Bitcoins experience


^ Well gold out of the ground has an established value.  It's value can and does change. But one things for certain, it has some value .  It's used in jewellery, electronics etc. 
You really don't get it at all. Gold has NO VALUE UNLESS SOMEONE WANTS TO BUY IT. If you were on an island, with lots of gold and no food, a single fish you could get from the sea would have move value that all the gold you can find.

There is NOTHING on Earth that has value by itself. It's all about offer and demand. Gold would have no value at all if there were no humans on Earth.
 
The scams I was referring to involve people sending in there bitcoins fo be invested or exchanged for real money. They never saw them again. What recourse do they have if it's not a currency recognised by their countries law.
The exact same scams are not only possible with gold, they are happening as we speak. Mail in your gold and they'll mail you back cash. Except sometimes they don't. And when they do it is pennies on the dollar of what the gold is actually worth.
^ Well gold out of the ground has an established value.  It's value can and does change. But one things for certain, it has some value .  It's used in jewellery, electronics etc.
No, it doesn't. It has a value based entirely on what people are willing to pay for it, period; it has no intrinsic value just because it exists. If nobody wanted gold it would have absolutely no value. This is universally true: everything is absolutely worthless until you find someone who wants it. Simply existing, having a physical thing you can trade, does not guarantee any concept of value. Garbage exists and you have to pay to get rid of it: it has a negative value. But then someone discovered a way to make money with certain types of garbage and suddenly garbage had a positive value.There isn't some government law setting prices, or mandating volumes or anything like that, it is quite literally two guys standing in a room saying "I'll sell X gold for Y dollars" and the other guy thinking "I can sell that gold to the public for more than Y dollars, I'll take it". There's very little government involvement. The price is entirely effected by public opinion and how much the traders think they can get away with. This is true of every commodity, whether it has a physical representation or not, its value is exactly what people are willing to pay for it (or pay to get rid of it). Gold's "established value" is entirely historical: you think it is worth something now because it was worth something in the past and people continue to want it.

People want gold, it is trading at some $1500 per ounce. People want bitcoins, they are trading at $225 per coin.
 
^ I do get it ekianjo and Wizardstan, what I'm saying is that people do want it (Gold) and thus it does have a value , but more importantly it has a value based on what it can be used for . ie it has USES. Perhaps the use of the word intrinsic was wrong, but you do get that Gold is a firmer  value proposition than nothing.

And as I said before , a currency like the USD is backed by the US for the reasons I gave . Basically Power , the power it uses to govern and give that currency meaning  . At the end of the day time will tell whether Bitcoins hold up with no governance

A very very worrying thing I'm seeing at the moment from people into bitcoins , is that they have invested in it.  It's like everyone I speak to that believes in it, is solely getting into it as an investment having seen its value rise.   That says Tulip bubble to me.

I can see others joining the party and launching their own currency based on nothing. What then, it will happen you can bet on that now that Bitcoins is bubbling away.

I'm not normally negative on anything, but this thing has warning lights flashing in my eyes. Be very careful is all I can say with it. I'd hate to see anyone burnt financially.
 
Last edited by a moderator:
^ I do get it ekianjo, what I'm saying is that people do want it (Gold) and thus it does have a value , but more importantly it has a value based on what it can be used for . ie it has USES. 
But that is exactly the same with Bitcoins.

People want it and so it has a value.

And it has uses, people use it to buy things or exchange it for different money.
 
^ I do get it ekianjo, what I'm saying is that people do want it (Gold) and thus it does have a value , but more importantly it has a value based on what it can be used for . ie it has USES.
Diamond then, if gold is problematic for you. The demand for diamond is entirely manufactured. Outside of jewelery, diamonds mined out of the ground serve absolutely no purpose. The only reason they cost so much is because the supply is carefully controlled and demand kept artificially high. If people weren't convinced that diamonds were pretty to look at and a sign of "true love" you wouldn't be able to give them away.
 
Even Diamonds are better than nothing.  At least at very minimum they are something real.  

But thats beside the point . The point is what/who governs Bitcoins to ensure the currency holds up?  It's not even legally seen as a real currency.

Again, all I can say is be careful.   
 
Last edited by a moderator:
Even Diamonds are better than nothing.  At least at very minimum they are something real.
I've got a pile of garbage you can have. It's real, right, and by your definition something being real is better than nothing. Heck, I'm sure we can find all kinds of crap that no one else wants. You'd be the richest person in the world, somehow. :p Or, as we've been trying to tell you, existence does not automatically grant any sort of value to something. If no one wants it, even physical commodities have no value, and in many cases negative value.

