Two Plus Two Publishing LLC Two Plus Two Publishing LLC
 

Go Back   Two Plus Two Poker Forums > >

Notices

Business, Finance, and Investing Making money, investing in markets, and running businesses

Reply
 
Thread Tools Display Modes
Old 04-11-2011, 10:37 AM   #101
Gullanian
Carpal \'Tunnel
 
Gullanian's Avatar
 
Join Date: Dec 2006
Location: London
Posts: 14,008
Re: Bitcoins - digital currency

I seriously can't think of any way they could kill it
Gullanian is offline   Reply With Quote
Old 04-11-2011, 10:38 AM   #102
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by mustmuck View Post
Pretty much a given that this will be said. It'll be true too. It also seems obvious that governments are going to hate this. The question is whether they can effectively kill it or not.
The decentralization is enough to keep it from being killed. The real question is if you can thrive with it. Will it ever become semi-mainstream? Governments have two threats from it. The first is just it makes it too easy for crime to happen. The second is it would displace them. They are two separate reasons to keep people from using it. A lot of people will be afraid from associating with it if it's just seen as a tool for criminals. Businesses won't accept it, and it will only be used in transactions where paying a high premium is perfectly acceptable for the benefits of it.

I see it thriving in the first "modern" country that has it's paper money get crushed. It could be huge in somewhere like Zimbabwe, but it's not like they have internet connections or whatever. It needs to be a more modern place, like Greece or Argentina.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 10:40 AM   #103
Gullanian
Carpal \'Tunnel
 
Gullanian's Avatar
 
Join Date: Dec 2006
Location: London
Posts: 14,008
Re: Bitcoins - digital currency

It would be interesting to see what would happen if it got any serious competition.
Gullanian is offline   Reply With Quote
Old 04-11-2011, 11:08 AM   #104
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by Gullanian View Post
It would be interesting to see what would happen if it got any serious competition.
That's the most serious flaw. There is no reason why this couldn't be cloned or improved and you lose the scarcity of it.

It definitely could be improved upon (are 1.0 products ever perfect?), so it seems inevitable that a new one is created at some point.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 11:13 AM   #105
FreeBird!
journeyman
 
FreeBird!'s Avatar
 
Join Date: Mar 2011
Location: In the front row hammered drunk!
Posts: 219
Re: Bitcoins - digital currency

Quote:
Originally Posted by Gullanian View Post
If I buy $100 of bitcoins, and this thing say doubles in usage over the next 6 months, how much would I be able to sell my $100 for?
Market price.
FreeBird! is offline   Reply With Quote
Old 04-11-2011, 11:26 AM   #106
FreeBird!
journeyman
 
FreeBird!'s Avatar
 
Join Date: Mar 2011
Location: In the front row hammered drunk!
Posts: 219
Re: Bitcoins - digital currency

Quote:
Originally Posted by TomCollins View Post
The decentralization is enough to keep it from being killed. The real question is if you can thrive with it. Will it ever become semi-mainstream? Governments have two threats from it. The first is just it makes it too easy for crime to happen. The second is it would displace them. They are two separate reasons to keep people from using it. A lot of people will be afraid from associating with it if it's just seen as a tool for criminals. Businesses won't accept it, and it will only be used in transactions where paying a high premium is perfectly acceptable for the benefits of it.

I see it thriving in the first "modern" country that has it's paper money get crushed. It could be huge in somewhere like Zimbabwe, but it's not like they have internet connections or whatever. It needs to be a more modern place, like Greece or Argentina.
It does seem like if it really takes off, it will be to solve a real need in a country with significant political or economic turmoil that still has reliable access to the internet. After it was established and 'proven' in those areas, it would be much easier for people in other areas of the world to start using it or at least get their head around the idea that it would work.

Quote:
Originally Posted by mustmuck View Post
Pretty much a given that this will be said. It'll be true too. It also seems obvious that governments are going to hate this. The question is whether they can effectively kill it or not.
Death by reputation seems to be about the only way for them to attack it. Complain loudly enough that it's a tool for terrorists and drug lords (like that evil online gambling), and you'll get a lot of people scared to use it.

