always have an underlying value as a collectible and speculative investment?
driverdan 13y ago
Just because the long-term price will reach zero doesn't mean you can't profit in the short-term. Defining "long-term" and "short-term" more precisely is key to finding profit though.
- schrodinger 13y ago
  The dollar has a long term price of zero too, doesn't it? If long term is defined far enough out that US is gone...
adrianwaj 13y ago
Just no intrinsic value to you... yet. But ask people in Cyprus who have had their money confiscated by their bank if they think bitcoins would've been valuable to them, or people in China who've walked across the border with a thumbdrive of bitcoins/litecoins/??coins. Ask anyone who has made an overseas funds transfer if doing so was quicker and more painless than at bank. Volatility is offset by the overall price rise. Saying it has no intrinsic value is a moronic statement. The main lesson to learn is in the altchains... otherwise it's just replacing one set of paper elites with a crypto elite. That's where the real awakening comes in, anyone can be an early adopter. Also, bitcoin is not a private blockchain, but even central banks could use cryptocoin implementations to move funds around internally. It's a piece of open-source software, that's a very important part of the equation of bitcoin's value: there can be pump and dumps at times, but overall it's severly missing the point to only see it as such. add: now that I think about it, it'd be interesting for corporations to add the equivalent of an intranet of cryptocoins for budgeting and spending. There are tons of information systems potentials in bitcoin it blows my mind... even without some official government endorsement.. just in the software itself. Some intra/outer mini-exchange interfacing into some b2b portal to then access the public blockchains.
- seiji 13y ago
  walked across the border with a thumbdrive of bitcoins/litecoins/??coins. What about walking across the border with the account credentials of a WoW character with a lot of gold? intranet of cryptocoins for budgeting and spending. Is there a way to make a "trusted bitcoin" for internal use only where you don't have to do all the computation? I guess at that point it could just be a centralized Excel spreadsheet for all anybody inside the company cares.
  - adrianwaj 13y ago
    You're not thinking too deeply. I think a company could use an intra-blockchain to run a micro-economy within it. Transactions take place that enable it to function. Also, there is an interface between intra and public blockchains. If your department wants pens, it must buy it internally from the Supplies department. At some point Supplies converts its intracoins to public cash or coins (with management approval^) to buy more pens. You work for intra-coins, and at some point you convert it to cash or public coins. Not sure if the overhead of these micro-transactions are worth it, on the other hand, conglomerates of companies could exist. But the intra-coins have real value, because management will convert them to proper cash or public cryptocoins. The key is making sure an employee can't just cash out with intra-coins somewhere else and quit. ^ the key here is that things can be monitored and controlled on a sped-up blockchain, while still allowing a market mechanism to take place. Perhaps pens isn't the best example, more like certain factors of production. The more I think about it, the more useful this seems to be. Especially attaching notes to transactions, and mining all coins instantly, and management dishing them out as needed. Perhaps creating more if needed. If the company is running low on cash, it can adjust the exchange rate, so the coins are worth less. If the company is doing well, the value of the coins goes up. This also gives the firm incentive to do well and be efficient, especially if staff are paid in intra-coins. Companies have intranets, why not intracoins?
erikpukinskis 13y ago
I don't think "intrinsic value" is a term in economics. It's a term in investing. Economics is far from clear about predicting how Bitcoin will end up. The professional economics world has yet to seriously weigh in about Bitcoin. I just searched the top 10 journals on this list: http://faculty.maxwell.syr.edu/whorrace/journals.htm http://faculty.maxwell.syr.edu/whorrace/journals.htm and none of them appear to have anything published about Bitcoin. That said, Bitcoin does have "intrinsic value" as a payment processor. Think about PayPal. There's two kinds of value in PayPal. First, they have their deposits, which are denominated in various different currencies, and which are backed by various governments and insured. Then there are the people, the servers, the contracts, the buildings, all the other stuff that's necessary for those deposits to actually move around the globe. Ebay didn't buy PayPal's deposits, which aren't really PayPal's, they belong to their