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srbmod
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Bitcoin, Currency Of The Future Or Just A Fad?

Thu Jan 23, 2014 10:47 pm

In recent years, we've seen the rise of cryptocurrencies, with Bitcoin being the first and the most well-known of them. There are more and more places that are accepting Bitcoin as payment for goods and services (transactions are done through a Bitcoin processor and the business gets their money in their local currency). At the same time, Bitcoins have been the currency of choice for illegal and illicit activities (Like drugs and weapons as well as money laundering.). The value for a single Bitcoin can wildly fluctuate hundreds of dollars in a very short time, something not commonly seen with other currencies or even stocks.

With Bitcoin, are we looking at the currency of the future whose value and acceptance is globally based (something that only a small number of government backed currencies can claim) and not backed by a government? Or is this another fad investment thing that will fizzle out in a few years leaving folks with a virtually worthless virtual currency?
 
Osubuckeyes
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Thu Jan 23, 2014 11:16 pm

Quoting srbmod (Thread starter):
The value for a single Bitcoin can wildly fluctuate hundreds of dollars in a very short time, something not commonly seen with other currencies or even stocks.

That is one of the biggest drawbacks of using Bitcoin as a primary currency. Also the fact that is susceptible to deflation in the current market state.

Overall it is hard to say whether it will be a fad or huge thing. One of the most dangerous things in my opinion is that it is subject to tastes and whims of people and does not hold any "official value." In other words people could start thinking other cryto-currencies are cooler, or something better could come along. Since it is a fixed money supply it is inherently deflationary so that is definitely a concern. Finally, one of the biggest concerns is that people are building special machines to hash bitcoins and the trend is becoming that a disproportionately low number of people hold a vast majority of the wealth. This could cause either a disinterest in the currency on a mass scale, currency manipulation, or undermine one of the goals of crypto-currency, which is to have a de-centralized currency held by the people.

On the other hand there is a lot of potential if more businesses get into it and the ease of transaction becomes that of regular currency. If somehow the currencies remain de-centralized there is a possibility that the markets are relatively stable and can operate as a regular currency.

Personally, I think bitcoin in particular is here to stay. I am not sure how much validity some of the other "coins" have.
 
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flyingturtle
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Thu Jan 23, 2014 11:25 pm

Bitcoin is a very good idea.

It is a truly international currency, and it can quite easily be turned it into the first type of money that is completely theft-proof.

Quoting srbmod (Thread starter):
At the same time, Bitcoins have been the currency of choice for illegal and illicit activities (Like drugs and weapons as well as money laundering.).

Given the surveillance of the internet by various governments, this will stop sooner or later - because Bitcoin money can always be traced back, as every "coin" has a fingerprint. It would be the same if you paid your coffee & donut with a dollar bill, and the coffeehouse wrote down its serial number. Then, when the coffeehouse buys new furniture, the furniture dealer would in turn write down the serial number - the money would be perfectly trackable.

Quoting srbmod (Thread starter):
Or is this another fad investment thing that will fizzle out in a few years leaving folks with a virtually worthless virtual currency?

Every currency is backed by something. If I give you goods or deliver a service in exchange for paperclips, then paperclips are a currency. Paperclips as a currency were only dead if nobody accepted them as a payment.


David
 
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DeltaMD90
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 12:45 am

Maybe not bitcoin but I'm sure there will be some virtual, international currency that will rise in popularity. It would have to stabilize out first... I'm not going to put my money in something that could be all of the sudden devalued out of my control. I guess this applies to any digital money services (like banks) but will there be a rise in hackers that create millions of bitcoins illegally? How would you track counterfeit bitcoins?

I also don't see governments giving up on a currency they can print and control. Just think of how much of a game changer that would be if governments couldn't mess with the money system. Good and bad things may result, isn't Greece in a similar boat not being able to really control the Euro?
 
romeobravo
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 1:11 am

I think Bitcoin has a lot of potential. It's still a new currency and is unstable but the more the press it gets the more people use it the more stable it will become.

Quoting DeltaMD90 (Reply 3):
Good and bad things may result,

Only good!!!

Quoting DeltaMD90 (Reply 3):
isn't Greece in a similar boat not being able to really control the Euro?

Greece is in that situation because it recklessly borrowed and now it can't prints its way out of the problem! It took the benefits of having a strong currency but then acted like it was dealing with a weak one. But even if it could print its way out of this situation, that would still be terrible for Greece - people's savings would be destroyed, and Drachma would plummet. One could consider this a learning curve i guess.

Losing control of the currency should be a welcome bit of discipline for governments to keep spending in check.

[Edited 2014-01-23 17:15:06]
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 1:19 am

Quoting RomeoBravo (Reply 5):
Losing control of the currency should be a welcome bit of discipline for governments to keep spending in check.

You invest in, and use bitcoin, let me know how you make out. What backs bitcoin, who controls bitcoin? I myself think it is a con game. Bitcoin is backed by what? Gold? Silver? Where is the value? What is the sense of bitcoin? Who will make the money? Why have it? The full faith and credit of what backs it?
 
romeobravo
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 2:10 am

Nothing backs fiat currencies either. In fact nothing backs gold. Most of its value is derived from the expectation that it'll have value in the future.