It seems like exchanges are the easiest target for governments (just like with online poker), but a technical attack would be fairly hard. It might be somewhat easier now, but if bitcoin ever became mainstream enough, there would be enough computing power in the network to make it fairly hard (from what I understand) for a government to try to take over the network.
FreeBird! is offline   Reply With Quote
Old 04-11-2011, 11:29 AM   #107
mustmuck
veteran
 
Join Date: Jul 2005
Posts: 2,497
Re: Bitcoins - digital currency

More than there being reasons for governments to dislike it, to me it's more that there's no reason for governments TO like it. This is outside of everything they control. If governments wanted a currency outside of the control of a central bank then they would have created one. Also, if it's successful it's likely to damage other currencies.

WRT to killing it, it depends on what we mean by killing it and how draconian the government is willing to be. If, say, the US government decides they want to hurt bitcoin (and that part almost certainly will happen) they could ban US based merchants from accepting it, ban financial transfers to known bitcoin markets, even attempt to take draconian measures at ISPs. While this may not outright kill bitcoin, if too many other governments join them it could create a condition where bitcoin would starve to death or at the very least fail in its goal by being permanently niche.

I don't see the possibility of other systems as being a critical flaw. Before people start trusting bitcoin there will have to be a lot of investment in it and a relatively large user base. A newcomer would have none of these things. Any improvements to bitcoin have to be accepted by the majority of running clients, I don't see why those resulting in a large scale change of scarcity would be accepted. A possible exception to this would be if a commercially backed similar system came out before bitcoin became popular enough. I suppose such a system would lack a lot of bitcoin's privacy and be designed to supplant it by being similar without the bits that most hurt the government. That's pretty hypothetical though.
mustmuck is offline   Reply With Quote
Old 04-11-2011, 11:57 AM   #108
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by FreeBird! View Post

It seems like exchanges are the easiest target for governments (just like with online poker), but a technical attack would be fairly hard. It might be somewhat easier now, but if bitcoin ever became mainstream enough, there would be enough computing power in the network to make it fairly hard (from what I understand) for a government to try to take over the network.
Taking over the network might not be as hard for the government as you might think. So much of the block generation is from specialized systems right now, you'll see block generation being done by a few big players with the most optimized systems driving everyone else out. This is a pretty dangerous thing for the network. Redman stated something about custom boards being available that could even outperform GPUs if they were targeted, so expect it to come even more centralized in the future. A government who is not out for profit but for destroying the system by infiltrating block generation would not take gigantic resources to out-compete these generators. By driving down the benefit by increasing the difficulty level, a lot of the miners go off-line or even shut down operations. The government pays for the electricity and hardware to make it unprofitable for them, and now they have control. There might be a few people who operate at a loss who do this protect the network, but it wouldn't be terribly hard for something with a big enough budget like the government to bring things down.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 12:49 PM   #109
FreeBird!
journeyman
 
FreeBird!'s Avatar
 
Join Date: Mar 2011
Location: In the front row hammered drunk!
Posts: 219
Re: Bitcoins - digital currency

Quote:
Originally Posted by TomCollins View Post
Taking over the network might not be as hard for the government as you might think. So much of the block generation is from specialized systems right now, you'll see block generation being done by a few big players with the most optimized systems driving everyone else out. This is a pretty dangerous thing for the network. Redman stated something about custom boards being available that could even outperform GPUs if they were targeted, so expect it to come even more centralized in the future. A government who is not out for profit but for destroying the system by infiltrating block generation would not take gigantic resources to out-compete these generators. By driving down the benefit by increasing the difficulty level, a lot of the miners go off-line or even shut down operations. The government pays for the electricity and hardware to make it unprofitable for them, and now they have control. There might be a few people who operate at a loss who do this protect the network, but it wouldn't be terribly hard for something with a big enough budget like the government to bring things down.
If that becomes a viable threat, it seems like mandating a small transaction fee (instead of making it optional) may help bring more miners who would make it harder for a single entity to take over. If (maybe when?) bitcoins rise in value once more people start using them, it would make mining more profitable anyways, and as people are buying computers/equipment specifically to profitably mine bitcoins, that in itself will make the network stronger.

It may also be the case that it doesn't take too many resources (for a gov't entity) to take over the network and undermine it in that way. If so, maybe this is the 'Napster' (even though it's decentralized) of crypto-currencies and within a couple of years we'll see the 'Bit Torrent' that governments try to defeat in court and get some ISPs to block/limit, but it still survives.
FreeBird! is offline   Reply With Quote
Old 04-11-2011, 12:57 PM   #110
Gullanian
Carpal \'Tunnel
 
Gullanian's Avatar
 
Join Date: Dec 2006
Location: London
Posts: 14,008
Re: Bitcoins - digital currency

Large organisations have tried to defeat torrents before by flooding them with fakes and fake users, ended up costing them way more than it was worth.