customers, eBay bought PayPal's assets. Think of Bitcoin like that stuff... a distributed payment processing company. It just as reliable as PayPal, except no one can ever freeze your account, and you can only transfer Bitcoins. PayPal was worth $1.5 billion to eBay, so that's a reference for your "intrinsic valuation" that you're working on. You might be thinking "well PayPal wouldn't be useful if it could only transfer Bitcoins and the value of Bitcoin is $0 so there's a chicken and egg problem!" Except I don't see a scenario where Bitcoin goes to $0. Let's imagine Bitcoin crashes all the way down to $0.01. Bitcoin is still useful if you're trying to get money to your grandma in Cuba, or to pay your Latvian web development contractor. Maybe it's extremely volatile, but that's OK because you otherwise have no way to get your money where it needs to go, and you're only going to keep it in Bitcoins for a few days. You buy some Bitcoins, send where they're going, and the other side cashes them out. Now why is this relevant? Well, if during those 4 days, there was $1,000,000 worth of money that people were trying to send this way, then there need to be at least $1m worth of Bitcoins to "float" those transactions. Essentially those people all show up on Monday being like "we don't care how much it costs because we're selling them again in three days, we just need $1m worth of Bitcoins to send to our grandma/contractor/etc". Therefore the "value" of Bitcoin goes up to at least $0.05 ($1m/21m). This is just one of Bitcoin's many "intrinsic" values. It is the "payment processor of last resort" for everyone who falls through the cracks of Western Union/Paypal/etc. This creates a floor below which Bitcoin is unlikely to fall.
- walden42 13y ago
nvader 13y ago
Once all the "free" bitcoins have been mined, the intrinsic value of bitcoin will be the computing power the network is willing to expend in exchange for that coin as a fee. Quite apart from using it as a store of value, and international payments processing engine, this could in fact be valuable in and of itself for purposes such as document signing and verification, a kind of peer-to-peer twitter[0], and (I guess here Bitcoin bulls speculate) other hitherto unknown uses. The intrinsic value of a bitcoin is therefore proportional to the value of the blockchain itself. [0] Actually, why _don't_ we have a twitter clone based on the blockchain? Doesn't seem to me that it would be too hard to implement. Of course, messages will take 10 minutes on average to send, be immutable and permanent, and throughput would be limited, but at the very least it would have a novelty factor.
WoodenChair 13y ago
You say you know "a lot about economics" and yet you don't know that currencies don't necessarily need to hold any intrinsic value. They are simply means of exchange. Paper money in the form of US Dollars has no intrinsic value (the value of the cotton paper... less than a cent per bill?). As long as people assign value to something and use it for exchange... it's a valid currency. Will people all quit on Bitcoin some day and its value will fall to $0? Perhaps. But it won't be because it has no intrinsic value. It will be because they decided it's not a good currency. Societies have used seashells and wampum in the past as currencies, which also have limited "intrinsic value". They're simply scarce resources that everyone agreed could be used for exchange - just like Bitcon.
- lingben 13y ago
  if you know even basic economics you know that bitcoin is not currency
  - WoodenChair 13y ago
    You mean "a system of money in general use in a particular country" (Oxford). Yeah definitely not a mainstream currency yet. That's why we use the polite term "alternative currency" which is short for "a system of money in limited use across many countries."
    - dubfan 13y ago
      But it's still not a currency, kind of like how "alternative medicine" isn't really medicine.
      - WoodenChair 13y ago
        It's medicine if it makes you better. It's a currency if you can exchange it for goods and services.
        dubfan 13y ago
kaa2102 13y ago
I think you have a point here. Money is a medium of exchange (check) and a store of value (?). Fiat currencies are backed by the country of origin. Monetary policy for each respective currency is managed by their Reserve Bank. Who or what backs the full faith and credit of the Bitcoin? Which individual or governing body sets the supply of Bitcoins?
KaoruAoiShiho 13y ago
Are you saying this because you've heard all the arguments for Bitcoin's value and think they're bunk or are you saying this because you're unaware of them?
kgo 13y ago
Define 'long term' Government's crumble making the long term value of any currency 0.
- kenrikm 13y ago
  or just print more of it until it's near worthless. http://www.xe.com/currencyconverter/convert/?Amount=1&From=ZWD&To=USD http://www.xe.com/currencyconverter/convert/?Amount=1&From=Z...

