Gold
Silver
“If you were smart you’d use your Bitcoin to buy Gold and Silver bullion”
I might do just that, with a few, when silver hits $18. ;)
Posted on 11/20/2013 7:49:21 AM PST by Errant
Five years ago it was worth $0. Then, a month and a half ago it went to $150 a piece. On Monday it shot to over $600. On Tuesday, the value rose to over $900, meaning a 6, 445%-increase in value since the start of the year. It plummeted to $531 at midday today and then recovered reaching $793 while being traded on the Asian markets. Bitcoin: it’s the bonanza of the century.
Volatility and hikes are based on nothing except speculation and the desire to make a mint, thinking that you can predict what the markets are going to do. But, will that Bitcoin volatility lead to a bubble? Or is it bringing in a new era of a new type of currency that people are willing to use and that merchants are now being forced to accept? It might never become a legitimate currency in the future, but that’s hardly important when you can make a profit from it. Of course central banks are at risk from the use of virtual currencies as it would mean that they would have little control over what we spend and how transactions are carried out. Is Bitcoin the death of our central banks?
(Excerpt) Read more at zerohedge.com ...
I'm still holding out for Beanie Babies to be used as the new world reserve currency.
Heck, you can even print out the codes, hide them someplace, or commit them to memory, and delete the wallet yourself. Try doing this with anything else of value. I believe this characteristic of crypto-money is what makes it appealing to anyone living in a country with a ruthless government and controls on capital (e.g., Cyprus, US, China, and others).
Agree, but there are many places that accept Bitcoin in the world. Especially in Europe. There is a PM site here in the US that takes Bitcoin. There are other businesses that do as well.
The establishments above do make it easy to use your Bitcoins by providing the ATM. Sounds like a workable work around.
“If you were smart you’d use your Bitcoin to buy Gold and Silver bullion”
Do not talk common sense to a bitcoiner. :-)
Silver
“If you were smart you’d use your Bitcoin to buy Gold and Silver bullion”
I might do just that, with a few, when silver hits $18. ;)
Honestly? The rapid rise caught me quite by surprise. Silk Road was pretty much the place to spend Bitcoins; it was by far the biggest marketplace in which Bitcoin was the preferred currency, rather than just some nifty gimmick. I expected the fall of Silk Road to decimate the value of Bitcoin, as it put a massive dent in people's ability to do anything with their Bitcoin holdings.
The skyrocketing exchange rate for Bitcoin should not be mistaken for "value". People talk about the "value" of BTC relative to the USD or EUR, but the term "value" implies that there's something intrinsically virtuous about Bitcoins and that that something is growing. This, of course, is false. Money of any kind, remember, is a proxy for the barter system; I build you a website for $5000 and then buy a thousand $5 cheeseburgers with that paycheck only because it's more convenient than making a website in exchange for a thousand cheeseburgers directly. When I agree to that $5000 fee, that agreement is motivated by what I can buy with that fee, not on the fee itself; by itself, the fee is of course meaningless. And what can I buy with Bitcoin? Not a lot, unless I convert it to USD first.
Now, the more BTC is used as a speculation instrument, the less stable it is as a transaction medium, and therefore the less it's used for commerce. I'm not going to agree to build your website for any amount of BTC if I don't know what I'll be able to buy with my fee tomorrow. I'm serious; if you told me right now (with BTC ~$500) that you'd pay me 10 BTC to build you a website (i.e. a $5000 value as of 2:00PM EST 2009-11-20), I'd tell you to go sit on it, as would any other rational worker who's not in on it solely as a speculative instrument. As such, the very act of speculating ironically drives up Bitcoin's exchange rate while simultaneously driving down its value.
This does not bode well for Bitcoin's future. It strongly suggests an endgame where handfuls of individuals sit on very large stockpiles of BTC that they refuse to part with for anything short of astronomical sums, while the rest of us merely ignore them and continue using more established currencies with more predictable day-to-day trade-in values. These "Sirs" will steadily cash out, one by one, as they come to the same realization that they need to convert their BTC to USD in order to turn their theoretical wealth into actual Ferraris and mansions and yachts. They will mostly sell solely amongst one another; every time one of them decides to cash out, the ones who remain will agree to pay his insane prices because they'll each believe that they in turn will be able to ask for higher prices still when it's their turn. At some point you'll have basically one guy (or a group of guys) literally owning all the money in the world; he'll own all the BTC, expecting other people to give him goods and services in exchange for them at a rate of $1B per BTC. And we will all laugh at him, and he won't understand why he's still renting a small cockroach-infested apartment despite being obscenely "rich".
