(VANITY) How do you view bitcoin as an "investment" or as a currency?

Vanity | 2/3/17 | Vermont Lt

[Vermont Lt]

Every once in a while I like to take the temperature of different forums I visit. I am wondering what the general thoughts are on bitcoin.

Yes, I know all of the pros and cons. Yes I have a little stash. No, I am not going to try to "sell" anyone on the idea.

I am simply curious.

[Navy Patriot]

Thanks, that explanation is easy to follow and I was able to compare gold to bitcoin with it and confirm that bitcoin could easily be used as a currency.

Also both bitcoin and gold both are not perfect, but counterfeit can be detected in each further easing the use as currency.

Now I have a general idea of bitcoin and how it works.

[Coleblue]

Everyone should be required to read Charles Mackay. Popular Delusions run amok!

[jjsheridan5]

Upon what is bitcoin value based? Can you buy it with paper on full faith and credit?

The value of bitcoin lies in three things. First, bitcoin is an inherently safer and much less expensive method for transferring wealth from person A to person B. Think of it not as a currency, but rather as a rival to Paypal. Second, the bitchain ledger framework provides an unparalleled source for non-tamperable and fraud-resistant records of transactions. This provides tremendous value to bitcoin, as a method of payment. Third, because a "bitcoin" is just a number, it can be stored off-line, and opens up security and redundancy options that are simply impossible with other forms of currency, and impossible with metals.

The value of bitcoin is indirectly derived from those three things. Directly, the value of bitcoin comes from its adoption as a method of payment (for goods, payroll, intra-company, etc.). If it is used, the value of bitcoin goes up. If it is not used, the value of bitcoin will ultimately go down. Its use, in turn, is derived from the advantages listed above.

[a real Sheila]

First of all, I’ve read several times and yet I still have no clue how it even works.

Supposedly U.S. currency is based upon gold, correct?

So what thing of value is bitcoin based upon?

Someone here please break it down to 5th grader level for me.

[jy8z]

How do I view bitcoin?

I'll tell you as soon as I actually see one. Do you happen to have a picture of one?

[jjsheridan5]

Ask 10 people that question, and you will get 11 different answers. The simplest, and most sensible answer IMO, is to NOT view bitcoin as a currency, but rather as a transfer mechanism. It is NOT a rival to the dollar (it could be, ultimately, but isn’t as of right now). Instead, it is a direct rival to things like debit cards and paypal. Its “value” is that as a payment framework, it is substantially safer, cheaper, and more resilient, than those rivals. In addition, since one’s “account” is measured in a publicly maintained ledger, you are not tied to a specific vendor (paypal, stripe, your bank, etc.).

All “speculation” on bitcoin’s value is just that: speculation. If bitcoin/bitchain becomes the transfer payment mechanism of the future, then individual bitcoins will rise in value dramatically. If, on the other hand, nobody is using bitcoin as a transfer payment mechanism in, say, 10 years, then the value of individual bitcoins will be zero.

[usconservative]

Excellent primer, thanks!

[editor-surveyor]

.
>> “Supposedly U.S. currency is based upon gold, correct?” <<

Nope! based on nothing but people’s willingness to accept it.

>> “So what thing of value is bitcoin based upon?” <<

World wide monetary freedom.
.

[amorphous]

How do I view bitcoin?

https://blockchain.info/

[jjsheridan5]

I'll tell you as soon as I actually see one. Do you happen to have a picture of one?

You can actually view of a picture of one, rather easily. There are printable bar codes, if you want. Or, you can simply write down the string of alphanumerics that make up that "bitcoin". If you want to feel perfectly safe, take that scrap of paper and bury it in a mason jar. As long as an EMP strike hasn't wiped out >99% of the nodes of bitcoin, you could take that scrap of paper, enter the number into you bitcoin wallet, and use the currency as if nothing happened. Or you could take it to a 7-11 in the middle of the sahara and, assuming they had internet access, use it as you would a dollar bill (assuming they accepted dollar bills).

[Coleblue]

Everyone should be required to read Charles Mackay. Popular Delusions run amok!

[bgill]

It’s great if you like flushing your cash down the toilet.

[nitzy]

Oh come on....

Do you get your paychecks direct deposited into your account? Do you have any money in stocks or bonds or mutual funds or a 401K or in a bank account or credit union??????? You do realize that they aren’t actually “holding” any money for you right? All you really have are 1’s and 0’s in a computer somewhere.

How on earth do you plan on getting to any of that after a mass EMP event???

I don’t think anyone ever claimed that bitcoin is absolutely bullet proof against any eventuality. I do think it is as legitimate as electronic “dollars” as a medium for transactions.

[amorphous]

You can print your own now with what ever amount you wish and protect the transaction code with a password phrase:

[jjsheridan5]

Actually, you don't go far enough -- one of the strenths of bitcoin is that it dwarfs other frameworks in terms of resiliency. I forget the actual number, but I believe that in excess of 99% of all nodes would have to be destroyed in order to affect the network as a whole. Given that these nodes are strewn across the world, it is almost certainly true that bitcoin is the safest digital method of holding on to wealth. And given that bitcoin can also be stored in a mason jar in the backyard, and in a safe-deposit box, and in a physical wallet, simultaneously, I would submit that it is also the safest physical holder of wealth, as well.

[jy8z]

Using my hard earned money that took me decades to amass to pay for a “barcode” or a “string of alphanumeric characters” is not going to happen. Yes, I am old school. You guys go for it.

[jjsheridan5]

Using my hard earned money that took me decades to amass to pay for a “barcode” or a “string of alphanumeric characters” is not going to happen.

Nobody is suggesting that you should. Was merely countering your point that bitcoin was not physical. But bear in mind that if you choose to horde cash, or store wealth in an account somewhere, or hold titles to anything (land, cars, etc), you are essentially paying for a "barcode". In fact, given that it is only a matter of time before all financial instruments and titles are going to be stored on a bitcoin-like network (many countries have already done this in certain industries, and this process is well underway everywhere, in virtually every financial industry), what will you put your money into, beyond that which you can carry?

[Database]

I've never seen Bitcoin explained in this way. Very nice in that it doesn't get into details about how it is implemented.

Just one quibble. I would change secured with encryption to secured with cryptography. Nothing in the blockchain is hidden.

[CharlesWayneCT]

Could you even invest $1000 in bitcoins in 2010?

Seriously — there are a limited supply of bitcoins, if someone had tried to buy a millon of them for $1000, it would have driven the price up wildly.

It is true though that the original bitcoins became rather valuable. That’s true of a lot of stocks as well, if you go back to the original valuation before they even became public.

And bitcoin is worth $1012 today. It won’t be tomorrow, it wasnt’ yesterday, it was 10% different last week, 30% different 2 months ago. It was higher in 2014, lower in 2016.

It is a wildly volatile product, and it has barely kept pace with the stock market in the past year.

It is however an interesting investment, in that it tends to spike up wildly whenever there is a scare that causes people to worry about normal investments.

Unfortunately, it reacts so quickly that you’d be hard-pressed to make money on that — if you could, someone a lot wealthier than you or I would be doing it already. Probably Soros.

[jy8z]

What will I put my money into?

My heirs will benefit from what I invested in as I was aging. Two very physical investments that have had value for centuries upon centuries. My kids are really lucky that I don't need this in my retirement as I am living on cash. I still don't believe a barcode and a string of alphanumeric characters bring any sense to a sound financial future. But that's just me.