Is Facebook Becoming a Central Bank?

Cash out early by LostCluster · 2012-01-20 12:30 · Score: 5, Informative

The history of the web is filled with play-online games for points that could be used for other things... but all crash in an inflationary spiral. Points are free, but the prizes offered are not and eventually the value falls below the "par value" the site originally had. Has anybody recently cashed out with GSN Oodles or Moola.com's Moola points?

Re:Cash out early by Anonymous Coward · 2012-01-20 12:52 · Score: 0

I'm still holding onto Beenz until I can find someone who will give me a good deal for Flooz. So far, Whoopi Goldberg hasn't returned my calls.
Re:Cash out early by ackthpt · 2012-01-20 12:59 · Score: 1

I'm still holding onto Beenz until I can find someone who will give me a good deal for Flooz. So far, Whoopi Goldberg hasn't returned my calls.
You could always cash it all in and get some slood.
Assuming you can find a civilisation advanced enough to have discovered it by now

--

A feeling of having made the same mistake before: Deja Foobar
Re:Cash out early by tragedy · 2012-01-20 13:40 · Score: 1

You don't have to be an advanced civilization to have discovered slood. It's easier to discover than fire, and only marginally harder to discover than water.
Re:Cash out early by religious+freak · 2012-01-20 13:42 · Score: 0

Or airline miles.
Yes, one should save money but spend any type of "credit" or "point" as quickly as possible.

--
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
Re:Cash out early by Bill,+Shooter+of+Bul · 2012-01-20 13:51 · Score: 3, Informative

I actually cashed out $10 worth of cybergold, back in 1998. That was the minimum amount you could cash in, never got more than 10 cybergold cents after that. Originally they offered points for surveys and adviews, but after I cashed out it was changed to more of a rewards program for shopping at certain sites and incentive to apply for credit cards.

--
Well.. maybe. Or Maybe not. But Definitely not sort of.
Re:Cash out early by GuruBuckaroo · 2012-01-20 13:55 · Score: 4, Informative

SecondLife's Linden Dollar, exchangeable for real cash, has maintained its value remarkably well, at roughly L$265/US$1, for the last 5 years.

--
Poor means hoping the toothache goes away.
Re:Cash out early by cgenman · 2012-01-20 14:49 · Score: 2

I think you're confused. You buy Facebook credits with real money, you don't earn them. They're a secondary medium of exchange, like Microsoft points on Xbox. You spend real money on them. You can't give them to friends, or use them to buy soda, etc. They're just a convenient way of not realizing that you're spending dollars.

--
The ______ Agenda
Re:Cash out early by NotQuiteReal · 2012-01-20 14:57 · Score: 1

Define "real cash"?

Everyone says "you can't eat gold", but it IS a fungible commodity... a handy point of reference is that, in say 1960, a 50 cent piece would by you a nice lunch.

In 2012 that same (90% silver) coin will still buy you lunch, since it is valued at over $11...

I would bet in another 50 years that Ben Franklin coin will STILL be worth lunch money, but $11 worth of "folding money*" (usd, pounds or euros) will not.

* note that "silver certificates" stopped being honored by the US Govt in 1968, even though the money says right on it that that they are worth the printed amound "in silver payable to bearer on demand" - Not worth the paper it's printed on... indeed.

--
This issue is a bit more complicated than you think.
Re:Cash out early by Zebai · 2012-01-20 15:00 · Score: 2

Points aren't necessarily free, points take time to earn and time is money. Spend a day earning points could be of equivalent value as spending a day at a job earning real money with just a difference in currency (& currency value) . You are right though this is nothing new with facebook you can make this comparison to almost any other online venture, warcraft being one of the most popular where there are people exchanging virtual for physical currency. I imagine one day we will not even distinguish between the two and just consider them no different than the difference between dollar and euro. I have a friend who has no problem at all with buying virtual currency with real currency, his point of view if it takes him a week to earn that currency by ingame methods but he can skip that whole week and buy it with a single day's worth of labor at his job then he buys it and then considers it profit and spends that week doing something else.
Re:Cash out early by im_thatoneguy · 2012-01-20 15:25 · Score: 1

I've always thought of it more like Microsoft Points. Less a reward and more of a micro-currency for buying things. I imagine any points awarded to players by games is paid for *directly* by Mafia Wars. Similarly Halo could theoretically give you MS points but it would come out of their sales.
Re:Cash out early by rtb61 · 2012-01-20 15:52 · Score: 2

So basically Facebook credits are a free loan that the unaware provide to Facebook. So does Facebook ever pay them back or are they a one way thing?

--
Chaos - everything, everywhere, everywhen
Re:Cash out early by rasmusbr · 2012-01-20 15:56 · Score: 4, Insightful

The real value of silver has undergone drastic changes in the past, sometimes because of enormous new finds, sometimes for other reasons.
It's probably better to use "a nice lunch" (as in a good but unpretentious restaurant meal of tasty, nutritious, healthful food, containing about 500 kcal) as your price reference. A meal at a restaurant is both a product and a service, and it contains a range of raw materials. Since the restaurant needs to pay real estate costs it also reflects the housing market.
Re:Cash out early by M.+Baranczak · 2012-01-20 16:29 · Score: 5, Interesting

Facebook credits are like the old Soviet-block currencies. If you were an American visiting the USSR, you could exchange your dollars for rubles when you arrived. But there was no way to exchange them back. And rubles were worthless outside the USSR.
Re:Cash out early by Whiteox · 2012-01-20 18:01 · Score: 1

Yeah I don't get it either.
The restaurant/shop gives you 30FB credits that can be swapped for a movie that costs $20. The only income I can see FB getting is via ads and their tax on 3rd party apps. The restaurant/shop may inflate the RRP - or more likely, FB pays them to give out credits. Maybe they get free or reduced cost of ads on FB for being part of the collusion?
So the draw is getting more Whatevers to join FB to play the games and click on ads?
Convoluted and troublesome.

--
Don't be apathetic. Procrastinate!
Re:Cash out early by repapetilto · 2012-01-20 21:55 · Score: 1

It is the same as gift cards. They get the money upfront to invest, which is preferable because USD now is worth more than USD later. Plus many people will probably not spend all of their credits.
Re:Cash out early by Hognoxious · 2012-01-20 23:12 · Score: 1

Slightly downmarket, but that's the thinking behind this

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:Cash out early by agw · 2012-01-20 23:35 · Score: 1

One thing one needs to understand when using the value of a "nice lunch" is that the definition of that will change over time.
After the war in Europe a "nice lunch" was probably more simple then it is now. Then, a "nice lunch" during the dot com boom might have meant something different for some of us then what it means now.
If you're into meat/beef you could just look at that which may have gone from "any meat" to "best filet" to "a nice burger".
Re:Cash out early by rasmusbr · 2012-01-20 23:53 · Score: 1

Sounds like you need to look up the word 'unpretentious' in a dictionary.
Re:Cash out early by airfoobar · 2012-01-21 03:00 · Score: 1

Lamp oil! Rope! Bombs! You want it? It's yours my friend as long as you have enough Rubles! MMMMMMM
Re:Cash out early by TheRaven64 · 2012-01-21 05:08 · Score: 1

Both of these are fairly difficult to discover if you happen to have evolved on a gas giant around a first-generation star...

--
I am TheRaven on Soylent News
Re:Cash out early by __aaltlg1547 · 2012-01-21 10:01 · Score: 1

It's only preferable at a significantly higher level of inflation than we are experiencing now, because it incurs an opportunity cost of everything you might want to spend money on besides Facebook.
If you're going to spend money on something as a hedge against inflation, you need to buy a commodity you can readily sell.
Re:Cash out early by 1s44c · 2012-01-21 10:11 · Score: 1

Where do you live? I'm guessing it's America somewhere but the prices you quoted look too high. Are you in the center of a city?
Re:Cash out early by repapetilto · 2012-01-21 10:21 · Score: 1

Huh? It is preferable to Facebook. I'm sure they will just change their prices to account for inflation so I don't think it is ever preferable for the user to hold credits.
Re:Cash out early by doccus · 2012-01-21 15:25 · Score: 1

Well, just like , because of the fact that Fort Knox is empty, they stuffed it full of wooden ingots with gold paint and then went off the gold standard, in order to mine all the copper and nickel in circulation, in my country, they're going to make all our coins out of steel from now on. That means our coins will now have the same government certified backing as our new rubber money ;-)

Bits are almost free by LostCluster · 2012-01-20 12:37 · Score: 1, Interesting

Interesting point that the main cost of music or movie is the "first copy"... duplication costs very little in the digital world. Seems like the movie industry are offering sequels to drive up interest in future movies.

