Anyone use any cryptocurrencies like bitcoin?

[backseat.bandit]

Some guys over on reddit have been doing some pretty amazing stuff with this 'joke' currency Dogecoin. They somehow were able to sponsor a Nascar Team by donating dogecoin.

Take a look:

 

[LiquorLanch]

It seems so damn useless. I'll stick to my good old benjamins that actually hold value. And are physical currency recognized by all.

 

[.MASSHOLE.]

It seems so damn useless. I'll stick to my good old benjamins that actually hold value. And are physical currency recognized by all.

You need to do some research then. It is far from useless. You think your benjamins actually hold value? Do you know what they are even backed by? Or how easy it is to alter the value if you are the Fed? Bitcoin offers something conventional money does not, a fixed supply. Once it stabilizes, which it eventually will, it will hold value much better than your dollar/euro/fiat money. It will be immune to many of the things conventional money are susceptible to, namely governmental influence.

 

[msg]

dogecoin has already boomed and crashed with the joke itself

 

[LiquorLanch]

You need to do some research then. It is far from useless. You think your benjamins actually hold value? Do you know what they are even backed by? Or how easy it is to alter the value if you are the Fed? Bitcoin offers something conventional money does not, a fixed supply. Once it stabilizes, which it eventually will, it will hold value much better than your dollar/euro/fiat money. It will be immune to many of the things conventional money are susceptible to, namely governmental influence.

You do realize that due to the nature of bitcoin versus actual, government endorsed currency it is much more probably that bitcoin will only succeed when it offers advantages over the current system of physical currency. I can't go to 7/11 and get gas with bitcoin. But I can with the USD.

TBH, I'm not even sure if you're trolling. Or, if you're one of those kids who thinks the internet is the answer to everything.

 

[.MASSHOLE.]

You do realize that due to the nature of bitcoin versus actual, government endorsed currency it is much more probably that bitcoin will only succeed when it offers advantages over the current system of physical currency. I can't go to 7/11 and get gas with bitcoin. But I can with the USD.

TBH, I'm not even sure if you're trolling. Or, if you're one of those kids who thinks the internet is the answer to everything.

Do you know the advantages it already has? Let me start; it cannot be duplicated, it has a finite supply (if you knew anything about monetary policy and supply you would understand this benefit), it allows for low transaction costs (huge), and it can be transported anywhere.

It may not be accepted yet, but it is relatively young compared to most currencies out there, and a shockingly high number of places are starting to accept it.

Bitcoin is not purely an online money, you can hold both physical bitcoins and bitcoin exchange cards.

If you understood monetary policy, supply, and seigniorage you would understand how bitcoin is revolutionary. Whether or not it actually succeeds is yet to be seen, but the options are endless. Imagine a currency that cannot be manipulated for political gains like the USD or Euro.

 

[msg]

If you understood monetary policy and money supply you would understand that fixing the amount of money is borderline retarded. If you have a limited supply of something and ever increasing demand with no substitute goods the cost of that item will always get higher. With currency that is called deflation and deflation is bad it just encourages people to sit on their money, banks not to lend, people not to spend. This SHUTS the economy down. Period. End of story.

Which is exactly what you get with bitcoins, people just hold on to they because they know the price will rise.

Bitcoin and other crypto currencies in that same model are literally useless-as in they provide no value whatsoever-commodities at best and economy destroying at worst.

Only the flipside, how do you create a digital currency that provides the benefits(really only low transaction costs) without creating a limited supply and still convincing people that it has some value. That is basically impossible and so the USD, the Euro, yen, yuan, francs and pounds(the only real currencies in the world imo) will remain king.

all bitcoins probably won't be in circulation until the 2100s. they hold value. I don't know what you're talking about. that's also not the only benefit

 

[cwphoto]

Haha dogecoin is the best. I've held a bunch since early january

 

[.MASSHOLE.]

If you understood monetary policy and money supply you would understand that fixing the amount of money is borderline retarded. If you have a limited supply of something and ever increasing demand with no substitute goods the cost of that item will always get higher. With currency that is called deflation and deflation is bad it just encourages people to sit on their money, banks not to lend, people not to spend. This SHUTS the economy down. Period. End of story.

Which is exactly what you get with bitcoins, people just hold on to they because they know the price will rise.

