Which is exactly what i'm saying for BTC. The value in BTC is the work input: the electricity. That is the only fundamental value for BTC, atm, because nobody is using BTC for actual goods or services. When people do, then we can assess some value. But right now, the price is completely speculation/expectation driven.
I don't want this to degenerate into an argument of semantics. We can all agree that the value of a currency is what you will trade it for, and over a wide enough population, that value becomes more accurate. It is also possible for the few to drive up prices unrealistically via speculation by ignoring fundamentals. Look at the housing bust, the dotcom bust, ANY bust.
I'm trying to get at the underlying fundamentals of BTC, which nobody seems to want to approach b/c they feel it's an attack on BTC, which it is not, I think we can all benefit from fundamentals.
You are completely wrong.
It's a common misconception that Bitcoins gain their value from the cost of electricity required to generate them. Cost doesn't equal value hiring 1,000 men to shovel a big hole in the ground may be costly, but not valuable. Also, even though scarcity is a critical requirement for a useful currency, it alone doesn't make anything valuable. For example, your fingerprints are scarce, but that doesn't mean they have any exchange value.
If you don't even understand this there isn't any point in talking further.
Ugh, you BTC flag wavers are TOUCHY! Its simple economics. If you can make a BTC worth 9 bucks for 25 cents, and the barriers to entry are very little, then other producers will keep entering the marketplace until the price equals cost, ie perfect competition.
If you don't even understand this there isn't any point in talking further.Ok, if you want to get into monetary policy, then sure, the Fed is responsible for the amount of circulation. They increase or decrease the amount based on a number of factors, but ultimately the GDP, i.e. the collective work of the US. So yeah, your work creates dollars.
You are completely 100% wrong on all points.
The Federal Reserve Bank has
nothing to do with the amount in circulation. (Go
here if you'd like to know what they really do)
GDP has
nothing to do with work. (It measures spending ONLY)
Work has
nothing to do with dollar creation.
And while I'm at it, this is wrong too:
It just doesn't make sense economically to spend BTC today when you know tomorrow it will be worth 15+ percent more. I'm sure people HAVE used them for goods and services, but not in this current environment where we're seeing at least a dollar a day increase in value.
First, no one
knows what anything will be worth tomorrow. And second, people do things all the time that don't make sense economically.
By the way, I would really like to get back to your insane (and I mean that clinically) notion that one currency is worth its production value, while another is worth its exchange value. In particular, I'd really love to hear how exchanging my work for dollars creates dollars (or at least gives them value, somehow) while exchanging my work for bitcoins does not.
[edit: fixed misplaced quote tag]
You just made a fool of yourself. Its called monetary policy.
http://www.federalreserve.gov/monetarypolicy/default.htmAlso, you are dead wrong about GDP, heres a direct quote from the Bureau of Economic Analysis:
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States. Source
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm the opening line.
Im tired of trying to educate you. You obviously have your mind made up and wish to stay ignorant. Do some research and learn about economics before you spout misinformation.