Problem with govnt using super computers to generate is that they can't keep it up forever, everyone would be hanging in waiting for it to go offline and mine the temporary sweet spot.
Gullanian is offline   Reply With Quote
Old 04-11-2011, 01:00 PM   #111
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by FreeBird! View Post
If that becomes a viable threat, it seems like mandating a small transaction fee (instead of making it optional) may help bring more miners who would make it harder for a single entity to take over. If (maybe when?) bitcoins rise in value once more people start using them, it would make mining more profitable anyways, and as people are buying computers/equipment specifically to profitably mine bitcoins, that in itself will make the network stronger.

It may also be the case that it doesn't take too many resources (for a gov't entity) to take over the network and undermine it in that way. If so, maybe this is the 'Napster' (even though it's decentralized) of crypto-currencies and within a couple of years we'll see the 'Bit Torrent' that governments try to defeat in court and get some ISPs to block/limit, but it still survives.
The transaction fees won't matter. The people taking over the network could cash those in. They just need to make it unprofitable for other miners. The way I understand it, mining's profitability is dependent on two things. 1) Difficulty Level, and 2) Costs to operate the mining rigs.

Difficulty Level can easily be manipulated by a powerful interest. All they need to do is drive the difficulty high enough that it's not profitable. If the benefit of mining successfully goes up, then the attacker would also get the same benefit.

Mining has a trend of being marginally profitable. If it's too profitable, tons of people enter with rigs. If it's not profitable, then people stop mining, making it easier on those who stay. Those who are most efficient will stay the longest (typically those with the best hash/power ratio, or those getting "free" electricity). There's also the uncertainty factor. It may be profitable now, but someone may be scared to invest $2000 in a mining rig if it won't be very profitable in 6 months.

ISPs are also an obvious choke point, I didn't think about this. Getting it labeled as only for criminal activities/etc... means they can get ISPs to block it. I have no idea how technically feasible that is, but there are only so many ISPs to choose from and this would be super easy to get them to ban it. The real question is if that is even possible.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 01:01 PM   #112
Gullanian
Carpal \'Tunnel
 
Gullanian's Avatar
 
Join Date: Dec 2006
Location: London
Posts: 14,008
Re: Bitcoins - digital currency

I'd put it down as being virtually impossible to block it via ISP's. You can always route the traffic through proxies. Anyone could set up a bit coin proxy.

Also idk too much about networks, but a bitcoin transfer really would be super hard to detect. It's going to have so little data in it.
Gullanian is offline   Reply With Quote
Old 04-11-2011, 01:02 PM   #113
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by Gullanian View Post
Large organisations have tried to defeat torrents before by flooding them with fakes and fake users, ended up costing them way more than it was worth.

Problem with govnt using super computers to generate is that they can't keep it up forever, everyone would be hanging in waiting for it to go offline and mine the temporary sweet spot.
There's a huge difference in this. It's super easy to seed. It's very hard to overwhelm forces of a lot of little guys. But hashing relies on being super hard. This means that the profit motive will drive only the most successful and efficient miners out of the game. It's a necessary feature for the network for the block solving to be hard, but that means only a limited few people can actually do this without costing themselves a significant amount.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 01:05 PM   #114
Gullanian
Carpal \'Tunnel
 
Gullanian's Avatar
 
Join Date: Dec 2006
Location: London
Posts: 14,008
Re: Bitcoins - digital currency

Quote:
Originally Posted by TomCollins View Post
There's a huge difference in this. It's super easy to seed. It's very hard to overwhelm forces of a lot of little guys. But hashing relies on being super hard. This means that the profit motive will drive only the most successful and efficient miners out of the game. It's a necessary feature for the network for the block solving to be hard, but that means only a limited few people can actually do this without costing themselves a significant amount.
I know it's a kinda bad example, but the point is anything distributed is virtually impossible to bring down in regards to people trading bitcoins, not mining.

But regardless, if the government mines 90% of all bitcoins, wont this just inflate the price of existing bitcoins if they just sit on them? It wont matter will it?
Gullanian is offline   Reply With Quote
Old 04-11-2011, 01:06 PM   #115
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by Gullanian View Post
I know it's a kinda bad example, but the point is anything distributed is virtually impossible to bring down in regards to people trading bitcoins, not mining.