by cjensen 13y ago

d23 13y ago

> Bitcoins have no intrinsic value Neither does gold, paper money, or diamonds. And yet they've remained valuable for a long time. What gives?

cjensen 13y ago
Gold and Diamonds have obvious intrinsic value. Paper money does too, but it's harder to demonstrate.
- pdeuchler 13y ago
  In all fairness the intrinsic value of Gold and Diamonds has only come about in the past 200-300 years... just about when, globally, we started seriously moving towards a purely fiat system.
  - yapcguy 13y ago
    Gold has been used as a store of value for thousands of years around the world.
    - yebyen 13y ago
      Intrinsic. Those people have not been making use of the intrinsic value of Gold, they have been making the same use as in fiat money and bitcoins today, as a rare commodity considered acceptable as a financial instrument. That's (rarity) not an intrinsic value. That is to say, its intrinsic value includes electrical conductive properties and capacity for use in electrolytic plating. I am ignorant, what are some other intrinsically useful properties of Gold (and Diamonds?)
      - zt 13y ago
        Well diamonds actually have a ton of useful properties -- beyond just being pretty to look at -- but that doesn't actually justify the price per se. The problem with Gold is also it's virtue: it's rare. Rarity is good in that it implies value. But let's say you're the American economy and you're growing 2% this year. Should your money supply be governed by how much of it you can dig out of the ground? That is, for example, when South African gold mines were discovered the money supply internationally radically increased, despite having no relationship to economic output. That ends up not working out very well. Bitcoin though could be thought of more like gold and diamonds not because those things are good to think of as currencies -- they really are not good currencies at all-- but because their all commodities with limited supplies that have markets that move on vagaries with little relationship to any economic necessity or output.
      - hmsimha 13y ago
        Well diamonds are also valuable because of their use as a coating for cutting instruments. But, much like diamond, your point is solid; gold and diamond have been valuable over the years for the sole reason that people are willing to accept they are valuable.
- sanderjd 13y ago
  Are you referring to the relatively recent industrial uses of gold and diamonds, or are you counting ornamentation as intrinsic value? Don't see the argument for the intrinsic value of paper money at all, but would love to be enlightened.
  - Locke1689 13y ago
    > Don't see the argument for the intrinsic value of paper money at all, but would love to be enlightened. You can pay your taxes in it.
    - sanderjd 13y ago
      I agree that paper money has value, I'm just not sure that it is intrinsic. I'm also not sure a currency necessarily should have intrinsic value.
    - mrb 13y ago
      You could pay taxes using the German Papiermark or Zimbabwean dollar, and look at what happened to them... Intrinsic value is not determined by the ability to pay taxes. Fiat money has zero intrinsic value (well, beside the value of the paper and metal bills and coins are made of, but this value is negligible - spare the US penny coin).
      - Locke1689 13y ago
        Obviously the importance of paying taxes directly depends on the strength and stability of the government collecting them. I am personally sure that 1) the US govt will be here tomorrow to collect and 2) they have enough guns to do so.
        mrb 13y ago
        Your original claim was that fiat currencies had intrinsic value. I don't see how 1) or 2) support the fact a fiat currency has intrinsic value. On the contrary, history shows that fiat currencies always significantly lose value over time. The USD for example has lost 85% of its value over the last 50 years. How is this observation compatible with any sort of intrinsic value? "Guns" and "taxes" did nothing to prevent this loss of value... What you are trying to say, I believe, is that fiat currencies will likely have some value in the future because they are in demand (notably from taxes). That is true, but this is no different from Bitcoin: it has value because it is in demand. I would argue that the potential demand for Bitcoin is higher than the potential demand for USD, if only because there are billion of people across the world from countries with terrible fiscal policies for whom Bitcoin is clearly superior to their local inflation-ridden currencies. Compare this number to the merely 200 million tax payers in the USA.
- nether 13y ago
  So tying the dollar to the gold standard is meaningless, because paper money is in itself intrinsically valuable? I thought the dollar was fiat [1], i.e. without intrinsic value. Just like bitcoin. [1] https://en.wikipedia.org/wiki/Fiat_money https://en.wikipedia.org/wiki/Fiat_money
- anonymoushn 13y ago
  The value of paper money is something like "If you want to exchange your work for goods and services, you will need to provide paper money to the local gang, or else." If the gang in power changes, or at the whim of the gang in power, the money can quickly become worthless. For instance, I have not succeeded in trading réis or markka for bread or gasoline recently.
- tlrobinson 13y ago
  Bitcoins' intrinsic value are as entries in a globally distributed ledger, or timestamps in a globally distributed timestamp server. Of course since 1 bitcoin is divisible into 100,000,000 pieces the value is negligible, but if you want to be pedantic it's there.
- deleted 13y ago
  [deleted]

richcollins 13y ago

They were initially valued as collectibles (just like gold) and then as a speculative investment. Now that a market exists and there is liquidity, they are valued for other reasons as well (payment system, black market transactions, hide wealth ... etc). Explain how we get to 0 from here since they will always have an underlying value as a collectible and speculative investment?

