Bitcoin crashes, losing nearly half of its value in six hours
- Thread starter ly2 from WF
- Start date
and just when I thought you understood basic economics. You can take anything on this planet and find someone willing to put a price on it. It could be a bag of sand, or a bunch of 1's and 0's strung together.
As long as people have a perceived value, even a cryptohash could be worth $10k. Its simply a matter of finding that right person. Just because you don't share that perception does not mean someone else won't
A bag of sand can be used for a variety of things by the buyer or someone else. A bitcoin is completely useless if you can't find someone who is willing to exchange it for something else, so it has no intrinsic value.
But people are willing to exchange it for something else. Therefore invalidating the idea that its worthless. Right now at this very moment people are willing to pay $124.90 for them. The day that people are unwilling to stop exchanging it for something else they will become worthless and useless. As mentioned before, you can take anything on this planet and find someone to exchange something for it.
It seems that the only real value Bitcoins bring is the anonymity they provide to the purchaser (what G was referring to as a proxy for the USD). If all merchants are just instantly converting the coins to USD/INSERTOTHERCURRENCY rather than keeping them as coins, BTC are essentially no different than drug dealers getting prepaid debit cards with their cash in order to launder it/by stuff only credit cards can buy.
Until people are ok with sitting on the coins because they intend to use them for additional purchases (such as a merchant stocking their inventory with purchases made with BTC), BTC are really just prepaid debit cards.
Prepaid debit cards accepted at that one bar in New York.
The rapid fluctuations in the price of BTC this week show that the price of the coins is entirely due to speculation and not because of the utility they were created to fulfill.
intrinsic vs extrinsic value...
Money has both, a currency can have just extrinsic value (see fiat + bitcoin)
I have a few questions about this. And I'm not necessarily arguing that bitcoins have any intrinsic value. I'm genuinely curious.
1. Say I have $10k in cash. I want to buy gold, privately. The guy I want to buy from is on the other side of the planet. So I exchange cash for bitcoin, pay the guy, get the gold (or whatever) shipped and the entire transaction is pseudo-anonymous. I value privacy. Because I couldn't make this transaction anonymously without bitcoin, would that give it intrinsic value just based on utility?
2. Assuming the answer to the above question is "no"... Do you think there could ever be a sound currency similar to bitcoin? There are a lot of digital commodities that do have intrinsic value. Links, traffic and domains come to mind. Could a cryptocurrency ever become sound money if somehow backed with a digital commodity? Maybe links. Maybe credits on a traffic network, or bandwidth/data, I dunno.
Any ideas on this?
The whole digital aspect of everything is where it gets complicated for me.
/economic ignorance
Stop calling it a currency. It's a commodity who's only real value is that for the time being you can convert it into US dollars. That's it. It's entire value is based on the fact the USD has value to it.
At least with a US Dollar if it's value falls to zero I can wipe my ass with it or start a campfire with the paper.
As much as people hate on the dollar it is still backed by:
1. Landmass
2. Natural Resources
3. Manufacturing/Agriculture
4. Huge Population
5. The strongest army on the planet
6. The strongest navy to project that force.
What is the Bitcoin backed by?
1. Speculation
At least with a US Dollar if it's value falls to zero I can wipe my ass with it or start a campfire with the paper.
As much as people hate on the dollar it is still backed by:
1. Landmass
2. Natural Resources
3. Manufacturing/Agriculture
4. Huge Population
5. The strongest army on the planet
6. The strongest navy to project that force.
What is the Bitcoin backed by?
1. Speculation
In this example, how is mailing the gold seller a bundle of USD cash any different than using BTC? Because it's "off the books"? Cash money is just as anonymous as BTC (hellooooooo drug dealers) they just aren't as easy to transport. But considering the seller would be mailing you gold, you mailing them cash doesn't seem unreasonable.
Okay, better example. I want to move $20k in assets to whomever, wherever, for whatever reason, and do it almost instantly and with pseudo-anonymity.
I guess the real question is that if people value privacy, speed of transactions, etc... Does that not in itself give bitcoin some level of intrinsic value based on utility alone?
I think I already know the answer to that. But I'm interested to hear ideas on it from those more educated on this stuff than I am.
To expand on what I just pointed out, the anonymity of BTC is only useful for digital transactions (And I suppose remote one way digital transactions, such as buying weed from a Latvian via Silk Road)
Imagine paying for hosting for your torrent site on some foreign host that respects privacy by paying them in bitcoins. That's where BTC would be very useful.
Imagine paying for hosting for your torrent site on some foreign host that respects privacy by paying them in bitcoins. That's where BTC would be very useful.
Not sure if this was their planned down time, or if this is just more server problems. Its not a DDOS. Simply shitty infrastructure.