But regardless, if the government mines 90% of all bitcoins, wont this just inflate the price of existing bitcoins if they just sit on them? It wont matter will it?
Mining isn't just for fun or expanding the supply, it's for recording transactions. With no mining, there are no more transactions. It serves a useful purpose.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 01:12 PM   #116
RedManPlus
banned
 
RedManPlus's Avatar
 
Join Date: Apr 2005
Location: Doomsday Vision
Posts: 2,172
Re: Bitcoins - digital currency

I've actually researched this fairly thoroughly...
And I have the background to understand this technology...
This is UNIQUE... it is the FIRST implementation...
Of a P2P, 100% decentralized, encrypted e-currency.

That's why every genius geek and commentator...
Is watching this closely the minute they discover it.

It's a miracle it got to $6 million...
That was the hard part...
And it is IN FACT growing exponentially...
Here is the BRILLIANT aspect of it:

"Every advance in Bitcoin’s traction...
Comes from it serving individual’s self-interests."

http://www.bitcoinmoney.com/post/439...0/viral-growth

And the exponential chart is here...
It's a logrithmic chart...
A straight line going up = exponetial growth...
Hashes/sec or the computing power thrown at this...
Has gone up 10,000 times since last summer...
And is growing at THAT RATE.

http://www3.telus.net/millerlf/hashes.png

From here:

http://blog.zorinaq.com/?e=49

It's a near-perfect form of anarcho-capitalism...
The question is what you can piggy-back on this...
Or what you can put out there IN THIS FORM...
There are like 1,000 geniuses out there not sleeping at night.

And you can buy "stock" in this start-up...
Simply by buying the currency.
RedManPlus is offline   Reply With Quote
Old 04-11-2011, 01:31 PM   #117
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

RedMan,

I'm not as knowledgeable about trading and markets as you, but just wanted your perspective.

There really seems to be two fronts to this.

1) Mining. People are trying to profit from building mining rigs, etc... It reminds me a lot of the early days of internet poker where all the geeks have a source of easy money, can get by with doing things inefficiently, etc....

2) Speculators. People who think that this has the potential to take off and become valuable and want to get in early. Some are speculating due to profit motives, others are due to ideologically wanting this to succeed.

Now some of the miners are also speculators, so that complicates it. But the actual economy in bitcoins seems to be super small right now. So until that actually expands and grows the coins usefulness, the value of the coins come down to if miners and current speculators are selling at a rate less than the demand for new (and expanding) speculators coming in. No one new wants to come in, you'll see a crash. A ton of people want to come in, and you'll see a huge gain.

Trying to predict the speculator market seems to be the key to understanding the value. Any tips or tricks for trying to understand this? Perhaps looking at when the big spikes happened and time it with big news stories out there, and figure out how big the stories were to bring new people in? Look at the register dates of people on the bitcoin forum, and the more new people on there, the more it is likely to go up?

There's also a huge push down on the price since it's difficult/expensive to get cash into BTC. If that ever comes easier, you could see a rise in price very quickly.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 02:55 PM   #118
mustmuck
veteran
 
Join Date: Jul 2005
Posts: 2,497
Re: Bitcoins - digital currency

Quote:
Originally Posted by mustmuck View Post
Can somebody send me a pittance on 1KD5XJy1RVrokUWQ4AR7mh5Nw1MZDeekdt ?
No biters. If somebody posts an address I'll ship to them and they can later ship it back.
mustmuck is offline   Reply With Quote
Old 04-11-2011, 02:59 PM   #119
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by mustmuck View Post
No biters. If somebody posts an address I'll ship to them and they can later ship it back.
Have you gone to the faucet yet?

http://freebitcoins.appspot.com/
TomCollins is offline   Reply With Quote
Old 04-11-2011, 03:01 PM   #120
mustmuck
veteran
 
Join Date: Jul 2005
Posts: 2,497
Re: Bitcoins - digital currency

I have, that's where I got the BTC I'm going to send.
mustmuck is offline   Reply With Quote
Old 04-11-2011, 04:26 PM   #121
steelhouse
banned
 
steelhouse's Avatar
 
Join Date: Feb 2007
Location: Los Angeles California
Posts: 6,114
Re: Bitcoins - digital currency

