sega — 2013-04-15T06:08:57-04:00 — #1
'Real' national currencies are controlled by the sovereign government and it's value is determined by the money in circulation linked to the GDP. Since currencies change value all of the time, this notion of any currency being stable is quite obsurd. The only thing that theoretically has some stability is commodies such as gold and silver, and since they are openly traded (i.e. forex) just like currencies the value changes all the time. Right or wrong this is how currencies and comodies work. I think you can even trade in orange juice!
Now bitcoins work differently.
The creator is said to be Satoshi Nakamoto, nobody has seen him or spoken to him. His transparency makes this 'virtual' currency even more suspicious. What strikes me even more is the way bitcoins work.
It's people that give this currency value and it's scarity through mining is what makes people want to buy this. In the early stages it was easier to mine them, that being said the more bitcoins which are bought the harder it is to mine them. So now it's virtually impractical to mine for bitcoins and you'd spend more on electricity that it would in the value of a bitcoin, so people now buy them. As an added downside there is a cap to the amount of bitcoins available.
In recent events this currency just crashed in relation to the dollar, reducing it from 280USD right down to 1 cent!!!! Absolutely crazy!
What's your take on this virtual currency?
parkint — 2013-04-15T06:21:54-04:00 — #2
A very well stated assessment, @Sega;.
It appears what was originally a "thought experiment" (and quite an interesting technological extrapolation) has turned into a "media storm" of nonsense.
A fascinating idea that may not have application in the real world.
sega — 2013-04-15T06:43:28-04:00 — #3
People actually believe in this scam/hoax/ponzi etc. as it being a way to say to stick it to global governments and in the meantime some masked guy from wherever he's from is probably sticking it to them.
I honestly don't understand what gives bitcoins value and what underlying principles back it. Many complain how the US dollar is no longer backed by gold, but even so, it's still backed by a country with natural resources, ideas, innovation, people working to say the least. When a country runs into economic problems they print more money and devalue their own currency. Can bitcoin even run in trouble considering it's not backed by any government or economy?
Conventional money machanics are open to debate and could undergo some changes to make the system more stable. That being said, bitcoins aren't backed by anything, aren't linked to an economy and have no intrinsic value on their own, even the people who buy into them are only doing so because they said 'open source' somewhere, and believe it's some kind of geeks currency. That all being well and true to some degree, this currency has no nation, has no base and does not care for the people of which it must cater for, whereas our own national currencies do (to some degree).
I was initially against the change to EURO's with the EC and as you can see many countries are now wanting to go back to their own currency.
That being said this sounds even more crazy, and I am confident that many have lost a lot of money buying into bitcoins.