[Edited 2014-01-23 20:44:27 by SA7700]
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 2:25 am

Quoting RomeoBravo (Reply 7):
Nothing backs fiat currencies either. In fact nothing backs gold. Most of its value is derived from the expectation that it'll have value in the future.

Gold, silver and diamonds are age old commodities, accepted the world over as hard tradable goods. I just wonder what backs bitcoins? What and who holds them, and where? How is there value? It is not even paper, it is a figure on a computer, poof, and is it gone? I do not pretend to understand how anyone could put their hard earned money into them. I guess I understand they are supposed to be free of government control. That is where I see a problem. If you cannot trust your government, your country, how do you trust a faceless electronic number, and those putting them out there.
 
romeobravo
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 2:44 am

Quoting WarRI1 (Reply 8):
Gold, silver and diamonds are age old commodities, accepted the world over as hard tradable goods. I just wonder what backs bitcoins?

Nothing backs bitcoin, and nothing backs gold or silver either. It's all faith based. Gold and silver have a good track record, bitcoin's building up its own track record.

Meanwhile the track record of the USD and other fiat currencies are taking quite a hit.
 
RussianJet
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 5:04 am

Quoting flyingturtle (Reply 2):

Every currency is backed by something. If I give you goods or deliver a service in exchange for paperclips, then paperclips are a currency. Paperclips as a currency were only dead if nobody accepted them as a payment.

Sir, I'd like to buy your paperclips.....it sounds as though we'll all be trading in them before long.
 
Beardown91737
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 6:30 am

When physical computing equipment got old, we used to call it a boat anchor (not that you could put anything that toxic in the water). Is Bitcoin going to be like Myspace that everyone leaves for the the next cool thing? Too big a risk for my taste.
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 7:06 am

Bitcoin is "backed" by computing power. Personally I don't buy it, I only mine it (not directly Bitcoins but altcoins), since the middle of December 2013, with a 1500€ investment of high end computer parts (that keep a high value for some time), I've mined about 1,5BTC.
 
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Tugger
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 7:22 am

It's entire weakness is that it can ONLY be used electronically and humans live in the real world. As long as someone is online or able to access and transact via electronic means it is fine but the moment one needs to buy something in the real world it must be converted to a real world currency. And everyone at some point must have "hard currency" to live.

So Bitcoin is dependent on other currencies and other currencies are not dependent on Bitcoin. That puts it in a weaker or subservient position.

Tugg
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 8:12 am

Actually some brick and mortar businesses accept it. The main problem is not that it's virtual, credit cards are virtual too aren't they ? The huge price fluctuations relative to other currencies is the main problem, since you can't price a service or good in bitcoins, you have to update your prices in quasi real time.

I just ordered some mining hardware from a guy/shop in the US to ship to France and used bitcoins to pay, that way no significant fees, and payment is almost instantaneous so he can send the package the same day. But he gave me a quote just a couple hours before.
 
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nighthawk
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 9:58 am

Quoting flyingturtle (Reply 2):
Given the surveillance of the internet by various governments, this will stop sooner or later - because Bitcoin money can always be traced back, as every "coin" has a fingerprint. It would be the same if you paid your coffee & donut with a dollar bill, and the coffeehouse wrote down its serial number. Then, when the coffeehouse buys new furniture, the furniture dealer would in turn write down the serial number - the money would be perfectly trackable.

This is not true. Sure you can trace the flow of each bitcoin, but there is nothing to say who owns each bitcoin. To trade bitcoins all you need to do is download a BitCoin wallet, free of charge online (or write your own - it's an open standard), then when you run the software, you generate a unique wallet ID. All that can be done is trace bitcoins back to that ID - there is nothing to link the ID to a person.

Your analogy of cash transactions also doesnt work. Sure you can record the serial number each time, but you still cant trace that to a person, unless you asked for photo ID when the person bought the coffee.

Quoting flyingturtle (Reply 2):
Every currency is backed by something. If I give you goods or deliver a service in exchange for paperclips, then paperclips are a currency. Paperclips as a currency were only dead if nobody accepted them as a payment.

Not true, and in your example the paperclip is not backed by anything either. It is worth exactly what both parties agree it is worth. With real money it is backed by the government and the banks. That £10 note I give you is worth exactly £10, and you can take it to the bank and deposit it for £10. Me and you could value that paperclip for £10, but if I take it to the bank, they wont give me £10 for it. They will value it for exactly £0. Therefore it is not backed.

Quoting DeltaMD90 (Reply 3):
Maybe not bitcoin but I'm sure there will be some virtual, international currency that will rise in popularity.

I think there will be, and I suspect it may not be bitcoin. The first on the market is rarely the one that becomes established. MySpace and AltaVista were the first. Who uses them anymore? BitCoin will establish the need for an international currency, but I think it will be replaced by a new, improved currency.

