Cryptocurrency - where's the actual value?

[TooMany2cvs]

WitnessProtection said:

To give a first world example, what about recent events in Houston? You've evacuated and have lost access to most of your belongings. Even if the only thing you saved was your phone, if it's got a crypto wallet on it, you can at least transact to buy essentials. True, that requires uptake from vendors, but I've read quite a few accounts of groups using crypto (Dash in that instance) to both fundraise and pay for help for people impacted. It allows small groups to organise without needing access to banking, which may be down at that time. Even if the banking networks are up, all the ATMs are underwater. Having the ability to transfer value in those circumstances would be very useful, both personally and to the wider community.

...and you've got internet access, have you?

[Benjaminpalma]

x5x3 said:

Another benefit of Bitcoin is the degree of anonymity it provides. It is not entirely anonymous as the blockchain is there for anyone to analyse but a lot of people are fed up with the amount of data amazon/visa etc carry about us and our spending habits.

Benefit this, benefit that, etc.

Still no value behind it.

[Behemoth]

Benjaminpalma said:

Benefit this, benefit that, etc.

Still no value behind it.

What does value mean for you in this context, then? A currency is a pretty simple thing. It usually stores value and has functional value in transactions. Bitcoin has both; since it is in the early phase of adoption it is natural that the first is to the fore. What exactly are you not understanding here?

[x5x3]

Benjaminpalma said:

x5x3 said:

Another benefit of Bitcoin is the degree of anonymity it provides. It is not entirely anonymous as the blockchain is there for anyone to analyse but a lot of people are fed up with the amount of data amazon/visa etc carry about us and our spending habits.

Benefit this, benefit that, etc.

Still no value behind it.

and the value in gold is?

The value in gold is nothing more than others desire it and it has been desired for a long time. I can buy some but then it has no use - other than as a store of value.

The continued reference to the Tulip bulb bubble is just a red-herring - there was never going to be a finite supply of bulbs, Bitcoin has far more similarities with gold than tulips.

I do understand your point, my interest started when I came across the original white paper in 2012 and was captivated by the idea of a currency not owned or manipulated by a government. The main issue I now see is that I am far too scared to spend any in case the price goes up further. Now that could be a bubble or it could be the start of something really big.

Yes the cryptos have a way to go in regards to volume/price of transactions etc but the one certain factor is that technological advances will enable us to solve these issues faster and faster.

Boomark this thread and come back in a couple of hundred years.

Anyone reading this thread should go and read the original white paper - understand the concepts and ideas and then make up your own mind.

https://bitcoin.org/bitcoin.pdf

[Dr Jekyll]

The OP seems to take the view that if currency isn't issued by a government it somehow doesn't count.

[Behemoth]

Dr Jekyll said:

The OP seems to take the view that if currency isn't issued by a government it somehow doesn't count.

Yes, it seems so. Such currency is more accurately called fiat money, which is a subset of all currencies. It's worth noting the existing worldwide fiat system has only been running since Nixon cancelled the notional ability to convert $ into gold in 1971.

[NickCQ]

Behemoth said:

If I lose £5 from my jeans pocket because I've been too lazy to secure it properly, that doesn't lead to the collapse of sterling. Storing passwords is certainly a weakness, but it doesn't have any effect on the strength of a distributed decentralised cryptocurrency network.

If the chap running a private blockchain had his pwd compromised, that might be another matter entirely

That's not an accurate comparison. The comparison would be dropping the login details to your online banking with no way to remotely block it.
The other issue with a decentralised ledger is the rate at which transactions can be processed. I think that has to be solved before you can run significant parts of the global economy on it.

[NickCQ]

Dr Jekyll said:

The OP seems to take the view that if currency isn't issued by a government it somehow doesn't count.

I think you may have scrolled past the discussion we have been having on this topic. Being issued by a government is a crucial distinguishing feature of a currency versus a commodity, and it gives it intrinsic value over a commodity due to the power of taxation a sovereign government has over national income.

[Dr Jekyll]

NickCQ said:

I think you may have scrolled past the discussion we have been having on this topic. Being issued by a government is a crucial distinguishing feature of a currency versus a commodity, and it gives it intrinsic value over a commodity due to the power of taxation a sovereign government has over national income.

So the original UK banknotes weren't currency?

[Behemoth]

NickCQ said:

That's not an accurate comparison. The comparison would be dropping the login details to your online banking with no way to remotely block it.
The other issue with a decentralised ledger is the rate at which transactions can be processed. I think that has to be solved before you can run significant parts of the global economy on it.

Using your scenario, if my bank login is stolen, I have a window of time to block the account before the cash goes walkies. If my crypto password is stolen, I equally have a window of time to move the funds to a new wallet. The end result is the same.

I certainly agree that transactions need speeding up. Work is well underway to solve that via Lightning Network (and by definition, Segregated Witness). Scalability with this delivers millions of transactions a second (I think even billions). Even micropayments per click will be easy. It easily surpasses the capabilities of any legacy payment method.

Bitcoin protocol and layers over it evolve to meet such demands, in a similar way that Berners-Lee's original html protocol has evolved considerably since its first iteration & now incorporates all sorts of technology like JavaScript and JQuery over the original idea.

