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I think Bitcoin does have a soft floor because that cost would form the natural price target for a miner trying to trade, but the cost is avoidable by switching

by chipsy 13y ago

I think Bitcoin does have a soft floor because that cost would form the natural price target for a miner trying to trade, but the cost is avoidable by switching to proof of stake as done in PeerCoin and Nxt. The crypto problems solved in Bitcoin don't have the intrinsic utility of a precious metal; you could make a better argument for something like PrimeCoin, which attacks a major computation problem, having this kind of utility. So as I see it Bitcoin is already obsolete; there are new coins that achieve the transaction capabilities for cheaper - they can be used in more potential applications, thus they're more interesting speculative instruments. The specific benefit of proof of work mining comes in insuring more people have a chance to enter during initial distribution, but it still massively favors the early entrants and especially the people who have the hardware environment to mine efficiently.

dnautics 13y ago
"The crypto problems solved in Bitcoin don't have the intrinsic utility of a precious metal." So gold was used extensively 2000-3000 years ago. Exactly what was its intrinsic utility then? Plating astronaut helmets and high-conductivity, corrosion-resistant electronics? The intrinsic utility of gold was that it was eminently verifable. It's got a characteristic ductility and it was a yellow metal. You could easily verify if it was 100%, 80% etc. In other words, to the ancients, the intrinsic utility of gold was "its trust model". Sound familiar?
- aes 13y ago
  Jewelry.
  - dnautics 13y ago
    that's not in any way "intrinsic" value.
    - thaumasiotes 13y ago
      Yes it is. The intrinsic value of food is that you can eat it; the intrinsic value of art objects is that you like them. All "intrinsic" value refers to is the use you can make of something without exchanging it for something else. If you were the only person in the world, and you appreciated the appearance of gold, than gold would be intrinsically valuable to you.
      - dnautics 13y ago
        I will accept this. How then is it not the case that "if you were the only person in the world, and you appreciated bitcoin, then bitcoin would be intrinsically valuable to you."
        lmm 13y ago
        The logical implication is sound, I just don't think the premise holds. If you were the only person in the world, a bitcoin would just be a random-looking sequence of numbers and letters, which really would be worthless.
      - aaren 13y ago
        Then can't I find the function of bitcoin intrinsically valuable? You mightn't like my tastes but I don't like your gold necklace either.
      - SilasX 13y ago
        But for the case of jewelry, its usefulness as such depends on it being valuable. So the buck can't stop there: what other use propped up its value?
        teddyh 13y ago
        The usefulness of gold as jewelry is not only its value; it also does not tarnish or rust, which is a very useful property for jewelry.
        itchitawa 13y ago
- carbocation 13y ago
  Your comments across multiple domains of knowledge have been on fire lately. Fantastic work! While I don't think this analogy works without flaw, I do think that it draws a powerful connection between something that is widely regarded as a store of wealth, and something that is vying to compete in the same space.
- XorNot 13y ago
  No it wasn't. It was that it was rare, and that it was pretty, and so rich people (the rulers) tended to buy it. And then, promptly, they also repeatedly ran their economies into the ground by conquering and mining tons more gold, and inflating their currency into worthlessness. And this happened over and over - the Spanish did it, the Chinese did it, the French did it. Every gold economy before the invention of actual economic thought destroyed itself with gold.
- eli_gottlieb 13y ago
  >So gold was used extensively 2000-3000 years ago. Exactly what was its intrinsic utility then? Well, usually, the intrinsic utility of gold and silver was that they could be used as jewelry and/or used as instruments of worship. Most bullion money has evolved from substances considered divine. Remember the Golden Calf?

by chipsy 13y ago

dnautics 13y ago

"The crypto problems solved in Bitcoin don't have the intrinsic utility of a precious metal." So gold was used extensively 2000-3000 years ago. Exactly what was its intrinsic utility then? Plating astronaut helmets and high-conductivity, corrosion-resistant electronics? The intrinsic utility of gold was that it was eminently verifable. It's got a characteristic ductility and it was a yellow metal. You could easily verify if it was 100%, 80% etc. In other words, to the ancients, the intrinsic utility of gold was "its trust model". Sound familiar?

aes 13y ago
Jewelry.
- dnautics 13y ago
  that's not in any way "intrinsic" value.
  - thaumasiotes 13y ago
    Yes it is. The intrinsic value of food is that you can eat it; the intrinsic value of art objects is that you like them. All "intrinsic" value refers to is the use you can make of something without exchanging it for something else. If you were the only person in the world, and you appreciated the appearance of gold, than gold would be intrinsically valuable to you.
    - dnautics 13y ago
      I will accept this. How then is it not the case that "if you were the only person in the world, and you appreciated bitcoin, then bitcoin would be intrinsically valuable to you."
      - lmm 13y ago
        The logical implication is sound, I just don't think the premise holds. If you were the only person in the world, a bitcoin would just be a random-looking sequence of numbers and letters, which really would be worthless.
    - aaren 13y ago
      Then can't I find the function of bitcoin intrinsically valuable? You mightn't like my tastes but I don't like your gold necklace either.
    - SilasX 13y ago
      But for the case of jewelry, its usefulness as such depends on it being valuable. So the buck can't stop there: what other use propped up its value?
      - teddyh 13y ago
        The usefulness of gold as jewelry is not only its value; it also does not tarnish or rust, which is a very useful property for jewelry.
        itchitawa 13y ago
carbocation 13y ago
Your comments across multiple domains of knowledge have been on fire lately. Fantastic work! While I don't think this analogy works without flaw, I do think that it draws a powerful connection between something that is widely regarded as a store of wealth, and something that is vying to compete in the same space.
XorNot 13y ago
No it wasn't. It was that it was rare, and that it was pretty, and so rich people (the rulers) tended to buy it. And then, promptly, they also repeatedly ran their economies into the ground by conquering and mining tons more gold, and inflating their currency into worthlessness. And this happened over and over - the Spanish did it, the Chinese did it, the French did it. Every gold economy before the invention of actual economic thought destroyed itself with gold.
eli_gottlieb 13y ago
>So gold was used extensively 2000-3000 years ago. Exactly what was its intrinsic utility then? Well, usually, the intrinsic utility of gold and silver was that they could be used as jewelry and/or used as instruments of worship. Most bullion money has evolved from substances considered divine. Remember the Golden Calf?