Bitcoin and other crypto currencies in that same model are literally useless-as in they provide no value whatsoever-commodities at best and economy destroying at worst.

Only the flipside, how do you create a digital currency that provides the benefits(really only low transaction costs) without creating a limited supply and still convincing people that it has some value. That is basically impossible and so the USD, the Euro, yen, yuan, francs and pounds(the only real currencies in the world imo) will remain king.

Two things about limited money supply:

First- Ever heard of high-powered money? Right. There is your answer to the first issue with limited supply. If Bitcoin ever got to a level where it could be used as high-powered money and back MS, it would solve that issue. It would be similar to the Bullion Gold-Standard system minus the transaction costs. Personally, I would use it as a combination of goods, but that is just me.

Secondly- 1 Bitcoin can be reduced into .000001 Bitcoins. There supply may be limited, but the denominations are not. What is stopping 1 Bitcoin from equaling $10,000,000 or even $1,000,000? To say that it will only be held as an investment is stupid. If the currency becomes stable and readily used the need for investment in it will fall.

So, you fear more about deflation from a currency that is still in its young age more than a currency dictated by political powers and can create billions of new reserves with more or less the click of a button? Man, I wish I had that mindset. I would much rather my current appreciate than depreciate. These governments make billions of dollars a year off of printing money, do you really think they want to lose that?

Also, I never mentioned using Bitcoin as sole money supplier, I personally think a bunch of private currencies is the best for the economy. It will stop the political pressures on the current currencies, prevent a monopoly on the monetary system, and eventually stop bust and boom cycles that come about from inflation and deflation of currencies. Do yourself a favor if you really want to learn more about competitive money suppliers. Read von Hayek's Denationalization of Money. You would find it eye opening if you think a government-run money supply is the only answer.

all bitcoins probably won't be in circulation until the 2100s. they hold value. I don't know what you're talking about. that's also not the only benefit

They arent really sure on the final year anymore, but yes, if the demand stays high and they stay relevant, they will hold value. They have much more potential than most people seem to realize. For all we know this is a stepping stone to a Bitcoin 2.0. Crypto-Currencies seem to be the future, whether its the technology that allows them to be limited in supply, or the low transaction costs that allow them to be easily transportable and usable.

 

[.MASSHOLE.]

Their supply*. Jesus.

 

[fortyvalve]

If you understood monetary policy and money supply you would understand that fixing the amount of money is borderline retarded. If you have a limited supply of something and ever increasing demand with no substitute goods the cost of that item will always get higher. With currency that is called deflation and deflation is bad it just encourages people to sit on their money, banks not to lend, people not to spend. This SHUTS the economy down. Period. End of story.

Which is exactly what you get with bitcoins, people just hold on to they because they know the price will rise.

Bitcoin and other crypto currencies in that same model are literally useless-as in they provide no value whatsoever-commodities at best and economy destroying at worst.

Only the flipside, how do you create a digital currency that provides the benefits(really only low transaction costs) without creating a limited supply and still convincing people that it has some value. That is basically impossible and so the USD, the Euro, yen, yuan, francs and pounds(the only real currencies in the world imo) will remain king.

They provide no value, yet right before that you state how people hold onto them because they know the price will rise....I.E value. I mean who wouldn't with prices still at over $400 USD per 1 BTC and it's only gone up. Also we already have a bitcoin vending machine here in the US (New Mexico), and retailers are starting to accept it more and more frequently. It simply can't be written off like some feeble attempt at a global currency like you make it out to be.

 

[backseat.bandit]

They provide no value, yet right before that you state how people hold onto them because they know the price will rise....I.E value. I mean who wouldn't with prices still at over $400 USD per 1 BTC and it's only gone up. Also we already have a bitcoin vending machine here in the US (New Mexico), and retailers are starting to accept it more and more frequently. It simply can't be written off like some feeble attempt at a global currency like you make it out to be.

A big problem with using some of these crypto-currencies to buy things from physical retail stores is that the conformation time is so long. No one wants to wait around for 10 minutes for their purchase to be confirmed

 

[fortyvalve]

A big problem with using some of these crypto-currencies to buy things from physical retail stores is that the conformation time is so long. No one wants to wait around for 10 minutes for their purchase to be confirmed

I agree that no average person wants to do that seeing as the average person would realistically not probably have more than 10 coins at this point with the price the way it is. But, if you are a long time miner or someone with a lot of bitcoin I don't see it being that big of an issue because they have been dealing with it for a while through buying and also the fact that the mining process is the longest/most difficult process they will have to go through.

