Catch up on stories from the past week (and beyond) at the Slashdot story archive

 



Forgot your password?
typodupeerror
×
The Almighty Buck Bitcoin

Steve Forbes: Bitcoin Not Money 692

MouseTheLuckyDog writes "A brief editorial by Steve Forbes, one of our moneymeisters, on why bitcoins are not money.. Hint: For those who are too lazy to read the opinion,. Bitcoins are too volatile to be money." From the article: "Money is most optimal when it is fixed in value just as commerce is facilitated when we have fixed weights and measures. When you buy a pound of hamburger you expect to get 16 ounces of meat. An hour has 60 minutes. A mile has 5280 feet. These measurements don’t 'float.' So too money best lubricates commerce when it has a fixed value."
This discussion has been archived. No new comments can be posted.

Steve Forbes: Bitcoin Not Money

Comments Filter:
  • Fiat Currency (Score:5, Insightful)

    by jasonlfunk ( 1410035 ) on Wednesday April 17, 2013 @08:31AM (#43471603)
    What what exactly is the value of the US dollar?
    • by KillaGouge ( 973562 ) <gougec17 AT msn DOT com> on Wednesday April 17, 2013 @08:33AM (#43471617)
      The value of one U.S. dollar is exactaly one U.S. dollar. The value doesn't change, how much you can buy with it however, does change.
      • Re: (Score:3, Informative)

        by marcovje ( 205102 )

        It was that way, when it was still linked to the gold standard. It isn't anymore.

        • Re:Fiat Currency (Score:5, Insightful)

          by Chris Mattern ( 191822 ) on Wednesday April 17, 2013 @08:39AM (#43471705)

          Money still fluctuates in value when you're on the gold standard. It just fluctuates in lockstep with the fluctuations in the value of gold. This means that it's unlikely to steadily decrease in value, but it doesn't mean it stops fluctuating.

          • This means that it's unlikely to steadily decrease in value, but it doesn't mean it stops fluctuating.

            Unless, say, you discover either an unexpected new easily exploitable source of gold or a new mechanism of extracting gold efficiently

        • Re:Fiat Currency (Score:4, Insightful)

          by chill ( 34294 ) on Wednesday April 17, 2013 @08:40AM (#43471723) Journal

          Only because Gold was defined in terms of U.S. Dollars. Specifically, the major nations of the world got together and said "1 ounce of pure gold is $21 U.S. Dollars".

          A gold standard isn't magic, nor does is prevent inflation or deflation.

          • Re: (Score:2, Insightful)

            by alen ( 225700 )

            gold be definition is deflationary
            there is a set amount of gold on earth. as the population increases there is less gold per person available. hence as population increases you will have deflation because there will be less and less money available per person.

            • Re: Fiat Currency (Score:3, Insightful)

              by dugancent ( 2616577 )

              Go look up the definiton of gold in a dictionary. If the word deflationary doesn't appear, it's not "by definition".

            • Re:Fiat Currency (Score:4, Insightful)

              by ShieldW0lf ( 601553 ) on Wednesday April 17, 2013 @08:54AM (#43471885) Journal

              gold be definition is deflationary
              there is a set amount of gold on earth. as the population increases there is less gold per person available. hence as population increases you will have deflation because there will be less and less money available per person.

              The population does not increase by definition.

            • Re:Fiat Currency (Score:5, Interesting)

              by chill ( 34294 ) on Wednesday April 17, 2013 @08:55AM (#43471897) Journal

              Gold is, but a gold *standard* isn't. Or, rather, it doesn't have to be.

              You just adjust the value assigned to the gold. Since there is no significant commerce valued in "ounces of pure gold", you adjust the value given to your medium of exchange.

              See 1971, when Richard Nixon revalued gold from $21 to $35 per ounce, but only for non-American exchangers.

              • Re:Fiat Currency (Score:4, Insightful)

                by FatSean ( 18753 ) on Wednesday April 17, 2013 @08:59AM (#43471935) Homepage Journal

                So instead of "printing money" they'll just revalue gold.

                • Re:Fiat Currency (Score:5, Insightful)

                  by Anonymous Coward on Wednesday April 17, 2013 @09:09AM (#43472037)

                  Yep, that's why keeping the gold standard was so asinine. It didn't do anything but obligate the U.S. government to hoard gold.

