Home Forums Hunting & Shooting Hunter's Campfire The Future of Money is Here!

Overstock.com announced earlier today that they are now accepting Bitcoin.

Don't bother, it won't have legs unless the banks control it, and if they don't they will undermine it.

10. Maybe 15 threads about bitcoins here and I STILL don't understand what they are.

If it really is the future of money, I'm in trouble.

This^^^^^^^^

Try explaining what the stuff we have now is.

It has no value in itself apart from use as currency, and it's not backed by anything of value. I think we're seeing a repeat of the Tulip Mania of 1637, and it's likely to end the same way.

What is a Bitcoin and what is it backed by? Bitcoin is a decentralized crypto currency that has no affiliation with any government or any borders (no need to convert dollars to euros if in in Europe). Bitcoins cut out the middle man when transferring money. You might have to wait 10 minutes for the block chain to confirm the transaction. Whereas if you deposit a check in the bank you have to wait 1 business day and possible the weekend while the bank earns an interest free loan from your deposit.

I used to think Bitcoins had 0 intrinsic value but they are backed by scarcity, only 21 million will ever exist. They are not are not attached to some debt/interest manifesto nightmare like the dollar is with the Fed. You have to ask yourself what is gold backed by? Gold is backed by nothing except scarcity, its usefulness as an industrial metal and its perceived value as being beautiful.

This is not the tulip bubble of the 1600's. The market cap on Bitcoin is around $10 billion. If you put this into perspective Mark Zuckerberg is worth $20 billion when Facebook is worth $140 billion.

I still have no idea why anyone would buy into the JP Morgan crypto currency. Bitcoin is unique because it has a mathematical algorithm that one's computer must crack to receive bitcoin. I doubt JP Morgan is going to make a currency that anyone can 'mine' like bitcoin. They probably will have a predetermined amount of JPMcoins that they will sell for fiat like: Ripple, MasterCoin and Nxt.

Scarcity cannot back a currency. Scarcity is a factor in the valuation of a desirable commodity, but the commodity must first be desirable in itself for scarcity to become a factor in its valuation.

For example, there are only twelve existing examples of signed original oil paintings by the late Irving Lipshitz, yet his widow can't convince anyone to pay more for them than the quality of their frames would warrant. Even though extremely rare, signed oil paintings by the late Irving Lipshitz would constitute a worthless backing for a currency. They lack the key characteristic of desirability in themselves, rare though they may be.

Nope, not so. Scarcity is a necessary attribute. If a commodity is scarce, durable, easily counted or measured, easily transported, it can serve as currency. Paintings aren't easily transfered, counted, or durable.

Scarcity doesn't make something valuable, as I demonstrated by my example. Another example would be the crap piles of the nearly extinct Javan Rhinoceros. Very scarce indeed, but you'd find it hard to buy much of anything in exchange for them.

PS Javan Rhino crap can be dried, compressed, and treated in such as way as to make it durable, easily transferred, etc.. Still won't be valuable, rare or not. Rarity doesn't impart value, so it (i.e., rarity) cannot be a backing for currency.

Apparently it requires dollars to purchase Bitcoins from the websites that are selling them. Don't really understand the point of having to use dollars to buy Bitcoins to buy something. Right now one Bitcoin costs about $870.

The price has risen about like tulip bulbs did in the Seventeenth Century. Smart folks are taking their profits now.

Apart from serious monetary flaws, Bitcoin is subject to technical attack such as the hacking of the block chain and the eventual cracking of the public-key cryptography vital to Bitcoin. Then there's the threat of a better alternative such as Zerocoin, which as its popularity grows the value of Bitcoins will plummet.

Just like you did when gold was pushing $1900 per oz?

I'm thinking you are right.

I think both you and Dutch are saying scarcity is a necessary but not a sufficient condition for an item to be used as currency. If so, you are both correct.

Apples and oranges. Gold and silver aren't investments. I was never in it for profit taking. Just for shielding savings from inflation in the long term. And you can't compare a 200% increase over several years (much of which was due to currency inflation, some of the rest to misplaced enthusiasm) to a several thousand percent increase over a single year.

I believe I've been clear on that point. My opponent has also been clear in stating that scarcity in itself (completely apart from value) is sufficient to "back a currency."