Re:Bits are almost free by hedwards · 2012-01-20 12:45 · Score: 3, Insightful

No, they do sequels because they don't generally have to sell them. The industry knows who's going to go to see a sequel and how large that audience is and as a result is able to much more accurately gauge the prospects. They won't know whom it is precisely that will go or precisely how many, but they'll have it down pretty good in general.
That being said the studios are always looking for new ideas the big problem they tend to have is that only a fraction of a percent of the ideas they receive are actually worth filming and of those only a fraction of them are going to be memorable.
Re:Bits are almost free by EdIII · 2012-01-20 13:45 · Score: 1

That logic does not explain Police Academy Six: We Can't Stop Making These Fucking Movies.
Your model does not fit the data. Try again.
Re:Bits are almost free by Bill,+Shooter+of+Bul · 2012-01-20 13:54 · Score: 1

I think LostCluster was suggesting a reason why the movie companies were offering those particular movies on facebook, rather than a more general motive for the creation of sequels of movies.

--
Well.. maybe. Or Maybe not. But Definitely not sort of.
Re:Bits are almost free by Anonymous Coward · 2012-01-20 14:03 · Score: 0

Low budget with midlevel revenues is a profitable business model. Viewers might not appreciate it, but as long as enough still view it, the studios will keep churning them out. Think about how long a reprieve we had from Rocky 5 to Rocky Balboa and how much of a quality difference there was between the later originals and the new edition.
Re:Bits are almost free by EdIII · 2012-01-20 14:12 · Score: 1

It's funny you bring that up.
The first Rambo kicked ass. The last Rambo was fucking hard core. The stuff in the middle you don't even have to keep.
Re:Bits are almost free by johnsnails · 2012-01-21 01:41 · Score: 1

In any sort of engineering the first is always really expensive... My omer diving fins are expensive because alot of engineering went into making a great product, subsequent fins would be a dime a dozen or something

Not a true currency. by TheNarrator · 2012-01-20 12:37 · Score: 4, Informative

The mark of a true currency is that it can be used to pay U.S tax liabilities. For Americans at least, anything else is just, at best, a commodity subject to capital gains taxes. For example, if you buy gold coins, or facebook credits, and then sell them after their value has doubled you'll have to pay capital gains tax on the amount they appreciated against the dollar. if you barter the gold coins, or facebook credits, for services or goods you will have to pay taxes on that barter transaction in dollars. If the dollar appreciates in value against other currencies though, there is no capital gains tax to pay, even though your dollar might buy more.

Re:Not a true currency. by hedwards · 2012-01-20 12:47 · Score: 2

Not quite, I can't pay my US tax bill in RMB, AUD, Euros or CAD, but I can pay them with USD. It doesn't mean that those other currencies aren't any good, it means that to do something interesting with them I probably have to either convert them or move.
Things like MS' points are basically a way to get you to pay for something with fewer protections so that they have your money and you can't get it back.
Re:Not a true currency. by Geminii · 2012-01-20 13:32 · Score: 4, Insightful

If you can buy goods or services with a currency, and exchange those goods or services for US dollars (via eBay, Craigslist etc), then the currency is a de facto method of paying US tax liabilities.
Re:Not a true currency. by NotQuiteReal · 2012-01-20 14:31 · Score: 1

...a commodity subject to capital gains taxes. For example, if you buy gold coins, or facebook credits, and then sell them after their value has doubled you'll have to pay capital gains tax...

...a commodity subject to capital gains taxes. For example, if you buy gold coins, or facebook credits, and then sell them after their value has doubled you're supposed to pay capital gains tax...

Heh, just like that "use" tax you have been paying, in lieu of "sales tax" on those online purchases you make, you have been paying them, right? Sure the Tax Man seems to have won that round (starting this year, I think) - but, in general, "no records, no tax" is the general drift of human nature.

--
This issue is a bit more complicated than you think.
Re:Not a true currency. by 1s44c · 2012-01-21 10:18 · Score: 1

The mark of a true currency is that it can be used to pay U.S tax liabilities
Not everyone likes paying tax. Quite a lot of people consider tax theft, and would quite like some form of currency that the government doesn't take a cut of every time they use it.

show me the money! by vencs · 2012-01-20 12:38 · Score: 0

can I pay with s' stock to buy the credits?

Farming by Anonymous Coward · 2012-01-20 12:39 · Score: 0

Roll on the bots to earn credits.

Can I interest you into a trade? by bigredradio · 2012-01-20 12:40 · Score: 1

Can I trade my Bitcoins for Credits? I also have some vintage CueCat rewards points?

--
Flexible bare-metal recovery for Linux/UNIX

Re:Can I interest you into a trade? by repapetilto · 2012-01-20 22:03 · Score: 1

Yes.

Ok, so here is plain and simple how I work.
I will sell small to medium transactions to people I feel are trustworthy enough in my mind based on a variety of factors.
I buy
MtGox USD
MtGox BTC
Btc
PPUSD
Paxum
Giftcards
I also buy alt coins and other things at a less than market but decent rate.
I pay in
MtGox USD
MtGox Btc
BTC
PPUSD
Solidcoin
Paxum
Giftcards
Facebook Credits
Eve isk
CashByMail (not responsible for items in transit)
Western Union (You pay fees, Mon-sat 9a-7pm pst, not available at times)
Others
I do not use
Liberty Reserve
Dwolla
MoneyBrokers
Alertpay
Virtual Credit Cards
Virtual Gift Cards with some exception
Message me with what you are looking for and what you would like to trade in, I will contact you back and discuss what my terms are and if I wish to continue. Search my name in the Honest Trader section and rest of forum for rep.

https://bitcointalk.org/index.php?topic=48285.0
Re:Can I interest you into a trade? by phungus · 2012-01-21 19:31 · Score: 1

Dude, you made my day by mentioning those two things in the same post. I worked on the really early Cue:Cat stuff (don't worry, it wasn't my idea!) and I'm like, totally into BTC now. :-)

No. No, no, no, no, no, no. by Anonymous Coward · 2012-01-20 12:41 · Score: 0

I don't even want to begin to imagine the nightmare of a profit driven private company being able to coin their own money.

It's a fancy gift card, not money.

(Also, WHY would another private company be willing to trade goods/services in exchange for your faerie's gold?)

Re:No. No, no, no, no, no, no. by Bucky24 · 2012-01-20 13:02 · Score: 1

Also, WHY would another private company be willing to trade goods/services in exchange for your faerie's gold?
Same reason that any other company is willing to trade good/services for pieces of green paper-there's an implied idea that there is some wealth behind that paper that makes it worth taking. Facebook credits, AFAIK, are backed by real money (the money that the user spent to acquire them), and I imagine if a user spends them on a game or something the developer of said game pockets some money for that transaction.

You use money that is a number in a database to buy more fake money that is another number in a database, then use that fake money to buy items that are simply more items in a database. Ironic that none of this is even real but the labor we put into earning that money in the first place. (This paragraph has nothing to do with the rest of the comment, just something that I thought while writing it).

--
All the world's a CPU, and all the men and women merely AI agents
Re:No. No, no, no, no, no, no. by Spottywot · 2012-01-20 13:08 · Score: 3, Interesting

We all use faerie gold already, the reason it works is not because it's worth anything, it's because enough people believe it's worth something. Money hasn't been worth anything since the gold standard was dropped. While I don't believe that FB money will ever take off in a meaningful way I also thought the Spice Girls were going to be a one hit wonder. There's no accounting for taste.

