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Thread: Editorial: BitCoins & LiteCoins; Mining the Future?

  1. Editor in Chief
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    #11
    And people have often said gold could collapse if financial markets were to stop valuing it. But there's a HUGE difference between a rare commodity who's physical production is limited. That difference is everything. No one is really to say more bitcoin can't just be created, or counterfeited. Or something else come along such as Litecoin. Bitcoin can't really be compared to a physical commodity with centuries of experience backing it as value - that circular sort of agreement is everything. And, in fact, if there should be some big new discovery of gold reserves its value WOULD collapse to reflect that.

    The currency argument is wholly different and not comparable. It's backed by the full faith of govt, and it has value because people want to buy and trade it for purchase of goods and services produced in that country - the world could reject the USD but I could still go into a McD's in NY and buy a hamburger with it.
    You just turned around and used my same arguments and proved my point again.

    1. First, you just said there is a huge difference between a physical commodity whose production is limited. Bitcoins are limited. They will run out in 2140. We don't know when/if gold will run out. The fact that gold is physical is irrelevant. The US Dollar isn't physical, even though it has a physical representation.
    2. Second, the USD can be counterfeited. Why do you think our government spends millions of dollars every few years making new money with harder ways to fake it? The US Secret Service focuses on chasing counterfeiters for a reason. A bitcoin is encrypted so it is actually much harder to counterfeit than an actual physical dollar.
    3. Third, you make the argument that the USD is backed by the full faith of the government. That means it is backed by "our" faith in our government. If our government collapsed or our faith in our government collapsed, it will tank in value.
    4. Fourth, you say that the USD has value because people want to buy and trade it for goods and services produced in that country. People buy and trade the bitcoin in the "country" of the internet for goods and services they consider valuable.



    Just so you know kodiak, I am not picking on you, nor trying to be deliberately argumentative. We could be seeing the birth of a new form of currency that might shape the future. The fact that it isn't backed by a particular institution means it isn't controlled and manipulated. Because of this it might actually hold its value better over time. It's possible it will just be a passing fad and will eventually fade away, but it isn't something that is easily dismissed, and it is great food for thought!
  2. Rescue Squad
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    #12
    Quote Originally Posted by dgstorm View Post
    1. Third, you make the argument that the USD is backed by the full faith of the government. That means it is backed by "our" faith in our government. If our government collapsed or our faith in our government collapsed, it will tank in value.
    Wonder how much "faith" those poor folks over in Cypress have in their Government. At least they can't come in and take 10% of my bitcoins

    Those events were one of the driving factors in the explosion of bitcoin value.
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  3. Administrator
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    #13
    Quote Originally Posted by Sydman View Post
    [/LIST]Wonder how much "faith" those poor folks over in Cypress .
    Literally and figuratively...what a sham that is. Extorting your own people because of your mistakes. Got to love that. SMH
  4. Droid Ninja
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    #14
    Quote Originally Posted by kodiak799 View Post
    Tripled in value the last month or two...Yeah, I'd say it's a bubble.

    And the biggest flaw is exposed by the advent of Litecoins itself - who's to say the financial community won't chase/agree on something else? There's no productive value, no true rare physical commodity. But with no real backing it's kind of a game of musical chairs.

    Interesting idea. It would be cool, in a really nerdy kind of way, to get some sort of framed certificate of ownership of a bitcoin.
    it's the exact same thing as the USD, it's a fiat currency. 100% fake backed by nothing.

    now do I have an extra computer and have I thought about setting it to mine because who knows it may get me 20 or 30 bucks? sure.... am I going to go out of my way to do it? probably not.