                • There are plenty of examples in history of governments 'devaluing' gold or silver coin by sneakily issueing a new coin made of an alloy of lower precious metal content.

              • Re:Fiat Currency (Score:5, Interesting)

                by Bob the Super Hamste ( 1152367 ) on Wednesday April 17, 2013 @10:55AM (#43473205) Homepage

                See 1971, when Richard Nixon revalued gold from $21 to $35 per ounce, but only for non-American exchangers.

                Wrong. It wasn't Nixon who changed the exchange rate from US dollars to gold but the F.D.R. administration which changed the exchange rate from $20.67/oz to $35.00/oz. . Also it wasn't Nixon who stopped US citizens from exchanging gold to US dollars but again was the F.D.R. administration. To add further insult to injury the F.D.R. administration nationalized the gold holdings of the US and only allowed the private ownership of gold for industrial, jewelry, art, coins that had special collector status (not ones that would have them in the future), and foreign legal tender. This began the slow march to the end of the gold standard in the US. A good introductory piece on this period that I have found deals with the curious case of the 1933 gold Double Eagle [wikipedia.org] over on wikipedia. Granted it isn't expansive on the gold standard but provides a good background on what the F.D.R. administration did and is a good jumping off point for other topics on the subject on the US gold standard of the time.

                What Nixon did was close the international gold windows that other countries were using to exchange US dollars for gold. This was being used by Charles de Gaulle to exchange France's dollar holdings for gold thus diminishing the US's economic power in the region. Add to it the deficit spending because Vietnam and it was necessary (from the Nixon administration's perspective) to remove the US dollar completely from the gold standard. What the Nixon administration did was put the final nail in the coffin of the US gold standard.

                Just because Nixon put the final nail in the coffin for the US gold standard doesn't mean he was bad in this regard. All Nixon did was end the Bretton Woods Agreements [wikipedia.org], he didn't confiscate anyone's private property. His role was actually quite small and the abuse he committed in regards to this issue were small especially compared to those of F.D.R. There are plenty of things to beat up Nixon on but this really isn't one of them.

                • Re:Fiat Currency (Score:5, Interesting)

                  by Jane Q. Public ( 1010737 ) on Wednesday April 17, 2013 @12:22PM (#43474265)

                  "Also it wasn't Nixon who stopped US citizens from exchanging gold to US dollars but again was the F.D.R. administration. To add further insult to injury the F.D.R. administration nationalized the gold holdings of the US and only allowed the private ownership of gold for industrial, jewelry, art, coins that had special collector status (not ones that would have them in the future), and foreign legal tender. "

                  This is a bit disingenuous. As you say, F.D.R. nationalized gold, in the sense that the Reserve banks had to turn their gold over to the treasury. However, he did not prohibit private ownership or sale of gold; only gold that was used as money.

                  It was indeed Nixon who halted just about all citizen gold trade. With pretty disastrous results.

                  By the way, just as an aside: by tossing out Bretton Woods, Nixon also effectively defaulted on U.S. debt. Quite intentionally. The people who said the "fiscal cliff" or not raising the debt limit would be the first time the U.S. defaulted on its debt are WAY off, by more than once.

                  YOU might not consider government defaulting on debt to be a bad thing. But other countries most definitely did.

                  "There are plenty of things to beat up Nixon on but this really isn't one of them."

                  That is VERY debatable.

            • Re:Fiat Currency (Score:4, Insightful)

              by Mystakaphoros ( 2664209 ) on Wednesday April 17, 2013 @08:58AM (#43471925) Homepage

              there is a set amount of gold on earth.

              True, but it's not all in humanity's possession, hence the interest in mining it (like you can do with BitCoin). And true, someday we will hit the limit (like we will do with BitCoin) and those who have it already will have power over those who desire it (ditto).

              • By the time all the gold on Earth is mined, asteroid mining will be in full swing.
                • By the time all the gold on Earth is mined, asteroid mining will be in full swing.

                  Perhaps even before then, at some point it may become cost-effective to synthesize gold [wikipedia.org].

