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Introducing bitcoins

Home Forums Archive Infrastructure Introducing bitcoins

This topic contains 48 replies, has 15 voices, and was last updated by Profile photo of Ken Sims Ken Sims 3 years, 1 month ago.

Viewing 15 posts - 1 through 15 (of 49 total)
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  • #1379
    Profile photo of Ken Sims
    Ken Sims
    Keymaster

    caveden’s attempted post (copied from the spam filter log):

    Hello all,

    I had posted this topic on the wrong forum section. It’s a topic where I briefly describe the bitcoin project, and I suggest The Seasteading Institute to accept bitcoins donations. I m copying the topic this section. I just removed my personal introduction and updated the numbers. Here it goes:

    Bitcoin is a P2P Cryptocurrency. That is, a form of currency based on cryptography and digital signature, with no central authority. Transactions are verified by a distributed network, as well as the “coinage” of new coins. The inflation rate is hardcoded on the algorithm. Everybody can be an issuer of bitcoins, but no issuer can control the monetary inflation rate, wich is set to rapidly decrease, until stopping completly once the total ammount of bitcoins get close enough to the assymptotic limit of 21 million. It is sound money with no central issuer to be shut down by governments.

    You can read more on the site linked above. I wrote a text about them myself, here is the automatic translation to English.

    I’m an enthusiast of bitcoins as I am an enthusiast of seasteading. During his speech, Patri Friedman emphasized that too much effort is spent in trying to convince people of libertarian ideas, while too few effort is spent into actually trying to do something. Well, the bitcoin project is a really creative attempt of creating a new, sound money.

    I ask you to consider reading about this project and, if you like it, consider accepting bitcoins donations directly from the Seasteading project site. It would be really nice for both projects – bitcoins would be promoted by an important project like the seasteading instute, and the seasteading institute would provide a way for people to donate anonymously, not to mention the potential increase in value bitcoins may yet experience.

    For you to have an idea in numbers, the first bitcoin transaction was a pizza delivery for more than 20.000 BTC if I remember well. Today, one bitcoin is worth something around 0,24USD. All 4,49 million BTC in existance today sum up 1.053.433 USD according to bitcoin watch, and the project is barely 2 years old!

    Well, that’s it for now. If you had questions about bitcoins, I’ll be happy to try to answer them. You may also check the official site, there are foruns there too.

    Best regards!

    #11798
    Profile photo of caveden
    caveden
    Participant

    Maybe the anti-spam didn’t like me because my user account is new… who knows..

    Thank you for copying it!

    #11799
    Profile photo of caveden
    caveden
    Participant

    Hello Alan,

    Alan wrote:

    Value is certainly in the mind of the beholder, but why would anyone value bitcoins?

    For its inherit attributes that make it a great means of exchange and store of value. I talk about these attributes on my text linked above, Biticoin: the new gold? .

    And bitcoin price has been raising sharply actually, with strong fluctuations last weeks. You may check some charts at MtGox.com if you want, it’s the main exchange site.

    Alan wrote:

    I could take a piece of paper, divide it into 20 parts, and scribble on each part – then claim that I will never make any more and that as more people accept my “scribblescraps” as currency their value will soar. I’ll be rich!

    It sounds about as plausible as “bitcoins”.

    There’s an important difference. Pieces of paper may be copied very easily. There’s no reasonable guarantee of its scarcity level. And even if you make them extremely hard to copy, we all would need to trust that at least you, who knows how to create them, won’t ever print a lot.

    Bitcoins are “cryptographycally” protected against fraud, and the monetary inflation rate is hard coded on an open source algorithm. It’s practically impossible to produce fake bitcoins, and no one controls the inflation rate.

    Alan wrote:

    I’m also not sure how effective a currency will be that cannot be expanded to be available to the majority of the world’s population. Gold at least has something like $5 trillion available in reserves.

    But they can be expanded, they are highly divisilble.

    #11809
    Profile photo of Alan
    Alan
    Participant

    caveden wrote:

    Alan wrote:

    I could take a piece of paper, divide it into 20 parts, and scribble on each part – then claim that I will never make any more and that as more people accept my “scribblescraps” as currency their value will soar. I’ll be rich!

    It sounds about as plausible as “bitcoins”.

    There’s an important difference. Pieces of paper may be copied very easily. There’s no reasonable guarantee of its scarcity level. And even if you make them extremely hard to copy, we all would need to trust that at least you, who knows how to create them, won’t ever print a lot.