 

[corona]

I was going to buy a bunch of Litecoin last year when it was super cheap. Was going to put $100 into it. I wanted to use credit card to pay but couldn't find an exchange that accepted it and then finally found a reliable secondary party that would accept credit that I could then transfer the money to an exchange. Turns out their credit system was down and I really didn't want to do a bank transfer or bother with money orders and shit so I gave up. 3 months later it had jumped to ~25 times the value. I was a bit pissed.

 

[mrbillgates]

I agree that no average person wants to do that seeing as the average person would realistically not probably have more than 10 coins at this point with the price the way it is. But, if you are a long time miner or someone with a lot of bitcoin I don't see it being that big of an issue because they have been dealing with it for a while through buying and also the fact that the mining process is the longest/most difficult process they will have to go through.

This. What I don't understand is if a bit coin is worth around $400, how do you walk into a store to buy something worth less than that? Can you buy half a bit coin's worth of goods? Or even a 1/4 of a bit coin's worth of goods?

 

[msg]

Can you buy half a bit coin's worth of goods? Or even a 1/4 of a bit coin's worth of goods?

yes, if you'd read through the thread

 

[.MASSHOLE.]

This. What I don't understand is if a bit coin is worth around $400, how do you walk into a store to buy something worth less than that? Can you buy half a bit coin's worth of goods? Or even a 1/4 of a bit coin's worth of goods?

I am assuming they have some sort of electronic system or ATM that allows you to input Bitcoins. You can send up to .000001 Bitcoins as a transfer, so I imagine it would be similar to what you do now. Give someone a $20 for $15 worth of goods and you get $5 back. So you buy something worth .5 of a bitcoin in dollars, you get .5 of that bitcoin back.

 

[fortyvalve]

I am assuming they have some sort of electronic system or ATM that allows you to input Bitcoins. You can send up to .000001 Bitcoins as a transfer, so I imagine it would be similar to what you do now. Give someone a $20 for $15 worth of goods and you get $5 back. So you buy something worth .5 of a bitcoin in dollars, you get .5 of that bitcoin back.

The buying process is still ultimately online, there are a few retailers that offer in store purchases but the online buying method is the way to go now. You can break bitcoin up to smaller amounts which is the beauty of it, and most places you will be getting a discount for using bitcoin as well so it's a win win. Say you want to sell or spend 0.1 BTC, currently you would be getting roughly $43.40 for it, or you could find the equivalent and spend 0.1 BTC on it.

I still have yet to come across a website or forum where people can offer their skills for Bitcoin. I want to do this with design work, anyone know of a place?

 

[.qzyxya]

I'm all over LNMNMMCs (Le New Meme Nice Maymay Man Coins)

 

[.MASSHOLE.]

You are looking at this way too literally. It is a very young "currency", so young that the IMF actually cannot figure out what to classify it as yet.(http://pix.cs.olemiss.edu/csci103/bitcoinMarketplace.pdf)

Is it a traditional currency? No. Is it backed by anything? No. But then I ask you this, beyond the roughly 3%(?) gold, what is the dollar backed by? Its back by our governments and government-backed business debts. To find a country that truly has a backing of a physical commodity you need to go back to the pre-WWI gold bullion standard where gold was the primary reserve backing. As long as there is demand and willing vendors, it can be an acceptable form of currency. I guarantee you it holds its value better than a Zimbabwean Botswana Pula which is an "official" government currency.

Give it time. Whether or not Bitcoin succeeds is up in the air, but crypto-currencies offer a lot of promise.

 

[.MASSHOLE.]

Beyond what 3% gold? The dollar is not backed by anything other than faith in the US government and if the us dollar is going to shit we are going to have a lot more problems than can be solved by a virtual currency.

"As long as there is demand and willing vendors, it can be an acceptable form of currency"

Yes and no. There are three things that are the function of money.

1. Store of Value. Bitcoins do not meet this one the currency is much too volatile.

2. Medium of exchange. Bitcoin meets this, used for transactions.

3. Unit of account, easily dividable, hard to counterfeit and used to measure the value of things. Bitcoin meets most of this but misses on the use to value things, when you buy something with bitcoin you are buying something valued in USD.