BTW, is the USD or EUR stable? Do I necessarily know that a $5000 paycheck today will enable me to buy a thousand cheeseburgers tomorrow? No, of course not; hyperinflation could hit so hard that I find myself having built an entire website yesterday and only get ten cheeseburgers for my effort (whereas I originally thought I'd do it for the equivalent of a thousand). However, it's extremely unlikely because of the ratio of USD usage in commerce versus speculation. The vast majority of individuals who hold USD right now, do so with the intent of using it to buy stuff at value in exchange for the labor or goods that they've already sold; they're not holding onto USD in the hopes of making USD scarce and therefore increasing their buying power as a side-effect of fluctuation in the transaction medium. The exact opposite is the case with BTC: most of the people who hold BTC right now are hoping that they can induce scarcity, which will allow them to trade it for much, much more labor or goods than they originally acquired it for. This means that, while the arguably biggest obstacle to good faith in the USD is the Federal Reserve, the biggest obstacle to good faith in BTC is every single fellow Bitcoin user. And that's why I'm staying far, far away from this game.
In my completely uninformed opinion, the reason BitCoin suddenly shot up is that the speculators have soured on Gold now that it has shown no sign of recovery from it’s doldrums.
Speculating is no fun if there isn’t a bigger sucker to buy you out.
bmfl
Interesting...
Thanks,
It's such an obvious mania that it's not even going to be fun to say I told you so.
Actually, take a look at this chart of unique Bitcoin addresses in the last year. See the recent skyrocket? That's consistent with a ton of new players suddenly entering the market, creating massive demand.
It's also consistent with a small group of individuals creating a shitload of proxy accounts and using them to buy and sell amongst one another on Mt.Gox, thereby creating an artificial price pressure through sheer volume. Thanks to Bitcoin's alleged anonymity, it's impossible to differentiate genuine demand from good old-fashioned price manipulation.
I’ve heard of Gresham’s Law, but am not especially familiar with its details or implementations. I’m a onetime distributed systems engineer, though, so I can tell when an enormous number of nodes, each operating with individual rationality on a perverse incentive structure, is headed toward a Byzantine collapse. :)
I look forward to your further insights.
Hmm. Based on a quick read of Gresham’s Law, I can definitely see the similarity. And, indeed, BTC’s economic properties are very much akin to a precious metal; Satoshi called the process of creating new Bitcoins “mining” for a very good reason. Certainly it’s true that mechanisms very similar to Gresham’s Law are at play here.
However, I would not characterize BTC as “good money”. Nor, for that matter, would I call gold or silver “good money”. As far as I’m concerned, there ain’t no such thing as “good money” except canned goods and ammunition; everything else is a negotiated proxy. :)
It they were “mining” Bitcoin (which in real monetary value would only cost the electricity to run their computers), they would be smart to then immediately “spend” this on physical gold/silver (and though it stinks as a value because of liquidity: Federal Reserve Notes (USD) as well).
It would be like getting “something for nothing”. IMO..
“As with all finite resources, they’ll become more valuable as they become fewer.”
Only if there is no substitute. One hiccup and the bitcoin becomes worthless.
Good point.
I do not disagree. Hence my reluctance to get involved with the craze. It’s not a commodity-backed currency, so it’s as worthless as printed cash with no gold or economic backing *coughTheDollarcough*
As a starting point the Bit Coin Directory http://cur.lv/4vi6w and the Bit Coin Mall http://cur.lv/4vi8m both have listings of Stores that except bit Coin (BTC).
Heh. Good one.
LOL, like everything in life, nothing's 100%. In one instance, something may be better (need to last centuries), in another instance (satisfy immediate hunger), something else is. Life is dynamic and the game changes continuously. Adapt or become extinct, it's as simple as that sometimes. :)
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