Quoting RomeoBravo (Reply 4):

I think Bitcoin has a lot of potential. It's still a new currency and is unstable but the more the press it gets the more people use it the more stable it will become.

It is unstable due to the low numbers of transactions taking place. Once it becomes more commonly used and accepted, the price will stabalise. Also, due to the fluctuations, a lot of people are using it for investment rather than transactions, exaggerating the swings. This will stablise once it starts to catch on more.

Quoting DeltaMD90 (Reply 3):
I guess this applies to any digital money services (like banks) but will there be a rise in hackers that create millions of bitcoins illegally? How would you track counterfeit bitcoins?

It is not possible to create them illegally. BitCoins are based on a cryptographic code, for which there are only enough combinations for 21m BitCoins. These coins need to be discovered via "mining", which can be done by anyone. Once all coins have been "mined", no more can be created.

Quoting tugger (Reply 12):
It's entire weakness is that it can ONLY be used electronically and humans live in the real world. As long as someone is online or able to access and transact via electronic means it is fine but the moment one needs to buy something in the real world it must be converted to a real world currency. And everyone at some point must have "hard currency" to live.

I don't think this is a weakness. The vast majority of transactions nowadays are done electronically anyway, how often do you really need to use cash nowadays? Cash is mainly used for smaller transactions where the processing fees of credit cards are prohibitive. The processing fee for BitCoin is almost negligible, so it would be more suited to these types of transactions.
 
Bongodog1964
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 10:45 am

Quoting RomeoBravo (Reply 6):
Nothing backs fiat currencies either. In fact nothing backs gold. Most of its value is derived from the expectation that it'll have value in the future.

Gold's value is historically based on its desirability, long before the USD GBP etc people wanted gold both for its physical and decorative properties, we are never more than a few cm from a practical use of Gold, if it weren't for gold connectors how would your computer work on which you "mine" bitcoins ?

Quoting nighthawk (Reply 14):
It is not possible to create them illegally. BitCoins are based on a cryptographic code, for which there are only enough combinations for 21m BitCoins. These coins need to be discovered via "mining", which can be done by anyone. Once all coins have been "mined", no more can be created.

This is one of the fundamental flaws, the "miners" get something for nothing then expect it to have a great value.

The final problem is that the rates are extremely volatile, in the past two months its swung from over $1000 down to $600 and back up to around $770. This makes it totally impossible for any form of serious business, taking a coffee break between receiving payment and cashing in could result in a large loss (or even profit)

Its all just a bubble that will burst and leave egg on a few faces.
 
srbmod
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 11:38 am

Quoting nighthawk (Reply 14):
The processing fee for BitCoin is almost negligible, so it would be more suited to these types of transactions.

Which may make it more attractive for businesses to start accepting. This week, two hotels in Las Vegas announced that they would start accepting Bitcoin to pay for rooms, meals and stuff in their gift shops and the owner of the hotel has gotten quite a bit of media coverage as a result. In an interview on Bloomberg, he said that about a year or so ago, they started to get the occasional customer asking if they took Bitcoin and in recent months they were getting asked this on an almost daily basis so they looked into it.

Quoting Beardown91737 (Reply 10):
Is Bitcoin going to be like Myspace that everyone leaves for the the next cool thing? Too big a risk for my taste.
Quoting Bongodog1964 (Reply 15):
Its all just a bubble that will burst and leave egg on a few faces.

Those are my thoughts as well. Before Bitcoin stated getting mainstream attention, there already have been booms and busts with it and it's just as likely to happen again, only this time more folks will see it happen.
 
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nighthawk
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 11:51 am

Quoting Bongodog1964 (Reply 15):
This is one of the fundamental flaws, the "miners" get something for nothing then expect it to have a great value.

It's not entirely something for nothing - it still requires power to run the machines. It is now at the point where the cost of running a PC to generate BitCoins outways the value of the bitcoins (bitcoins become harder to generate as the number in circulation increase - similar to gold). You now need to use specialist hardware to generate BitCoins economically, but this of course comes at a cost. Eventually all possible bitcoins will have been mined, and it will no longer be possible to mine them (I believe we are halfway at present).

Quoting Bongodog1964 (Reply 15):
The final problem is that the rates are extremely volatile, in the past two months its swung from over $1000 down to $600 and back up to around $770. This makes it totally impossible for any form of serious business, taking a coffee break between receiving payment and cashing in could result in a large loss (or even profit)

While it does fluctuate, it has been sitting fairly consistently around the $1000 mark for the last few months. Normal currencies fluctuate too don't forget. As bitcoin matures it will start to stabalise, and the fluctuations will decrease.
 
Bongodog1964
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 1:30 pm

Quoting nighthawk (Reply 17):
While it does fluctuate, it has been sitting fairly consistently around the $1000 mark for the last few months. Normal currencies fluctuate too don't forget. As bitcoin matures it will start to stabalise, and the fluctuations will decrease.

