Bitcoin

[dalebert]

John, Chartarum has no intrinsic value.  It's just bits.  It's just a sequence of numbers on a hard drive.

UPDATE: It just occurred to me that this wasn't the best example for making my point because John wasn't making the point that they have no value because they're just bits.  Obviously it was meant to be sarcastic.  We all go and watch multi-million dollar digital movies and we wouldn't say the movie has no value because it's just bits!  Talk to the people who invested countless hours acting, directing, arranging sets, editing, etc. And obviously lots of people are willing to pay to see the "bits".  Yet people apply that same irrational criteria to this incredible useful massive network of applications that keeps up with transactions and facilitates trade with anonymity and security.  I'm about to post what I think is a better way of thinking about it.

[alaric89]

The value of something is exactly what someone would pay for it. Bitcoins are valuable right now, and coincidentally pretty close to a once of silver at the moment. I wish I had listened to Terror Australia when he said to buy these things.

[John Shaw]

<<<Glad he called Dale before responding to posts.

I'll leave my argument at "As a conservative investor, I am not yet ready to place money into Bitcoins as any sort of long term wager."

CHARTARUM has MASSIVE INTRINSIC VALUE.

HOOORJ. Iputonmyrobeandwizardhatetc.

[dalebert]

Imagine a giant Excel sheet that's visible to everyone who wants to engage in peaceful trade without interference from third parties.  We'll call it, oh... a free market.  When someone provides an item or service, it's recorded on the sheet that the recipient now owes that person something in exchange of arguably equal value.  Now that debt can be transferred to someone else who is also considered trustworthy within this cozy group dubbed the "free market" via a trade from the debtor to someone else.  It then gets recorded on the giant Excel sheet.  It gets really complicated to imagine such a thing in action, but think of all the records as a cloud of goods and services and debts between everyone.  You provide something of value, the cloud owes you something in return.

The Bitcoin network is that giant spreadsheet but with everything automated and convenient.  Bitcoins are a tracking mechanism to keep up with what the cloud owes any individual via a market-controlled universal unit of value.

Think of Bitcoins as a contract-facilitating tool that's excellent at foiling interference from violent busy-body outsiders, making traditional currencies obsolete in many ways.  Why do libertarians find a tool that facilitates trade so effectively to be of no value?

Another way to think of it is that a Bitcoin is in fact backed up by an array of goods and services, whatever people are willing to trade within this network, which is a lot right now, and will be for as long as there are peaceful people who want to be a part of this network of peaceful exchange.

[John Shaw]

Some questions I have -

Where do Bitcoins come from?

Can you Convert Bitcoins into FRNs or Silver or Gold or whatever within an hour of receiving them?

Can you withdraw Bitcoins as FRN's in the same quantity as you can deposit them? Specifically can you put $10,000 into your wallet and then immediately turn around wnd withdraw the full amount? Are there withdrawal limits?

Also can you address this?:

http://www.cbsnews.com/8301-504943_162-20069780-10391715.html

Garzik says that they have cooperated with authorities in conjunction with Silk Road and are currently working to distance themselves from the illegal site. Similarly the site is working to make their service entirely legal and in conjunction with government standards.

Meaning that their goal is just to be another bank, yes?

More -

https://rulingclass.wordpress.com/2011/06/09/bitcoin-and-agorism/

We are working with the government to make sure indeed the long arm of the government can reach Bitcoin
Jeff Garzik, Bitcoin Developer

Two days ago, on the show, What’s Trending, Bitcoin developer Jeff Garzik remarked that despite the opinions of the libertarian user base of Bitcoin, the success of Bitcoin required cooperation with government regulation.

That sounds really really bad.


Anyway, I totally get the my paranoia and cynicism have denied me great profit at times, nevertheless, I'm personally gonna stay away from this product at this time.

[dalebert]

As I understand it, I don't see how they could possibly offer to do those things.  The nature of the beast is that they created it, like a Frankenstein monster, and let it lose in the world.  It's peer-to-peer now.  The software is open-source.  The whole point was that it's not centrally-controlled.  There is no head of the snake to chop off nor to negotiate with for terms like that.  Thousands of peers, all equal in status, are running the show now based on the algorithms they designed.

Again though, I've not looked into it closely as a software engineer and encryption has never been my specialty.  In fact, I'm pretty new to the concept.

It would be like Jason Sorens showing up at the police dept, all on his own, and saying "I represent the free-staters".  Then he might negotiate some terms for none of the free-staters to chalk the MPD anymore and to behave, etc. Meanwhile, he's just one dood with no power who came up with the idea before it started evolving into something he could never have anticipated.  Know what I mean?  Therefore I find the quotes confusing and I think they might just be playing along to keep themselves out of trouble for being deemed domestic terrorists or something.

[John Shaw]

I'm just telling you what's out there with the quotes. Seems like a valid concern. The dude who created the thing is a government sellout, publicly. Basing investments on whether or not you *think* you know what a dude is thinking is... Not so great. I'd never invest money on the bet that "He might just be saying that he's in line with gooberment just because he doesn't want them harassing him." That's a big assumption. The dude said it publicly. I'll take him at his word and stay away.

But my real concerns were the questions I asked:

Where do Bitcoins come from?

Can you Convert Bitcoins into FRNs or Silver or Gold or whatever within an hour of receiving them?

Can you withdraw Bitcoins as FRN's in the same quantity as you can deposit them? Specifically can you put $10,000 into your wallet and then immediately turn around wnd withdraw $10,000 (the full amount)? Are there withdrawal limits?

[sillyperson]

They are like fiat currency, though, in that they have no intrinsic value, each bitcoin just being a number.