Quote:
Originally Posted by mustmuck View Post
1. steelhouse, why do you want money supply growth? 2. Why, or better yet HOW, do you want to link it to silver? I think you're missing key concepts that are differentiating bitcoin from something like e-gold.
1. bitcoin is already set, but the source is open. Money supply growth will prevent hoarding by say the 10 largest bitcoin holders to manipulate the value of bitcoin in cycles. bitcoin has one good risk that the system will collapse or be shut down somehow, that will prevent large hoards of bitcoin. bitcoin is presently undergoing 50% annual inflation rate that will be 13% in 2 years. A permanent 1 percent (2 percent) inflation rate would be better imho. It would also keep the miners running. Thus if someone trys to hoard bitcoin, and they own 20 million and the price of bitcoin is $100. They are going to be paying $2 million for that privilege, it will stabilize bitcoin. It will also make bitcoin holders look to be a btc business owner a vendor, as oppose to use bitcoin to preserve wealth.

"If I buy $100 of bitcoins, and this thing say doubles in usage over the next 6 months, how much would I be able to sell my $100 for?" Usage does not determine the value of bitcoin, it is what merchants are willing to accept for it. It is also what merchants expect to be able to convert it to in good or services or $.

If some large btc/usd merchant said they will always peg bitcoin to mimimum 1/10th of an ounce of silver. You could take the merchants word on it. Thus, as long as that merchant is in business a btc will always be worth more than 1/10th an ounce of silver. They should advertise the backing and show your support for the BTC/silver backing by using them as your exchange service. You could also put this vendor on the Global Bitcoin Stock Exchange and btc users could hold stock in this merchant. What makes the play money on FTP.net worth so much in $.

Last edited by steelhouse; 04-11-2011 at 04:45 PM.
steelhouse is offline   Reply With Quote
Old 04-11-2011, 04:37 PM   #122
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by steelhouse View Post
1. bitcoin is already set, but the source is open. Money supply growth will prevent hoarding by say the 10 largest bitcoin holders to manipulate the value of bitcoin in cycles. bitcoin has one good risk that the system will collapse or be shut down somehow, that will prevent large hoards of bitcoin. bitcoin is presently undergoing 50% annual inflation rate that will be 13% in 2 years. A permanent 1 percent (2 percent) inflation rate would be better imho. It would also keep the miners running. Thus if someone trys to hoard bitcoin, and they own 20 million and the price of bitcoin is $100. They are going to be paying $2 million for that privilege, it will stabilize bitcoin. It will also make bitcoin holders look to be a btc business owner a vendor, as oppose to use bitcoin to preserve wealth.

"If I buy $100 of bitcoins, and this thing say doubles in usage over the next 6 months, how much would I be able to sell my $100 for?" Usage does not determine the value of bitcoin, it is what merchants are willing to accept for it. It is also what merchants expect to be able to convert it to in good or services or $.
The high inflation rate early on makes sense on a feasibility standpoint. You could start with 20 million bitcoins right away, but you need to distribute them somehow. How do you do this "fairly?" The current model gives a big advantage to those who jump in early and less each year to those who follow. This is by design and will get a lot of people to hope to catch lightning with a startup and gets a lot of early investors.

You seem to be concerned about hoarding, but a high inflation rate early on makes the benefit of "hoarding" much less of a winning strategy. And even if someone hoards some, who cares? You can buy stuff more cheaply now, and when they "flood the market" you can trade your stuff for even more bitcoins than you had before.

If you take a loan in bitcoin, you are at risk of course, but that's the risk in taking a loan. And I don't see bitcoin loans being even close to anything significant at the moment, so who cares about a problem that doesn't exist?
TomCollins is offline   Reply With Quote
Old 04-11-2011, 04:41 PM   #123
TomCollins
Carpal \'Tunnel
 
TomCollins's Avatar
 
Join Date: Jul 2003
Location: The Blockchain
Posts: 42,490
Re: Bitcoins - digital currency

Quote:
Originally Posted by steelhouse View Post
If some large btc/usd merchant said they will always peg bitcoin to mimimum 1/10th of an ounce of silver. You could take the merchants word on it. Thus, as long as that merchant is in business a btc will always be worth more than 1/10th an ounce of silver. They should advertise the backing and show your support for the BTC/silver backing by using them as your exchange service.
But you can't just peg stuff like that or you get crushed. It's the same reason why dual metal currency never works (if silver is more valuable than the amount of gold you can get for it, everyone trades their gold for silver, and vice versa).

