Bitcoin discussion thread - Page 10

The economic significance of this roller coaster was basically nil. But the furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.

But bitcoin evangelists insist that it’s about much more than greasing the path for illicit transactions. The biggest declared investors in bitcoins are the Winklevoss brothers, wealthy twins who successfully sued for a share of Facebook and were made famous by the movie “The Social Network” — and they make claims for the digital product similar to those made by goldbugs for their favorite metal. “We have elected,” declared Tyler Winklevoss recently, “to put our money and faith in a mathematical framework that is free of politics and human error.”

The similarity to goldbug rhetoric isn’t a coincidence, since goldbugs and bitcoin enthusiasts — bitbugs? — tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, it’s very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air. Gold’s value comes in part because it has nonmonetary uses, such as filling teeth and making jewelry; paper currencies have value because they’re backed by the power of the state, which defines them as legal tender and accepts them as payment for taxes. Bitcoins, however, derive their value, if any, purely from self-fulfilling prophecy, the belief that other people will accept them as payment.

The practical misconception here — and it’s a big one — is the notion that we live in an era of wildly irresponsible money printing, with runaway inflation just around the corner. It’s true that the Federal Reserve and other central banks have greatly expanded their balance sheets — but they’ve done that explicitly as a temporary measure in response to economic crisis. I know, government officials are not to be trusted and all that, but the truth is that Ben Bernanke’s promises that his actions wouldn’t be inflationary have been vindicated year after year, while goldbugs’ dire warnings of inflation keep not coming true.

The philosophical misconception, however, seems to me to be even bigger. Goldbugs and bitbugs alike seem to long for a pristine monetary standard, untouched by human frailty. But that’s an impossible dream. Money is, as Paul Samuelson once declared, a “social contrivance,” not something that stands outside society. Even when people relied on gold and silver coins, what made those coins useful wasn’t the precious metals they contained, it was the expectation that other people would accept them as payment.

On November 30 2013 14:16 obesechicken13 wrote:
Repeating my question from above in the hopes that someone will see it:

There is one thing that has always confused me though. If you buy equity for $2 per share, then over the next few months it grows to $10 per share, doesn't that mean that as long as the value per share does not drop by more than $1 per share per day, and you tell yourself you will drop them at $8 per share, you'll still make money no matter what? Or do you have to find a seller and does it take a few days to sell your stocks?

On November 30 2013 14:35 TotalBalanceSC2 wrote:


It's a question of liquidity, if you hold a very liquid asset like shares in a big publicly listed fortune 500 company you could sell them pretty quickly. If however you hold an illiquid asset like say expensive paintings you might have to wait days or weeks before you could find a buyer to pay your price (by which time the value of your art could have dropped significantly). I have not done much research on bitcoin but I would assume it is a decently liquid market and that you could probably dump your holdings fairly quickly.

So yes, if the price doesn't fall by more than a dollar a day you could probably sell out your hypothetical asset at 8$ and be guaranteed to make money as long as your hypothetical asset has some liquidity to it.

On December 01 2013 22:47 MoonfireSpam wrote:
Maybe I'm being dumb, but if your hard drive fails, you lose all the currency on it right?

On December 02 2013 00:02 BrTarolg wrote:
so yeah remember that time when i posted i had bought 100 coins at 5 dollars a piece...

On November 30 2013 07:41 0x64 wrote:
This guy is very biased, and so are bitbugs, indeed.
I understand bubbles and tulip crisis but I am not understanding the bticoin yet and I believe very little people do.
Goldbugs got screwed by government decisions big time, hen there was this 10% fall, that had never happened in one day on gold. The problem is that someone who has run a system based on money printing wont suddently stop and say good thing about a system that is opposite and remove all his power.

And whatever we say, we leave in a hyperdeflation where the value of what we hold most dear is halved every six month :D and thats a thing I never hear mentioned.

On December 01 2013 23:44 Chrono000 wrote:


no u can store all your bitcoin in your brain if u like by memorizing some stuff.

when u create a bitcoin wallet u will have a public address people can send cash to and a secret key which u might keep on paper somewhere. if u loss/damage your harddrive, u can access your bitcoin by using your original secret key. the process is a bit more complicated but bitcoin are nearly all up in the air locked away in very very complicated code that keeps getting stronger as more people use it.

its not much different than having an email account.

On December 02 2013 03:03 Acrofales wrote:

Well, a bitcoin is a long complicated code, so in theory you can memorize it, but in practice that is utterly useless advice. If you lose the harddrive where you have your wallet with those codes stored, they are lost, unless you made a backup (in the cloud, copied to another drive, etc.). Same as if you walk around with a regular wallet with regular money, and lose it (except now you actually have the ability to make a backup).