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Using Bitcoin is basically, like using a foreign currency, with the only difference, that in case of a the conventional currency you might actually live in the

by jevgeni 12y ago

Using Bitcoin is basically, like using a foreign currency, with the only difference, that in case of a the conventional currency you might actually live in the country it is used. In other words, whenever you use Bitcoin you take on FX risk. This means, that Bitcoin is something you wouldn't want to store value in for the long-term. Hedging that risk will also prove a major headache, since there aren't that many Bitcoin contracts out there, and the ones that are, carry some major credit risk with them.

furbyhater 12y ago
It's different than most other foreign currencies in the sense that it's variance in value is MUCH higher than your usual currency. I would consider storing my personal fortune in CHF, JPY, USD, or even EUR but never in BTC.
- jevgeni 12y ago
  Exactly, the volatility is why people wouldn't use it as a store of value. P. S. I like how you went "...or even EUR" ;)
wyager 12y ago
>This means, that Bitcoin is something you wouldn't want to store value in for the long-term. I can think of a reason you would want to. Bitcoin is strictly supply-limited, and all fiat currencies are not. One might decide that, despite Bitcoin's volatility, the expected change in unit value over time is higher than that of any (inflationary) fiat currency.
- bigiain 12y ago
  With the difference that other fiat currencies are spectacularly unlikely to be declared illegal in your jurisdiction. There's a non-zero chance of your "bitcoin stored value" being about as desirable as a few suitcases full of cocaine, if your local laws fall that way. I wonder if tip4commit have even considered whether any of the unsolicited donations they're collecting for are intended for residents in any of the non-green countries here: http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country ? If you're a contributor to an open source project and you live in Bangladesh, this is about as welcome as receiving illegal drugs in the post in return for your open source project commits. (Yeah, a bit of hyperbole there, but still...) http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country
  - wyager 12y ago
    >With the difference that other fiat currencies are spectacularly unlikely to be declared illegal in your jurisdiction. So we've gone from "it's volatile" to "it's maybe, potentially, illegal at some point in the future"? Well, there are a few reasons I wouldn't be worried about this. A) It's not likely that Bitcoin will be banned outright in most countries. B) If it were to be banned outright, you'd likely have plenty of notice and be able to sell it before the laws took effect. Also, it is not as if the project is actually sending Bitcoin to the developers; it is simply making it available for them to claim. A more comparable analogy would be if a sweepstakes in Colorado told me I had won some free marijuana; even though marijuana is illegal in my state, I am not legally culpable unless I actually claim the winnings.
    - ayrx 12y ago
      > If it were to be banned outright, you'd likely have plenty of notice and be able to sell it before the laws took effect. Ah, but who would want to buy Bitcoin in that scenario?
      - wyager 12y ago
        People in countries where it was not going to be outlawed, or customers who planned to use it for illegal purposes anyway.
    - bigiain 12y ago
      True - like I said, I was being hyperbolic... I still think the "potentially illegal at some point in the future" is a real consideration in the discussion about using Bitcoin "to store value in for the long-term". As for the difference between "sending Bitcoin to developers" vs "making it available for them to claim" - think about how you'd feel if someone in Colorado was running a website saying "Donate marijuana to wyager for each of his upvoted HN comments!", then had your local police come round to your place asking you about"your" 7oz of illegal drugs? However "in the right" you are, being put in that position without being asked, and having "that guy" argue about whether he needs to stop doing it when you complain... I personally wouldn't want to be involved in those arguments, nor would I be at all happy about other people supporting :that guy"'s rights to keep doing it.
- jevgeni 12y ago
  True, if we expect the BTC FX risk to be lower, than the inflation risk of the best possible fiat currency choice, then BTC would be the superior choice.
- davidgerard 12y ago
  Bitcoin is strictly supply-limited, but there are an unlimited number of altcoins. (I see Bitcoin advocates pushing people to stop using altcoins. It's unclear to me what force they can put behind this admonition.)

by jevgeni 12y ago

furbyhater 12y ago

It's different than most other foreign currencies in the sense that it's variance in value is MUCH higher than your usual currency. I would consider storing my personal fortune in CHF, JPY, USD, or even EUR but never in BTC.

jevgeni 12y ago
Exactly, the volatility is why people wouldn't use it as a store of value. P. S. I like how you went "...or even EUR" ;)

wyager 12y ago

>This means, that Bitcoin is something you wouldn't want to store value in for the long-term. I can think of a reason you would want to. Bitcoin is strictly supply-limited, and all fiat currencies are not. One might decide that, despite Bitcoin's volatility, the expected change in unit value over time is higher than that of any (inflationary) fiat currency.

bigiain 12y ago
With the difference that other fiat currencies are spectacularly unlikely to be declared illegal in your jurisdiction. There's a non-zero chance of your "bitcoin stored value" being about as desirable as a few suitcases full of cocaine, if your local laws fall that way. I wonder if tip4commit have even considered whether any of the unsolicited donations they're collecting for are intended for residents in any of the non-green countries here: http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country ? If you're a contributor to an open source project and you live in Bangladesh, this is about as welcome as receiving illegal drugs in the post in return for your open source project commits. (Yeah, a bit of hyperbole there, but still...) http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country http://en.wikipedia.org/wiki/Legality_of_Bitcoin_by_country
- wyager 12y ago
  >With the difference that other fiat currencies are spectacularly unlikely to be declared illegal in your jurisdiction. So we've gone from "it's volatile" to "it's maybe, potentially, illegal at some point in the future"? Well, there are a few reasons I wouldn't be worried about this. A) It's not likely that Bitcoin will be banned outright in most countries. B) If it were to be banned outright, you'd likely have plenty of notice and be able to sell it before the laws took effect. Also, it is not as if the project is actually sending Bitcoin to the developers; it is simply making it available for them to claim. A more comparable analogy would be if a sweepstakes in Colorado told me I had won some free marijuana; even though marijuana is illegal in my state, I am not legally culpable unless I actually claim the winnings.
  - ayrx 12y ago
    > If it were to be banned outright, you'd likely have plenty of notice and be able to sell it before the laws took effect. Ah, but who would want to buy Bitcoin in that scenario?
    - wyager 12y ago
      People in countries where it was not going to be outlawed, or customers who planned to use it for illegal purposes anyway.
  - bigiain 12y ago
    True - like I said, I was being hyperbolic... I still think the "potentially illegal at some point in the future" is a real consideration in the discussion about using Bitcoin "to store value in for the long-term". As for the difference between "sending Bitcoin to developers" vs "making it available for them to claim" - think about how you'd feel if someone in Colorado was running a website saying "Donate marijuana to wyager for each of his upvoted HN comments!", then had your local police come round to your place asking you about"your" 7oz of illegal drugs? However "in the right" you are, being put in that position without being asked, and having "that guy" argue about whether he needs to stop doing it when you complain... I personally wouldn't want to be involved in those arguments, nor would I be at all happy about other people supporting :that guy"'s rights to keep doing it.
jevgeni 12y ago
True, if we expect the BTC FX risk to be lower, than the inflation risk of the best possible fiat currency choice, then BTC would be the superior choice.
davidgerard 12y ago
Bitcoin is strictly supply-limited, but there are an unlimited number of altcoins. (I see Bitcoin advocates pushing people to stop using altcoins. It's unclear to me what force they can put behind this admonition.)