--
In a cybernetic fit of rage she pissed off to another age...
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-20 13:46 · Score: 5, Insightful

You're half right. Money hasn't been worth anything since before the gold standard was dropped. Even gold is fiat currency. Money, including precious metal coinage, is just tokens meant to simplify complex barter arrangements. It only has value based on people's faith in its value.
Re:No. No, no, no, no, no, no. by Anonymous Coward · 2012-01-20 14:21 · Score: 0

Shiny rocks are a much better currency than paper. At least with shiny rocks the pie can be constrained and individuals can increase their slice of the pie at the cost of everyone else. Yes, great idea.
Re:No. No, no, no, no, no, no. by ObsessiveMathsFreak · 2012-01-20 14:32 · Score: 1

I don't even want to begin to imagine the nightmare of a profit driven private company being able to coin their own money.
I hate to break it to you, but privately owned banks do this in almost every country in the world, every single minute of every single day.
All banks are licensed, by government, to create credit out of thin air. This is subject to very loose restrictions about reserves, but in reality, frat-house rules apply across the board and you can do almost anything you like as long as you've got enough chuzpah to back it up.
And if you think I'm making this up, or exaggerating in any way, do yourself a favour and never, ever read up about the "shadow" banking system of repos, securitization , CDOs, CDSs, and good old fashioned fraud.
The reality of today's banking system is worse than any nightmare.

--
May the Maths Be with you!
Re:No. No, no, no, no, no, no. by arose · 2012-01-20 14:48 · Score: 4, Insightful

It only has value based on people's faith in its value.
Or, more precisely, by their willingness to accept it as payment. Recursively. Acceptance all the way down.

--
Analogies don't equal equalities, they are merely somewhat analogous.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-20 16:07 · Score: 1

That's a pretty good way of putting it.
Re:No. No, no, no, no, no, no. by Anonymous Coward · 2012-01-20 16:51 · Score: 0

Fair enough, it's just that there's far more people who will accept gold bullion as than those who would accept even the world's reserve currency. For thousands of years, in fact, people all over the world have held gold as a valuable commodity in goods exchange. I'd say a majority of people would recognize it as so, which is far more valuable than any fiat currencies, which have all eventually failed. Even after the US dollar fails, gold will still hold value, as it did long before the greenback and as it will long after.
Re:No. No, no, no, no, no, no. by Sqr(twg) · 2012-01-20 19:03 · Score: 1

Actually, gold has real value. It has valuable chemical properties, and is used in catalysis, electronics, and medicine among other things. Even if the world lost its "faith" in gold, electronics manufacturers would be willing to trade goods for it.
However, gold is currently overpriced, compared to, for example, platinum. A small amount of platinum can replace a large amount of gold in many catalysis applications. So "faith" probably accounts for a part of the price of gold, but not all of it.
Re:No. No, no, no, no, no, no. by satuon · 2012-01-20 20:05 · Score: 1

Gold is not fiat. Gold is jewelry, and jewelry has intrinsic value. Intrinsic value doesn't mean you can eat it btw, you can't eat an iPhone but no one would argue that it doesn't have intrinsic value.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-20 20:32 · Score: 1

Gold at the moment, and throughout history, is a valuable commodity. At the moment people would probably accept gold bullion because the value is going up. It's gone up ridiculously in the last few years, even compared to other precious metals. At the moment, I believe it's higher than rhodium. Anyone who has paid any attention to the price history of gold can see that there's currently a gold bubble. When the price of gold breaks, the only people who will want to be paid in gold will be people operating in black markets and they'll expect to be paid well above the market value.
After a failure of the US, gold will have value, just like steel, copper, silver, lithium and partially hydrogenated soybean oil will hold value. Metals, when used as a currency have always had the advantage of being worth something just about everywhere, but that doesn't mean that you could ever just spend your gold coins everywhere. For one thing, it's almost always been illegal just about everywhere to spend foreign minted money locally. You had to take your money to a money changer and pay what amounted to a service fee and/or a tax. Black market transactions were all over the place, but counterfeiting was rife in such transactions and very few people actually have the expertise to identify counterfeit gold coins. As for the value of just a given amount of gold, it was all over the place. The massively wealthy Mali empire prospered as a gateway for gold from more southern parts of Africa to Europe where it was worth many times as much. Laws were necessary all over the place to stabilize precious metal values. For example all the laws setting the value of silver at 1/16 the value of gold.
Given all this, it's hard to see gold as anything special. I find it almost funny that a lot of people investing in gold right now because they think the country is going to completely break down aren't actually directly buying gold. Instead they're buying shares in a market. A market that, if the reasons they think they need gold pan out, will just collapse and vanish.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-20 20:40 · Score: 1

Yes it's valuable as a commodity. That always confounds these discussions. Copper has value as a commodity too and has a long history of use in currencies as well, but people don't obsess over it they way they do over gold. The point I was making is just that there's nothing special about gold that requires that currency be backed by stacks of it sitting in a vault somewhere. If currency has to be backed by a commodity, then it can be backed by any precious metal, or by non-metallic elements, or by land, or by any mineral rights, or by any other resource a nation may possess.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-20 22:11 · Score: 1

Historically, it has tended to be the commodity with the best combination of
1) Fungiblity
2) Ease of transfer
3) Ease of storage
4) Durability
5) Right combination of divisibility and rarity
6) Few alternative uses
So, as a currency, tobacco is preferable to cattle, paper is preferable to tobacco (until the entity creating the paper messes up #5, which it seems is inevitable). I think it is all an attempt to objectively quantify social capital.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-20 22:18 · Score: 1

Gold certificates are clearly a scam. If there is a collapse of the USD, big investors who have friends with guns will get the real gold while average person #3,004,390 will be left with nothing. There are good reasons people have defaulted to using gold as a currency in the past though.
Why do you think laws setting the value of gold vs silver were necessary? I didn't really follow your reasoning. Shouldn't the value of gold vs silver vary according to supply and demand? If not, why not?
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-20 22:36 · Score: 1

Copper has more uses than gold...therefore it would be a poorer choice.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-20 22:48 · Score: 2

"Intrinsic value" isn't intrinsic, it is subjective and dependent on context.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-20 22:59 · Score: 1

Once you start looking into it you realize you are staring into the void and see the evidence all around you.
Re:No. No, no, no, no, no, no. by Hognoxious · 2012-01-20 23:57 · Score: 1

Actually, gold has real value. It has valuable chemical properties
Pretty much every element in the periodic table does.

Even if the world lost its "faith" in gold, electronics manufacturers would be willing to trade goods for it.
They'd have to do the same for all their inputs if they wanted to stay in business.
In any case, the electronics industry only uses a tiny proportion of gold produced.

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:No. No, no, no, no, no, no. by Hognoxious · 2012-01-21 00:13 · Score: 1

Gold is jewelry, and jewelry has intrinsic value.
Why?

Intrinsic value doesn't mean you can eat it btw
So what does it mean?

you can't eat an iPhone but no one would argue that it doesn't have intrinsic value.
That's redundant, you already mentioned jewelry.

