Another Bitcoin site bites the dust

Posted by richrobinson 11 years, 5 months ago to The Gulch: General
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I actually started looking into bitcoin as an investment about a month ago. It looked like a viable option. Now I wonder...what next

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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    That is why I say money is only infrastructure. It facilitates the transfer of value much like the electric lines facilitate the transfer of energy from the generators to your house.
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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    Right on! They borrow the money and pay less than the rate of inflation therefore the money they pay back is less than they borrowed.
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  • Posted by khalling 11 years, 5 months ago in reply to this comment.
    Yes and convenience. There are high costs in transferring currencies worldwide. The higher the value the more it 's protected. Think valuable antiques.
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  • Posted by jbaker 11 years, 5 months ago in reply to this comment.
    Right. And to be clear, I don't think it is a Ponzi scheme, I was just outlining the argument.
    And to be fair to those that make that argument, I think what they are really saying is that Bitcoin has certain characteristics in common with a Ponzi scheme that could have been exploited by those that started it.
    Personally I see those characteristics as an intentional system of incentive, the purpose of which was/is to get the currency off the ground.

    I don't think one can argue well that it is literally a Ponzi scheme. Besides the points you mention, most Ponzi schemes rely on secrecy. The people buying in have to think they are getting something that is not really there. Bitcoin is decentralized and open. Everyone knows how many bitcoins there are and they also know, at least approximately, at what rate they are being produced.
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    House - no
    Food - no

    There can only be "value" in term of trade.

    Each has utility, but no value.
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    Ah, but you prove my point. You demand your corn and your house. Thus, they have value to you. They have no value to me, so long as I cannot have them. Only if you agree to some trade, do they have any value to you or to me.
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  • Posted by Rozar 11 years, 5 months ago in reply to this comment.
    Because whoever owns the pigs may not want corn. They may not know what they want at all, but the pig will go to waste of they don't trade it for something.
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    Actually they did that by spending the dollars at the time and leaving IOU's in their place. Those IOU's are worth less because they were pegged at the interest rate specified by the risk of Treasuries. That risk was very low, so the interest rate was likewise rather low. Only in the past few years has the Fed directly been manipulating those interest rates via direct purchase of treasuries (ie, monetizing the debt).
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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    Does your house still have value to you if no one wants to buy it. Does your food still have value to you if no one wants to buy it. What value does your bitcoin have to you if no none wants to buy it?
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    Money is a store of value and convenient medium of exchange. That is all.

    The difference in a money that is backed by something (gold, or in the case of Bitcoin, the scarcity) is the relative stability. There is nothing wrong with fiat money if it is not drastically increased in quantity. That is the risk. Since Bitcoin is totally digital, and there are very smart people out there, I always was concerned that someone could break into the code and create/destroy at will, thus manipulating the supply and thus, value.
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    Who would they sell to? There is no "cashing in" there is only exchange. So, if "everyone" sells, there must be some buyer. Thus, whatever value all parties agree to is the true value.
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  • Posted by khalling 11 years, 5 months ago in reply to this comment.
    1. a ponzi scheme does not produce any value. There is no win-win. Not a value for value exchange
    2. Bitcoin in and of itself is a currency. A currency can be a ponzi scheme if someone can arbitrarily create more (counterfeit) for itself. The fact that bitcoin is finite is important
    3.Mining bitcoin is a business model that trades computer resources for bitcoins. It provides a service for without which, bitcoin can not exist.
    4.If bitcoin "miners" kept their bitcoins, they are essentially currency investors or traders. AND they may have just so happened to pick the better currency to trade in.
    Am I missing something?
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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    Corn is a commodity. If its "dollar" value goes to zero, I can still eat from it. That's Value. If my house value goes to zero I can still live in it. If my bitcoin value goes to zero what do I have?
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    The problem is that bitcoin is entirely electronic, a venue that the government is very adept at manipulating. Drugs are disbursed and tangible. Entirely dependent upon the person who is involved being able to keep physical items hidden.
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    Not necessarily. Like any commodity, it's value is determined by supply & demand. If you increase the supply at the same demand, the value will go down. That has nothing to do with it being a Ponzi scheme, merely supply/demand.
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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    Hi Rich, think about what I said below about Ponzi. If everyone cashed in now would they make money or be made whole?
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  • Posted by Robbie53024 11 years, 5 months ago in reply to this comment.
    It could only be a Ponzi scheme if at the end, the items retained no value in and of themselves. The only value that existed was in getting more people involved and for them to bring something of value to distribute to those who had come earlier. I don't see that as the case here. While the value of each individual "coin" decreases as more are generated (theoretically), the miners are not distributing new outside funds to those involved earlier. And at the end of the generation process, the "coins" would still have some value.
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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    Good Points. If it is not a Ponzi Scheme then if everyone decided to cash in now they would all make money or be made whole.
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  • Posted by EngineerJ 11 years, 5 months ago in reply to this comment.
    If they want to trade it for a pig why do they need money or bitcoins. They can just make the trade on value for value.
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