              • by alen ( 225700 )

                and if history is going to repeat itself, those without it will just come and kill you and take your gold or bitcoin or whatever limited currency you will have

              • Re:Fiat Currency (Score:5, Interesting)

                by Dins ( 2538550 ) on Wednesday April 17, 2013 @09:42AM (#43472425)

                True, but it's not all in humanity's possession, hence the interest in mining it (like you can do with BitCoin). And true, someday we will hit the limit (like we will do with BitCoin) and those who have it already will have power over those who desire it (ditto).

                That's what's so odd to me about Steve Forbes' comments. He seems to be a proponent of the gold standard. Well, gold is very similar to bitcoins (i.e. a fixed total amount, people mining to get more, etc.) If anything, I view the wild fluctuations of bitcoin a function of it being new and people not knowing quite what to make of it yet, and to some extent the opposite of the natural fluctuation of fiat currencies like the dollar and the euro. There is a fixed amount of bitcoins. There isn't a fixed amount of fiat currencies. So if 1 bitcoin is worth $50 today and $100 tomorrow you could argue the bitcoin is the same value both days, but the dollar is worth LESS tomorrow.

                But what do I know. I got Cs in Econ 22 years ago...

            • by danlip ( 737336 )

              There may be a set amount of gold on earth, but it is an unknown amount, and the amount of mined gold is constantly increasing. Also the population will (hopefully) not be constantly increasing - if we don't get that under control soon we are seriously screwed - it will either decrease slowly and voluntarily or dramatically and tragically.

          • Re:Fiat Currency (Score:4, Insightful)

            by LoyalOpposition ( 168041 ) on Wednesday April 17, 2013 @10:19AM (#43472815)

            A gold standard isn't magic, nor does is prevent inflation or deflation.

            Actually, it sort of is. Consider when inflation is high (that is: when the growth in the gold supply exceeds growth of the population), then gold isn't worth as much. That means that it isn't as valuable to people to mine and mint it. Marginal mines close down. CEOs decide not to produce minor veins. Workers move into other lines of business. The supply of gold falls. The inflation is reduced. Now consider when inflation is low. Gold becomes more valuable relative to the available goods and services. Wildcatters spring up. Chemists research more efficient ways to extract gold from tailings. People start using alternatives in electronic circuits. The supply of gold rises. The deflation is reduced.

            Now consider fiat money. Unless there are rigid controls on the creation of money, and who gets to spend it, then the guy who decides to make the money benefits from making it, and there is little limit to how fast he would want to.

            ~Loyal

            • by lgw ( 121541 )

              The amount of physical currency in circulation is largely irrelevant to the money supply. The total value of all money in all savings accounts and CDs is something like 20x the total physical currency in circulation.

              Using gold coins instead of dollar bills might prevent inflation or deflation of that 5% of the money supply. It's just not significant.

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        that tautology works just as well with bitcoin, though.

        • Re:Fiat Currency (Score:4, Interesting)

          by hedwards ( 940851 ) on Wednesday April 17, 2013 @08:57AM (#43471919)

          No, it doesn't. It's sort of like if I were paid in Euros and had all my expenses to be paid in USD, CAD or RMB, except that the relationship between the currencies were fluctuating by up to 50% on any given day with little or no predictability.

          Bottom line is that the people who throw out fiat currency in relationship to the USD are being disingenuous when they suggest that USD is subject to the same level of instability. Sure it is slightly unstable, but we're not talking about hyperinflation or hyperdeflation, which is something that could definitely happen with BTC. And the amount of money you make tends to rise with inflation in general, assuming some sort of sane monetary policy.

          What's more, since nobody is forced to take BTC for anything, you can very easily wind up in a situation where the BTC economy grinds to a halt because people think their money is going to be worth more the next day or in a month.

          • It absolutely does. You're going way beyond the original tautology, which was "the value of 1 (unit of currency) is 1 (unit of currency)". You can sub in bitcoin, dollars, whatever... it still holds true. Hell, it goes way beyond money, that tautology holds true for absolutely anything you can assign a value to.
      • Wait for it.... (Score:2, Insightful)

        by Anonymous Coward

        ...here it comes. Legions of teenage and college Slashdotters, who think they are MBAs, Accountants and public policy experts, engaging in Fan Boy, Face Painting, Homer rants about how bitcoins are really money...really!

      • The value doesn't change, how much you can buy with it however, does change.

        How much you can exchange it for is what determines its value. The number written on it is its notional value (aka face value).