driverdan 13y ago

Just because the long-term price will reach zero doesn't mean you can't profit in the short-term. Defining "long-term" and "short-term" more precisely is key to finding profit though.

schrodinger 13y ago
The dollar has a long term price of zero too, doesn't it? If long term is defined far enough out that US is gone...

adrianwaj 13y ago

Just no intrinsic value to you... yet. But ask people in Cyprus who have had their money confiscated by their bank if they think bitcoins would've been valuable to them, or people in China who've walked across the border with a thumbdrive of bitcoins/litecoins/??coins. Ask anyone who has made an overseas funds transfer if doing so was quicker and more painless than at bank. Volatility is offset by the overall price rise. Saying it has no intrinsic value is a moronic statement. The main lesson to learn is in the altchains... otherwise it's just replacing one set of paper elites with a crypto elite. That's where the real awakening comes in, anyone can be an early adopter. Also, bitcoin is not a private blockchain, but even central banks could use cryptocoin implementations to move funds around internally. It's a piece of open-source software, that's a very important part of the equation of bitcoin's value: there can be pump and dumps at times, but overall it's severly missing the point to only see it as such. add: now that I think about it, it'd be interesting for corporations to add the equivalent of an intranet of cryptocoins for budgeting and spending. There are tons of information systems potentials in bitcoin it blows my mind... even without some official government endorsement.. just in the software itself. Some intra/outer mini-exchange interfacing into some b2b portal to then access the public blockchains.

seiji 13y ago
walked across the border with a thumbdrive of bitcoins/litecoins/??coins. What about walking across the border with the account credentials of a WoW character with a lot of gold? intranet of cryptocoins for budgeting and spending. Is there a way to make a "trusted bitcoin" for internal use only where you don't have to do all the computation? I guess at that point it could just be a centralized Excel spreadsheet for all anybody inside the company cares.
- adrianwaj 13y ago
  You're not thinking too deeply. I think a company could use an intra-blockchain to run a micro-economy within it. Transactions take place that enable it to function. Also, there is an interface between intra and public blockchains. If your department wants pens, it must buy it internally from the Supplies department. At some point Supplies converts its intracoins to public cash or coins (with management approval^) to buy more pens. You work for intra-coins, and at some point you convert it to cash or public coins. Not sure if the overhead of these micro-transactions are worth it, on the other hand, conglomerates of companies could exist. But the intra-coins have real value, because management will convert them to proper cash or public cryptocoins. The key is making sure an employee can't just cash out with intra-coins somewhere else and quit. ^ the key here is that things can be monitored and controlled on a sped-up blockchain, while still allowing a market mechanism to take place. Perhaps pens isn't the best example, more like certain factors of production. The more I think about it, the more useful this seems to be. Especially attaching notes to transactions, and mining all coins instantly, and management dishing them out as needed. Perhaps creating more if needed. If the company is running low on cash, it can adjust the exchange rate, so the coins are worth less. If the company is doing well, the value of the coins goes up. This also gives the firm incentive to do well and be efficient, especially if staff are paid in intra-coins. Companies have intranets, why not intracoins?

