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Author Topic: Bitcoin - the currency of the internet.  (Read 27019 times)

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Offline Snake X

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Re: Bitcoin - the currency of the internet.
« Reply #15 on: June 02, 2011, 10:41:28 pm »
Quote from: Goplat on May 29, 2011, 11:38:06 pm
The way any currency has value is that you can buy things with it. The value is basically proportional to the amount of trade that takes place with the currency, divided by the amount of the currency in existence.

Bitcoin has a tightly controlled rate of creation (more people getting into it does not mean more bitcoins will be created), so the more people involved, the more valuable it gets. Once that gets as high as it's going to get, the 2009ers will cash out, making themselves rich, but causing a large drop in bitcoin value (due to the millions of "new" bitcoins entering circulation), which will very quickly turn into an outright crash (nobody wants to be stuck holding a currency that's rapidly dropping in value, so people will try to get out while they still can, causing a positive-feedback loop) - so everyone else is stuck holding now-worthless imaginary money.

I just thought os something.. You said it'd be worthless once millions of coins are generated. You also forgot what backs up the value in the bitcoin. As new coins are generated, the difficulty increases. This is what will keep the vue once they are starting to near the 21 million coins, the work and power it takes to generate them in the firs place.
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Offline Deep Toaster

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Re: Bitcoin - the currency of the internet.
« Reply #16 on: June 02, 2011, 10:57:14 pm »
Quote from: ruler501 on May 29, 2011, 11:15:35 pm
Could someone please explain why this makes the coins of monetary value?

Think about it: Why are U.S. dollars of monetary value? Because the people who you pay them to are gonna use them. That's all that's behind modern currency -- all you really "receive" is a promise that you'll be able to use it in the future.
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Offline ruler501

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Re: Bitcoin - the currency of the internet.
« Reply #17 on: June 02, 2011, 11:02:27 pm »
So ow does inflation happen. I don't understand economics at all currently
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Offline z80man

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Re: Bitcoin - the currency of the internet.
« Reply #18 on: June 02, 2011, 11:23:17 pm »
Inflation happens when the symbolic money cannot be physically backed up. The US treasury maintains an enormous sum of gold used to back up the dollar. When the symbolic paper dollar is produced in mass quantities each dollar then represents a smaller portion of that gold, therefore decreasing its value.
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Offline ruler501

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Re: Bitcoin - the currency of the internet.
« Reply #19 on: June 02, 2011, 11:24:52 pm »
So it is more than just belief that soemone will give you something for that dollar that makes it worth something
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Offline Deep Toaster

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Re: Bitcoin - the currency of the internet.
« Reply #20 on: June 02, 2011, 11:30:47 pm »
Quote from: ruler501 on June 02, 2011, 11:24:52 pm
So it is more than just belief that soemone will give you something for that dollar that makes it worth something

If there's something to back it up, like gold, that definitely makes it worth more because you know that even if you can't get anything else (thanks to inflation), you can always get gold, which can never depreciate much in real value since there's a limited amount of it in the world.
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Offline Snake X

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Re: Bitcoin - the currency of the internet.
« Reply #21 on: June 03, 2011, 06:22:58 am »
yeah. Actually the thing that backs it up is confidence. By the way, how would the 2009'ers cashing out lead to a spiral of doom?
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Offline ZippyDee

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Re: Bitcoin - the currency of the internet.
« Reply #22 on: June 03, 2011, 08:45:17 am »
Quote from: z80man on June 02, 2011, 11:23:17 pm
Inflation happens when the symbolic money cannot be physically backed up. The US treasury maintains an enormous sum of gold used to back up the dollar. When the symbolic paper dollar is produced in mass quantities each dollar then represents a smaller portion of that gold, therefore decreasing its value.
But Nixon took us off the gold standard. The whole point of that was so we wouldn't have to rely on having an equivalent amount of gold.

Quote from: Snake X on June 03, 2011, 06:22:58 am
yeah. Actually the thing that backs it up is confidence. By the way, how would the 2009'ers cashing out lead to a spiral of doom?
Remember that value is based on the amount of trade using that currency divided by the amount of that currency in circulation. By people caching in and therefore adding their bitcoins back into circulation, this is now increasing the amount of currency, but not increasing the amount of trade. Basically, you're now dividing by a much larger number, so the value will plummet.

Once the bitcoin's value has decreased, prices will skyrocket, but people won't have enough bitcoins to afford any of it. It's basically the same thing that happened in the Great Depression, and also similar to what's happening now in this recession. Value of currency decreases, so prices increase.
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Offline BrownyTCat

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Re: Bitcoin - the currency of the internet.
« Reply #23 on: June 03, 2011, 09:04:10 am »
We should use ByteCoins since we measure things in bytes still.
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Offline ruler501

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Re: Bitcoin - the currency of the internet.
« Reply #24 on: June 03, 2011, 09:50:36 am »
Quote from: BrownyTCat on June 03, 2011, 09:04:10 am
We should use ByteCoins since we measure things in bytes still.
I think they were just getting a generic computer term to use
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Offline BrownyTCat

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Re: Bitcoin - the currency of the internet.
« Reply #25 on: June 03, 2011, 10:30:11 am »
Quote from: ruler501 on June 03, 2011, 09:50:36 am
Quote from: BrownyTCat on June 03, 2011, 09:04:10 am
We should use ByteCoins since we measure things in bytes still.
I think they were just getting a generic computer term to use
Trading hats is more addictive though.
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Offline ruler501

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Re: Bitcoin - the currency of the internet.
« Reply #26 on: June 03, 2011, 10:42:29 am »
They are trying to make money not addictions
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Offline Snake X

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Re: Bitcoin - the currency of the internet.
« Reply #27 on: June 03, 2011, 04:28:05 pm »
Quote from: ZippyDee on June 03, 2011, 08:45:17 am
By people caching in and therefore adding their bitcoins back into circulation, this is now increasing the amount of currency, but not increasing the amount of trade.

Ah but arn't you trading though to some company that has money that will give you money for your coins?
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Re: Bitcoin - the currency of the internet.
« Reply #28 on: June 03, 2011, 04:53:13 pm »
I kinda read through this, and while I may not know everything behind it, it looks unfair, it seems to be a waste of time and computational power, and I think it would be more beneficial to actually work for real money.
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Offline ruler501

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Re: Bitcoin - the currency of the internet.
« Reply #29 on: June 03, 2011, 04:54:59 pm »
its an easy way for a few people to get really rich
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