Quote from: netrin on October 18, 2011, 02:12:36 AM

Do you not feel that a crypto-currency requires some base inherent value? The bitcoin transaction is a valuable, not-scarce service, while the bitcoin unit is nothing at all.

Yes, and they do have value. Functionally, crypto-currencies are no different from central bank-managed money - transactions are a commonality between fiat and crypto-currencies. The distinction is in where and how the management occurs.

Quote from: miscreanity on August 11, 2011, 06:02:52 AM

Bitcoin may be an ideal reserve currency, but gold is an ideal reserve asset. A grocery store is wonderful so long as it has groceries. Bitcoin works great as long as the network is operational. Gold is great only if you have it. Both Bitcoin and gold are essential. Together, they are Captain Planet!

...

How many gold coins do you need to carry with you to start a new life elsewhere? If living expenses keep deflating, a single ounce of gold may come to be an average person's life savings. For now, at almost $2,000 per coin, a suitcase would easily hold a hundred ounces or so. Just make sure you've got wheels on it and hope you don't get stopped at a border. The latter problem applies to paper money too. That's where Bitcoin comes in.

Stick some gold in a bank as collateral and you can use the same currency system you've always been used to. Buy some 1/10th ounce coins and buy enough groceries to feed the family for a month. The internet may have caused whirlwind change, but it hasn't eliminated the need for food, water, shelter and a method of acquiring them. Without the internet, no Bitcoin. Then what?

Quote from: miscreanity on August 13, 2011, 08:37:25 AM

Quote from: cypherdoc on August 12, 2011, 07:00:46 PM

Quote from: miscreanity on August 11, 2011, 06:02:52 AM

Paper currencies (including digital variants) were as good as it came for ages, but the manifestation has always proved too whimsical to be stable. The only difference between any of them is physical presence.

Paper is subject to human nature, which can be unreliable to put it nicely. And you never know, the internet could conceivably be completely shut down and take Bitcoin with it, as unlikely as that is. Gold would still exist, even though it's harder to transport.

In a sense, Bitcoin provides debt with its own measure of value - it gives the abstract concept a definable quantity without being backed by anything other than its sheer existence, which is why it works as long as it exists. But again, if it somehow ceases to exist, we still have gold - the final insurance policy.

heres where it gets fascinating. the argument for Bitcoin as money. i would argue that Bitcoin is backed; by the network. the huge amount of hashing power which has been brought to bear to process tx's and the blockchain. this is what the gold bugs miss when they say there is no "backing" for btc. the network comes with a cost and a BELIEF. you said earlier belief in money makes it what it is. lose that belief and it vaporizes.

Precisely! It isn't just belief, but mathematically-provable certainty. Currencies over the ages have been structured in a bid to mitigate the human intervention element. Bitcoin actually does it - it's as abstract as the concept of money itself. And yes, the network is the reason it has value; existence of the network is the belief and therefore the existence of Bitcoin. Well, that in combination with the way individual, relatively straightforward technologies are utilized in conjunction with each other (cryptography, distributed networking, triple-entry accounting) to form a truly unique system that is (as cliche as the saying is) greater than the sum of its parts.

Forget just gold bugs, almost nobody (even some economists with doctorate degrees) grasps that distinction thus far. For now, it's just a bunch of nutcases pushing computers to melting points who "get it". I'd even go so far as to say this is as big a development as written language, but to go down that road I'll have to start talking about Gaia theory and human-machine integration - i.e. fringe.

We definitely agree on Bitcoin. Grin

The fundamental value is intangible but necessary, as the network itself minimizes fallible human intervention and management. It's only a matter of time until crypto-currencies have matured and become widely adopted (probably a few years, at least). Banks are struggling to stay alive right now - soon they'll have to struggle to stay relevant. I can see them becoming transaction verification acceleration providers and/or returning to genuine investment services.