It hasn't sat "fairly consistently" at all as the figures I quoted show, the fluctuation has been around 40% in under 2 months and who can predict where its heading. With conventional currencies economists can look at economic data and give some idea of where they expect the $, £, euro etc to be heading, what drives bitcoin apart from speculation ?
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 1:34 pm

Quoting Bongodog1964 (Reply 15):
This is one of the fundamental flaws, the "miners" get something for nothing then expect it to have a great value.

Considering my computer hardware and electricity bills, I wouldn't say it's nothing ! In the case of Bitcoin mining you need hardware that can't do anything else (other than mine a few other copies of Bitcoin), and the ROI is not that quick that I wouldn't sleep well owning that kind of stuff.

Miners also confirm transactions and get paid for that.
 
Stabilator
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 3:53 pm

Quoting Aesma (Reply 19):
my computer hardware

Miners make me sad because they almost exclusively use AMD video cards, which drives the prices up significantly for gamers like myself, as well as others like graphic designers etc, etc.

What has China said about bitcoin? If they fail to embrace it, I believe the value will drop quite a bit.
 
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Tugger
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 4:51 pm

Quoting Stabilator (Reply 20):
What has China said about bitcoin? If they fail to embrace it, I believe the value will drop quite a bit.

They don't like it and don't support it and are working to quash it's use in China.

Quote:
In December the People’s Bank of China decreed that merchants may not accept Bitcoin and forbade banks and payment processors from converting Bitcoin into yuan.
http://www.forbes.com/sites/kashmirh...14/01/06/china-bites-into-bitcoin/

And this is what I was talking about being its weakness. It is worthless (OK worth LESS) if it can not be converted to an accepted real world currency. It may not kill it outright but it is a weakness. And to the question of who uses real money, well I do, all the time, sure I get paid electronically, and I use credit cards a lot, and bank online etc. But it is all related to the real world prices that are set in the local currency and a currency must be relateable and exchangeable to that currency to have relevance (just ask Argentina and other nations with currency that needs to be exchanged but the value is in question). I can't eat electrons and somewhere down the line in the process of payments the currency will and must be converted to something that someone can exchange in the real world with an electronic device. Bitcoin cannot do that.

Tugg
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 5:59 pm

Last time I checked we don't base our laws on what the Communist Party of China decides ! Often we protest violently at their decisions, offer asylum to political opponents, etc.
 
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Tugger
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 6:32 pm

Quoting Aesma (Reply 22):
Last time I checked we don't base our laws on what the Communist Party of China decides ! Often we protest violently at their decisions, offer asylum to political opponents, etc.

Yes however I was just answering a question as to how China regards Bitcoin. Regardless of what China does or decides, until there is a hard currency for Bitcoin (there are nice pictures of neat looking "Bitcoins" all of the place) that is accepted by merchants, Bitcoin is at the mercy of being able to be exchanged/converted into the appropriate currency. A Las Vegas hotel or your local vet may accept it as payment but they will likely want to be able to convert it if they wish.

Tugg
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Fri Jan 24, 2014 6:44 pm

Well, if they accept it, they're probably using a service that allows them to exchange it, because I doubt their employees and suppliers accept it.
 
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nighthawk
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 5:13 pm

Quoting tugger (Reply 23):
until there is a hard currency for Bitcoin (there are nice pictures of neat looking "Bitcoins" all of the place) that is accepted by merchants, Bitcoin is at the mercy of being able to be exchanged/converted into the appropriate currency.

That's no different to accepting a foreign credit card. I can use my UK credit card in a US store - no "hard" or "physical" currency changes hands, instead money is transferred and converted virtually. BitCoin would be no different.

I accept right now a bitcoin transaction is a little more difficult as the support is not quite there yet, but as support grows this will change. It doesnt need to be any harder than accepting a credit card.
 
Rara
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 5:47 pm

Quoting osubuckeyes (Reply 1):
In other words people could start thinking other cryto-currencies are cooler, or something better could come along. Since it is a fixed money supply it is inherently deflationary so that is definitely a concern.

You realize that these two would counteract each other? In the first scenario Bitcoin keeps on losing value and in the second scenario Bitcon keeps gaining value. Now, if both happen simultaneously... sounds like they'd cancel each other out and the currency remained stable.

Quoting WarRI1 (Reply 5):
Bitcoin is backed by what? Gold? Silver? Where is the value?

Gold and silver are backed by what? By their rareness. If you hold a large amount of gold, you can reasonably assume that the global supply won't dramatically increase over night, and that you won't be left with an abundant and therefore worthless metal. It's the same with Bitcoin. They will remain rare because that's inherent in the formula.

Quoting WarRI1 (Reply 7):
Gold, silver and diamonds are age old commodities

In fact diamonds should be practically worthless. They're just carbon, an element that exists in abundance. It's only the idea in peoples' heads that they're rare and valuable that keeps the price up.

Quoting Aesma (Reply 11):
with a 1500€ investment of high end computer parts (that keep a high value for some time), I've mined about 1,5BTC.

Interesting, so break-even is in sight. How do the electricity costs factor in though?
 
solarflyer22
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 5:57 pm

I think its here to stay along with the notion of a virtual currency but that does not mean that it will appreciate as it has been. I am sure governments and the IMF will try to stop this as its hard to regulate or ban. You'll note during the great depression they banned private ownership of gold and melted US coins so the government could monopolize it. I could see that happen here too.