The countless numbers that were used to build your house (like measurements, budgets, heat exchange calculations) have "no intrinsic value" and yet your house couldn't have been built without them.

Dude, this demonstrates a deep fail in understanding what money is.

No matter how much information I have about the specified sizes of the parts of my house... no brainful contractor will trade me the words "35'x45' living room" for the labor & materials required to actually produce such a room for me.

But people saying they have "no intrinsic value!" sound like a caveman looking at a lump of freshly mined copper and saying it has no value because they've never seen fancy plumbing or electrical wire in action.

Funny... you sound a lot like a former Deputy Secretary of the US Treasury that I got to interview on my show. I asked him why the central banks of India and China are buying gold, and he told me it was because their understanding of economics are not as well-developed as our here in the USA. Gold, basically, is like a security blanket or teddy bear for them.

Keep your bitcoins. I hope they make you rich.


This post brought to you by Mersenne primes 2305843009213693951, 618970019642690137449562111, 162259276829213363391578010288127, and 170141183460469231731687303715884105727.

Keep the change.

[sillyperson]

as long as people realize its a fiat currency and are not forced into using it, why should anyone else care?

'cause I got friends smoking that crack, man, and I don't want to see them get hurt

[Wayne]

Bitcoin was never intended to be a long-term (or even mid-term) store of value. The misperception that that is it's best use is really causing some PR problems for bitcoin, and is going to get a lot of people burned.

The ideal use for bitcoin is as an anonymous, decentralized means of transferring money. That's it. But it's the best thing for that; so good that the feds are scared to death, and are trying to shut it down (good luck with that though.)

Trying to sell your friends onto bitcoins because of how much it's going up is to turn them into speculators. It might pan out, it might not. That's kinda risky.

Instead, just suggest that when your friends want to buy stuff online, they try to use bitcoins to do it. Privacy and all. Want to send money to a loved one across the country? Use bitcoins, and avoid those hefty transaction fees. Someone trying to leave the country, but not wanting to carry their gold with them? Convert the gold to bitcoins just before the trip, then upon arrival, immediately cash out in the local currency and buy more gold. It'll cost a little for the transaction fees and bitcoin price fluctuation, but it's better than not getting the gold across the border at all.

Transfer of value, folks, not store of value.

[alaric89]

Michelle Seven on the 10-06-2011 FTL said something pretty smart about bitcoin. Paraphrasing, she mentioned that because there is no physical entity nothing of value could be seized. The government couldn't use the stolen bitcoins against the creators like they did with the liberty dollar.
I can't afford to invest in bitcoins but I am stoked on my new possibilities with my agorist machining business.

[sillyperson]

Transfer of value, folks, not store of value.

THANK YOU, Wayne, that makes like 1000x more sense than anything I've read so far.

So, a better term would be "BitChecks"
They're like checks, not like coins

[alaric89]

Is it speculators investing in bitcoins and jacking up the price or are they actually trading that much?
I guess that if bitcoin can only have a limited amount in existence a individual bitcoin would gain value everytime it was used in a transaction via the invisible hand, but I doubt there is that much trade for goods at the moment. Most are probably hanging on to them like Dalebert. Could be a simple matter of no one allowing them to move and buyers needing them for the silkroad and such.

[dalebert]

Keep your bitcoins. I hope they make you rich.

Someone did.  If he sells them now, he will make a ton.

http://tinyurl.com/65po2gx

But let's get something clear here.  I own about 12.  Srsly.  All I did was start accepting them as contributions to the comic.  Yes, I've been sitting on them but I don't know how long I would.  I didn't expect them to shoot up this fast and anything like that always appears to be a bubble.  If I had a LOT of Bitcons right now like the dood above, I'd cash a good chunk out for that reason.  They're new and have a lot of promise so it's natural that some people are placing a high value on them and predicting increase in value.

Wayne's right.  They're value is in their utility for facilitating trades.  If you're familiar with debt currency, they're like that except they have engineered them to solve many of the downsides associated with debt currency.

For those who aren't familiar, a debt currency is a tool for facilitating trade.  Everyone in some community gets issued the same amount of an agreed-upon currency (yes, fiat).  Anytime they feel there is not enough in circulation they ALWAYS issue more currency to every individual evenly.  When Jack hires Jill to do something, he gives her some of this currency.  What this effectively means is that Jill has produced something and is now owed something back by the "cloud".  Jack hasn't produced anything yet and so is in debt to the "cloud", the cloud being all the participants in the agreed-upon currency.

There's nothing anti-NAPish about a debt currency.  It's a tool to advance the process of trade to something more efficient, just as hard asset currencies like precious metals.  Debt currencies have pros and cons and hard asset currencies have pros and cons.  Traditionally I have always heavily favored the pros and cons of hard asset currencies, but then Bitcoins comes along and drastically improves on some of the worst cons of debt currencies-- off the top of my head-- not centrally controlled, can't be printed arbitrarily (scarce to avoid excessive inflation), very difficult to counterfeit.

[dalebert]

Basing investments on whether or not you *think* you know what a dude is thinking is... Not so great. I'd never invest money on the bet that "He might just be saying that he's in line with gooberment just because he doesn't want them harassing him." That's a big assumption. The dude said it publicly. I'll take him at his word and stay away.

I still have to investigate further and do a bit more research, but that's not what I was saying.  I was saying he CAN'T do the things he's promising the gubment.  I'm saying he has no control over Bitcoins anymore so they are empty promises.  I was only psychoanalyzing him to figure out why he would say things like that when he knows he can't and when he knows that people who understand Bitcoins know he can't.  They DESIGNED them to be decentralized and NOT controllable in that manner.