    Bitcoins are “cryptographycally” protected against fraud, and the monetary inflation rate is hard coded on an open source algorithm. It’s practically impossible to produce fake bitcoins, and no one controls the inflation rate.[/quote]

    I’m still not buying it. Even if my pieces of scribblescrap were absolutely uncounterfeitable, I doubt that anyone would value them much.

    Why? because there is nothing of value backing them – not even “the full faith and credit, etc.” of a government (which isn’t much).

    Paper money has always been a symbol of value, representing gold or silver or the government’s promise. No one really placed the value on the paper itself. How much less so will they value an immaterial series of bits, unless those bits represent something that at least many people will value.

    Perhaps this bitcoin idea will work well as a prototype for something else, or perhaps it represents some value I’m not understanding, but rarity itself is not sufficient to give value to something.

    #11831
    Profile photo of
    Anonymous

    The problem, as far as I can tell, is that nothing stops somebody from creating a P2P currency that competes with bitcoins.

    So the scarcity of bitcoins is sort of dependent on the ability and willingness of programmers to come up with similar or even better schemes. And they most likely will.

    It seems to me like you still need some tangible, scarce resource to back a currency (unless you have the power to force everybody in a market to use your un-backed currency that is…).

    #11834
    Profile photo of
    Anonymous

    Carl wrote:

    (unless you have the power to force everybody in a market to use your un-backed currency that is…).

    …like, gasp?, a legal tender law?

    “This note is legal tender for all debts, public and private”

    #11835
    Profile photo of caveden
    caveden
    Participant

    Carl wrote:

    The problem, as far as I can tell, is that nothing stops somebody from creating a P2P currency that competes with bitcoins.

    So the scarcity of bitcoins is sort of dependent on the ability and willingness of programmers to come up with similar or even better schemes. And they most likely will.

    Sure, nothing stops you from starting your own currency, inspired by bitcoin if you will. That’s the good thing of free software… who knows, maybe someone will have an even better idea one day.

    But in no way that could affect the scarcity of bitcoins, because your new currency wouldn’t be accepted by software that only deals with bitcoins. The digital signatures and cryptography assures that you cannot make your new currency pass as bitcoins. To create new bitcoins, you have to follow the protocol rules, and that includes respecting the inflation rate.

    #11836
    Profile photo of caveden
    caveden
    Participant

    Alan wrote:

    I’m still not buying it. Even if my pieces of scribblescrap were absolutely uncounterfeitable, I doubt that anyone would value them much.

    Why? because there is nothing of value backing them – not even “the full faith and credit, etc.” of a government (which isn’t much).

    Well, if you still doubt it, just check the exchange sites. The most used is MtGox, look at its BTC/USD charts: http://mtgox.com/trade/history . Another nice site is http://www.bitcoinwatch.com/ there you’ll see the total value of bitcoins in existence. They’ve passed one million dollars recently.

    The same questions you raise could be raised for gold. Nothing backs gold value, and yet people use it as a store of value.

    Alan wrote:

    Paper money has always been a symbol of value, representing gold or silver or the government’s promise.

    Interesting you mention that, have you ever heard about what happen to Somalia’s money after the collapse of the central dictatorship?

    Lots of people starting printing the ex-official money, what made inflation rise really sharply. But, nobody would accept “new” notes, because everyone knew which were the notes that existed until the collapse of the government. So more zeros couldn’t be added to the notes. Inflation “stopped” as soon as the actual value of the highest number paper note got close from its production cost.

    Somalians are now literally using paper and ink as money. And it’s somehow stable.

    If you want to know more, there is a particularly interesting podcast here: http://fee.org/media/stateless-in-somalia-by-benjamin-powell/

    Any commodity may be used as money. Some have “features” which make them better than others.

    Alan wrote:

    Perhaps this bitcoin idea will work well as a prototype for something else, or perhaps it represents some value I’m not understanding, but rarity itself is not sufficient to give value to something.

    It’s not just rarity, bitcoins have other features that make them a good store of value and means of exchange, like high divisibility, easy stockage, easy/cheap transffers, easy authenticity verification…

    #11837
    Profile photo of caveden
    caveden
    Participant

    Recently the Eletronic Frontier Foundation has started to accept bitcoin donations. Look how simple it is: http://www.eff.org/helpout

    :)

    #11840
    Profile photo of Ken Sims
    Ken Sims
    Keymaster
    caveden wrote:

    The same questions you raise could be raised for gold. Nothing backs gold value, and yet people use it as a store of value.

    Gold has intrinsic value. It is used for industrial purposes and also for decorative purposes. (Granted that the price generally does not accurately reflect the true intrinsic value.)

    Bitcoins have no intrinsic value.