      • Re:Fiat Currency (Score:5, Insightful)

        by Richard_at_work ( 517087 ) on Wednesday April 17, 2013 @08:42AM (#43471757)

        I think its useful to say that the value of a currency is really in how stable it is within an economy - once hyperinflation takes over, it doesn't matter how established the currency is, its value as money disappears (see Germany in the 1920's, Russia in the 1990's and Zimbabwe in the past decade) and people move to alternative means of payment.

        $1 today will buy me a loaf of bread. That loaf of bread might cost $1.01 tomorrow, or even $0.99, but while that's an inconvenience its not disastrous. If that loaf of bread goes from $1 one day to $5 the next, and $20 the next, then its value as actual money is gone - theres no way to establish a stable economy on such a basis because there's no way to plan for the future.

    • Comment removed based on user account deletion
    • by Shivetya ( 243324 ) on Wednesday April 17, 2013 @08:46AM (#43471797) Homepage Journal

      not that their value changes, but that the changes are to volatile to make it a worthwhile currency. Its more like a commodity than anything else.

    • Comment removed (Score:4, Insightful)

      by account_deleted ( 4530225 ) on Wednesday April 17, 2013 @08:52AM (#43471855)
      Comment removed based on user account deletion
    • Significantly more stable?

    • Re:Fiat Currency (Score:4, Interesting)

      by dkleinsc ( 563838 ) on Wednesday April 17, 2013 @09:10AM (#43472043) Homepage

      A few bits of actual value:
      1. If you're a US citizen, you can use US dollars to pay your legally required taxes to the US government (and probably the government of your town, county, and state). If you don't have US dollars, you can't, and the IRS can and will seize your other assets, sell them for US dollars, and use that to pay your taxes. And if you try to stop the IRS from doing this, the police and courts will if necessary use force to make that happen.

      2. On your US dollar bill, you'll see "This Note Is Legal Tender For All Debts, Public and Private". If you go to a restaurant, order a meal, and offer the appropriate amount of cash to pay for your meal, the restaurant owner cannot legally refuse to accept your cash and then have you arrested for not paying your debt to them. Again, this is enforced by the police and court system.

      3. Because of points (1) and (2), most everyone in the US has US dollars to pay for things, so a business that doesn't accept US dollars is going to be at a severe competitive disadvantage.

      None of this stops you from exchanging your RAM sticks for someone else's kumquats if you and the kumquat-seller both agree to it.

  • So... he doesn't use any money i guess?
    • by Anonymous Coward on Wednesday April 17, 2013 @09:07AM (#43472011)

      He said "too volatile." Not that it doesn't change but it doesn't swing in value as much.
       
      Oh, who am I fooling? This is Slashdot. The morons here are either super-literal or undeniably obtuse... to the point that they're a mockery of themselves. And they wonder why people in the real world find them awkward to deal with.

  • Judo (Score:5, Interesting)

    by superwiz ( 655733 ) on Wednesday April 17, 2013 @08:36AM (#43471647) Journal
    The main premise in Judo is to use opponent's strength against them. Forbes knows he sounds snooty. Which is why he takes on a position contrary to the one he actually wants to advocate. Let's say he loaded up on Bitcoins and he wants them to go up. His choices are (1) stay silent; (2) promote it; (3) oppose it. Staying silent obviously will not help him cause. Promoting it will not help his cause because the kinds of people who would take him at his word are not the kinds of people to seek out an alternative currency (he is all about orthodoxy). But he can use the fact that anyone seeking to oppose orthodoxy would do the opposite of what he'd recommend (this is Judo). Oh, and if he really didn't think much of Bitcoin, he would simply not comment.
    • Re:Judo (Score:4, Funny)

      by Anonymous Coward on Wednesday April 17, 2013 @08:50AM (#43471835)

      I'm all for martial arts metaphors when possible, but this is fucking ridiculous.

    • And I'm sure if Forbes wrote "Bitcoin is a fantastic idea, I fully support it" you would be saying "oh he is just taking the contrary position because he knows reverse psychology blah blah blah" ?

      Maybe (just.. maybe) he says he doesn't think Bitcoin is money because he doesn't think Bitcoin is money?
    • That is some seriously inane bullshit there. I realize that in your fantasy world bitcoin is going to be a huge success and all that money you sunk into this at best zero-sum game/ponzi scheme is going to be worth millions, but back here in reality, we're all laughing at your antics. Look at me go: ha.