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:No. No, no, no, no, no, no. by Anonymous Coward · 2012-01-21 06:35 · Score: 0

Tabbacco is merely fancy bater, if it wasn't actively taken out of the system by users supply would just about double every year (and historically the economy couldn't keep up with that). Its an attempt to quantify capital, not social capital, and not objectively but to merely quanitfy using one unit.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-21 14:13 · Score: 1

Well, if you say so.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-21 15:16 · Score: 1

Why? Because it's a waste to lock up useful copper doing nothing but not a waste to lock up useless gold? Nations have plenty of other commodities that they can back their currencies with and not need to lock them in heavily armed vaults. That can include things such as the land it holds and the productive output of its workforce.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-21 15:33 · Score: 1

I wasn't advocating laws fixing the value of one precious metal against another, I was just pointing those out as a common example of how precious metal coinage was actually largely still a fiat currency with a value set by law. Such laws were deemed necessary because some people would take their 10 gold coins, cross a border and trade them for 170 silver coins, cross back over the border and trade them for 11 gold coins until they were filthy rich. So, nations needed all kinds of internal laws and treaties with one another to synchronize the value of their currencies. If precious metals had some sort of specific intrinsic value, that sort of thing wouldn't be necessary, but they don't, so nations had to craft laws like that so that people wouldn't lose faith in the currency. Now, gold and silver and so forth would still have had value even if they stopped basing the currency on them (like they have now), but the value would have been subject to supply and demand just like any other commodity.
Basically, in currency, you want to avoid the situation where something relatively small happens (like a mine discovers a huge new vein, or a cargo ship sinks, etc.) and suddenly everyone's life savings can only buy half of what it could before. Modern fiat currencies (and the system of "saving" your money in the stock market) don't actually provide that sort of security sadly, but precious metals don't either.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-21 18:31 · Score: 1

I agree that coinage or specie or whatever has often been a form of fiat. I also agree that laws setting the exchange ratio were deemed necessary by governments. However, I think you have mixed up cause and effect. The reason people could profit off arbitrage by going from one country to another was because the exchange ratio was set by governments in the first place. To deal with this problem (created by government intervention in the first place), laws and treaties were necessary to stabilize prices. This was seen as beneficial because it facilitates trade in the context of government issued coinage.
The reason governments attempt to set the gold/silver ratio is because they wish to inflate the value of their coinage, for obvious reasons. This is a losing battle against Gresham's law, which is why they eventually turned to issuing pure fiat.
With regards to goldrushes, etc; in the long run, these pretty much random events are far less harmful to an economy than giving politicians or bankers control over the value of currency.
But I may be wrong, I am still new to this field. I welcome any opposing argument.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-21 18:36 · Score: 1

But are these other commodities you mention as easily quantified, divisible, storable, transferable, etc?
Re:No. No, no, no, no, no, no. by satuon · 2012-01-21 20:40 · Score: 1

My understanding of intrinsic value is that it's the value you get from something even if you're forbidden to trade or exchange it. If I gave you an iPhone with the condition that you never sell it to anyone, you could still use it as a phone. If I gave you a $100 bill with the condition that you never give it to anyone else, there's not much use for it.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-21 23:21 · Score: 1

I agree. If you think about it though, the value of an iPhone is dependent on how good the cell network functions, how many other people have smartphones and/or the internet, how expensive it is to charge it, etc. Some people may prefer to keep to themselves and reflect on their life without external input, making the phone relatively less valuable (to that person). So, it seems to me, the value of an iPhone is subjective and dependent upon context, just like anything else.
Re:No. No, no, no, no, no, no. by satuon · 2012-01-22 03:19 · Score: 1

Of course. That's why some people buy iPhones and a lot more don't. A price in an idealized marketplace is the subjective value people attach to something when averaged out. Or, more precisely, it is the meeting point where the number of sellers willing to sell at that price equals the number of buyers willing to buy at that price (in a simplified case where each seller has exactly 1 item on stock, and each buyer wants to purchase exactly 1 item).
Re:No. No, no, no, no, no, no. by Anonymous Coward · 2012-01-22 08:18 · Score: 0

Well, if you say so.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-22 15:21 · Score: 1

No, the reason that people could go from one place to another and trade their gold and other precious metals at different rates wasn't because governments set the values. It could happen if local government set the values in ignorance of how other countries were setting them, certainly. It didn't matter whether the value was set by local government or not, however, the simple fact is that the precious metals were worth differing amounts in different places. In some places a particular metal was worth more because it was more scarce and in others it was worth less because it was less scarce and in yet others, it was worth more even though it was less scarce and in others it was worth less even though it was more scarce. Heck, in some places gold was worth pretty much nothing because, ok, sure it's shiny, but nowhere near as shiny and pretty as this polished shell! Without governments setting prices, the values of precious metals were essentially arbitrary. I'm not saying that there isn't a lot of power in cultural inertia. There is. Thousands of years of something being precious "just because" is virtually a tangible thing as things go. It's not going to convince me that money backed by gold is any less of a fiat currency than any other. To look at it from another point of view, money based on assets that are actually out for the public to see doesn't require much faith whereas money based on a gold in a vault that barely anyone gets to enter... Well, I think it takes a lot of faith to believe it's not just lead bars with thin electroplating.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-22 15:33 · Score: 1

Many of them are as easily quantified, divided, stored and transferred. Some of them more easily.
Consider quantification of gold: Currently worth about $52 per gram. Great. How accurate is your scale? Not perfect? Then you're going to be off by a few dollars. I won't even go into the purity here.
Divisible: I'll grant you, easily divisible. Of course, then you run into the quantification problem.
Storable: Stores easy, have to give it that Not a lot of corrosion happening wherever you put it.
Transferable: Yeah, in heavily armored trucks. Or do you just mean carried around in your pocket? Sure, but it's so soft that, if everyone does that, in a few years your gold coin will be missing a few dollars worth (and laundromats will be making a killing on the gold dust they filter out of the water people wash their pants in). Use an alloy. Great. How can you tell that it's really 18k and not 16k? Oh, it's stamped on the coin so you can just take it on faith.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-23 08:34 · Score: 1

So, do we agree there is not really a such thing as intrinsic value?
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-23 08:39 · Score: 1

I think the situation you described almost certainly existed to some extent, mostly during transitional periods. Do you have any sources for how much the value of gold has varied from place to place historically?
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-23 08:45 · Score: 1

Ok... now consider land and productive output then compare the results with gold. I think gold comes out superior.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-23 13:45 · Score: 1

Ok. A square kilometer of land receives an average of 250 MegaWatts of solar energy and about 715 millimeters of rain per year. Even if it's not particularly arable land, with work it can typically feed at least a thousand people. It contains all kinds of things that can be harvested and mined and used. Actually, the top hundred meters of soil and rock will contain something like 750 kg of gold, which, at current prices, is about $37.5 million dollars, which is the value of the land if it sells at $150,000 an acre. So... that just confuses things comparing something that contains gold to just plain gold...
Anyway, you wanted to compare productive output of the land and the lump of gold. So, the land has all of the above going for it and more, and the equivalent value 750 kg of gold... sits there. Or, it does if you want to back your currency with it. Otherwise, you can use it productively to make things. It does have some useful properties (almost always useful in extremely small amounts and extremely thin films, of course), so you can do that. But, if your going to back your currency with commodities you're actively using, why can't you also use all of the other commodities you're actively using?
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-23 13:54 · Score: 1

Well, the Mali empire is a great example. They were wealthy and powerful for centuries because they were a chokepoint for gold from more southern parts of Africa to Europe, but they didn't really have all that much of their own gold production. Once traders started cutting out the middle man and sailing around them, their empire lost all that wealth and power.
There really are plenty of examples, but it's silly to expect me to provide them. It's dead obvious that gold will generally be worth less in places that are actively exploiting the gold resources they have and worth more in places without such resources or where they're not exploited. It's also obvious that a lot of the value gold beyond its rarity and shininess is cultural, so different cultures will have different values for it. Frankly it's amazing that anyone could think that the value of gold wouldn't vary widely from place to place without modern automated markets and instant communications.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-23 18:34 · Score: 1

Bleh. "your" to "you're". Can't believe I did that.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-23 20:18 · Score: 1

So to flesh out this concept:
If the USD was backed by land, and the government needed to pay back a loan, would the creditor be able to claim land rather than the currency? Who would be responsible for appraising the total value of the land?
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-23 21:22 · Score: 1

I think this quote from the gold wikipedia page illustrates the point I was making:

The Mali Empire in Africa was famed throughout the old world for its large amounts of gold. Mansa Musa, ruler of the empire (1312â"1337) became famous throughout the old world for his great hajj to Mecca in 1324. When he passed through Cairo in July 1324, he was reportedly accompanied by a camel train that included thousands of people and nearly a hundred camels. He gave away so much gold that it depressed the price in Egypt for over a decade.[36] A contemporary Arab historian remarked:
Gold was at a high price in Egypt until they came in that year. The mithqal did not go below 25 dirhams and was generally above, but from that time its value fell and it cheapened in price and has remained cheap till now. The mithqal does not exceed 22 dirhams or less. This has been the state of affairs for about twelve years until this day by reason of the large amount of gold which they brought into Egypt and spent there [...]
â"Chihab Al-Umari[37]
Yes, arbitrage would occur, but as the volume of trade increased between multiple cultures, the value would become equal. This is true for any easily trade-able commodity. It is not an issue in terms of trade. Once governments began minting coins and setting the exchange rate, it became a problem due to loss of gold or silver or whatever was undervalued. At least that's my understanding.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-24 12:38 · Score: 1