US Treasury hates it too because they can't follow, sanction or tax it. If you want to finance something illegal, bust sanctions on Cuba or Iran its all fair game. Worse yet without the master password to your wallet the government can't actually seize your money.

I am a fan of freedom though and even knowing the potential risks, I say let it ride. The real problem I suspect long term is that competitors that are better are cropping up (LiteCoin for example).

The notion of an encrypted digital currency is here to stay though. It was probably only a matter of time. It seems like the natural course of development of the internet.
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 7:49 pm

Quoting solarflyer22 (Reply 27):
The notion of an encrypted digital currency is here to stay though. It was probably only a matter of time. It seems like the natural course of development of the internet.

What happens if someone defeats the encryption system? Well within the realm of possibility. You know what you will be holding? Say a government such as China, the US, Russia go after the system. We know the paper system can be forged. Imagine a computer system. It seems easier and easier as time go by. Virtual money? The thieves must be licking their lips in anticipation.
 
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flyingturtle
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 7:59 pm

Quoting WarRI1 (Reply 5):
Bitcoin is backed by what? Gold? Silver?
Quoting RomeoBravo (Reply 8):
Nothing backs bitcoin,

Computational power, as explained above. So there is investment (computing time) to harvest these coins.

So these bitcoins are backed even better than our fiat money. Only about 1% of all money in circulation actually exists in the form of coins and bank notes. For every buck you have in hour hand, there are 99 other bucks that only exists in the form of book money on bank accounts.

...and you can guess something... 99% of our dollars, euros and other currencies are already a form of bitcoin!

David

[Edited 2014-01-25 12:02:37]
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 8:12 pm

Quoting flyingturtle (Reply 29):
As you can guess, most money exists in the form of bits and bytes on your bank's computers.

The banks are allowed to do this by a national banking system, backed by the government. What backs the bitcoin? Where is the collateral?
 
PPVRA
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 10:26 pm

I personally don't truly understand it, so I can't really say it will work long term. But they talk a really, really good game.

At this point, I see it as a niche currency at best. It appears to be backed not by computing power, but by the value of the payment system it provides (which itself uses computing power but this alone has nothing to do with the value of the currency IMO). Sort of like VISA creates value by providing its services, but I could never see the planet replacing all currencies with shares of VISA, for example. There is not enough value in it to serve as a store of value for everything else. Especially when alternative, competing payment systems exist.

That said, I have nothing against competing currencies. Bitcoin, litecoin, etc. Much better than the current monopoly we have.

The most important thing is that social experiments like this be allowed to take place freely. It does not matter if your mother buys bitcoins and ends up losing all the money she put into it in the end, it's her choice to take the risk in a new and risky project. Don't like bitcoin? Just stay away from it. Don't try to restrict this just because some people got hurt.
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 10:41 pm

http://finance.fortune.cnn.com/2014/01/24/why-bitcoin-could-fail/




I agree with this man. I cannot see how it is not a scheme to make money, for them, not for us. What a way to get burned. Who has the time, the nerve, the stupidity to plunge into such a scheme? Certainly not I. I would not be blasé to my Mother, if she ever had any, losing all her money. Who would?
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 10:46 pm

Quoting Rara (Reply 26):
Interesting, so break-even is in sight. How do the electricity costs factor in though?

My rig is not the most efficient one as I favored parts I wanted to buy anyway (powerful CPU not needed at all for mining, for example) to limit the risk, the PSU is a very efficient Platinum one though, in the end it's sucking 1100W for a cost of about 110€/month.

Quoting WarRI1 (Reply 28):
What happens if someone defeats the encryption system? Well within the realm of possibility. You know what you will be holding? Say a government such as China, the US, Russia go after the system. We know the paper system can be forged. Imagine a computer system. It seems easier and easier as time go by. Virtual money? The thieves must be licking their lips in anticipation.

Theft of bitcoins is already happening, without it being a flaw of the currency, but rather a flaw of the user (insecure password, typically). For the encryption itself, it's really complicated to explain but it's not possible to defeat it like you would attack an encrypted file, you'd have to fool millions of machines at the same time. And with that you could only disturb the currency and reverse some transactions or double spend some money, not steal it outright.
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 10:51 pm

This week at the World Economic Forum in Davos, U.S. financial leaders shared a similar outlook on bitcoin: "The question isn't whether we accept it," JPMorgan (JPM) CEO Jamie Dimon told CNBC. "The question is do we even participate [with] people who facilitate bitcoin? The people who are going to eventually really get upset with it will be governments."



These are the enemy of the Bitcoin. Governments, Bankers.
 
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flyingturtle
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sat Jan 25, 2014 11:29 pm

Quoting WarRI1 (Reply 30):
The banks are allowed to do this by a national banking system, backed by the government. What backs the bitcoin? Where is the collateral?

Every single buck has a U.S. government bond as a collateral. So, the dollar is effectively backed by the faith that the U.S. government won't go bankrupt in the next few years.