  • Say what, Steve? (Score:5, Insightful)

    by Chris Mattern ( 191822 ) on Wednesday April 17, 2013 @08:36AM (#43471653)

    *All* money fluctuates in value. Yes, even if you run on the gold standard (which I know you favor). Money that fluctuates too much isn't very good for money's intended purpose (as a means of exchange and a store of value, particularly the latter), but you can't say that something isn't money because it fluctuates. Was the Deutschmark not money during the hyperinflation of the 1920s?

    • Same thing with the Zimbabwean Dollar in the 2000s, before they... stopped using the Zimbabwean Dollar. Once you start issuing $100 trillion dollar notes, people get kind of leery.
    • by Nidi62 ( 1525137 )

      Was the Deutschmark not money during the hyperinflation of the 1920s?

      Apparently they were more useful as building blocks [wordpress.com]

    • by chill ( 34294 ) on Wednesday April 17, 2013 @08:49AM (#43471825) Journal

      Re-read the article. His point is that once a currency becomes *too* volatile it ceases being money. He doesn't say money *has* to be fixed to be useful, just that it is OPTIMAL when fixed. The *less* it fluctuates the more useful it is as a standard medium for exchange.

      "Money is most optimal when it is fixed in value..." (Emphasis mine.)

  • Price Anarchy (Score:5, Interesting)

    by eldavojohn ( 898314 ) * <eldavojohn@gma[ ]com ['il.' in gap]> on Wednesday April 17, 2013 @08:38AM (#43471669) Journal
    One of my childhood friends does internal auditing for a large bank. One time I asked him what his biggest fears were (having been able to look at all the books) and he told me at the time it was actually price anarchy. This was around the 2008 time frame and he was trying to describe a situation where nobody knows how much money to charge for something. I later heard a This American Life episode that details life in Brazil when something like this happens [thisamericanlife.org].

    So my friend told me that his biggest fears are when you go into a market one day and eggs are 68 cents a dozen and you go in the next day and they're $5.92 a dozen ... and you can go to the store management and they're looking at some graphs at the beginning of each day to set their prices but they're doing guesswork because the money fluctuates so quickly. So my friend's real fear was that there's some point where that swings wildly out of control and -- similar to the bank runs that happened before regulation -- weird swings cause people to act erratically and irrationally. And those actions cause the swings to get even wilder and suddenly you have price anarchy where nobody knows what anything is worth at a given point in time. The funny part is that on some days he would watch the terminals and freak out and go withdraw as much money as he could from the ATM to hedge into some liquid assets since he kept everything in the bank. That amused me because by using inside information he was performing what were erratic behavioral patterns ... but I guess that's another discussion.

    Anyway, yeah, back to Bitcoin ... if you want some entertainment, keep this tab open throughout the day [clarkmoody.com]. So many people are gaming Bitcoin right now that it makes for an excellent show! Behold, the completely unregulated market!
    • Re:Price Anarchy (Score:5, Interesting)

      by dj245 ( 732906 ) on Wednesday April 17, 2013 @09:23AM (#43472215)

      .... Anyway, yeah, back to Bitcoin ... if you want some entertainment, keep this tab open throughout the day [clarkmoody.com]. So many people are gaming Bitcoin right now that it makes for an excellent show! Behold, the completely unregulated market!

      The thing I noticed a couple weeks ago when I first looked at bitcoin price graphs is that the different currencies are not trading at the level which would be indicated by the actual bank exchange rates. Doesn't this indicate that there is not enough volume or FX traders in the system?

      It crossed my mind that the differences were due to fees which may apply when converting different currencies. But if this were true, then the graphs of different currencies would at least trend each other. They don't.

      If I had the time and motivation, it would be worth investigating opening many international accounts and trading between the currencies using bitcoin as an intermediary.

  • by leonbev ( 111395 ) on Wednesday April 17, 2013 @08:38AM (#43471679) Journal

    Considering that one of their freelance journalists (Tim Lee) on forbes.com is one of the biggest supporters of Bitcoin.

    Check out all of the articles he's written about how great Bitcoin is:

    http://www.forbes.com/sites/timothylee/ [forbes.com]

    I find it amusing that they let this one freelance writer attempt to pump up his personal Bitcoin stash on such a popular financial site.

