For a smart guy you do sometimes have some gaping holes in your reasoning.
If Bitcoin is traded as a currency it’s a currency, simple as that. A currency is a means of exchange. It’s obviously a lot more volatile than established currencies like the USD, but it doesn’t mean it’s not useful to some people. It has its pros compared to debt based currencies, and minuses too. There’s no reason to deride it because it’s set up differently to other currencies. It’s almost impossible to print to oblivion and is more difficult to control by a central bank or government, these are all big pluses. It’s easily tradeable and very difficult to counterfeit. On the otherhand, it’s still highly volatile and in it’s teething stages.
I don’t think the comparison to the tulip bubble is valid. A tulip can’t be wired across the world to pay for transactions instantly. Try to pay for stuff with a tulip and people will laugh at you, but at least with bitcoin you have good options to exchange it for legal tender. It dies and is not easily stored for safe keeping. It can’t be broken into smaller parts without killing it etc.
People say another internet currency can come along and replace it, but it’s obvious that the network effect is key for these type of currencies. Even with some drawbacks, if it’s popularly accepted as a means of exchange and becomes more widely used over time, it will create a positive feedback cycle. Other internet currencies can be designed to have other criteria that will suit some traders or savers more, they may become more popular overtime but they require a certain uptake and fame first to benefit from the network effect.
For all the countries that say they are ‘banning bitcoin’ there are other countries (and their financial markets) which seem wary to lock themselves out of this nascent new currency/market, particularly the UK, US, Japan and Singapore. It looks fairly likely Bitcoin will eventually get more regulated and then be approved as a legal tender in many countries. At that stage Bitcoin use would explode, so it’s not a bad bet in terms of buying and holding. It could go South but it has a better chance to go North over time.
How can it ever be a global means of payment when there is a limit of the above … explain please![/quote]
Bitcoins can be split into very small pieces so the theory is that Bitcoin will go to 1M (or something ridiculous) so everyone continues to hold it.
I would be neither encouraged or discouraged by Bitcoin holding its ground pricewise at this point. The entire thing is being held up by speculators looking to get rich quick. Let’s see how long they stay if the price goes sideways for 6-12 months.[/quote]
If Bitcoin looks to move towards more acceptance as a legal tender, then it’s value could easily explode again up to it’s previous highs or more. Yes it will be a speculative blast but it has a reasonably good chance of happening.
Sometimes words people use actually have generally accepted definitions, currency being one of them. I’m not interested in what the media and the libertarians of the world call it. I’m only interested in what it actually is. It does not yet meet the minimum requirements of a currency.
Neither of those are true.
Not easily counterfeit? You don’t know much about technological advancement and criminal activity do you? Yeah, some dude who invented this thing is going to stay ahead of the criminals and the ever improving technology of our world. :roflmao:
Comparisons to “tulips” are metaphors. It’s not meant to be a literal comparison. Wiring tulips around the world? Was that a serious comment?
Uh… just in the time you started posting in this thread, two digital currencies have come along that gained widespread support and users. Instead of talking about what won’t happen, why not just open your eyes and view what actually is happening as we speak?
No, all that will happen is people will start realising that in order for these new digital currencies to be widely adopted, it will inevitably involve a currency exchange back into dollars.
At the end of the day, my point is the same. These are not currencies and will not threaten the rock solid nature of the US dollar. All they are is clever technological advancements in the realm of DIGITAL PAYMENT SYSTEMS. Nothing wrong with that and there’s certainly room for them to take off in that sense because as everybody knows it isn’t cheap or easy to transfer money. Bitcoin and the like make it much easier and cheaper, so good for them and I hope that continues. Legally of course. At the moment, Bitcoin is only being “used” by criminals, and being “hoarded” as a speculation instrument for everyone else. It’s not being freely and widely exchanged and I don’t imagine it will be any time soon.
[quote=“headhonchoII”]
Even with some drawbacks, if it’s popularly accepted as a means of exchange and becomes more widely used over time, it will create a positive feedback cycle.[/quote]
Or – to be more specific – a speculative bubble.
Belief in something definable may or may not be rational. Belief in belief is just stupid.
Are you telling me that the US could pay back all the money it owes overseas?
All money is belief.
Currencies are a means of exchange, that’s it. Different people need different means of exchange, according to their personal situation, geographic location, business needs and who they are trading with. It’s really not very complex. No one currency will suit everybody obviously, and with the digitalisation and globalisation of commerce, a digital currency that is not beholden to one central bank is a good idea. Each currency can be adjusted according to it’s intended user base. Just like there will not be one sovereign currency, there also wouldn’t be one digital currency. Digital currencies will be promoted by the financial industry as much as actual currency users as a new means to make money (commission/exchange rate gains), if some places/industries don’t go for it, others will. There’s money to be made!
Speculation occurs in all currencies, so what. People speculate on everything.
It’s all nice to debate it theoretically, but people do use it and it is becoming more common to use. I think we’ll see more use as a unified worldwide income and asset reporting system becomes more the norm and not just a conspiracy theory. Banning bitcoin, that’s just funny. :loco:
It’s gotten much easier to cash in and out of bitcoin. The liquidity is now there.
[quote]It’s all nice to debate it theoretically, but people do use it and it is becoming more common to use. I think we’ll see more use as a unified worldwide income and asset reporting system becomes more the norm and not just a conspiracy theory. Banning bitcoin, that’s just funny. :loco:
It’s gotten much easier to cash in and out of bitcoin. The liquidity is now there. [/quote]
FYI, all research thus far shows the exact opposite. It shows just how few people control the bulk of the Bitcions in circulation and just how few are actually being traded and used. There’s a few anecdotal stories here and there in the media of people buying things with Bitcoin, but I would venture a guess no more so than people buying stuff with other digital coins and vouchers, vintage Air Jordans, stamps, or even baseball cards. Barter has always existed and that’s true today with all kinds of random items including Bitcoins. However, Bitcoin is not being used as a currency. The vast majority of holders are far too scared to miss out on future appreciation to actually be using them in any meaningful way for spending. You’d have to completely bastardise the definition of the word currency to equate it with whats happening with Bitcoin. Maybe some day it will be who knows (my guess is no but I could be 100% wrong) but right now today it surely falls far short.
Anyway, if people wish to continue believing Bitcoin is a currency that’s fine. I’ve had similar debates with people and it never goes anywhere. No amount of logic or common sense will change peoples opinion when they are adamant in avoiding the facts. Honestly, there’s still people who with a straight face will tell you gold is a currency too. :loco: There’s no shortage of people who don’t understand what the word means…
I wonder how long it will be before the next major crisis hits the Bitcoin true believers
Actually tulip bulbs can wired around the, let’s say I’m a bulb trader in Europe and someone else is a bulb trader in the US … we make an agreement that we together set up a bulb trading company … someone in Europe wants to sent bulbs to the US I instruct my partner in the US by wire to deliver some bulbs to the recipient … works the other way around too … and yes, bulbs can be split into more bulbs.
Going through a bit of a phase of reading Hayek at the moment. His ideas are, I think, very much a product of his time and his personal experiences, but he was an astoundingly smart guy and offers much food for thought.
Anyone interested in the bitcoin debate, or alternative currencies in general, will find this interesting:
