Bitcoins explained

[mineistaken]

So I always said that bitcoins have no actual value other than that value which depend on how many people think that it is valuable.

Analogy would be here:

http://www.nytimes.com/2013/05/15/ar...bys.html?_r=1&

You have a painting which real value is in the hundreds or maybe $1000 tops. However if you have people who somehow think it is worth more you can sell $1000 value thing for 46 millions.

And yes I know that "something is valuable as much as somebody is going to pay for it". Point is that some people simply overvalue things. 0 value bitcoin or $1000 value painting are just examples of this.

[Nice_Nick]

Are you drinking because that didn't explain shit.

[SilentKnight]

Originally Posted by Nice_Nick

Are you drinking because that didn't explain shit.

Are you too simple to understand the concept?

[EpicPanda]

Supply/demand, aka the market sets the value. If modern art helps you understand this, then that works.

This guy on reddit did some good work:

http://www.reddit.com/r/Bitcoin/comm...oin_community/

[slapass]

Originally Posted by mineistaken

So I always said that bitcoins have no actual value other than that value which depend on how many people think that it is valuable.

Analogy would be here:

http://www.nytimes.com/2013/05/15/ar...bys.html?_r=1&

You have a painting which real value is in the hundreds or maybe $1000 tops. However if you have people who somehow think it is worth more you can sell $1000 value thing for 46 millions.

And yes I know that "something is valuable as much as somebody is going to pay for it". Point is that some people simply overvalue things. 0 value bitcoin or $1000 value painting are just examples of this.

The value in bitcoins is in the encryption. The ability to quickly and safely shift them across the world. Diamonds and gold have a similar value. Add in scarcity and those who want that ability are willing to pay extra to do it.

[seeandsee]

bc are same as paintings?

[12clicks]

A better explanation would be this:
Gold has been accepted as valuable for 1000s of years even though its only an element found in the earth.
The people behind bitcoins WISH to have them accepted in the same way.

Speculation over how many dummies will be lured in ensues.

[Jel]

cool err... I mean shit story bro

[dyna mo]

the analogy/explanation doesn't really work. A painting, any painting, has value in the supplies used- paint, canvas, frame, etc. I can hand a painting to you. you can touch a painting.

I can't hand you a bitcoin.

bitcoin is simply an experiment in peer-to-peer currency for simplifying transactions. if a group of people can agree amongst themselves that bitcoin is a trusted medium of exchange, then a value for bitcoing is determined amongst them and business transaction happen. no big deal.

[mineistaken]

Originally Posted by dyna mo

the analogy/explanation doesn't really work. A painting, any painting, has value in the supplies used- paint, canvas, frame, etc. I can hand a painting to you. you can touch a painting.

And that is exactly why I said that painting has value of hundreds or $1000 and not $0.
My point was that if you get enough people to overvalue things you get unreal values/prices.

You get many people to agree that $1000 painting is actually 46 million painting and it is sold for 46 million. Doesn't change the fact that real value is $1000.
You get many people to agree that $0 playcoin is actually $800 playcoin and it is sold for $800. Doesn't change the fact that real value is $0.

That ^ is the analogy.

[Jel]

so any dvd is worth 15p; any book is worth about 45c, and so on? This is a revelation - things for sale are worth more than the raw materials used to produce them. I'm fucking staggered, truly.

[mineistaken]

Originally Posted by Jel

so any dvd is worth 15p; any book is worth about 45c, and so on? This is a revelation - things for sale are worth more than the raw materials used to produce them. I'm fucking staggered, truly.

I am not that dumb. In fact I am staggered by you thinking that I am.
I know that paintings are worth more than just materials. When I valued that painting at $1000 I did not mean that only materials cost $1000. Both materials and work hours making it are included in that price. And it does not matter $1000 or $1500 etc, it is still not 46 million.
How to determine real value of "painting" like this - go buy materials and draw something like that. See if you sell it for even $2000.
People are overpaying because this "painting" is made by famous artist long time ago, while "painting" itself is not worth more than thousand(s).
If you take a dump and try to sell your shit people will pay $0.
If Michael Jackson takes a dump and tries to sell his shit people will pay $10 or $100 or whatever.
That does not change the fact that your shit and MJ's shit is shit and both worth $0.
I am staggered that I have to explain further. Although not so much as I am used to you not getting the point.

[Jel]

Originally Posted by mineistaken

I am not that dumb. In fact I am staggered by you thinking that I am.
I know that paintings are worth more than just materials. My point is that THAT painting is not worth more than $XXXX.
How to determine real value of "painting" like this - go buy materials and draw something like that. See if you sell it for even $2000.
People are overpaying because this "painting" is made by famous artist long time ago, while "painting" itself is not worth more than thousand(s).

but THAT "painting" (is it really a cake?) IS worth more than $XXXX, as evidenced by the fact someone paid more than $XXXX for it. You could just as easily have used the book or cd or dvd or slippers or microwave ovens or cars or...... and so on, it makes no sense as an analogy, and is a really crap story as well

ps
I know I've been very douchey in this thread with my replies, but this whole thread is just a wide open, glaring invitation for douchey replies. Don't take it personally, I'm in a douchey mood today, and have yet to douche out, so to speak

pps above is a long-winded way of saying I act like a cunt sometimes, and today is one of those times

[Jel]

sneaky beaky, you added some more irrelevance. You could say that about everything in existence though. Nothing has actual cash value in and of itself, even gold.

[mineistaken]

Originally Posted by Jel

sneaky beaky, you added some more irrelevance. You could say that about everything in existence though. Nothing has actual cash value in and of itself, even gold.

My point is very simple - that painting is not worth no where 46 million because no level of skill is required to make it. Any art school pupil/student could do that. I am being generous because I could say that not art students could do that as well.
So maybe hundreds, maybe thousands, ok staggering 100K. But nowhere close 46 mill.
This is a fact.
Stupidity is endless though and when you get few people to believe that it is worth 46mil you get it sold for that. Does not change the fact it is not worth that much.
And no, not everything in existence is overvalued. Far from it. 99% of goods are valued correctly. Take a look around your room and you would see that every item is priced correctly, maybe extra for brand names etc, but nowhere close to over valuation of that painting.

[Jel]

Originally Posted by mineistaken

My point is very simple - that painting is not worth no where 46 million because no level of skill is required to make it. Any art school pupil/student could do that. I am being generous because I could say that not art students could do that as well.
So maybe hundreds, maybe thousands, ok staggering 100K. But nowhere close 46 mill.
This is a fact.
Stupidity is endless though and when you get few people to believe that it is worth 46mil you get it sold for that. Does not change the fact it is not worth that much.
And no, not everything in existence is overvalued. Far from it. 99% of goods are valued correctly. Take a look around your room and you would see that every item is priced correctly, maybe extra for brand names etc, but nowhere close to over valuation of that painting.

priced correctly in *your* (and also ofc generally) opinion. Though this is getting even more off course now than your analogy. And over valuation in your opinion, though dictated by market forces, even though nothing is worth anything in monetary terms in and of itself anyway.

[woj]

can't you use the same logic for USD or gold? Isn't a piece of paper that says "100" on it really worthless? but yet, people gladly exchange goods and services for that piece of paper....

[dyna mo]

Originally Posted by mineistaken

My point is very simple - that painting is not worth no where 46 million because no level of skill is required to make it. Any art school pupil/student could do that. I am being generous because I could say that not art students could do that as well.
So maybe hundreds, maybe thousands, ok staggering 100K. But nowhere close 46 mill.
This is a fact.
Stupidity is endless though and when you get few people to believe that it is worth 46mil you get it sold for that. Does not change the fact it is not worth that much.
And no, not everything in existence is overvalued. Far from it. 99% of goods are valued correctly. Take a look around your room and you would see that every item is priced correctly, maybe extra for brand names etc, but nowhere close to over valuation of that painting.

But that final work of art provides value. I disagree it's a fact that a $46 million painting isn't worth $46 million. The value that the creation returns could very well be worth that. I also don't think an art school student can do what Picasso did. They may well be able to decently recreate a Picasso, but if they could create cubism, they would have. That's what you're paying for, among other things.

Also bitcoin wasn't invented to be used that way or the way it's being used. It's a currency by design. Just like a dollar bill. Just not officially backed.

Originally Posted by woj

can't you use the same logic for USD or gold? Isn't a piece of paper that says "100" on it really worthless? but yet, people gladly exchange goods and services for that piece of paper....

I'm with you, Same paper makes $1 bills!

[CPA-Rush]

"So I always said that bitcoins have no actual value other than that value which depend on how many people think that it is valuable."

same thing apply for money , gold and women etc

[sobecash]

Originally Posted by rosx

"So I always said that bitcoins have no actual value other than that value which depend on how many people think that it is valuable."

same thing apply for money , gold and women etc

I agree with the first quote, as well as the second. But with paper money, there is also the concept of being backed by a Central Bank (or a government). Money released by a government would have some verbiage saying that this piece of paper is proof that the government owes the holder money (or some such meaning). This is how governments control the supply and flow of money.

With Bitcoin, there is no authority or governing body which would be supporting the "currency", what Bitcoin is meant to do is stand on its own, without being backed by any real (intrinsic) value. Which means that unlike paper money from a Central Bank, Bitcoin is truly dependent on how many people think it is valuable, and by how much are they willing to pay for it.

[CPA-Rush]

true

[AmeliaG]

Originally Posted by sobecash

I agree with the first quote, as well as the second. But with paper money, there is also the concept of being backed by a Central Bank (or a government). Money released by a government would have some verbiage saying that this piece of paper is proof that the government owes the holder money (or some such meaning). This is how governments control the supply and flow of money.

With Bitcoin, there is no authority or governing body which would be supporting the "currency", what Bitcoin is meant to do is stand on its own, without being backed by any real (intrinsic) value. Which means that unlike paper money from a Central Bank, Bitcoin is truly dependent on how many people think it is valuable, and by how much are they willing to pay for it.

Governments control the value of fiat money by doing 2 of the following 3 things (not possible to do all 3):

controlling capital inflows and outflows from their country
maintaining stability of the exchange rate of their currency
monetary policy adjusting the money supply and interest rates

Whichever one of those 3 options a government does not take makes its economy vulnerable to different types of problems.

When the Quantum Fund tanked the baht, what do you think people got for that paper money?

I can spend Bitcoin in California a lot easier than I can spend Thai baht.

[Wellness Cash]

Originally Posted by woj

can't you use the same logic for USD or gold? Isn't a piece of paper that says "100" on it really worthless? but yet, people gladly exchange goods and services for that piece of paper....

The same is true for anything, get enough people willing to start trading using dirt and the perceived 'value' of dirt will go up.

You just have to find an audience willing to start doing business for payments of dirt.

[woj]

Originally Posted by Wellness Cash

The same is true for anything, get enough people willing to start trading using dirt and the perceived 'value' of dirt will go up.

You just have to find an audience willing to start doing business for payments of dirt.

more and more people each month choose to do business using bitcoins... it is true that bitcoins are intrinsically worthless, but if that group of people agree that it does indeed have value, where is the problem? or do you agree that there is none?

[DWB]

Originally Posted by mineistaken

So I always said that bitcoins have no actual value other than that value which depend on how many people think that it is valuable.

That is pretty much how every fiat currency in the world works. Everyone believes it is worth something because the governments and banks say it is, and tells them how much, therefor it is worth something.

[Wellness Cash]

Originally Posted by woj

more and more people each month choose to do business using bitcoins... it is true that bitcoins are intrinsically worthless, but if that group of people agree that it does indeed have value, where is the problem? or do you agree that there is none?

Oh I'm in total agreement with what you said, just re-iterating for the idiot brigade in terms they might actually understand.

As for us, we're out of Bitcoin right now, other than our mining rigs (which we're gearing up to sell on eBay), we made good money from it and have moved on to better pastures, we still have a few bitcoin over at BTC-E but I doubt we'll touch them again for a few years and the value has stabilized somewhat (hopefully higher than it is now).

[sobecash]

Originally Posted by DWB

That is pretty much how every fiat currency in the world works. Everyone believes it is worth something because the governments and banks say it is, and tells them how much, therefor it is worth something.

During the 1980's there was a joke in Brazil that you would know how high the inflation rate was with what people rode, a bus or taxi, on their daily commute. If the inflation rate was higher than normal, there would be more people riding the bus, and if it was lower, they would be riding the cab. The difference was that you paid the bus when you boarded, whereas you paid the cab when he dropped you off at your destination. At the time Brazil and Argentina, had triple digit inflation. The inflation was was because the people didn't trust the local currency.

The real, which replaced the older inflationary currency was a brainchild of two non-government academic-types who sold the idea of an intrinsic value on whatever currency is used. It's a good read, unfortunately, a bit on the technical side.

This is the part where bitcoin is worth whatever value the users would want it to have. The only way for any government to have control over it is if they were able to do bitcoin mining themselves. But since no government, as yet, has any large amount bitcoin in their wallet, then they can't control the value like they do with government backed dollars, euros, yen, rinminbi, etc.

Which is where a lot of people gets confused.

[Jel]

Originally Posted by sobecash

The only way for any government to have control over it is if they were able to do bitcoin mining themselves. But since no government, as yet, has any large amount bitcoin in their wallet, then they can't control the value like they do with government backed dollars, euros, yen, rinminbi, etc.

funnily enough the thought popped into my head earlier that it would be pretty easy and do-able for say the US gov't to just buy up every bitcoin on the market, and put a stop to bitcoin fairly quickly. Obv thy would be pushing the price up themselves, so it's not a case of paying that day's rate and buying all, but should btc ever really threaten as a currency, I can see them spending xbillion to take back control of people's spending ability etc.

Though that of course just means the next alt currency would present the same scenario, ad infinitum.

So much like the OP, this is a nothing post