So, to answer a question with paraphrasing of the question:
If the USD was backed by gold, and the government needed to pay back a loan, would the creditor be able to claim gold rather than the currency? Who would be responsible for appraising the total value of the gold?
The same essential answers apply. When US dollars were backed by gold, there wasn't exactly a counter at Fort Knox you could walk up to with some cash and walk away with a gold bar. Also, I never said that the currency is backed by land, I said it's backed by every asset of the government and its people, which includes land, but includes the people and their labor and everything that a country is. That even includes the gold.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-24 14:32 · Score: 1

Still depends a lot on where the trade routes actually are and turnaround times, etc. But, as you say, it's just like any other commodity. Which, to my understanding means no special intrinsic value which makes it a magic one true currency.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-24 19:03 · Score: 1

I wasn't alive at the time, but here is a picture of a 5 dollar note from 1928:
It reads: "Redeemable in gold on demand at the United States Treasury or in gold or lawful money at any Federal Reserve Bank"
http://www.deerrunmercantile.com/friedberg1952-cfivedollarfederalreservenotepmg66gem.aspx
"The terms 'lawful money' or 'lawful money of the United States' shall be construed to mean gold and silver coin of the United States.
- Title 12, U.S. Code, Section 152 [12 USC 152]
The value of the dollar was set equal to a certain weight of gold. The value of the gold was determined by the market (how much you could sell it for).
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-24 19:10 · Score: 1

I don't think it does has a special magic value. I think it is relatively divisible, rare, easy to transfer, store, and very durable, etc. Making it a good currency, but not as good as paper (due to storage, etc). So it is logical to use something like gold as a store of value, and use paper notes that someone you trust promises to take in exchange for gold to transfer value around. It's not magic, it is just convenient. Also, I agree that the term intrinsic value is BS.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-24 21:24 · Score: 1

The act you mention defining lawful money was from after the Civil war when the US returned to the gold standard. What you're quoting was about requiring banks to recognize each others financial instruments and setting reserve levels. That capital T in your quoted sentence should be lower case and the period at the end should be a semicolon because you're not quoting a sentence, you're quoting a sentence fragment as a full sentence. That's also referred to as quoting out of context. The whole thing is:
"Every association organized under section 151 of this title shall at all times keep on hand not less than 25 per centum of its outstanding circulation, in gold or silver coin of the United States; and shall receive at par in the payment of debts the gold notes of every other such association which at the time of such payment is redeeming its circulating notes in gold coin of the United States, and shall be subject to all the provisions of title 62 of the Revised Statutes: Provided, that, in applying the same to associations organized for issuing gold notes, the terms ''lawful money'' and ''lawful money of the United States'' shall be construed to mean gold or silver coin of the United States; and the circulation of such associations shall not be within the limitation of circulation mentioned in title 62 of the Revised Statutes."
Note that there's only one period in the whole thing. That's just the way lawyers roll. Anyway, you'll not that, in context, it doesn't define what constitutes "lawful money" for the purposes of individual citizens redeeming their notes. Actually, it just seems to confuse the whole matter. Also, it doesn't define what it means by coin. "gold and silver coin of the United States" has no need to actually mean physical coins of gold or silver, it can be anything the US coins as gold and silver "coin", which can include things like treasury bonds and, in fact, dollar bills.
Anyway, with the reserve set at 25% (and that not necessarily in physical gold and silver) only a small percentage of people would actually be able to go the the bank and get gold. They certainly couldn't go to Fort Knox to do it. You should also note that the 5 dollar bill says "gold or lawful money", not "gold or silver", which would be shorter. In this day and age, anyone who has managed to avoid sending their life savings to a Nigerian prince should recognize that as weaselspeak for: "gold or whatever we deem to be lawful money, at our option".
Also, the value of the dollar was set equal to a certain weight of gold as you say. What you didn't say is that the weight of gold that the dollar was equal to could be arbitrarily changed by the government and was.
Just face it, the gold standard wasn't some paradise. It never really worked very well. There just wasn't enough gold, for one thing. And if you had piles of the stuff backing the paper currency, you had to spend money like crazy on security to protect it. Now, it's true that people whose savings were in gold in nations that have economically collapsed have managed to make out better than their fellow countrymen. But the same would be true if their money were in foreign investments, or other precious metals, sometimes in land (other times, the land may be seized by the government or by mob rule, but then again, they can do the same thing to the gold), or in valuable art, etc.
The point is, there's nothing special about gold. The gold standard has been de facto defunct in the US for about a century since shortly after it went back on it. There's nothing magical or special about gold that makes it the king of metals, or the only proper basis for currency. It's just a shiny, relatively rare, heavy metal that some people fetishize unduly. I would like a giant pile of gold coins to swim around in like Scrooge McDuck as much as the next guy, but I think it's silly to base a system of economics on it. When you consider that a high estimate of all the gold the human race has ever produced (and most of which has probably been lost by now) doesn't even equal a quarter of the world GDP even at the current hyperinflated gold prices, how could you even consider a gold standard?
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-25 11:21 · Score: 1

The thing is though, at the moment it's not a good idea to use gold as a store of value because gold prices are experiencing a bubble right now. Sometime in the next few years they're going to drop down by half at the very least. Right now, gold is only a good store of value if you can manage to short it.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-25 12:45 · Score: 1

Note that there's only one period in the whole thing. That's just the way lawyers roll. Anyway, you'll not that, in context, it doesn't define what constitutes "lawful money" for the purposes of individual citizens redeeming their notes. Actually, it just seems to confuse the whole matter. Also, it doesn't define what it means by coin. "gold and silver coin of the United States" has no need to actually mean physical coins of gold or silver, it can be anything the US coins as gold and silver "coin", which can include things like treasury bonds and, in fact, dollar bills.
After reading that, I agree with you on the weasel wording of the coin thing. It still says on the bill you could go to the treasury to redeem it for gold though. I don't really have any idea how common it was for a normal person to do that in practice, probably not very. On the other hand, governments could and would decide to change the weight of gold the currency was defined as, as you say.

Anyway, with the reserve set at 25% (and that not necessarily in physical gold and silver) only a small percentage of people would actually be able to go the the bank and get gold. They certainly couldn't go to Fort Knox to do it. You should also note that the 5 dollar bill says "gold or lawful money", not "gold or silver", which would be shorter. In this day and age, anyone who has managed to avoid sending their life savings to a Nigerian prince should recognize that as weaselspeak for: "gold or whatever we deem to be lawful money, at our option".
The more I think about it the root problem seems to be a lack of competition in issuing money. There must be a market for paranoid people who want to keep their money in a full-reserve bank, backed by whatever, just look at everyone buying gold certificates. It would be basically the same thing.

Just face it, the gold standard wasn't some paradise. It never really worked very well. There just wasn't enough gold, for one thing. And if you had piles of the stuff backing the paper currency, you had to spend money like crazy on security to protect it. Now, it's true that people whose savings were in gold in nations that have economically collapsed have managed to make out better than their fellow countrymen. But the same would be true if their money were in foreign investments, or other precious metals, sometimes in land (other times, the land may be seized by the government or by mob rule, but then again, they can do the same thing to the gold), or in valuable art, etc.
The US currently spend about 1/3rd of it's budget protecting its people, land, and other investments. I would say this is pretty much equivalent to protecting the value of the dollar.

