I had this discussion last week with my best friend who owns a server farm (his 14-year old son wants to put in a Bitcoin server). My assertion in that conversation was that Bitcoin was setup as a replacement to fiat currency, and works perfectly in a barter/exchange economy within industries like his and mine. The problem as I see it is that with all the other cryptos out there, it's no different than the US economy back in the late-1700's and a majority of the 1800's when there were multiple currencies. I would gladly accept Bitcoin, Litecoin or Ethereum from my larger customers.

My assertion in that conversation was that Bitcoin was setup as a replacement to fiat currency, and works perfectly in a barter/exchange economy within industries like his and mine.

I think it was intended as a replacement to fiat currency (or at least that's how I understood it), but I don't think it's functioning that way currently. I don't know what industry you're in, but it seems to me that it is only working now as an investment. You might barter/exchange it in the same way you could trade IBM stock or real estate, but it isn't working as a currency. It's too volatile and it's value is entirely speculative, no?

If you have employees, for instance, I don't think you'd be happy if you agreed to pay them in bitcoin a year ago. I think you'd be bankrupt.

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

No bitcoin is a cash mining scheme, 1000 people own 40% of what's available. Most successful ponzi scheme of the last 200 years.

If it's a commodity, then it's value should be close to zero as its only inherent value is that it offers proof that a lot of computing resources (and attendant electricity) were used to create it.

It has some likely utility as a currency, especially for users in countries without stable governments and currencies of their own, and for those who engage in a broad spectrum of shady financial dealings.

But, as a a widespread digital currency, it has some inherent technical limitations. Not the least of which is its transaction speed. It usually takes 30 minutes and occasionally up to 16 hours for the network to confirm a bitcoin transaction. So, IMO, it will never replace other payment forms for Point of Sale transactions. (Imagine going to Starbucks and having to wait 30 minutes for your latte purchase to be approved...)

The underlying blockchain technology has great potential value, but that value is totally decoupled from the exchange price of bitcoin. That is, you aren't "investing" in blockchain technology at all by buying bitcoins.

Personally, I think that bitcoin will end up being to crypto currencies what MySpace ended up being to social media -- early and eventually irrelevant.

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"100% of the people who confuse correlation and causation end up dying."

I think most feel this way, but out of this there will be a Facebook that emerges that sticks. We are a long long way of using crypto as a common transactional medium of exchange, due to all sorts of reasons, but it is coming. The eventual winners in this space may not even be out there yet.

For sure even Bitcoin will not look and operate in two years like it does today. Even in the space today, most would agree (and it was designed as such) that Bitcoin was not meant for transactional purposes, but more of a store of value. There are other cryptos out there that are designed more for micro transactions, not Bitcoin.

Will be interesting to see what happens.

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If it's a commodity, then it's value should be close to zero as its only inherent value is that it offers proof that a lot of computing resources (and attendant electricity) were used to create it.

Agreed. Seems like it's neither fish nor fowl, and ultimately worthless.

It has some likely utility as a currency, especially for users in countries without stable governments and currencies of their own, and for those who engage in a broad spectrum of shady financial dealings.

I'm sure some people will wring some utility out of it. But I can't see how it can function as a replacement currency as long as it's value is so speculative. Same goes for any other crypto-currency.

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

Bitcoin is functioning more like a medium of exchange than anything right now. It is sort of the digital USD (ie the Japanese, Chinese, Russians, everyone buys the USD). Almost every transaction, every ALT currency that is being bought, is first being converted to either (no-pun intended), Bitcoin or Etheruem from USD and other local currencies, euro, korean juan etc. It is then being converted to the ALT coins. But of course it didn't start out that way, this is what it has evolved too.

In fact people deep in the system don't want to even hold Bitcoin. Transactions take too long so when they buy Bitcoin, which they have to do because it is functioning as a medium of exchange, they immediately convert it to something else.

Which to me is all interesting because when this all comes crashing down they are going to have to first convert to BTC/ETH and then back into their local currency or the dollar. It is like an additional layer of Ponzi on Ponzi which may be keeping the Ponzi afloat to some extent as well as it takes multiple steps to get back to USD and of course there is a fee most steps of the way and people hate those so they don't convert back to USD and stay in the digital ecosystem.

What amazes me is people who talk about it like they understand what it is, what it can or cannot become, it takes really truly someone who is going to be play in the sandbox, get a little dirty, and then have the mind, focus, and creativity to see where it is going to even have a chance of influencing the direction this goes.