    Of course, this is Forbes... They'll post anything for page views and ad impressions. I still remember the crap they posted about the merits of SCO's pathetic Linux patent infringement case against IBM back in the day, mostly because they loved the negative attention from the Microsoft and Linux fanboys.

  • This isn't news, unless you disengage your brain.

    Right now BTC is, at best, an investment, and I use that term loosely.

  • Bitcoins aren't money in the same way that gift cards aren't money. That prepaid card at the gas station isn't for X gallons of gas, it's for some artificial amount called dollars that can later be traded for gas.
  • Since Steve Forbes is against it, Bitcoin has its first ringing endorsement.

    Forbes doesn't seem to be capable enough to run a hot dog stand. Of course I am just a plebeian.

  • That inflation exists. Or did he miss out that vital piece of information during his little rant?

    Unfortunately for Steve Forbes, the value of things are relative.

  • So it might not be your definition of 'money'. But, it's something that has value and can be used to trade for other currencies, goods, and services. What is it?
  • by fredan ( 54788 ) on Wednesday April 17, 2013 @08:43AM (#43471761) Journal

    1) First they ignore you

    2) Then the laugh at you

    3) Then they fight you

    4) Profit!

  • by dotHectate ( 975458 ) on Wednesday April 17, 2013 @08:44AM (#43471773) Journal
    I'm sure the storm above this post has already pointed this out, but just because something is not the best form of it's kind does not automatically mean that it is not of that kind.

    Gold, while extremely useful in many ways, is less useful for everyday transactions than our fiat dollar. That doesn't make it any less of a monetary base though for transactions. Bitcoin is no different.

    Some people really can't get over the hump of intangible objects. You'd think with thousands of years of intangible religious experience behind humanity that virtual property wouldn't be that much harder either...
  • by Anonymous Coward

    Relative stability in value is a necessary property of any real currency to remain effective. This is true whether you tie supply to amounts of a particular type of dirt extracted (varies with mining of said dirt - which will kill the bitcoin ultimately just as it killed the gold standard) or determined by human thinking. Bitcoin has none of the properties of a currency - it's just a classic market bubble in a worthless commodity.

    • At least tulips are pretty.
    • by Jesrad ( 716567 )

      The analogy is sounds, but not at all for the reasons you try to expose.

      Bulb tulips were a popular way for investors to save their welth from massive devaluation caused by the practice of clipping gold coins, combined with the special rules of the dutch banking system (free coinage) and the massive influx of precious metals from newly discovered America: gold would flow into the dutch banks, get deposited at facial value in exchange for full(er) coins - or certificates of value which end up buying bullion f

  • When measured against USD, maybe it seems to be. The reality is that it isn't the denomination currency for many goods and services, yet.
    Once a piece of bread starts being listed for 0.01 Bitcoin no matter the exchange rate, then where is the volatility you refer to?

    What happens when people start getting paid for a set amount of work or services in Bitcoins? Would that seem volatile to you then?
    Exchange rates have always existed and always will. People used to pay with grain in ancient times. What do you th

  • Therefore, Gold is too volatile to be money... Sorry all those gold speculators. (and for those of you who do want to get technical, Gold is a commodity, not money, but in almost every corner of the globe gold can be used to buy stuff, so therefore it can be used as money, although again, technically, that's barter.)

    I mean yes, if you want to get very technical, "money" is a bartering system put in place by a government, who guarantees that these debt slips can be traded for goods and services. And since bi

  • From the last paragraph of the article:

    We donâ(TM)t really know how this coin is created. You canâ(TM)t have a functional money without a basic transparency.