[NickCQ]

Dr Jekyll said:

NickCQ said:

I think you may have scrolled past the discussion we have been having on this topic. Being issued by a government is a crucial distinguishing feature of a currency versus a commodity, and it gives it intrinsic value over a commodity due to the power of taxation a sovereign government has over national income.

So the original UK banknotes weren't currency?

Apologies, I used the word 'issued' inaccurately - as I understand it the original UK (and current Scottish) banknotes were issued by retail banks. And the Bank of England was a private company at one stage, no?

What I mean is more that taxes and income are denominated in a particular currency. Basically, the UK government has the power to demand people pay it a certain amount of GBP. That's just what tax is. So there will always be people that need to buy GBP off you to settle debts with the UK government. Not so with tulips (never), gold (any more) or BTC (yet).

[Behemoth]

NickCQ said:

So there will always be people that need to buy GBP off you to settle debts with the UK government. Not so with tulips (never), gold (any more) or BTC (yet).

So your point is that HMRC doesn't accept bitcoin. So what? That doesn't negate the value of bitcoin whether in utility or wealth.

[NickCQ]

Behemoth said:

NickCQ said:

So there will always be people that need to buy GBP off you to settle debts with the UK government. Not so with tulips (never), gold (any more) or BTC (yet).

So your point is that HMRC doesn't accept bitcoin. So what? That doesn't negate the value of bitcoin whether in utility or wealth.

It does. If everyone got bored of gold tomorrow, it would have no intrinsic value beyond the demand for jewellery. The value above that support is purely there because people in general believe it has value or will at some stage in the future. The same is not true of GBP, USD, EUR etc and that's a fundamental difference between a commodity and a currency.

[Behemoth]

I agree there's a difference but it is nuanced and not important. The notion that gold would be abandoned is very hypothetical. Bitcoin has far higher risk, that is very clear. But I believe it has the functional power and resilience to remain of great utility.

Bitcoin is classed as a currency, a commodity and even as property is various jurisdictions. That doesn't concern me; it's natural for there to be debate and confusion over something so transformational. The fact remains that it exists as both a store of value and increasingly as a method of transactional exchange. If you don't want to call that a currency, I don't much care. The definitions and legal statuses will resolve over time.

[TooMany2cvs]

WitnessProtection said:

TooMany2cvs said:

...and you've got internet access, have you?

Mesh networks would work in such a situation, and have been used during mass protests (e.g. Arab Spring and Occupy events) when authorities blocked regular internet access. Point being it would be far harder to block such networks than it would to (for example) lock up the banks and deactivate ATMs.

Didn't work so well on Barbuda, is it?

There's parts of the UK - including right here - with no mobile signal for SMS, let alone viable internet. There are places within a mile or so of here who's only internet connection option is satellite. How's this "mesh network" going to be connecting to the net?

[Benjaminpalma]

x5x3 said:

and the value in gold is?

The value in gold is nothing more than others desire it and it has been desired for a long time. I can buy some but then it has no use - other than as a store of value.

The continued reference to the Tulip bulb bubble is just a red-herring - there was never going to be a finite supply of bulbs, Bitcoin has far more similarities with gold than tulips.

I do understand your point, my interest started when I came across the original white paper in 2012 and was captivated by the idea of a currency not owned or manipulated by a government. The main issue I now see is that I am far too scared to spend any in case the price goes up further. Now that could be a bubble or it could be the start of something really big.

Yes the cryptos have a way to go in regards to volume/price of transactions etc but the one certain factor is that technological advances will enable us to solve these issues faster and faster.

Boomark this thread and come back in a couple of hundred years.

Anyone reading this thread should go and read the original white paper - understand the concepts and ideas and then make up your own mind.

https://bitcoin.org/bitcoin.pdf

With fiat currency, at some point in the past there will have been an act of forbearance in exchange - with the exception of inflationary quantitative easing.

With bitcoin, there will have no forbearance other than mining.

Hence, bitcoin has no intrinsic worth.

Get it?!

[Dr Jekyll]

Benjaminpalma said:

With fiat currency, at some point in the past there will have been an act of forbearance in exchange - with the exception of inflationary quantitative easing.

With bitcoin, there will have no forbearance other than mining.

Hence, bitcoin has no intrinsic worth.

Get it?!

No.

No currency has intrinsic worth it's just a question of what people will exchange for it.

[Behemoth]

Benjaminpalma said:

With fiat currency, at some point in the past there will have been an act of forbearance in exchange - with the exception of inflationary quantitative easing.

With bitcoin, there will have no forbearance other than mining.

Hence, bitcoin has no intrinsic worth.

Get it?!

I'd appreciate you avoiding or explaining in laymen terms words like forbearance. The very definition of fiat money is that there is no intrinsic value. I believe you are describing representative money, which went out the window with Bretton Woods when Nixon detached the $ from gold in the early 70s.

[Benjaminpalma]

Dr Jekyll said:

No.

No currency has intrinsic worth it's just a question of what people will exchange for it.

So when receiving Bitcoin, what have those who receive it done in exchange?

[Dr Jekyll]

Benjaminpalma said:

So when receiving Bitcoin, what have those who receive it done in exchange?

Sometimes provided another currency, sometimes provided goods, sometimes a service.