Quote from: tadamichi on Today at 08:28:39 AM

Quote from: larry_vw_1955 on Today at 12:51:35 AM

There is no need for trying to control the exchange rate assuming you mean what the asset can be bought and sold for. Its price should be determined by the market. That means it can go up and down. We're not talking about it having to be some type of stable coin. I dont see why you need a central entity to redeem the asset either. it just depends on what the asset is. Some assets might not need a central entity. Some might.

K let me give you an example.

Let’s say 1 litre of oil is 1$.

If you want Bitcoin to be „backed“ by another asset you need to introduce something that says 1 Bitcoin = 1 litre of oil(or whatever other asset you’re thinking of) for example. This already gives it a fixed value, it won’t ever be worth more than 1 litre of oil, because if it reaches higher prices than oil(Lets say 1 Bitcoin was 2$), people just can redeem their oil for Bitcoin and sell it right away, they essentially bought a Bitcoin for 1$ and sold it for 2$ in this example, making the price of 1 Bitcoin go back to 1$ over time, because there will always be new people coming, buying oil for Bitcoin and then selling it for profit, it would be free money from a flawed system. This system doesn’t work. That’s why it becomes fixed exchange rate, even if you try to let the market find a price. When Bitcoin would be under 1$ you could get oil for cheaper than its market price, making the market price always hover around the backed asset.

Then theres the problem of storage.

Who stores your oil? This doesn’t work in a decentralized way, because then you need to trust random people to keep reserves and redeem them for you. So a central entity is needed. In both ways it requires trust to work, with random people or central entity.

There’s no asset that can do this in a decentralized way that doesn’t require trust, and apart from this, i outlined above how it’s a dumb decision to be backed by something.

I hope you get this part now.

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Now you have another asset that is decentralized and doesn’t have the problems i mentioned above. Is designed by computer science, cryptography, math, economics, game theory, psychology and a strong community. Has no need to have something else attached to it. Is the first currency that works trustlessly on the internet. Most successful asset of the last decade. Triggers people worldwide but can’t be stopped. That doesn’t need anyones approval, and is strong in reality and not just with words. Is an actual alternative to the current failing money system, and the only alternative there’s ever been that doesn’t require a central entity to work. Is gaining more and more people every day. Gives you full ownership over your wealth. Hardest asset to confiscate.

Let me guess. You're talking about bitcoin. All of that sounds nice in theory. But guess what I do need peoples approval to buy bitcoin. I have to depend on my bank to allow me to send money to coinbase. Then I have to trust coinbase to not freeze my funds once I send them there. Then I have to trust coinbase again when I buy bitcoin to let me send my bitcoin off their platform. I need their permission to do all of these things. And then they will report me to the government too maybe. Then if I ever want to cash out my bitcoin I need to send back to coinbase and hope they don't freeze my bitcoin and allow me to sell it. Once I sell it i have to trust them to not steal my money but to honor my instructions to send it to my bank account then i have to trust my bank not to freeze those funds once they get in the bank account.
Bitcoin is not trustless in practice. As this example shows. It requires depending on multiple central authorities for the average person.

This is something so many people are preaching since so long against,

don’t
use
centralized
services
to
buy
Bitcoin(especially not Coinbase),

There is decentralized alternatives, there is decentralized exchanges, there is p2p ways, you can buy and sell Bitcoin for cash and so on. You don’t need anyones permission to do this, it’s completely legal.

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Now alternatively, consider oil. Oil has uses. it makes gasoline which runs cars. It has an objective value and people are willing to pay for it. If they lost faith in gasoline due to high prices then they can buy an electric car but that doesn't meant that gas price goes to 0. Likewise, a cryptocurrency that was backup by a decentralized asset should be able to maintain its value no matter what people thought about it whether it was too high price or not. Whether they used an alternative or not.

This point is redundant with what i mentioned above, Bitcoin is the most decentralized asset there is, so how would the other „decentralized asset“ gain its value then, and be so superior that Bitcoin needs it? There is a logical flaw here. There’s no shortcut to letting people find Bitcoins value themselves, why is this so hard to accept?

Why is bitcoin only selling for $20,000 now when it used to be 3 times that? Did it become 3 times less value for some reason?

There is too many factors working in the market to understand this fully, it’s traded 24/7/365 worldwide, any tiny impact can influence the price, this happens fast. Then there’s other factors from centralized services giving out more paper Bitcoin than they have in their reserves, to unregulated banks overleveraging into Bitcoin with billions and then almost getting liquidated. Prices can’t be predicted accurately, it will stay volatile for quite some time, that’s the only thing that’s sure.

In 2020 there was buying opportunities for 5000$ still, only consistency and patience get rewarded here, but no one can guarantee you a profit.

This is about buying Bitcoin, because you understand what it offers, because you believe it will succeed, because you want the money system to be fixed, because you want control over your money back, this is no free painless money. It’s a wild ride, it takes time to get, it means a lot of studying, it means taking responsibility, but it’s also fun tho.

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Except that bitcoin requires computers and the internet. Fiat and gold don't depend on any of that. And until people can buy everything they buy with fiat using bitcoin then "I don't think so".

Fiat and gold depend on the internet the same as almost anything else does on this planet now.

Me wondering how gold and fiat existed prior to the 1990s. I guess they didnt.

Im not saying it cant work without the internet again, but im saying the internet isn’t leaving anytime soon, so it won’t.

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We can’t expect an asset that came out in 08/09 to have the same acceptability, as gold or fiat yet. But over time this will fix itself and we can see this trend already happening. How was the internet used in the 90s and how is it used now? The Unit of account phase comes last and isn’t relevant for the initial adoption stages. Because Fiat is a terrible store of value, and Bitcoin will be adopted as hard money first.

Fiat is a great store of value. I can buy almost anything I want with it. Including things that I can't buy using bitcoin or any other crypto for that matter. I've yet to find a use case for bitcoin myself. Do I need to look harder?

Maybe we’re living in different universes, where fiat was a good store of value once, but nowadays it’s working against the working class and they’re too unaware of what inflation means. They don’t question why they can barely afford anything anymore and less and less over time, this has nothing to do with going trough bad times or not whining, that’s what older generations don’t get, this is caused by economic decision making by the system, the outcome is already determined beforehand. Money will flow to the top automatically over time and concentrate there, this is the predetermined constant that won’t ever change in fiat, which makes it a terrible store of value for regular people. Sounds more like a ponzi scheme to me, where everyone else but a few people get left with nothing over time.

So what can you use Bitcoin for?

The first stage of Bitcoin will mean it will become established as a store of value, this is the most popular use case now. You can already use it as a medium of exchange, you can already use it as a unit of account, and this will increase over time. You can become your own bank, custody ur own funds, work when banks don’t, become resistant against censorship, transact permissionlessly worldwide, have a fixed supply which means your relative Bitcoin amount will never decrease in relation to the to total supply(no inflation), which means the money you worked 30 years for, can’t loose 10% every year, because someone at the top decides so. So you better want Bitcoin to succeed, except if you enjoy working for free and gifting that money to someone, who already has too much at the top.

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I hope it became clear now why it can’t be backed by anything else but itself.

ponzi scheme.

I’ll give you time to read this part.