    We know exactly how this coin is created! At least those of us that know how to read the technical specs and source code of the implementations. It is a strictly designed mathematical implementation that will release a certain number of bitcoins at a certain rate over a set period of time. Maybe to a guy that is used to the money supply tap

  • by rogueippacket ( 1977626 ) on Wednesday April 17, 2013 @08:53AM (#43471875)
    There have been enough "millionaires" minted by BitCoin to ensure it has a place for some time as a purely speculative market, and a speculative market can be just about anything - goods, services, money, pork chops, anything that people want. Regardless of whether the fanboys think it will become a real currency or not - usually by asking retarded and self-explanatory questions like "What is the exact value of a U.S. Dollar?" - BitCoin has now drawn the attention of every get-rich-quick schemer and arm-chair investor on the planet, and rightly so - there is likely still some good money to make if you don't mind extreme risk. Unfortunately, all of this just adds to the volatility, which will ultimately keep sane, stable, financially-minded people out of the BitCoin market.
    Remember, kids, the markets tied to the real-world are based on investments - the idea of buying into something which will generate a return for you in the long run, usually a corporation beholden to the shareholders which must prove they have used your money to generate value every quarter. This stability draws more and more investors, which in turn builds confidence and ensures that you will have a buyer when you actually want to cash-out. You could have a million BTC today, but without a buyer, you don't have a penny - and judging from the news, the only way to attract buyers is by constantly screaming "Look at us! You're going to be rich!" over and over until you attract someone willing to accept greater risk than you by purchasing your BTC.
    TL;DR - go ahead and play hot potato with your money if you want to, but the rest of us will play in markets that won't lose 50% of their value overnight.
  • by yesterdaystomorrow ( 1766850 ) on Wednesday April 17, 2013 @08:54AM (#43471881)
    ...when you can pay your taxes with them.
  • Comment removed (Score:4, Interesting)

    by account_deleted ( 4530225 ) on Wednesday April 17, 2013 @09:05AM (#43471989)
    Comment removed based on user account deletion
  • by Dogtanian ( 588974 ) on Wednesday April 17, 2013 @09:26AM (#43472255) Homepage
    Saying "we don't really know how this coin is created" displays the author's fundamental misunderstanding of the phenomenon. You don't need to know the exact technical details- and I don't either- to understand that the process of bitcoin production is clearly defined and entirely transparent (for those who *do* understand the technical details). (*)

    Of course, you *should* understand the principles of what has to be done, the nature of Bitcoin and the factors involved in it in general (such as the fact there will only ever be a finite number of Bitcoins). But saying that "we" (i.e. humanity) don't understand how it's created is nonsense; what he means is that *he* doesn't understand. "We" created the damn thing entirely ourselves along arbitrary lines!

    IMHO, the real question is the philosophical one of whether Bitcoin's creation is an arbitrary, Sisyphian task and whether this makes any sense.

    Also, the Bitcoin's value *is* fixed- a Bitcoin is worth 1 Bitcoin, just as a US Dollar is worth 1 US Dollar. Granted, in the real world the dollar is almost certainly a better measure of "absolute" value than the Bitcoin is at present. Still, this doesn't change the fact that in principle it has no more inherent value and stability than Bitcoin, only what it's worth against other currencies- and of course, the dollar is always going to be stable if you choose the dollar as your "stable" currency to measure it against.

    (*) I was going to post this on the Forbes site too, but I notice the *first* comment there already made *exactly* the same point.
    • I think that you DO need to know exactly how they are created. A big problem for bitcoin in my mind is that they give the early adopters and proponents a huge advantage over than latecomers. I want to know if the person who invented this is sitting on a fortune versus being just a guy who donated the idea gratis without any monetary compensation for it.

      In some ways it is like someone finding a big mine of worthless kryptonite. They spend a year mining the kryptonite and getting a horde stored away. Then

  • by Bob9113 ( 14996 ) on Wednesday April 17, 2013 @09:47AM (#43472473) Homepage

    "Money is most optimal when it is fixed in value"

    While it may be true that currency can be too volatile, Cyprus would disagree that a fixed value is ideal. Cyprus is on the Euro, whose value is based on something more stable than Cypriot econmics (ie: the economics of the entire EU). The debt in Cyprus got too big to be supported by the modest production of the island nation.

    That is a bad thing in itself, and governments should not let such things happen, but what happened next is worse. Normally a country would devalue its currency in this situation. That's bad, because it generally leads to further devaluation of the currency, and in extreme cases can lead to hyperinflation. But when the currency can't be devalued, and the country doesn't have the money to service its debt, things get really unpleasant.

    In the end, the EU wound up bailing Cyprus out, but things were getting really nasty. The Economist has a good article. [economist.com]

There is no opinion so absurd that some philosopher will not express it. -- Marcus Tullius Cicero, "Ad familiares"

Working...