The point is, there's nothing special about gold. The gold standard has been de facto defunct in the US for about a century since shortly after it went back on it. There's nothing magical or special about gold that makes it the king of metals, or the only proper basis for currency. It's just a shiny, relatively rare, heavy metal that some people fetishize unduly.
I think he reasons for that are political more than a failure of gold to store wealth. And, as described by you above, the gold standard wasn't really "pure" anyway, so it may not be the best example. I think decentralized cryptocurrencies are a great idea by the way. Widespread adoption of those would get rid of the expensive storage and fractional banking issues altogether, but we will see what happens with the bitcoin project.

I would like a giant pile of gold coins to swim around in like Scrooge McDuck as much as the next guy, but I think it's silly to base a system of economics on it. When you consider that a high estimate of all the gold the human race has ever produced (and most of which has probably been lost by now) doesn't even equal a quarter of the world GDP even at the current hyperinflated g
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-25 12:52 · Score: 1

I currently think it will turn out to be a bubble as well. This is not a sure thing though. If things come to a head hyperinflation of the dollar will be the last resort. What will people turn to? Gold may be chosen for almost superstitious reasons, but we shouldn't ignore that public perception will play a role what happens.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-25 14:02 · Score: 1

For that situation though, it seems even better to stock up on other tangible goods like canned food. Sure, you might be able to buy them with gold afterwards, but who knows at what exchange rate. You can buy about 100 $0.50 cans of beans right now for the value of a gram of gold. If the economic disaster you posit actually happens, chances are pretty good that gram of gold, in hand, isn't going to buy you anywhere near as much food.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-25 14:35 · Score: 1

As far as the competition in issuing money, I sort of see the point. The trouble is, the massive abuse of workers by companies paying in their own scrip back in the 19th and 20th centuries, and the continued practices of abuse of users of gift cards and all kinds of "point" systems right up to the current day leaves me a bit shy on the idea. We still do have barter of goods and services (with the attendant confusion on taxation of such) to fall back on, the problem is, whenever anyone tries to think up a good system to facilitate barter, they always end up right back at currency and the need for a central authority to back it. Bitcoin tries to use fundamental laws of math (unproven ones, of course, and many of us are actually hoping that they're not fundamental laws) as the central authority, but I don't quite think that system is going to make it in the long run.
As for full reserve banks, those exist now as part of some bank branches in the form of safety deposit boxes. If the banks can't loan out your savings, however, the only way they can stay in business is to charge you fees for holding your stuff for you (of course, banks currently can loan out more money than they have deposited with which is a bit disturbing).
The US does spend a lot on guarding its assets, but I don't think they'd spend less on guarding the rest of it if they also had to guard huge piles of gold, they would just spend extra on guarding the gold. Of course, since the US doesn't have all the money they're spending on the military at the moment, they're actually putting everything at risk. The lesson the US apparently didn't learn from the economic meltdown of the USSR is that the same think could happen to the US as well.
If the US decided to go back on the gold standard right now, it would have to either buy up a lot of gold, which would drive up the price even more, so it would be much better for the us to wait until it drops back down again if it were to do so (which it just isn't ever going to do unless some really fringe politicians manage to take over Congress), or it could start a massive gold mining program which would drive the price of gold way down. Anyway, a system backed with a fractional reserve of gold wouldn't be truly gold backed (the realities of which are why the US went off the gold standard in the first place). For bank fractional reserves (which are ridiculously low even if the federal reserve didn't itself only use a fractional reserve), the rest of the deposits are backed by debt to the bank and most of those debts are backed by collateral in the form of real assets like vehicles, land, etc. So a fractional reserve gold backed system would really be backed by other assets and would be pretty much the system the US has now (after all, the US does still have some gold) with a different official name.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-25 16:46 · Score: 1

I don't think that would be totally rational. That supply (I know it is just an arbitrary example) would last about 3 months for each mouth to feed, and really $500 isn't that much, it would be easy to do both for the type of person who has money to invest in gold. If you think the chaos is going to last longer than 3 months I think it would be time to diversify into guns/ammo, medical supplies, etc.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-25 17:20 · Score: 1

Sorry, 50 bucks.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-25 18:10 · Score: 1

As far as the competition in issuing money, I sort of see the point. The trouble is, the massive abuse of workers by companies paying in their own scrip back in the 19th and 20th centuries, and the continued practices of abuse of users of gift cards and all kinds of "point" systems right up to the current day leaves me a bit shy on the idea.
I don't really see a difference between scrip and "debt bondage" or whatever you want to call it. Today, people think they "own" a house because they agree to paying a bank for 30 years to have the right to it. The use of credit cards is rampant, it is an extra tax on every purchase you make, no matter where. The whole scheme has just added in one more layer of complexity. In fact I think the new thing is going to be to phase out cash, and only allow use of credit and debit in the name of preventing money laundering and tax evasion.

Bitcoin tries to use fundamental laws of math (unproven ones, of course, and many of us are actually hoping that they're not fundamental laws) as the central authority, but I don't quite think that system is going to make it in the long run.
What do you mean here? You could be referring to many things and I am not an expert. Do these rules of math you refer to also apply to our current system (e.g. password encryption)?

As for full reserve banks, those exist now as part of some bank branches in the form of safety deposit boxes. If the banks can't loan out your savings, however, the only way they can stay in business is to charge you fees for holding your stuff for you (of course, banks currently can loan out more money than they have deposited with which is a bit disturbing).
I would add escrow fees and probably "processing fees" for exchanging bank notes to whatever is backing it. Also I saw an article awhile back that banks did start charging large depositors to store dollars due to high insurance costs. I couldn't find it with a quick google, so I don't have the details.

The US does spend a lot on guarding its assets, but I don't think they'd spend less on guarding the rest of it if they also had to guard huge piles of gold, they would just spend extra on guarding the gold. Of course, since the US doesn't have all the money they're spending on the military at the moment, they're actually putting everything at risk. The lesson the US apparently didn't learn from the economic meltdown of the USSR is that the same think could happen to the US as well.
Any more than is spent on Area 51? For all we know places like that are where the secret stash of gold is already held. That is getting "speculative", but I imagine if we totaled the amount spent on black projects it would set an upper bound on what it would cost to defend a huge gold stash. It may be a drop in the bucket.

If the US decided to go back on the gold standard right now, it would have to either buy up a lot of gold, which would drive up the price even more, so it would be much better for the us to wait until it drops back down again if it were to do so (which it just isn't ever going to do unless some really fringe politicians manage to take over Congress), or it could start a massive gold mining program which would drive the price of gold way down.
Haha, yea only the insiders would know beforehand.... more conspiracy theory leading to your second possibility, etc.

Anyway, a system backed with a fractional reserve of gold wouldn't be truly gold backed (the realities of which are why the US went off the gold standard in the first place). For bank fractional reserves (which are ridiculously low even if the federal reserve didn't itself only use a fractional reserve), the rest of the deposits are backed by debt to the bank and most of those debts are backed by collateral in the form of real assets like vehicles, land, etc. So a fractional reser
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-26 14:00 · Score: 1

On scrip and other exploitive "private money", I agree that it has never really gone away. Also agree somewhat on the disturbing money tracking trend.
As for bitcoin, a number of facets of the bitcoin system depend on the fairly predictable difficulty of cryptographic computer problems. As computing power increases, the actual amount of computing power available to everyone presumably increases at the same rate. Someone might develop some sort of amazing new computing technology that's a thousand times faster than what anyone else has for the same price, but only supervillains use super-advanced technology they've developed in crazy schemes to manipulate currency. Sane people get rich by selling the technology (well, then there's all those so called "quants" working for brokerages, but their "technology" isn't really good for anything except cynically manipulating markets). Hardness of problems in computer science is a difficult thing to prove, however. Until someone proves how hard they really are, most of the problems in cryptography are believed to be very hard, but not absolutely proven to be so. The crypotgraphic problems that prevent double spending and quick mining of bitcoins may some day fall to some sort of cryptoanalysis. To compare to the gold standard, it would be like someone suddenly finding an entire mountain of gold. In some cases, someone solving that sort of problem would render a lot of password and encryption systems virtually useless.
As for banks, they'll find any way they can to double or triple dip with fees, certainly. The fundamental model of banks though is still that people deposit money in them, then they loan out that money to earn interest. In a lot of ways, depositors are like investors in the bank. Banks these days clearly don't see their depositors that way, however.
Safeguarding the nations gold store certainly wouldn't be the largest expense the US government has. It's just that simply owning it would be an expense, so if the currency were backed only by gold, it would require a constant stream of money, backed by gold to keep it.
As for insiders, technically congresspersons and other politicians aren't considered insiders for the purposes of SEC rules. They just manage to get really amazing returns on their investments. They must just be really smart investors.
In the end, whatever it's backed by, currency is basically just something we made up. Sort of a shared dream like civilization, justice, truth and all that stuff. It works because the majority of us believe in it and go about our lives treating it as real. Government is another such thing we just made up to make civilization possible. Regulating money is one of the things it exists to do and is one of its proper functions and, at present, I don't think it would be better any other way. I do, however, think that the US government (and other governments) are doing a really, really terrible job at it and have been for a very long time. I would really like to see the people in charge actually doing their jobs for once, as a matter of fact.
Re:No. No, no, no, no, no, no. by tragedy · 2012-01-26 14:47 · Score: 1