The bitcoin is equally backed by the faith of its users.


David
 
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WarRI1
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sun Feb 09, 2014 6:52 pm

 
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Tugger
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sun Feb 09, 2014 7:08 pm

And then there is this from Friday:

Quote:
Bitcoin plunged more than 8 percent today after a Tokyo-based exchange halted withdrawals of the digital currency, citing technical malfunction.

Mt. Gox, a popular exchange for dollar-based trades, said in a blog post it needed to “temporarily pause on all withdrawal requests to obtain a clear technical view of the currency processes.” It promised an “update” -- not a reopening -- on Monday, Feb. 10, Japan time.
http://www.bloomberg.com/news/2014-0...t-gox-exchange-halts-activity.html

Mt.Gox was one of the biggest Bitcoin exchanges though it has fallen off recently. This just makes matters worse. The real question is, what is the technical issue and why is it such an issue?

As I mentioned in prior posts, the biggest problem that Bitcoin has is that is is not a "hard" currency, it exists online only and must be converted to other currencies to be useful. Someday it is possible it could overcome that except that ultimately all currency needs a "hard" element to be fully useful. No matter how much of the USA's (for example) economy and USD financial transactions take place online, it is those $100 bills trading around the world in peoples hands that give it even more strength and relevance. The people holding those bills want or need to be able to trade their services or products for something they can hold. There are no two ways around that.

Tugg

[Edited 2014-02-09 11:29:18]
 
PPVRA
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sun Feb 09, 2014 11:29 pm

Quoting tugger (Reply 37):
As I mentioned in prior posts, the biggest problem that Bitcoin has is that is is not a "hard" currency, it exists online only and must be converted to other currencies to be useful. Someday it is possible it could overcome that except that ultimately all currency needs a "hard" element to be fully useful. No matter how much of the USA's (for example) economy and USD financial transactions take place online, it is those $100 bills trading around the world in peoples hands that give it even more strength and relevance. The people holding those bills want or need to be able to trade their services or products for something they can hold. There are no two ways around that.

The amount of printed and coined U.S. Dollars is T-I-N-Y compared to the total supply of the currency.

Value doesn't only exist in tangible format.

[Edited 2014-02-09 15:30:08]
 
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Aesma
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Sun Feb 09, 2014 11:30 pm

The problem is that MtGox uses a custom wallet software that wasn't updated when a small bug in the Bitcoin protocol was solved, and now their wallet issues invalid transactions. It shouldn't be too difficult to solve. Far more worrying is that they've been having trouble transferring USD/EUR/YEN for months because banks are reluctant to work with them.

Personally I use an exchange that can get my my euros in a couple of days, and never keep Bitcoins long on any website. I'm "earning" Bitcoins, not buying them, so if some more shops were accepting them, I could use them without dealing with euros for the whole process. It's already possible to get food delivered to my house that way, but I prefer to eat out or make food myself so I have no use for this.
 
redflyer
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Mon Feb 10, 2014 6:50 pm

Quoting srbmod (Thread starter):
The value for a single Bitcoin can wildly fluctuate hundreds of dollars in a very short time, something not commonly seen with other currencies or even stocks.

IMO, this is the single biggest drawback to using Bitcoin and other like-currencies as "money". There's no central bank to intervene and it will be far more difficult to predict when an event or new development, however slight, could have an impact on its value.

People are pissing and moaning over our current economic system which is the most stable in human history and, relatively speaking, the most "fair". If these virtual currencies ever become widely accepted they will eventually die the day a large number of people or institutions see their holdings wiped out because of some ridiculously small and unforseen event that impacts the desire of traders to hold the currency.
 
Ken777
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Mon Feb 10, 2014 7:16 pm

Quoting flyingturtle (Reply 2):
It is a truly international currency, and it can quite easily be turned it into the first type of money that is completely theft-proof.

We have a lot of international currencies available to us today: the Euro, the UK Pound and the US Dollar are the first three that come to mind. While they have their ups and downs they have the benefit of being supported by actual governments.

As for theft-proof, trojans will always keep them at risk:

http://www.securemac.com/CoinThief-BitCoin-Trojan-Horse-MacOSX.php

Quoting RomeoBravo (Reply 8):
Nothing backs bitcoin, and nothing backs gold or silver either

At the lowest level manufacturing backs gold & silver. Look at the demands for silver in production of electronic components.

Above that, until women are happy with getting an aluminum engagement ring with glass (or manmade stone) I think that the demand for gold will continue to hold value, even if it fluctuates.

Bitcoins have a long way to go before they totally loose their fad status and I don't know if they will get there.
 
tommy1808
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Mon Feb 10, 2014 8:41 pm

Quoting tugger (Reply 37):
As I mentioned in prior posts, the biggest problem that Bitcoin has is that is is not a "hard" currency, it exists online only and must be converted to other currencies to be useful. Someday it is possible it could overcome that except that ultimately all currency needs a "hard" element to be fully useful.