    Quote Originally Posted by kodiak799 View Post
    And people have often said gold could collapse if financial markets were to stop valuing it. But there's a HUGE difference between a rare commodity who's physical production is limited. That difference is everything. No one is really to say more bitcoin can't just be created, or counterfeited. Or something else come along such as Litecoin. Bitcoin can't really be compared to a physical commodity with centuries of experience backing it as value - that circular sort of agreement is everything. And, in fact, if there should be some big new discovery of gold reserves its value WOULD collapse to reflect that.
    go read [HTML=Rich Dad's Advisors: Guide to Investing In Gold and Silver: Protect Your Financial Future: Michael Maloney: 9780446510998: Amazon.com: Books]Guide to Investing In Gold and Silver[/HTML] it explains how gold has continually revalued itself, it's certainly not a worthless commodity and it has been fallen back on by governments as far back as the Romans, and farther. Silver and gold have always shared a 9:1 ratio on price, that is silver is 9x more expensive than gold, due to the fact that there has historically been 9x more gold on the face of the earth i.e. readily accesible is compared to gold.

    this number has dropped dramatically because of electronics and it's actually closer to a 6:1 or even a 5:1, prices haven't caught up yet

    Quote Originally Posted by dgstorm View Post
    This argument is irrelevant to whether bitcoins/litecoins have value. One could make the argument that throughout the history of the world, gold didn't have the value that was assigned to it. Until current times when we started using gold in electronics, the "rare and precious" metal was relatively useless. It is too soft to be of much use other than in Jewelry. It was only valuable because it was rare and shiny and because people believed it had the value assigned to it. You could easily make the same argument about bitcoins/litecoins, except for the shiny part.
    people, humans, terrans whatever you want to call us, always have and probably always will assign value to gold, it's has always been used as a currency is some form or another. the USD used to be backed by gold, at that time the USD was a true really currency because it was backed by something that had (you are right the value is perceived, however perception is reality in most cases) value, that was gold. After the USD was taken off the gold standard it caused the dollar to become a fiat currency: The term fiat money is used to mean: *any money declared by a government to be legal tender. state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard, money without intrinsic value. gold has, as I said before, historically revalued itself over and over again. the problem with bitcoins is should something as ridiculous as the show revolution happen bitcoins would have zero value. gold would have value though.
    Last edited by liftedplane; 04-10-2013 at 02:58 PM.
    Myth's and legends that did not exist in yesterday's world will exist in tomorrows. ~Allanon
  5. Droid Sensei
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    #15
    I didn't turn around your arguments at all, you miss the point. You're missing critical distinctions for why gold and USD are effective and widely spread vs, say, the Albanian lek. That might be a good comparison - I would say bitcoin has the potential of some horribly unstable 3rd world currency.

    1) No, there's a HUGE difference between limitations on a PHYSICAL commodity and one arbitrarily limited digitally, especially with questions on the regulation and administration of the latter.

    2) Yes, the USD can be counterfeited, but it HAS NOT been done successfully in meaningful quantities such as to devalue everyone else. This goes back to the regulation and administration I referred to. The history for gold and the USD has a ton of value in terms of future expectations.

    3) Again, "full faith of the US govt" is also not arbitrary. Once again, we are back to regulation, administration, and consistency of expectations. This is far from trivial - the PESO certainly doesn't carry the same weight. This is critical in efficiently functioning debt markets, whether it be private or govts seeking to raise funds in dollar-denominated bonds. Political stability is a big deal, too. And the fact is, thru debt markets, the USD is actually linked to physical claims on good and properties.

    4) I'm aware people trade bitcoin. The float and market isn't remotely comparable. Liquidity is a big deal, and bitcoin suffers from the chicken/egg dilemma in that you don't have sufficient liquidity to give it legs until it is more widely accepted everywhere, but that won't happen until it has greater liquidity.

    These are not trivial differences I'm pointing out even if it's subtle nuances. A fiat currency is not effective or liquid if it's not credible, and it can't be credible created by some blackbox on the internet with no real apparent regulation and oversight. It needs to have confidence as a store of value and medium of exchange - this is why economists have advocated competing currencies issued by large bulge bracket banks.

    You make an interesting distinction between control and manipulation. I'd suggest they are one in the same - something not controlled is as easily manipulated as something that is controlled, but that manipulation (in the case of bitcoin) might not be so visible or easy to detect.