But if only rich people can afford to store value in gold anyway, why do the rest of us care if it's a good store of value or not? If you're storing value for a complete collapse, the best store of value is always going to be the things you're actually going to need, if you can store them. If I think that there's going to be a home heating oil crisis, I don't stock up on gold to buy home heating oil, I stock up on home heating oil. If I think there's going to be a crisis that makes it near impossible to buy food, I'm not going to stock up on gold to buy food, I'm just going to stock up on non-perishable food items.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-27 15:36 · Score: 1

I'd say first of all it is likely to remain a good store of value, whether due to superstition or prettiness, or whatever. Although this value may drop during times of chaos, it will be deemed likely by many people to recover once stability is restored (a self-fulfilling prophecy?) Although gold is more difficult to store than paper, it is much easier to store than the other two examples you give, and is non-perishable. It also has the added advantage of being difficult to generate, thus limiting the extent to which the supply can be manipulated by the powerful. This is the primary advantage of gold over fiat or a complex basket of goods. While people may accept altering the value of a dollar in terms of the wieght of gold, they are unlikely to accept altering the definition of a gram or ounce.
I agree that it is a relatively useless substance. The lack of alternative uses contributes to its usefulness in storing value. However, I would not count on it to be valuable in times of chaos.
Re:No. No, no, no, no, no, no. by repapetilto · 2012-01-27 15:55 · Score: 1

Regulating money is one of the things it exists to do and is one of its proper functions
I think we have found the crux of the matter. I disagree. This is certainly a role government's have seen fit to take upon themselves, especially in times requiring large deficit spending (i.e. war), and also to inflate indicators of economic activity (to increase the popularity of politicians). However, I do not see this as a proper function of government. I guess I see the government's ideal role as promoting the general welfare of a society. It is possible that a government could manage the currency supply in a way that promotes the general welfare, but this is a powerful tool that can be used for good or bad. There are also many ways a government can mismanage the currency supply leading to various negative outcomes. A few examples I see in the US today include: income inequality, debt-fueled bubbles in various sectors of the economy, artificially causing people to consume at an unsustainable rate, etc. In practice the latter appears to be much more common, so I think it is better for a government to not have this tool.
I would note that, central banking or not, as soon as banks are treated differently than other businesses (e.g., government sanctioned bank holidays), this tool has been handed over and the value of the currency is now partially backed by military and police power.

Credits? by Anonymous Coward · 2012-01-20 12:41 · Score: 0

What are these Credits of which you speak?

Seriously, FB isn't getting my any of my financial information. Not even telling them who I bank with with a "Like" or where I currently work with a "Like" either.

Kind of like bitcoins. by Anonymous Coward · 2012-01-20 12:42 · Score: 1

Except it has more confidence in it, and it's more stable.

Re:Kind of like bitcoins. by icebraining · 2012-01-20 12:54 · Score: 2

Except it's not. It's controlled by a single entity, which can "print" all it wants and even revogate someone's credits.
It's much more like dollars than Bitcoins.

--
Dilbert RSS feed
Re:Kind of like bitcoins. by lightknight · 2012-01-20 13:49 · Score: 1

Exactly. Facebook Credits = Flooz.

--
I am John Hurt.
Re:Kind of like bitcoins. by Hognoxious · 2012-01-21 00:20 · Score: 1

But not all single entities are created equal. One of them could revoke a lot more than your credits, and yet I'd trust that one more than I would Facebook.

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."

Wired article from a few years ago by MrDoh! · 2012-01-20 12:47 · Score: 1

Predicted all of this, and explained very clearly why as soon as there's some traction, and the ability to move/take cash out, the existing banks/authorities will be down on their heads like a weight of very heavy things.
Why Bitcoin was so scary for a time.

These things offer wonderful room for money laundering.

--
Waiting for an amusing sig.

Re:Wired article from a few years ago by ackthpt · 2012-01-20 12:56 · Score: 3, Insightful

Predicted all of this, and explained very clearly why as soon as there's some traction, and the ability to move/take cash out, the existing banks/authorities will be down on their heads like a weight of very heavy things.
Why Bitcoin was so scary for a time.
These things offer wonderful room for money laundering.
I dunno. I see PayPal and eBay as a cartel which should be broken up, but nodbody has done anything about it, yet. All right out there in the open.
! It appears you are attempting to receive payment by means other than PayPal which is not allowed, please correct your listing so we get an even bigger cut of your sale

--

A feeling of having made the same mistake before: Deja Foobar
Re:Wired article from a few years ago by Anonymous Coward · 2012-01-20 16:23 · Score: 0

Conducting trade in a currency other than your country's currency is bad for your sovereignty (even if your country's currency is an inflated worthless steaming pile).
Re:Wired article from a few years ago by repapetilto · 2012-01-20 23:05 · Score: 1

Bitcoin is bigger than ever right now. It is just that it has moved beyond creating bubbles by getting stories on slashdot. Recently there was a "The Good Wife" episode with the goal of doing that.
http://tvrecaps.ew.com/recap/the-good-wife-season-three-episode-13/

This guy is flogging his own product by Animats · 2012-01-20 12:50 · Score: 5, Insightful

From the article:

Peter Vogel is co-founder of Plink, a Facebook Credits-based loyalty program that rewards Facebook members for dining and making purchases at their favorite restaurants and stores.

"Facebook credits" are just another gift card scheme. You can't cash them out. You can't invest them. You can't convert them to another currency. You can't transfer them to another individual. And Facebook takes a 30% cut off the top.

The only virtual currency that comes close to behaving like a currency is Linden Dollars, the monetary unit of Second Life. Those, you can transfer and convert.

Bitcoin had potential, but it turned into a pyramid scheme.

Re:This guy is flogging his own product by Anonymous Coward · 2012-01-20 13:01 · Score: 5, Informative

BitCoin is not a pyramid scheme, technically it is a pump and dump.
Re:This guy is flogging his own product by Anonymous Coward · 2012-01-20 13:09 · Score: 0

How did Bitcoin "turn into" a pyramid scheme? The value of my (few) bitcoins doesn't change whether I convince anyone else to use bitcoins, or not. There's no definition of pyramid scheme I know of that would fit the bill.
I just spent 3.06 BTC buying 3 months of VPN services a few hours ago. I really like not having had to use my credit card for that.
Re:This guy is flogging his own product by Teppy · 2012-01-20 13:24 · Score: 4, Insightful

Bitcoin hasn't gone away. It may not be an investment to hoard at the moment, but as a currency it's functioning beautifully. I run Dragon's Tale, a casino MMORPG hybrid, which uses Bitcoins exclusively. Our new-players-per-week initially peaked right at the peak of the Bitcoin bubble (around 120 new players per week for a couple weeks), dropped to about 20/week, and has been growing for the last few months. Currently we get around 60 new players per week. Revenue from Dragon's Tale's hasn't passed our other game, A Tale in the Desert yet, but on several recent weeks it's come close.