If a merchant says they will buy bitcoins for 1/10th of an ounce of silver, or sell them for the same price, and the price of bitcoins drops below 1/10th an ounce of silver on the outside market, people will just flood the dealer for silver. They better have a ton of silver on stock, because they will end up with all of the bitcoins and no silver. And then they just donated a bunch of silver to the bitcoin geeks.

This is a terrible idea, even for you.
TomCollins is offline   Reply With Quote
Old 04-11-2011, 05:11 PM   #124
mustmuck
veteran
 
Join Date: Jul 2005
Posts: 2,497
Re: Bitcoins - digital currency

Quote:
Originally Posted by steelhouse View Post
1. bitcoin is already set, but the source is open. Money supply growth will prevent hoarding by say the 10 largest bitcoin holders to manipulate the value of bitcoin in cycles. bitcoin has one good risk that the system will collapse or be shut down somehow, that will prevent large hoards of bitcoin. bitcoin is presently undergoing 50% annual inflation rate that will be 13% in 2 years. A permanent 1 percent (2 percent) inflation rate would be better imho. It would also keep the miners running. Thus if someone trys to hoard bitcoin, and they own 20 million and the price of bitcoin is $100. They are going to be paying $2 million for that privilege, it will stabilize bitcoin. It will also make bitcoin holders look to be a btc business owner a vendor, as oppose to use bitcoin to preserve wealth.
You're confusing inflation meaning an increase in the money supply with inflation meaning price inflation which is what people usually mean when they say "inflation". You're also assuming that bitcoin is extremely badly distributed. This is possible but you'll have to back it up. I'm not too sure what you mean about bitcoin holders/owners/vendors. I think that you're implying that price inflation will lead to more equality in the distribution of wealth? If so then this would not gel with anything I've read regarding inflation and the distribution of wealth.

Quote:
If some large btc/usd merchant said they will always peg bitcoin to mimimum 1/10th of an ounce of silver. You could take the merchants word on it. Thus, as long as that merchant is in business a btc will always be worth more than 1/10th an ounce of silver. They should advertise the backing and show your support for the BTC/silver backing by using them as your exchange service. You could also put this vendor on the Global Bitcoin Stock Exchange and btc users could hold stock in this merchant. What makes the play money on FTP.net worth so much in $.
Nobody in their right mind is going to trust a market operator who made such a claim. No market operator in their right mind would make such an offer.
mustmuck is offline   Reply With Quote
Old 04-11-2011, 05:52 PM   #125
steelhouse
banned
 
steelhouse's Avatar
 
Join Date: Feb 2007
Location: Los Angeles California
Posts: 6,114
Re: Bitcoins - digital currency

Quote:
Originally Posted by TomCollins View Post
But you can't just peg stuff like that or you get crushed. It's the same reason why dual metal currency never works (if silver is more valuable than the amount of gold you can get for it, everyone trades their gold for silver, and vice versa).

If a merchant says they will buy bitcoins for 1/10th of an ounce of silver, or sell them for the same price, and the price of bitcoins drops below 1/10th an ounce of silver on the outside market, people will just flood the dealer for silver. They better have a ton of silver on stock, because they will end up with all of the bitcoins and no silver. And then they just donated a bunch of silver to the bitcoin geeks.

This is a terrible idea, even for you.
Not really they are making 10% on all the bitcoin exchanges. If bitcoin is $.70 right now the would not set the peg a $.70 they would set the peg at something much lower lower like $.20. Like the people found out in 1933, the gold is not always there. There are many games that have coins like 2nd Life. But what are they worth, nothing. It is very like MTOX the largest bitcoin/$ service is already in fact backing bitcoin. They make money in bitcoin so they protect its value. It is these services that will back bitcoin as is. They have to get their coins from somewhere and they get those coins from buying low and selling high with fees. bitcoins value chart above looks to be going down in almost manipulated fashion. But what if everybody sold, would bitcoin go to zero?

Last edited by steelhouse; 04-11-2011 at 06:02 PM.
steelhouse is offline   Reply With Quote

Reply
      

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


Forum Jump


All times are GMT -4. The time now is 07:55 AM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
Copyright © 2008-2010, Two Plus Two Interactive
 
 
Poker Players - Streaming Live Online