Bitcoin ?!

[vecino]

It is that the "normal" currency (dollar, euro, etc.) is also based on trust.

 

[Diceman]

depends on the rate of inflation - after the WW2 german people bought bread with wheelbarrows of cash

and this is not because i am particularly supporting any views and details expressed in this thread, but, I have one of these notes of cash from Zimbabwe (somewhere) - a simple search will find photos of zimbabweans' wheelbarrows ... still have friends who live there. venezuela.

you be the judge.

EDIT : what I was, and have for some time, wondering about is : if I have bitcoin bought some time ago, treated this as if a stock market item, and wanted to sell it now for cash in my pocket : how does that happen and where is the "CASH" as it were ( after all who knows how long one will be living post-retirement, for instance, and have purchasing power to enjoy it - whats the average age of the forum, again?? )

if gold doesn't back fiat currency now : what backs bitcoin / cryptocurrencies? its bought and sold using fiat? bartering? promise of a new car? promise of double your money next week? [the latter being a ponzi scheme] etc..... if BTC is backed by "confidence" then, that graph in #74 is disturbing. the whole thing is just intangible

You bring up an interesting point "Where is the value in Bitcoin?".

If Bitcoin was stored in a centralized database where the administrator simply created Bitcoins and handed them out when needed, then you would be correct and Bitcoins would be worthless. It would just be another fiat currency that can be generated by a central authority whenever it suited them. In fact, the central banks of the world are creating their own digital currencies that very way, and of course it too will be a fiat currency (digital fiat), without any intrinsic value and will be doomed to fail through hyperinflation.

Bitcoin if vastly superior to fiat.

1. There is no central Bitcoin authority. No government can raid Bitcoin headquarters because there are no headquarters. Bitcoin exists on the Internet in the millions of Bitcoin miners (servers) throughout the world.
2. Bitcoin is deflationary, not inflationary like fiat currency. A Bitcoin block is created by its own network of miners, every 10 minutes. This block currently has 6.25 Bitcoins. This controls the number of Bitcoins that can be created and prevents overprinting regardless of the number of computers put to the task of mining Bitcoin. This prevents the devaluation of Bitcoins the way central banks do when they print a trillion dollars a year to bail out their friends. The U.S. is printing $1 trillion a month now to cope with COVID-19. How long can they keep this up?
3. The number of Bitcoins in the block is cut in half every 4 years. In 2009 it started off at 50 Bitcoins per block and 4 years later it was reduced to 25, last year it was 12.5 before there was another "halving event" that reduced it to 6.25 Bitcoins per block. The creator of Bitcoin did this because he knew the value of Bitcoin will continue to increase in value because it is deflationary, and needs to reduce the reward of finding the next block every 4 years.
4. Unlike the current fiat money system that use brick and mortar banks and the new digital currencies to be rolled out (this year?), neither the government nor the banks can seize your Bitcoins when they are stored in an encrypted wallet. Bitcoin is the people's "coin".
5. When banks fail and shut their doors, you've lost your money or your gold deposit. That's not the case with Bitcoins if they are stored in your private wallet that is in your possession. If you don't hold it, you don't own it.
6. The intrinsic value of Bitcoin comes from the amount of electricity and hardware required to mine Bitcoin. If it was easy like it was in 2010, then Bitcoins would have very little value and were worth around 10 cents back then. Today there are warehouses of computers all vying to be the first one to find the next Bitcoin block. Their reward will be the next 6.25 Bitcoins at the current value of 6.25 x $37,000=$230,000. The calculations performed by the machines that failed to find the block will be discarded and they will have to start again. Only 1 machine will be awarded the prize of finding the next Bitcoin block. The slowest machines will consume electricity and will soon be out of business. When it comes to mining it is the survival of the fittest (fastest) with the cheapest electricity. Machines can also make some money by validating the transfer of Bitcoins from one wallet to another.
7. Why spend all this effort mining Bitcoin? Because Bitcoin uses mathematics to solve the problem of double spending. This is a monumental achievement. The Bitcoin network of mining machines also verifies that the transfer of Bitcoins from one wallet to another wallet is secure and valid without using a central authority. Wrap your head around that problem for more than a few minutes and you may give up like all those before you. It is not a simple problem.
8. Transferring Bitcoin from one private wallet to another private wallet anywhere in the world cannot be blocked and the Bitcoins cannot be seized and you do not need anyone's permission to do so. It is also cheaper, faster and more efficient than using the current fiat money system. That is why the current paper fiat money system is doomed to die.