Well yea it holds its value better than the zimbabwe currency simply because there was no trust in the government and of the terrible fiscal policy and other economic blunders.

With no centralized control you lose the ability to manipulate the money supply to improve the economy.

It does have a smidgen of gold backing it, but not much. That is my point, you are saying the USD is different than Bitcoin because it has "value" is wrong.

I have never advocated it as a "pure currency" but rather a pseudo-currency that is too young to really place anywhere. No one knows where to place it which isn't shocking.

1. It does store value, but it is volatile more so than a typical government-backed currency

2. Obviously.

3. Value-It can be used to value things. Things are now sold in terms of bitcoins. You seem to be overlooking the fact that currency exchanges happen. You can measure a good in USD, Euro, and Bitcoins now. Is it widely used? No. But again, look how young it is.

The best thing about Bitcoin is its lack of manipulation! You do realize the Fed is more or less a political tool for the President to use to promote his/her own economic plans? The Federal Reserve/other central banks and the control of money supply is behind the boom-bust cycles that plague our world today.

Go back to the gold standard. Look at how few boom-bust cycles there were when it ran effectively. Central Banks could not manipulate their MS to promote long-term domestic economic policies.

 

[Madzzb]

Some ridiculously smart asian kid at my school had a stupid amount of bitcoin currency and has since transferred it to some form of real currency and is rich as fuck now.

 

[Chunter]

Ahahaha I can't believe they managed to sponsor a NASCAR team...

 

[steezysteeze]

Can somebody please explain to me why it's important for money to be backed by a physical commodity?

 

[.MASSHOLE.]

Can somebody please explain to me why it's important for money to be backed by a physical commodity?

By pegging a currency to a physical commodity it prevents unwarranted inflation assuming that commodity is scarce.

Take the gold standard for example:

Gold has historically been an important and desired monetary unit. It has both physical and economic characteristics that make it both viable and desirable to be used as physical currency and high-powered money, or monetary base money. Its unique physical characteristics confer it with beneficial attributes that have made it historically desirable. It is extremely durable, very easy to recognize and store as well as being very portable. Importantly as well, it is impossible to counterfeit and is easy to measure, weigh and value consistently. Additionally, its scarcity as a resource makes it unlikely to fluctuate in its value as a result of massive changes in new supply.

The gold standard is a fixed exchange rate system that uses physical gold as an anchor for national currencies. The aforementioned physical characteristics and its economic benefits made it attractive to governments as a unit of exchange and store of value. It has a high cost of production, which makes its supply very difficult to manipulate over the short-run, promoting its use as a currency anchor. The use of the gold standard over the long-run is apparent in its price stability, making it a valuable asset to national governments.

The classical model of the gold standard was the preeminent model prior to WWI. There were rules to this standard, and their enforcement was necessary to maintain a proper trade balance and promote capital flows between markets. The rules were as follows:

1. Fix a gold price and convert gold freely between domestic money and gold at that price.

2. Lack of export restrictions on private citizens of gold or capital

3. Backing of national banknotes and coinage with gold reserves and condition long-run money growth on gold reserves.

4. To have the central bank extend liquidity at higher interest rate in cases of short-run liquidity crises resulting from gold outflows.

5. If Rule 1 is temporarily suspended, to restore convertibility at the soonest feasible point in time at the old parity.

6. Allow the common worldwide price to be determined endogenously by global supply and demand of gold

If governments and their central banks were to follow these rules, the natural consequence would be endogenous control over prices that facilitate capital flows. Subsequently, trade would become dependent on the relative price of gold and domestic and foreign income. If domestic price levels of a country were to rise relative to international price levels, then imports would increase. As a result, the increases of imports would then cause an outflow of gold in a process called price-specie flow which would return prices to their previous levels.

Under this classical model, central banks were allowed to use tools of monetary adjustment to change gold flows. Central banks could move money supply in anticipation of gold flows rather than allowing it to happen passively. However, these central banks were expected not to pursue counter-cyclical monetary policy to manipulate domestic interest rates and devalue their currency.

 

[backseat.bandit]

Some ridiculously smart asian kid at my school had a stupid amount of bitcoin currency and has since transferred it to some form of real currency and is rich as fuck now.