Why do you need to be able to convert them to other currencies? The Bitcoin you pay with in Germany is the same Bitcoin you use in the USA, there is no reason to exchange it into another currency. Of course it is nice to be able to buy Bitcoins, but as i can mine my own, i don´t even need to be able to convert my currency into Bitcoins in order to pay with them.
As long as there are people that accept Bitcoins, it does have a real value. Either because it is freely exchangeable into "real" money, then their will be a market price, or the tax authorities will assign a fair value in order to be able to tax business transactions in Bitcoins. Either way the money is just as real as your every day US$, EUR or CHF.
If people just stop accepting US$ bills (for whatever reason), the purchasing power of your "real" money will just seize to exist, no matter who backs the paper you have in your hand.
Of course in bad times like wars a digital currency might have shortcomings due to lack or power and internet, on the other hand the value of gold deflates rapidly in times of true emergency compared to shelter, heat, food, water or cigarettes. And neither shelter, heat or cigarettes are backed by anything buy perceived value in the light of demand & supply.
And if history has a lesson for us to learn, than it is that any government attempt to fix the value of a currency to a certain level ultimately failed. Those central banks and governments, that have to work hard and often fail to meet their inflation targets can somehow guarantee the value of your money? Our money is just as real as a box of premium brand corn flakes has a higher value than as no-brand ones, even if the quality is the same. And that is real enough.

best regards
Thomas
 
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Tugger
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Mon Feb 10, 2014 9:39 pm

Quoting tommy1808 (Reply 42):
Why do you need to be able to convert them to other currencies? The Bitcoin you pay with in Germany is the same Bitcoin you use in the USA, there is no reason to exchange it into another currency. Of course it is nice to be able to buy Bitcoins, but as i can mine my own, i don´t even need to be able to convert my currency into Bitcoins in order to pay with them.

Because at some point in the currency flow, you or someone downstream from will have to buy something "in the real world" that requires a hard currency. Electronic avenues for transaction are great, but I transact everything in Dollars (unless I am on travel).

So here is a test, how much is a Bitcoin worth? But do not use any other currency to express its value.
As an example: With $1.00 I can buy a loaf of bread at the store. With $4.00 I can buy a box of GS cookies.

The USD has a $17T+ economy to back up its use and value, how much of an economy does Bitcoin have backing it up (and yes, I am fully aware of inflationary, and "printing", etc. pressures and issues the USD faces)? Bitcoin right now is just another investment for people and they are hoping to buy low and then sell high at a later time (at which point they will convert into a more useful currency). Yes, I know the theory is you could instead use the 'coin to pay directly for a service but that is a tiny portion of its use now.

Tugg

[Edited 2014-02-10 13:41:24]
 
EricR
Posts: 1226
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Tue Feb 11, 2014 2:50 am

Quoting tugger (Reply 43):

The USD has a $17T+ economy to back up its use and value, how much of an economy does Bitcoin have backing it up

  

Conceptually, people may find the bitcoin as an attractive alternative to everyday currency. However, in reality it has absolutely no value because there is nothing backing it up (ie. the full faith and credit of a nation or backed by gold or some other commodity). The bitcoin is a house of cards that will crumble. It has all the smells of a pyramid scheme. I would stay clear from it. You may be lucky and catch it on an upswing in price, but unlike a country's currency, there is nothing to protect the bitcoin from dropping to zero.

Quoting tugger (Reply 43):

With $4.00 I can buy a box of GS cookies.

$4.00!?!?!? Those are overpriced.
 
tommy1808
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Tue Feb 11, 2014 7:20 am

Quoting tugger (Reply 43):
Because at some point in the currency flow, you or someone downstream from will have to buy something "in the real world" that requires a hard currency. Electronic avenues for transaction are great, but I transact everything in Dollars (unless I am on travel).

Since i can buy real products in real stores from real people and pay in Bitcoins, i don´t see a reason that i *have* to be able to convert them. Its more convenient if i can, but not strictly speaking a requirement.

Quoting tugger (Reply 43):
So here is a test, how much is a Bitcoin worth? But do not use any other currency to express its value.
As an example: With $1.00 I can buy a loaf of bread at the store. With $4.00 I can buy a box of GS cookies.

A coffee in a restaurant is about 0,004 Bitcoin for example.

Quoting tugger (Reply 43):
The USD has a $17T+ economy to back up its use and value, how much of an economy does Bitcoin have backing it up (and yes, I am fully aware of inflationary, and "printing", etc. pressures and issues the USD faces)?

I am sure the citizens of Cyprus where really happy to have government backed money in their bank accounts when it disappeared.

best regards
Thomas
 
EricR
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Tue Feb 11, 2014 4:10 pm

Quoting tommy1808 (Reply 45):
I am sure the citizens of Cyprus where really happy to have government backed money in their bank accounts when it disappeared.

With all due respect, you cannot point to one bad apple and say the entire orchard is bad. Especially when you completely disregard all of the examples where this works. Every day, national currencies float on the exchanges and countries have the ability to adjust the valuations of their currencies through various monetary policies as changes occur in their economies.