erikpukinskis 13y ago

I don't think "intrinsic value" is a term in economics. It's a term in investing. Economics is far from clear about predicting how Bitcoin will end up. The professional economics world has yet to seriously weigh in about Bitcoin. I just searched the top 10 journals on this list: http://faculty.maxwell.syr.edu/whorrace/journals.htm http://faculty.maxwell.syr.edu/whorrace/journals.htm and none of them appear to have anything published about Bitcoin. That said, Bitcoin does have "intrinsic value" as a payment processor. Think about PayPal. There's two kinds of value in PayPal. First, they have their deposits, which are denominated in various different currencies, and which are backed by various governments and insured. Then there are the people, the servers, the contracts, the buildings, all the other stuff that's necessary for those deposits to actually move around the globe. Ebay didn't buy PayPal's deposits, which aren't really PayPal's, they belong to their customers, eBay bought PayPal's assets. Think of Bitcoin like that stuff... a distributed payment processing company. It just as reliable as PayPal, except no one can ever freeze your account, and you can only transfer Bitcoins. PayPal was worth $1.5 billion to eBay, so that's a reference for your "intrinsic valuation" that you're working on. You might be thinking "well PayPal wouldn't be useful if it could only transfer Bitcoins and the value of Bitcoin is $0 so there's a chicken and egg problem!" Except I don't see a scenario where Bitcoin goes to $0. Let's imagine Bitcoin crashes all the way down to $0.01. Bitcoin is still useful if you're trying to get money to your grandma in Cuba, or to pay your Latvian web development contractor. Maybe it's extremely volatile, but that's OK because you otherwise have no way to get your money where it needs to go, and you're only going to keep it in Bitcoins for a few days. You buy some Bitcoins, send where they're going, and the other side cashes them out. Now why is this relevant? Well, if during those 4 days, there was $1,000,000 worth of money that people were trying to send this way, then there need to be at least $1m worth of Bitcoins to "float" those transactions. Essentially those people all show up on Monday being like "we don't care how much it costs because we're selling them again in three days, we just need $1m worth of Bitcoins to send to our grandma/contractor/etc". Therefore the "value" of Bitcoin goes up to at least $0.05 ($1m/21m). This is just one of Bitcoin's many "intrinsic" values. It is the "payment processor of last resort" for everyone who falls through the cracks of Western Union/Paypal/etc. This creates a floor below which Bitcoin is unlikely to fall.

walden42 13y ago

nvader 13y ago

Once all the "free" bitcoins have been mined, the intrinsic value of bitcoin will be the computing power the network is willing to expend in exchange for that coin as a fee. Quite apart from using it as a store of value, and international payments processing engine, this could in fact be valuable in and of itself for purposes such as document signing and verification, a kind of peer-to-peer twitter[0], and (I guess here Bitcoin bulls speculate) other hitherto unknown uses. The intrinsic value of a bitcoin is therefore proportional to the value of the blockchain itself. [0] Actually, why _don't_ we have a twitter clone based on the blockchain? Doesn't seem to me that it would be too hard to implement. Of course, messages will take 10 minutes on average to send, be immutable and permanent, and throughput would be limited, but at the very least it would have a novelty factor.

WoodenChair 13y ago

You say you know "a lot about economics" and yet you don't know that currencies don't necessarily need to hold any intrinsic value. They are simply means of exchange. Paper money in the form of US Dollars has no intrinsic value (the value of the cotton paper... less than a cent per bill?). As long as people assign value to something and use it for exchange... it's a valid currency. Will people all quit on Bitcoin some day and its value will fall to $0? Perhaps. But it won't be because it has no intrinsic value. It will be because they decided it's not a good currency. Societies have used seashells and wampum in the past as currencies, which also have limited "intrinsic value". They're simply scarce resources that everyone agreed could be used for exchange - just like Bitcon.

lingben 13y ago
if you know even basic economics you know that bitcoin is not currency
- WoodenChair 13y ago
  You mean "a system of money in general use in a particular country" (Oxford). Yeah definitely not a mainstream currency yet. That's why we use the polite term "alternative currency" which is short for "a system of money in limited use across many countries."
  - dubfan 13y ago
    But it's still not a currency, kind of like how "alternative medicine" isn't really medicine.
    - WoodenChair 13y ago
      It's medicine if it makes you better. It's a currency if you can exchange it for goods and services.
      - dubfan 13y ago

kaa2102 13y ago

I think you have a point here. Money is a medium of exchange (check) and a store of value (?). Fiat currencies are backed by the country of origin. Monetary policy for each respective currency is managed by their Reserve Bank. Who or what backs the full faith and credit of the Bitcoin? Which individual or governing body sets the supply of Bitcoins?

KaoruAoiShiho 13y ago

Are you saying this because you've heard all the arguments for Bitcoin's value and think they're bunk or are you saying this because you're unaware of them?

kgo 13y ago

Define 'long term' Government's crumble making the long term value of any currency 0.

kenrikm 13y ago
or just print more of it until it's near worthless. http://www.xe.com/currencyconverter/convert/?Amount=1&From=ZWD&To=USD http://www.xe.com/currencyconverter/convert/?Amount=1&From=Z...