    The emergence of litecoin is a huge problem. How do you pick the winner, or how do you know something else won't come along to replace it? That's the inherent problem with something created with the push of a button and distributed by "lottery" - there's no tangible or physical good of value, not in the end product or production, and there's no sweat equity in its creation. I think you're better of playing blackjack with your money because at least you know your odds.
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  6. Droid Sensei
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    #16
    Further, I'd argue that fiat currency is superior to the gold standard for multiple reasons. People that like to pretend otherwise typically ignore that the gold standard wasn't immune to recessions (some severe) and liquidity issues. And I'd contend many European countries have something to say about the loss of sovereignty and policy response with a "global" currency.
  7. Droid Sensei
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    Quote Originally Posted by liftedplane View Post
    it explains how gold has continually revalued itself, it's certainly not a worthless commodity and it has been fallen back on by governments as far back as the Romans, and farther.
    You might want to read a a little more. It's widely acknowledged that gold has value because the market says so. It has little productive use, as opposed to copper or even silver. It's really come to represent more of a hedge, or tracking stock, for the USD. What causes investors to buy gold again and again is ONLY confidence investors in the future will continue to do so. If gold should ever lose that it would become virtually worthless. But it's simplicity and directness in exposure has pretty much cemented it as a viable and lasting financial instrument.

    Bitcoin has a much better shot of replacing gold than it does a major fiat currency, but why would everyone holding and trading gold allow that to happen? It's really a psychological phenomenon, and not one I can see being replicated by some electronic medium. Who knows what happens hundreds of years for now, but there's added security/confidence in the fact that any turmoil/disruption in the gold market can always be settled by who physically holds the gold.
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  8. Droid Ninja
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    #18
    Quote Originally Posted by kodiak799 View Post
    Further, I'd argue that fiat currency is superior to the gold standard for multiple reasons. People that like to pretend otherwise typically ignore that the gold standard wasn't immune to recessions (some severe) and liquidity issues. And I'd contend many European countries have something to say about the loss of sovereignty and policy response with a "global" currency.
    I never said that gold was immune to recessions, that's not the problem, the problem with a fiat currency is that the government, as ours has, can print money willy nilly and devalue itself in an instant. when it's backed by gold it's only worth what gold is worth and only worth as much gold as they have. I'd much rather have something that has value, be is perceived or otherwise, than a currency that the government can exploit at will

    Quote Originally Posted by kodiak799 View Post
    You might want to read a a little more. It's widely acknowledged that gold has value because the market says so. It has little productive use, as opposed to copper or even silver. It's really come to represent more of a hedge, or tracking stock, for the USD. What causes investors to buy gold again and again is ONLY confidence investors in the future will continue to do so. If gold should ever lose that it would become virtually worthless. But it's simplicity and directness in exposure has pretty much cemented it as a viable and lasting financial instrument.

    Bitcoin has a much better shot of replacing gold than it does a major fiat currency, but why would everyone holding and trading gold allow that to happen? It's really a psychological phenomenon, and not one I can see being replicated by some electronic medium. Who knows what happens hundreds of years for now, but there's added security/confidence in the fact that any turmoil/disruption in the gold market can always be settled by who physically holds the gold.
    I need to read more? seriously. gold has always held value, pretty much since forever. it doesn't have a lot of uses but it does have enough gold has swung up and down, been worth next to nothing and then been one of the most expensive commodities on the planet. either way it has ALWAYS revalued itself as a currency. clearly that's not just because "investors" have always held faith in it.
    Myth's and legends that did not exist in yesterday's world will exist in tomorrows. ~Allanon
  9. Droid Sensei
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    #19
    Quote Originally Posted by liftedplane View Post
    I need to read more? seriously. gold has always held value, pretty much since forever. it doesn't have a lot of uses but it does have enough gold has swung up and down, been worth next to nothing and then been one of the most expensive commodities on the planet. either way it has ALWAYS revalued itself as a currency. clearly that's not just because "investors" have always held faith in it.
    No, 99% of the value of gold is literally driven by speculators. It doesn't "revalue" itself, it is subject to speculative swings (i.e. nothing to do with its productive use or inherent value). Gold is worth only what speculators agree it is worth. It is not nearly as subjected to the laws of supply and demand to determine value/price as other goods and commodities.
    Last edited by kodiak799; 04-10-2013 at 06:04 PM.
  10. Super Moderator
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    #20
    Everything we hold dear in this world is subject to people assuming or speculating... This could very easily take on momentum and go somewhere...

    But I'd be very carefully watching it...
    Last edited by 94lt1; 04-10-2013 at 07:18 PM.
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