The bitcoin does not have that luxury. What happens when one of the main exchangers of the bitcoin ends up on the wrong side of a currency deal? Will that entity have the ability to back up the losses? Most likely no, especially when we see the large swings in the valuation of the bitcoin.

People who believe the bitcoin will work do not truly understand how the currency & exchange systems work. I am not saying that the idea of the bitcoin will not work conceptually, but what I am saying is that the bitcoin system does not have the proper infrastructure in place and therefore is highly risky.

There is saying that the rich get richer and the poor get poorer. However, the more accurate statement is that the informed get richer and the uniformed get poorer. Place your money in bitcoin without knowing how the exchange systems work, and you could end up losing your shirt by trusting that the bitcoin will maintain its value.
 
tommy1808
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Tue Feb 11, 2014 9:07 pm

Quoting EricR (Reply 46):
With all due respect, you cannot point to one bad apple and say the entire orchard is bad. Especially when you completely disregard all of the examples where this works.

Ever heard the term "currency reform" in a context where government just decides to decrease the value of your oh so secure government backed money?

Quote:
Every day, national currencies float on the exchanges and countries have the ability to adjust the valuations of their currencies through various monetary policies as changes occur in their economies.

You are aware that you are just trying to sell the governments ability to change the value of your hard and secure government backed money as something positive, while at the same time that is supposedly a week point of the Bitcoin?

Quoting EricR (Reply 46):
What happens when one of the main exchangers of the bitcoin ends up on the wrong side of a currency deal? Will that entity have the ability to back up the losses? Most likely no, especially when we see the large swings in the valuation of the bitcoin.

That risk is not specific to bitcoins, it is however a good reason to regulate Bitcoin exchanges just like any other money exchanges. On the other hand with Bitcoins i don´t care if my bank goes bankrupt ......

Quoting EricR (Reply 46):
People who believe the bitcoin will work do not truly understand how the currency & exchange systems work. I am not saying that the idea of the bitcoin will not work conceptually, but what I am saying is that the bitcoin system does not have the proper infrastructure in place and therefore is highly risky.

On that i can agree with you, Bitcoin trading houses, Bitcoin Banks, Bitcoin Exhanges should be regulated in the same way conventional banks are. The moment you put such regulations in place Bitcoin becomes a real currency in every regard.

Quoting EricR (Reply 46):
Place your money in bitcoin without knowing how the exchange systems work, and you could end up losing your shirt by trusting that the bitcoin will maintain its value.

You have faith that your government won´t take your money, neither directly via currency reform, nor indirectly via inflation or expropriation of valuables like gold, to give it value it doesn´t have, despite countless examples to the contrary throughout history, that is your decision. Some people use gold as back up, others shuffle money into several currencies, other buy Bitcoins. The only advantage the others have over the bitcoin is that they have a history you know and Bitcoin doesn´t. On the other hand dice have no memory, so pretending they have is probably not the smartest way to go.... managing risk by splitting it however has always been a good advice.

best regards
Thomas
 
EricR
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Tue Feb 11, 2014 9:37 pm

Quoting tommy1808 (Reply 47):

That risk is not specific to bitcoins, it is however a good reason to regulate Bitcoin exchanges just like any other money exchanges. On the other hand with Bitcoins i don´t care if my bank goes bankrupt ......

But you will care if your bitcoin exchange goes bankrupt while attempting to complete your transaction. All you are doing is moving risk from the bank to the bitcoin exchange. This does not eliminate any risk. What you are not taking into consideration is that banks are insured to protect your money, but bitcoin exchanges are not.

Quoting tommy1808 (Reply 47):
You have faith that your government won´t take your money, neither directly via currency reform, nor indirectly via inflation or expropriation of valuables like gold, to give it value it doesn´t have, despite countless examples to the contrary throughout history, that is your decision.

Absolutely. I would much rather trust my government than some unknown shadow that holds your bitcoin reserve. When you step back and think about it, you are saying that you would be more willing to put your faith in a currency you know nothing about, backed up by nothing, and run by some shadow group than a government backed currency. You can do what you want with your money, but I do not consider investing money in some unknown entity run by people I know nothing about as smart investing.

Quoting tommy1808 (Reply 47):
You are aware that you are just trying to sell the governments ability to change the value of your hard and secure government backed money as something positive, while at the same time that is supposedly a week point of the Bitcoin?

The point that you are missing is that these governments have the ability to stop or minimize a decline in a currency through various monetary policies. You just do not realize it when they are doing so because you, as well as most others, do not pay attention when they do this. However, bitcoin does not have the ability to do so.
 
PPVRA
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RE: Bitcoin, Currency Of The Future Or Just A Fad?

Thu Feb 13, 2014 6:02 pm

Quoting tugger (Reply 43):
So here is a test, how much is a Bitcoin worth? But do not use any other currency to express its value.

Looking around, it seems like a 500GB hard drive goes for about 0.1 BTC (some places have better prices than others). In other words, 1 BTC can buy 500GB*10 = 5000GB.

All you have to do is look up something that is priced in BTC.

[Edited 2014-02-13 10:03:04]

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