I Finally Figured Out Bitcoin

[Locutus]

Economists,
Lieutenants,
Agents in the Field,

lend me your ears!

For I have finally figured out bitcoin! And truthfully, this is one of my best mental achievements. And hopefully, through my ability to write clearly and explain things, I may be able to explain bitcoin to us all.

I had listened to this:

The Truth About Bitcoin - YouTube

It was very good, but did not fully answer my question, "why does a bitcoin have any value?" However, what the podcast did do is bring my perception or "observation" up high enough that I could finally see and conclude how bitcoin does actually have value.

To understand why bitcoin has value, you first need to think about why currencies exist in the first place.

The answer from an economics 202 class is "to avoid barter."

Barter is horribly inefficient. If you are a cow herder and want a pint of ale, well, you're out of luck. Because you can't trade a whole cow for a measly pint of ale. Nor can you slice off pieces of beef from the live cow to make the trade more fair. Therefore, if any kind of economic trade and progress is to be made, you need a currency.

more

Captain Capitalism: I Finally Figured Out Bitcoin

 

[Machjo]

Islamic Dinar & Dirham

Another private currency here. In principle, if you have gold or silver and decide to melt it down and form it into a gold or silver dinar, you now have something to trade. Same concept.

If you want a more non-religiously based gold standard, prior to WWI there was also the spesmilo:

Spesmilo - Wikipedia, the free encyclopedia

I would actually support the government of Canada legally recognizing some form of gold currency. This would allow anyone to melt gold down and form it into the legal currency. Maybe a silver currency alongside it with the government determining the apropriate official exchange rate between equivalent mass of gold and silver.

 

[jjaycee98]

[And hopefully our Governments will twig onto what is happening here.

I know someone who was smart enough to set up an online gambling site that uses Bitcoins. This person has always wanted to fly under the "radar" and has hit on something that is making millions for him... if he can manage to hide it off shore.

Someone else invested $1000 CDN and just cashed 1/3 for $150,000.

Wonder how much Drug money is getting laundered through Bitcoins. How much investment money just got pulled out of the economy to invest in Bitcoions? It's all Tax Free because it isn't really money.

Who is making money on this and avoiding doing the research and exposure as to the harm being done.

 

[BornRuff]

[And hopefully our Governments will twig onto what is happening here.

I know someone who was smart enough to set up an online gambling site that uses Bitcoins. This person has always wanted to fly under the "radar" and has hit on something that is making millions for him... if he can manage to hide it off shore.

Someone else invested $1000 CDN and just cashed 1/3 for $150,000.

Wonder how much Drug money is getting laundered through Bitcoins. How much investment money just got pulled out of the economy to invest in Bitcoions? It's all Tax Free because it isn't really money.

Who is making money on this and avoiding doing the research and exposure as to the harm being done.

It isn't just laundering, people use the currency online to purchase drugs, child porn, and other illegal things since it can't be traced back to them.

Economists,
Lieutenants,
Agents in the Field,

lend me your ears!

For I have finally figured out bitcoin! And truthfully, this is one of my best mental achievements. And hopefully, through my ability to write clearly and explain things, I may be able to explain bitcoin to us all.

I had listened to this:

The Truth About Bitcoin - YouTube

It was very good, but did not fully answer my question, "why does a bitcoin have any value?" However, what the podcast did do is bring my perception or "observation" up high enough that I could finally see and conclude how bitcoin does actually have value.

To understand why bitcoin has value, you first need to think about why currencies exist in the first place.

The answer from an economics 202 class is "to avoid barter."

Barter is horribly inefficient. If you are a cow herder and want a pint of ale, well, you're out of luck. Because you can't trade a whole cow for a measly pint of ale. Nor can you slice off pieces of beef from the live cow to make the trade more fair. Therefore, if any kind of economic trade and progress is to be made, you need a currency.

more

Captain Capitalism: I Finally Figured Out Bitcoin

There isn't really anything magic to the concept of a Bitcoin. It has value because (some)people are willing to accept it as payment. It derrives value in the same way that a Loonie does. It is worth whatever people are willing to give you for it.

The main problem with Bitcoin as a currency is that it is extremely volatile. A few days ago a bit coin was worth over $700, now it is somewhere in the $500. In April it was worth $238, then it dropped down to around $100 and didn't get back past the April high until this month. Can you imagine trying to conduct your personal finances, or even worse trying to run a business, using a currency the behaves like that?

You receive money in the form of Bitcoin one day, and when you go to pay your bills later in the month, all of a sudden your money is worth less than half what it was earlier in the month. Or you agree to pay someone x number of bitcoins when they are worth $500, but then the price spikes to $700 and that deal you agreed to look very very different.

Bitcoins are a bubble that will burst eventually. Most people buying Bitcoin right now are doing so on a speculative basis, not to actually use on a daily basis.

It will never establish itself as a widely accepted currency as long as the value is so volatile. It will never stabilize unless people stop viewing it as a speculative investment, but if that happens, you wont have all the speculators propping up the price and the crash in value will be dramatic.

 

[eh1eh]

The last person who tried to start a private currency, based on silver, was RFK. Look what happened to him.
Meanwhile. I wish I sold my house and bought Bitcoins at $4.

 

[Tecumsehsbones]

I would actually support the government of Canada legally recognizing some form of gold currency. This would allow anyone to melt gold down and form it into the legal currency. Maybe a silver currency alongside it with the government determining the apropriate official exchange rate between equivalent mass of gold and silver.

Why?

 

[taxslave]

Islamic Dinar & Dirham

Another private currency here. In principle, if you have gold or silver and decide to melt it down and form it into a gold or silver dinar, you now have something to trade. Same concept.

If you want a more non-religiously based gold standard, prior to WWI there was also the spesmilo:

Spesmilo - Wikipedia, the free encyclopedia

I would actually support the government of Canada legally recognizing some form of gold currency. This would allow anyone to melt gold down and form it into the legal currency. Maybe a silver currency alongside it with the government determining the apropriate official exchange rate between equivalent mass of gold and silver.

Gold is legal tender in the Yukon.