But thats beside the point . The point is what governs Bitcoins to ensure the currency holds up?  It's not even legally seen as a real currency.
Nothing, just like there's nothing governing gold, diamond, copper, oil, electricity, water, your TV signal, or the poptart you had for breakfast. Stop calling it a currency, that's just confusing you. You don't know what a currency really is, you just have this idea about what you think it is and that isn't meshing with the way bitcoins work. Just think of bitcoins as if they were any other commodity, like gold, diamond, or corn, or even a non-physical commodity like electricity or weather futures. These things do not have built in value, they have value only because someone wants them. In most cases people want them because you can do something with them, this is entirely true, but it is not necessary, there are tonnes of things that people want that don't do anything and people are willing to pay through the nose to get some of them (see weather futures). A hundred year old stamp cannot be used, it is too old to go through the system, it literally serves no purpose, and yet you would get thousands of dollars (or more) from the right collector for one. People want bitcoins, they have found uses for them, and people are willing to pay for them.
 
Whatever. Look vcoilero let people do what they want to do with their money. You don't like bitcoins? don't buy them. End of story.
 
Last edited by a moderator:
WizardStan,  I said the Government via it's power and laws ensures it's currency has value within it's countries boundaries.  

By this it backs that currency up. ie It can step in with measures to do so if it desires including using its reserves of other tangibles like gold, land etc.

By governance, the reserve bank can

1) Buy it's own currency to prop the dollar up,

2) It can ease the curency,

3) It can raise/lower interest rates.,

The government can

4) Stimulate the economy which has an effect also

Bitcoins has nothing in reserve it could call upon and no governance that can be used to maintain the currency.

Again, I'll ask you .  Who governs and backs up bitcoins?    If you asked me , the answer would be no one.  No one can step in to assist it if it goes wrong.

Also, in regards to gold it has 2 values if you like, one is its value as a pseudo currency if you like, the other is its value based on what it can be used for .  With Bitcoins they have only there monetary value, they cant be used for jewelry , electronics etc ie they only have 1 value base.  Thats where it differs from gold, diamonds etc.  I hope that clears things up.  Good luck making jewelry out of your garbage by the way  :p
 
Last edited by a moderator:
WizardStan,  I said the Government via it's power and laws ensures it's currency has value within it's countries boundaries.
You're wrong. I keep trying to tell you this. The government does not have anything backing its money. They create and destroy money arbitrarily to control the supply, and they change interest rates to control the demand. And really neither of these things are done by "the government". There are no laws, there is no power, there is nothing in the US or any modern country which guarantees that the currency has any value whatsoever. A dollar has value because people want it, and people want it because it can be traded for other things, and it can be traded for other things because it has value. The only thing that keeps money having value is a circular argument, that's it. Not gold, not laws, not power, money has value because people want it because it has value.
Again, I'll ask you .  Who governs and backs up bitcoins?    If you asked me , the answer would be no one.  No one can step in to assist it if it goes wrong.
No one. The same no one that regulates oil, the same no one that regulates electricity, the same no one that regulates bananas. The same no one that regulates the dollar bill in your wallet. Of course, all of these things ARE regulated in one way or another, but there is always the potential for any one of these things to suddenly drop out and become worthless, or have a sudden run and become worth a lot.
Again I will tell you to stop calling it a currency. You don't understand how currencies work and I don't know how else to explain it to you. Instead, just think of it as any other commodity. Not a currency. It's just a "thing" that can be bought, sold, and traded, like stamps or baseball cards.
 
Also, in regards to shops etc that accept bit coins, do they pay sales tax?  I wonder if they don't how long governements will take before they put a stop to this.
In practical effects, they wouldn't pay taxes on the bitcoins anymore than you'd pay taxes on a box of baseball cards someone gave you. If you then turn around and sell those baseball cards that is considered income and you would be expected to pay taxes on them. Similarly, a shop which accepts bitcoins would not be required to pay taxes on the immediate sale, but when they sell their bitcoins for local currency they would be required to pay taxes on that. That is income tax.Sales tax is different and depends on location. Some places don't require tax on online sales regardless of how it was purchased. I can buy things from Amazon.com as a gift for a friend in the US and not pay any tax, but if I purchase from amazon.ca I do. If I purchase something from amazon.com and have it shipped to myself I don't pay immediate tax but I am expected to pay tax on it either when it crosses the border or with my income tax at year end. To that end, places that accept bitcoins would still need to charge tax if that is required. Consider the following: an item costs $200, or 1 bitcoin, and there is 10% tax. You then pay $220, or 1.1 bitcoin. That $20 is legally property of the government, you're just holding onto it. Similarly that 0.1 bitcoin is property of the government, you are just holding onto it. When it comes time to pay your taxes, if the government accepts bitcoins then you have no problem making the transfer, just give them the 0.1. If they don't accept bitcoins then you simply give them the exchange value. If bitcoins are going for $250 now, you give 0.1 worth, or $25, even if bitcoins were only worth $200 each when the sale was made.