I see people who are not very technical and they don't even need to be scammed, they make a technical error, like sending crypto to the wrong address. Well there is no getting it back, you sent it to the wrong address. Those people are one and done and it is clear this has a lot of maturing to go to even truly go mainstream. There are so many unknowns and risks but it is also sad to see some people think that 2500% returns over 24 hours is normal. There will continue to be a number of people who make a great deal of money and whole lot more that are going to get crushed.

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I wouldn't even call it a commodity except in how it's traded as if it were one.

It's primary use is as an object of financial speculation.

Second is use as medium of exchange for nefarious purposes.

Distant 3rd in volume of transactions is use by idealistic types promoting it as an alternative currency.

But a good property of currencies is stability, and crypto currencies haven't achieved that yet. I'm amused by how some people think the rapidly increasing value of bitcoin vs. the dollar means it's "beating the dollar" as a currency. No. That's not what it means.

This analysis is overestimating what it takes to remain a viable currency. Granted, the backstop value for bitcoin is nefarious digital exchanges. However, that value is real. Remember the only backstop value for the USD is that you can pay your taxes with it.

I view "replacement currency" is an unnecessarily ambitious and arbitrary goal for bitcoin. It's like asking whether an University might field a viable football team and then replying "no" because they won't have the reputation and resources to win a national championship.

I wouldn't even call it a commodity except in how it's traded as if it were one.

You're right- I only used that term as a contrast to "currency." I agree that since it has no inherent value, "object of financial speculation" is a better term.


But a good property of currencies is stability, and crypto currencies haven't achieved that yet.

Exactly my point. Frankly, some of the technical economic issues with it are sailing over my head. But as long as people are investing in it in hopes of wild appreciation, and as long as it's fluctuating wildly in value, it is not being used as a currency, and it isn't fit to be a replacement currency. It's just speculation.

I'm not sure if I see a path to stability for them.

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

Speaking of the speculation, I really hadn't been keeping up with the scope of that. I just read a NYT article about it. Ridiculous. I'll be pissed if this stupidity has leakage into the broader economy. I've been burned like that a couple times now, and have no stomach for another round.

It is attractive versus fiat currencies because there is a ceiling on how many bitcoins there will ever be. A government can't print more just because they feel like it. So in that regard it is more similar to gold.

Doesn't seem like it. There might be a ceiling on how many bitcoins there will be, but there's no ceiling on their value, and no limit on how they can be divided, right?

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

Not a ponzi scheme. A ponzi scheme is, by definition, a scheme where older investors are paid off by income from new investors. Bitcoin isn't like that. Most of your "1000" have no obligations to older investors nor have any dependence on new investors. It's just a classic speculative bubble, like tulip bulbs.

in the sense that it's "mined" i and exchanged and stuff, it does sort of act more like a commodity than a currency proper . . . though in some sense maybe it's best to be thought of as a kind of a service. it's ethereal, anyway.

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https://lshtm.academia.edu/MikeCallaghan

http://howtobeswiss.blogspot.ch/

Nucking futz.

Anyone who needs more evidence that this is nothing but pure speculation, well...

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"Go yell at an M&M"

Well, it's getting the Zuckerberg bounce today. Up $1800+ as Zuckerberg says FB is looking into how it can use cryptocurrency.

If he can get FB's 1 billion users to exchange Bitcoin then it certainly will act more like a currency.

Specualtion? Hell yeah. But on days like this, I'm glad I threw some chump change at it instead of just watching from the sidelines.

Bitcoin is something, not sure commodity is the right word anymore either, apparently it's very easy to manipulate it's market value.
https://techcrunch.com/...in-from-150-to-1000/

Last summer during the World Series of Poker nearly every conversation was dominated by crypto talk and how if you were smart, you were buying as much as you could afford and then borrowing against your baby's future to buy more. Ninety nine times out of a hundred that means stay far away, but I have to give it to them...nailed this one as long as they aren't greedy and have been getting out.

My experience with greed, I bought a stock with a high dividend yield. It just flushed 30% of it's value after 2 bad quarters. Hmmm, yeah, pigs to slaughter.

Yup, tournament poker is very top heavy in payouts. If you aren't in the top 1-2%, it's a lot of wasted time. They like to go big or go home.