Main Area and Open Discussion > Living Room
Does anyone here use Bitcoins?
IainB:
...If somebody cleans out my bank account I have several very direct avenues of legal recourse....
-40hz (April 08, 2013, 09:34 PM)
--- End quote ---
Yes, well, maybe you might have - today, in any event - but this would seem to be inapplicable if you live in Cyprus/Europe.
The currency "backing" you perceive is just that - i.e., perceived. Modern money is generally created by things including credit creation, printing, and fiat, supported by fractional reserve banking (a virtual accounting myth) and enabled with stability of notional value through trust. Military or economic might do not of themselves "prove" or "command" money to have/retain value - as you seem to be suggesting - the USSR and China already tried that and failed (QED).
No, breach that trust and the whole thing collapses like a house of cards and the notional value evaporates.
So...guess what just happened in Cypress?
I am very interested in, but also ambivalent about Bitcoin and crypto-currency generally, but I do at least see that in Bitcoin the currency seems to be its own gold standard (as I wrote in a separate post), and trust seems to be made irrelevant and is substituted by the security and statistical authenticity inherent in the incorruptible cryptographic protocol. I would suggest the possibility that Bitcoin - or other crypto-currency - could be considered as a potential new "gold standard", against which all other currencies could be valued.
Nationa/International settlement and exchange could even take place through the medium of the crypto-currency, thereby reducing systemic risk. Forex trading could become obsolete.
I recommend maintaining a healthy skepticism toward any of the MSM (mainstream media) running TV docos or writing pro-Bitcoin or anti-Bitcoin pieces. They are arguably not doing this from the perspective of good journalism, since most of them don't seem to know the meaning of that term. So why would they be doing it? The answer is that, generally speaking, the MSM communicate only those religio-political marketing messages and propaganda that they are told to communicate (QED), and so the messages are dumbed down and NTR (No Thinking Required), aimed at the standard reading ability and/or mentality of a 13 or 14-year old.
40hz:
^I have a healthy skepticism for all things created by humans. I'm also a keen student of history and a decent enough amateur psychologist that I'm not too easily 'taken in." At least not unknowingly. (Allowing oneself to be knowingly taken in is an altogether different thing. That's the tariff we pay for allowing ourselves to have hopes and dreams. It's a fair exchane IMHO.)
;D
Again, it comes down to a question of having a relative and reasonable level of trust - or more correctly, a rational level of reliance on something. When looking at something like Cypress, about the best I can say is that the United States is not Cypress. And although the world's economy and monetary system has a significant impact on the American economy, and a collapse elsewhere would be felt, it's consequences would be different both in form and scale.
And a sudden economic collapse would be nothing new for us. The US has been through one totally catastrophic economic collapse recent enough to still be within living memory. It has also weathered several major recessions, and at least two (depending upon how you define it) systemic banking crises. We're somewhat used to them. And mechanisms are in place for dealing with it as far as that goes. So Cypress is not actually that equivalent here.
Regarding currencies, they're all perfect examples of a willing suspension of disbelief. But some lies are more 'dependable' than others - relativistically speaking.
Which brings me back to my problem with bitcoin. Right now it's not a big enough - or a commonly believed enough 'falsehood' - for me to knowingly let myself be taken in by it. And this roller coaster ride it seems to be so proud of is a clear indication (to me at least) of its total lack of control and failure to exercise fiscal responsibility as either a medium of exchange or an investment vehicle. Not exactly something I'd want to get involved with.
8)
tomos:
The current artificial and deliberate cap of about 20 million BTC numbers (objects) that can be created in/by the Bitcoin protocol is very interesting in that it is a control - it safely controls the experiment and caps the bubble that we see inflating/deflating (it is currently re-inflating after having had one major deflation).
This control affects/limits the endogenous money supply (M3) in this enclosed system, but not necessarily the velocity of circulation of the money. The latter may be theoretically unlimited, but in practice could be under a constraint set via a function determining the necessary CPU cycle time forced to be consumed in operating the protocol.
-IainB (April 08, 2013, 07:22 PM)
--- End quote ---
I'm not too well up on the terminology here Iain - could you explain what you mean by "operating the protocol"? Do you mean 'creation of' - or simply trading bitcoin? I thought only creation was affected by CPU etc. but confused when you say this will affect the "velocity of circulation".
I am very interested in, but also ambivalent about Bitcoin and crypto-currency generally, but I do at least see that in Bitcoin the currency seems to be its own gold standard (as I wrote in a separate post), and trust seems to be made irrelevant and is substituted by the security and statistical authenticity inherent in the incorruptible cryptographic protocol. I would suggest the possibility that Bitcoin - or other crypto-currency - could be considered as a potential new "gold standard", against which all other currencies could be valued.
Nationa/International settlement and exchange could even take place through the medium of the crypto-currency, thereby reducing systemic risk. Forex trading could become obsolete.-IainB (April 09, 2013, 05:33 AM)
--- End quote ---
I wonder what would/will happen if/when another similar currency is created ... (I suppose that would only happen if Bitcoin is a 'success' - in the medium term at least.)
IainB:
@tomos: I'm no expert. I was using the terminology and concepts explained here: About Bitcoin
Concise Oxford: Computing protocol - a set of rules governing the exchange or transmission of data between devices.
Operating the protocol occurs at an internal "clock" speed, which governs the rate at which it consumes CPU cycles. The output from the cycles is an object - actually a number - and that is the Bitcoin.
The velocity I referred to was the velocity of circulation of a currency, which, if it is scarce, might change hands faster to compensate for the lack of supply.
But since the protocol apparently has to be involved to exchange Bitcoins, then that might constrain the max velocity of exchange of Bitcoins in a Buy/Sell transaction.
tomos:
^Thanks Iain
"the protocol apparently has to be involved to exchange Bitcoins" would explain it.
Re the circulation: unless it's value stabilises, this will be useless as a currency AFAICS. Even then it would have to stabilise at a very high value. At very high value, it could be divided in 'billionths' or 'trillionths'. The trickle down effect would take a long time to be felt by those without Bitcoin though....
Ska's link was interesting (http://www.naturalnews.com/039830_bitcoin_bubble_crash.html).
I quote -
• Bitcoin is a currency that's subject to human psychology
• As such, it is subject to the "greed" and "fear" herd mentalities of human investors
Sounds like something Jeeves would say to Wooster - "it's subject to human psychology" :)
I think in order for a money to be successful in terms of everyday use it has to somehow avoid those pitfalls.
I like the idea of a mutual credit system where one can create 'money' through work - rather than (mostly) needing the money to be available before work can be done - but it's not something I know much about. AFAIK it has only ever been implemented locally, on very small scales.
Navigation
[0] Message Index
[#] Next page
[*] Previous page
Go to full version