I wouldnt be supriesed if he was either was an early supporter or was one of those people who developed malware that mines on other people's computers.

 

[chicken]

why would I? I got real dollas bitch.

 

[ABdrummer]

The (private) entity that is the federal reserve is turning our currency into fucking toilet paper. I've been meaning to get into this stuff for a while. Just not sure what exchange to use.

 

[Turd.Ferguson]

heard its pretty hard to do lines with a bitcoin, YOU NEED THE BENJAMINS TO DO THAT SHIT you internet-hippies

 

[.MASSHOLE.]

Any evidence of this? Inflation has been super low. The rate of the dollar against the euro been slightly down recently but how often are you going to europe anyways.

The anti-central bank movement stems from the Austrian School of Economics with economists like von Hayek and Mises who have theorized that a state-run monopoly of money issuance creates the boom-bust cycles that plague the classic Keynesian model of economics. Almost every single capitalist country follows the Keynesian Economic models.

Von Hayek is very wary of central bank and their control over interest rates, as he sees that as the reason there are boom and bust cycles. Obviously, interest rates and money supply are related with the Fed, and by tinkering with the interest rates, the money supply will change.

It is a very complicated topic to really explain without going into a lot of depth. You should try to take a course on both if you can.

Here are two funny videos to showcase the Keynesian v. Hayek in an informative matter

 

[.MASSHOLE.]

The current financial crisis emerged out of an economic boom that began in 2003 and saw rising stock values, increasing home prices, and high levels of employment and production. The upturn followed a downturn that hit in 2001 after the dazzling prosperity during the second half of the 1990s.

In other words, over slightly more than one decade, the economy has gone through two swings of the business cycle, with still no certainty about how long and severe the recession phase of the present cycle will turn out to be.

Many mainstream economists are baffled about these events. The Keynesians certainly cannot claim there has been any shortfall in "aggregate demand." Both in America and around the world, the demand for raw materials and consumer goods has been riding high for a long time.

On the other hand, the monetarists believe monetary policy has not been excessive; price inflation has remained pretty much in check, with consumer prices only rising at 2 to 3 percent a year for a long time.

So what has caused these economic crises? The answer can be found in the ideas of another group of economists, those of the Austrian school. Though this school of thought developed in Austria in the late nineteenth century and the first half of the twentieth century, most "Austrian" economists are Americans living in the United States.

The two leading figures of the school in the twentieth century (and who were originally from Austria) were Ludwig von Mises and F. A. Hayek, who won the Nobel Prize in economics in 1974 partly for his work on business cycles.

For many Austrian economists the past two business cycles have been, in the words of Yogi Berra, "like déjà vu, all over again." Mises and Hayek had first developed their theory of the business cycle in the 1920s, when the American economy experienced numerous technological innovations that lowered manufacturing costs, raised labor productivity, and thus resulted in an expanding supply of consumer goods, along with a rising stock market and a massive real estate boom. And all the while the general level of prices was rising at no more than 2 percent a year.

There was much talk of a "new economic era" and the "death" of the business cycle. One of America's most renowned economists, Yale professor Irving Fisher, publicly declared in the spring and summer of 1929 that the stock market had reached a plateau from which it could only go higher. That was just months before the great stock-market crash in October.

The Austrians argued, both before and after 1929, that the cause of the boom and the inevitable depression was Federal Reserve monetary policy. Under the influence of a variety of economists, including Fisher, the Federal Reserve had sought to stabilize the general price level on the rationale that both inflation (rising prices) and deflation (falling prices) were harmful.

Given the expansion of the supply of goods and services during the 1920s, prices throughout the economy would have been expected to fall slowly, and this likely would have happened if not for the Fed's policy.

Viewing any decline in the price level as a sign of "bad" deflation, the monetary authorities pumped additional quantities of money and credit into the banking system to prevent prices from falling. The banks could lend this newly created money only by lowering interest rates below what the Austrians call their "natural," or equilibrium, level, where the amount of money demanded by borrowers would equal the amount saved by income earners. Thus there were insufficient savings to complete and maintain many of the investment projects that were undertaken.

Because monetary expansion prevented prices from falling, no harmful price inflation appeared. Thus the magnitude of the monetary inflation was hidden by the stable price level. Nevertheless, the investment distortions and imbalance between savings and investment were real.