    I’m with those who think that a virtual currency which has no backing will never supplant currencies which have some kind of backing, whether it be backed by some commodity for which it can be exchanged on demand (my preference by far) or backed by government fiat (like the U.S. dollar).

    #11855
    Profile photo of caveden
    caveden
    Participant

    Ken wrote:

    Gold has intrinsic value.

    Nothing has intrinsic value. That’s the very basis of the value theory of the austrian economics. Value is an opinion people have on stuff, not an attribute of stuff. It’s important to remark this difference, as I said in the other thread, because otherwise people may claim that when your actions change their property’s value, you’re violating their property rights.

    Value is an opinion of the beholder, as Alan noted.

    Now, what matters to whether a commodity is a good currency or not is not the fact that it can make beautiful necklaces, but other features it must have in order to become a good means of exchange and store of value. Gold has quite some interesting characteristics for these purposes – no wonder why its demand to make jewerly and all is much smaller than the demand for use it as a store of value. I wrote a text explaining why bitcoins share all these characteristics, and even improves them when compared to gold. It’s liked on my first post.

    #11856
    Profile photo of caveden
    caveden
    Participant

    You know what? I’ll follow Patri Friedman example and do something, instead of just try to convince people of my points.

    I’ll try to orgnanize a donation to the seasteading project among the bitcoin community forums. There aren’t that much of people there, so don’t expect a lot… but most of them are libertarians, so I suppose they do identify with the seasteading project as I do.

    I’ll gather all the donated bitcoins in a MyBitcoin account until the day the seasteading institute start accepting them. Then I’ll transfer them all.

    #11857
    Profile photo of Ken Sims
    Ken Sims
    Keymaster

    caveden wrote:

    Ken wrote:

    Gold has intrinsic value.

    Nothing has intrinsic value. That’s the very basis of the value theory of the austrian economics. Value is an opinion people have on stuff, not an attribute of stuff.

    [/quote]

    Somehow I don’t think your body cares about anyone’s opinion of the oxygen in the air you breathe, but if it wasn’t there, you’d have problems!

    Webster’s New World Dictionary:

    intrinsic adjective belonging to the real nature of a thing; not dependent on external circumstances; essential; inherent

    There are two “value” meanings involved here:

    1. The actual usefulness of a physical substance. That’s what I’m talking about with intrinsic value. This doesn’t depend on anyone’s opinion. (Whether people actual use it that way does depend on opinion, but that doesn’t change how it can be used.)

    2. How much someone is willing to pay for something. That’s the value you’re talking about, and it does depend on opinion, but it’s not the same thing as intrinsic value.

    Bitcoins have no intrinsic value, so the question becomes … why should anyone have an opinion that they have any value?

    Because U.S. dollars are no longer backed by anything with intrinsic value, they no longer have any intrinsic value (other than that of the materials of which they are made, whose value is minimal). U.S. dollars have value only because the U.S. government says they do, and people’s opinion of that statement still is more-or-less favorable. However as the U.S. government because less and less trustworthy, U.S. dollars have less and less value, especially outside of the U.S. Within the U.S. people are pretty well stuck with them.

    Bitcoins are not back by any authortative organization, so again the question is … why should anyone have an opinion that they have any value?

    #11858
    Profile photo of caveden
    caveden
    Participant

    I’ve opened the account. Whoever wants to donate bitcoins to the Seasteading project may donate to 194qHQhV1r48xoLu5vMP4A54ekdvGfcEGW

    Once the institute is accepting bitcoin donations, I’ll transfer everything.

    #11859
    Profile photo of caveden
    caveden
    Participant

    Ken wrote:

    There are two “value” meanings involved here:

    1. The actual usefulness of a physical substance. That’s what I’m talking about with intrinsic value. This doesn’t depend on anyone’s opinion. (Whether people actual use it that way does depend on opinion, but that doesn’t change how it can be used.)

    This is not value, this is utility at most. You may say that gold has intrinsic properties that make it useful for some stuff, but that’s not value.

    The Fallacy of “Intrinsic Value”, by Gary North.

    Ken wrote:

    Bitcoins are not back by any authortative organization, so again the question is … why should anyone have an opinion that they have any value?

    Well, you should ask each person that is currently trading bitcoins, accepting them in exchange for their services, or accepting donations of bitcoins (like the EFF), why each one of them value bitcoins.

    I value them because, as I said, I believe its features make it even a better currency/store of value than gold already is. The fact that it is P2P open software, with no central authority that could be shut down by governments, is also a great feature. I think it has great potential. I would love to be able to provide services for bitcoins on a seastead one day. :)

    Best regards!

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