Let's put the last item to the test with a simple mind teaser. Let's say you are in the U.S. and you have $100 million in $100 bills sitting on the desk in front of you.

How much fiat are we talking about? Let's see. $100 million in $100 bills = 1 million 100 dollar bills. (I hope you didn't need to use a calculator for that) . They are stored in $10,000 packets of $100 bills, and that means there are 1 million / 10000 = 1000 stacks of $10,000 bills. That should fit in two good sized trunk with a total weight of 800 Kg (I looked up the weight).

Your goal is to transfer this money from your desk in the U.S. to your colleague in France in the shortest time possible with 100% reliability. How do you do it? Please list the steps below in point form. Include any potential problems you might encounter along the way that would affect the time to reach its destination and you must ensure there is no chance of theft at each leg of its journey.

 

[cklester]

Off the top of my head...

If you want to know why BTC has value, do a search for "why gold is money." In those articles, you can substitute "BTC" for "gold," and you'll discover why BTC has utility and value as money. However, BTC has one advantage over other forms of money (e.g., gold) and two disadvantages (one of which will prevent its long-term adoption).

Money and currency are two different things. Money is that which can be a store of value. Currency is that which represents money. Currency is an IOU. Money is what you owe.

For example, when the US was on the gold standard, each dollar represented some amount of gold. The dollar itself was not valuable. It was what it represented.

Now, when we consider BTC, it has all the characteristics that make it good for money (except for one, which we'll get to). In fact, it trumps gold in one way: it is easier to store and transfer. Consider @Diceman 's hypothetical transfer to $100 million. To do that with cash or gold would be slow, difficult, and expensive. To do that with BTC would be quick and easy and cheap.

However, BTC is fragile in two ways, one which is long-term fatal:

1) BTC depends on the grid. The electric grid. If that goes down, BTC would be rendered unusable (eventually; batteries would help in the interim, but if the grid stayed down, BTC would be useless).
2) BTC transactions are not private. This is what will kill it long-term. Businesses do NOT want to reveal their buying and spending habits, and the BTC blockchain brings this into the open. Competitors, stock brokers, and the public will have a field day with this information. Business transactions must be private. This is what will kill BTC and enable a privacy coin (XMR) to take its place for the long term.

Probably.

 

[ilan]

Tesla buys $1.5B in Bitcoin, will accept as payment soon!!

Tesla buys $1.5B in Bitcoin, will accept as payment soon

SILVER SPRING, Md. (AP) — Holders of Bitcoin may be able to cash in some of their investment in the digital currency for a brand new electric car.

apnews.com

 

[Diceman]

View attachment 107699

Tesla buys $1.5B in Bitcoin, will accept as payment soon!!

Tesla buys $1.5B in Bitcoin, will accept as payment soon

SILVER SPRING, Md. (AP) — Holders of Bitcoin may be able to cash in some of their investment in the digital currency for a brand new electric car.

apnews.com

This was a brilliant advertising move by Elon Musk for Tesla Inc.. Not only did it not cost him a dime, he made $300 million just from the announcement. He pumped Bitcoin by 20% in one day with an $8000 move up in the price (biggest ever). Anyone with 10 Bitcoin could take that day's profit and head to their nearest Telsa dealership and buy a car just from what he did. Think about it for a second. For those with 10 or more Bitcoin (or someone leveraged 10x with just 1 Bitcoin), he not only gave you the opportunity to trade your Bitcoin for a new Tesla, but he also gave you the money to do it! You end up getting the car for free, Tesla Inc. gets the sale and Elon made $300 million all in one day. Simply brilliant all the way around.

Too bad Ford, Chrysler or GM didn't think of this. Of course they are still stuck in the 20th century developing old tech cars in exchange a dying fiat currency.