In late 1928 and early 1929, the Fed became concerned that its expansionary monetary policy was finally threatening a significant rise in the price level. The bank put on the monetary brakes, and in late 1929 and 1930 the stock-market, investment, and real-estate house of cards came tumbling down.

The severity and the duration of what soon became labeled the Great Depression were caused by the interventionist policies of first the Hoover and then the Roosevelt administrations. Rather than allow the market to adjust to the new noninflationary environment—which would have required timely downward adjustments in prices, wages, and shifts in production and employment—the government used various pressures and controls to prevent these changes. The American economy for a long time was caught in "disequilibrium" relationships between costs and prices, supply and demand, and production and consumption—not because of any "failure of capitalism" but because the heavy hand of government prevented the market from reestablishing "full employment."

How similar this is to the events of the last decade! Technological innovations, cost efficiencies, greater output and new goods on the market, along with booming stock prices and real-estate values—all occurring mostly with an annual price inflation of around 1 or 2 percent.

But throughout the second half of the 1990s and then again after 2003, the Fed undertook expansionary monetary policies, with the money supply sometimes increasing annually at double-digit rates. Interest rates were pushed to 1 to 2 percent and were even at times negative, when adjusted for price inflation. Money for investment and other purposes was being given away virtually for free.

Is it any wonder that financial markets boomed, that standards of credit-worthiness for investment and mortgage loans almost disappeared, that real-estate prices went up and up? Both in 2000 and in 2007, when the Fed became concerned that its policy was creating an unstable and unsustainable inflationary environment, did it put on the brakes. And both times the Fed-created house of cards came tumbling down.

Every historical episode has its own unique features. History never mechanically repeats itself. But like causes do bring about like effects. The concentration of monetary control in a central bank means that those who manage monetary policy are in effect central planners. Like all forms of central planning, monetary planning is heavy-handed, clumsy, and pervasive in its effects throughout the economy.

We will see the same inevitable sequence again and again for as long as money is in the hands of a monopoly central bank and the central bankers believe they are sufficiently knowledgeable, wise, and able to manage the society's economic affairs.

http://www.fee.org/the_freeman/detail/the-current-economic-crisis-and-the-austrian-theory-of-the-business-cycle

 

[bieberhole69.]

The anti-central bank movement stems from the Austrian School of Economics with economists like von Hayek and Mises who have theorized that a state-run monopoly of money issuance creates the boom-bust cycles that plague the classic Keynesian model of economics. Almost every single capitalist country follows the Keynesian Economic models.

Von Hayek is very wary of central bank and their control over interest rates, as he sees that as the reason there are boom and bust cycles. Obviously, interest rates and money supply are related with the Fed, and by tinkering with the interest rates, the money supply will change.

But changing the money supply is a more effective way to combat recessionary/inflationary gaps than the Keynesian method of shifting aggregate demand. There's significantly less time lag and it helps avoid the political business cycle

 

[bieberhole69.]

*But changing the money supply is a more effective way to combat recessionary/inflationary gaps than the Keynesian method of shifting aggregate demand. There's significantly less time lag and it helps avoid the political business cycle

I don't know how I quoted my own reply

 

[.MASSHOLE.]

*But changing the money supply is a more effective way to combat recessionary/inflationary gaps than the Keynesian method of shifting aggregate demand. There's significantly less time lag and it helps avoid the political business cycle

I don't know how I quoted my own reply

Changing the money supply results in interest rate changes, and these are at the heart of many depression and recessions that have occurred in the last few decades.

 

[bieberhole69.]

Changing the money supply results in interest rate changes, and these are at the heart of many depression and recessions that have occurred in the last few decades.

Well sometimes they had to decrease the money supply to increase interest rates and decrease inflation, in order to prevent the market from correcting itself later on once the situation had gotten a lot worse.

The goal is for smooth growth, taking away both the lows and also the highs to make the economy more stable

 

[.MASSHOLE.]

Well sometimes they had to decrease the money supply to increase interest rates and decrease inflation, in order to prevent the market from correcting itself later on once the situation had gotten a lot worse.

The goal is for smooth growth, taking away both the lows and also the highs to make the economy more stable

Exactly, but that is not how it is primarily used. The goals of the Fed are more based on unemployment levels than stability.