Another Bitcoin site bites the dust
Posted by richrobinson 10 years, 3 months ago to The Gulch: General
I actually started looking into bitcoin as an investment about a month ago. It looked like a viable option. Now I wonder...what next
SOURCE URL: http://www.cnbc.com/id/101463888
If TSHTF, immediately some unit of gold may have less value to me than a bottle of whiskey or fresh vegetables or gallon of uncontaminated water.
Lagavulin 10yr is about $25 (750ml) here in Cambodia.
You see the corn and want to make 100 meals out of it.
Someone else sees it and wants to trade it for a pig.
... etc.
The difference in a money that is backed by something (gold, or in the case of Bitcoin, the scarcity) is the relative stability. There is nothing wrong with fiat money if it is not drastically increased in quantity. That is the risk. Since Bitcoin is totally digital, and there are very smart people out there, I always was concerned that someone could break into the code and create/destroy at will, thus manipulating the supply and thus, value.
Food - no
There can only be "value" in term of trade.
Each has utility, but no value.
How can wealth increase if the goods that two people bring to a trade do not physically change?
There is utility in the food. It is only valuable if I choose to trade it for something else.
Shells, beads, heck, even colored washers (from my personal experience) have been used as "money." The key to an enduring money is that it be rather stabile in quantity, only increasing in relative proportion to the economic activity in which it circulates. Even fiat money can have this characteristic (such as Bitcoin) so long as it is maintained. The problem with the dollar is that this has been violated, and violated aggressively as of late.
Wealth is the sum of value. Value is determined by the traders desires for goods.
When one trader brings a good to a trade, and a second trader brings their own goods, each must value the goods of the other more than their own goods otherwise the trade will not occur (why would I trade something that I own for something that is less valuable to me?). Thus each party must place a higher value on the items of the other than on the items that they themselves own.
So prior to the transaction each party has goods of let us say a value of 1. Total wealth of 2. After the trade each party feels that they got 1.1 value in exchange for their 1 that they traded. 2 x 1.1 = 2.2, wealth has increased.
Notice that I did not use money here at all.
Basic Austrian economics.
Certainly not because they're economists. I don't think there's an economist in the whole bunch.
At the very beginning, bitcoins were easy to produce/mine. The early adopters got on and started mining bitcoins. Now it is much more difficult to do so. Since (and if) bitcoin gains popularity, the early adopters have profited by the increased market value of a single bitcoin that is a result of the "hordes" of newer people coming to value the currency.
So, the argument goes, it is _like_ a ponzi scheme in the sense that early adopters have an opportunity to cash in and it requires more and more new people to continue to increase the value of a bitcoin.
Now whether it __is__ a ponzi scheme is a little different question.
2. Bitcoin in and of itself is a currency. A currency can be a ponzi scheme if someone can arbitrarily create more (counterfeit) for itself. The fact that bitcoin is finite is important
3.Mining bitcoin is a business model that trades computer resources for bitcoins. It provides a service for without which, bitcoin can not exist.
4.If bitcoin "miners" kept their bitcoins, they are essentially currency investors or traders. AND they may have just so happened to pick the better currency to trade in.
Am I missing something?
And to be fair to those that make that argument, I think what they are really saying is that Bitcoin has certain characteristics in common with a Ponzi scheme that could have been exploited by those that started it.
Personally I see those characteristics as an intentional system of incentive, the purpose of which was/is to get the currency off the ground.
I don't think one can argue well that it is literally a Ponzi scheme. Besides the points you mention, most Ponzi schemes rely on secrecy. The people buying in have to think they are getting something that is not really there. Bitcoin is decentralized and open. Everyone knows how many bitcoins there are and they also know, at least approximately, at what rate they are being produced.
Present an economics problem here and I'll give you the answer. I gave you one, but will repeat it here: How can wealth increase when the two parties that bring something to a trade have not changed the physical properties of what they have traded?
http://en.wikipedia.org/wiki/Comparative...
opportunity costs and efficiency-there would be no need to trade otherwise
I see it as a hedge to currency fluctuation and world events. It rose 22% not because the DOW tanked but due to the world political stage. . It is a risky investment, but I support it in part because I find it a moral solution to govt fiat of currency and govt intrusion into every financial transaction its citizens make in the name of safety-but more importantly in the name of slavery. I own myself.
The more govt seeks to control its operations, the higher its value-I predict.