This is not a theoretical exercise, there are places that accept multiple currencies and this is exactly how they do it. A store near the US/Canada border might accept either currency (maybe with an exchange rate) and they still have to charge taxes regardless of where you came from, and similarly must convert foreign currencies to local when it comes time to pay the taxes they've collected.
 
You cannot compare bitcoins with regular currency. Currency will be protected by governments and are 'too big to fail'. In some cases governments and central banks are influencing exchange rates. That will not happen with bitcoins. If the hype is over and prices drop it can become a free fall and you can say 'bye bye' to your money/bitcoins. 

Can happen to the official currencies as well, but bitcoins seem to me less robust.  I do see lots of similarities with second life. They were / are also creating demand with nothing. How is the Linden doing?
 
What is happening in Europe then? The Euro is being protected by lots of countries (governments).
Artificial enforcement in one location is not a guarantee on the whole. The Euro is maintained by decentralization and agreements between countries: they agree it has value and they give it to their citizens who want it because they think it has value. It is the exact same circle, it just goes wider, and requires more careful calculations for interest rates. Supply and demand are controlled in exactly the same way except it spans countries.It is in no distinct way different than the USD having the same "value" in Texas as it does in New York, and yet there are some things that cost more in Texas than in New York and vice versa.

There isn't some stockpile of gold backing the Euro, there is no governance saying "the Euro WILL have this value, everyone gets paid X amount and can buy Y items", the Euro is affected by market desire the exact same as the USD, any other currency, and every item that has ever existed: if people want it the value goes up, if people don't want it the value goes down. The only thing that gives currency any stability is the ability to create and destroy it, thus controlling demand.

This is the one thing that separates bitcoins from government currencies: not laws, not any backing, not acceptance, just the ability to destroy the currency to increase demand.
 
THEIR bitcoins have exchange value (measured in euros, dollars etc) so it is a theft of an item of value (like a car, necklace etc) covered by that nations' laws.
 
I basically agree with what you are saying WizardStan. The only thing I do believe is that when national/international currencies are at risk of going to collapse because of inflation governments and central banks will take action. The same applies to deflation. 

There are no governmental forces that try to regulate the value of bitcoins. That is an advantage, but certainly also a big disadvantage if things go wrong. 

THEIR bitcoins have exchange value (measured in euros, dollars etc) so it is a theft of an item of value (like a car, necklace etc) covered by that nations' laws.
Can you elaborate a bit more?
 
If a store only accepts bitcoins and uses them and therfor never buys dollars , Whats stopping them not paying taxes at all, there's a reason bitcoins is seen as a black market currency.  Do you honestly believe governments will let that go on.

Governments do provide their currency with legitimacy which is backed by their power to govern and wealth reserves (including gold , land etc which it does have).  Every economic article Ive read that talks about what gives currency it's backing and legitimacy talks about this.  Read my post above #69 as to how the US governs the economy and currency .

Anyway, no point arguing over this crap, all I was saying is be carefull with this stuff.  The value of bitcoins seems to be rising solely by people investing in them because they are rising.  A self fulfilling bubble scenario , which like all bubbles eventually bust.  

And by the way WizardStan Oil price is regulated , ie OPEC
 
Last edited by a moderator:
I bsically agree with what you are saying WizardStan. The only thing I do believe is that when national/international currencies are at risk of going to collapse because of inflation governments and central banks will take action. The same applies to deflation. 

There are no governmental forces that try to regulate the value of bitcoins. That is an advantage, but certainly also a big disadvantage if things go wrong. 
No, usually government policy is at the root of inflation. See Quantitative Easying. They dont protect the currency at all. And when Europe decided to steal money from Cyprus banks they knew it would make the Euro fall and they still did it. 
 
If a store only accepts bitcoins and uses them and therfor never buys dollars , Whats stopping them not paying taxes at all, there's a reason bitcoins is seen as a black market currency.  Do you honestly believe governments will let that go on.
Replace bitcoins by cash. 

Cash is also a black market currency, then. It can be easily used to avoid taxes, and thats exactly how it is used by shop owners: they dont declare all their revenues in cash because its damn easy to hide.

And explain me how goverments are going to stop bitcoin? Its decentralised and anonymous. Good luck with that.
 
Last edited by a moderator:
Back
Top