Players love Bitcoin because deposits *and withdrawals* are instant, unlike all other online casinos. I know that some of my players also play poker at Seals With Clubs, a Bitcoin-only poker site. They may have a win at Dragon's Tale, shoot the money over to Seals, shoot their winnings back to DT, or into their Silk Road account to buy some goodies, or into their desktop wallet. If Bitcoin were never to go beyond gambling, it will be a success: it allows all Bitcoin-based casinos to function as one huge meta-casino.
Re:This guy is flogging his own product by religious+freak · 2012-01-20 13:50 · Score: 1

+1

--
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
Re:This guy is flogging his own product by Anonymous Coward · 2012-01-20 13:54 · Score: 0

I think your con-radar is malfunctioning. Bitcoin was always a scam. Bitcoin is the modern day equivalent of tulip mania.
Re:This guy is flogging his own product by lightknight · 2012-01-20 14:12 · Score: 4, Interesting

Agreed. I purchased web hosting for a year (out of the US), and a domain name. I'm considering a Parisienne firm for some minor website artwork. The number of businesses / services that accept BitCoins are growing.
The only people shouting Pyramid Scheme as those who are butt-hurt from trying to 'get in' at the wrong time; many of those people were more invested in turning a magical short-term profit by reselling their coins to 'suckas' who would buy in later. Surprise, surprise, the same kind of mentality seen with the flipping of homes on the real estate market, and just like with that market, it backfires -> absolutely no understanding of market fundamentals or finance, but the people involved think they've found a path to Easy Street. Probably bought in at $14 / coin, and sold out at $3 / coin, only to watch the market rebound, as of late, back to $7 / coin. Guys, if you want to turn a major profit, do two things -> 1.) read up on some finance / economics (the heavy stuff that you special order online, not the stuff B&N stocks in the "Investing" aisle), and 2.) long-term investing (not everyone is cut out to be a day trader, and long term tends to be quite profitable).
One of the larger things harming BitCoin is the constant f*ckups the various exchanges and online wallet sites keep experiencing. Mt. Gox kept screwing the market with their repeatedly hacked accounts (ah yes, PHP, the epitome of secure languages), followed by Dwolla and their API nonsense (has anyone seen my head? it appears located inside my rectum), and that one online BitCoin wallet service whose owners took everyone's wallet and cashed out (why yes, everyone, why doesn't you store your unencrypted wallet with me for a while? wink wink). In all seriousness, I myself am surprised that BitCoin is still around -> it's based on a sound design, but the growing pains it has experienced from every goober who has come along since have been synonymous with a 90 lbs geek trying out for the high-school football team.

--
I am John Hurt.
Re:This guy is flogging his own product by Anonymous Coward · 2012-01-20 14:13 · Score: 0

Bitcoin had potential, but it turned into a pyramid scheme.
Any currency that is neither centrally controlled nor backed by something that's centrally controlled, hence free by my definition, will inevitably become a pyramid scheme by your definition. Doesn't even matter if it's tangible or not. I'd rather not use the term pyramid scheme (although any free currency would have phases that resemble exactly that) since they have utility that non-free currencies cannot provide. Same goes for the term `pump and dump`. People can do whatever they want with them, and that's exactly why these things happen. The debate should not be whether it's a scheme, but whether we need a free currency.
If there were a free digital currency that's widely used, I can't see any reason why I would prefer intermediary payment systems like Facebook credits or Paypal over using that currency directly. And if any such currency inevitably has to go through pyramid / pump'n'dump / my-grocery-store-doesn't-accept-this-thing phases, I don't have much to protest. Let's hope that Bitcoin survives in the long run.
Re:This guy is flogging his own product by Anonymous Coward · 2012-01-20 20:02 · Score: 0

Add to this, that:
- You have no idea what the commission will end up being since 30% is FB's cut, not taking into account the comission for SMS / CC / whatever the purchase is made with
- We have seen far higher rates of fraud with teenager targetted services then using other payment methods... Buy something (not physical), receive, claim your account was hacked, get money back, repeat. They actually told us 70% refunds due to customers claiming they where hacked "is about the norm".
- Customer service is friendly but really slow, and not even close to any of our other payment partners
We spend more time with keeping facebook credits running then anything else, and it brings in less then 0.01% of our sales. :D
Re:This guy is flogging his own product by Anonymous Coward · 2012-01-20 22:08 · Score: 0

Damn comment spammer. Leave slashdot now!
Re:This guy is flogging his own product by repapetilto · 2012-01-20 23:56 · Score: 2

USD appears to be a pump and dump as well.
Re:This guy is flogging his own product by repapetilto · 2012-01-21 00:07 · Score: 1

It is a good idea. There is a "pump and dump" aspect to it due to the speculators treating it as a penny stock, but it is useful regardless of the exchange value for dollars. Whether or not the bitcoin project fails, the idea of a decentralized cryptocurrency is here to stay. It is just another example of people engineering a way around a problem. I am still confused by the hostile attitude of slashdotters towards it.
Re:This guy is flogging his own product by Hognoxious · 2012-01-21 00:49 · Score: 1

The difference is that no matter how hungry you get, you can't eat bitcoins.

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:This guy is flogging his own product by Hognoxious · 2012-01-21 01:13 · Score: 1

"Facebook credits" are just another gift card scheme. You can't cash them out. [...] You can't transfer them to another individual.

So they're the ideal thing if I want to give a gift to myself?

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:This guy is flogging his own product by OxfordLlama · 2012-01-21 06:28 · Score: 1

ah yes, PHP, the epitome of secure languages
The security of the site has nothing to do with the language. The security relies on coder competence. That is what was lacking.
Re:This guy is flogging his own product by Dwonis · 2012-01-21 17:53 · Score: 1

I think it stopped being a pump-and-dump when the last bubble burst. I find it's still a very useful micropayments platform, especially when the exact dollar value of the micropayments doesn't matter that much (e.g. when donating money to somebody who operates a website).

Look I'm sure they'll only create a few extra by Colin+Smith · 2012-01-20 12:50 · Score: 4, Funny

When they discover they can get stuff for free. Same way the US government has done.

--
Deleted

Re:Look I'm sure they'll only create a few extra by lightknight · 2012-01-20 13:44 · Score: 2

Which is the importance of getting your contracts specified in a currency that they can't print. For US contracts, get the money paid in Euros. For European contracts, get the money in Yen (or whatever Asian currency you prefer), and for Asian contracts, get the money paid in US dollars.
The government will call their brethren overseas to trade their currency for the one specified in your contract. Get a general idea of when they make that transaction, and you can make some more money -> I call it fractional investing. The people in the government who signed a contract with you have been playing the money printing game since forever, so play them at their own game, and hit them up for extra cash at every milestone. A single $30 million dollar contract can, with the right information, be worth over $250 million.
As the saying goes, we will pretend to work as they pretend to pay us. But then, I can understand their approach -> as the Finance majors have pointed out to us on many occasions, the value of a currency is entirely in your head. And I can actually understand now why these people are so desperate to spend their dollars -> no one knows when this house of cards will come tumbling down, which makes trading paper for hard assets a good idea. With a currency that is rapidly depreciating, and is on questionable grounds, spending it immediately would be a good idea.

--
I am John Hurt.
Re:Look I'm sure they'll only create a few extra by postbigbang · 2012-01-20 14:08 · Score: 5, Insightful

Ummm, no. The finance majors don't say that. Nor do the economists. There is chutpzah, there is subterfuge, and there are varying indicators, but it's not pretend.
When a letter of credit clears, there's a complex set of events that's spawned. Lots of people get paid. Sometimes they get paid in differing currencies, but they get paid. When the Russians had their post Soviet-breakup crunch, maybe they paid in potatoes, but they paid. Trading is something humans do well, and there is some predictability beyond "pretend".

--
---- Teach Peace. It's Cheaper Than War.
Re:Look I'm sure they'll only create a few extra by wisty · 2012-01-20 19:45 · Score: 1

Actually, economics majors say that money is a "thin veil over barter", so you don't have to worry about it. Queue the Global Financial Crisis, and they say it can only be modelled as a shock. They don't like considering debt, because it would help them predict crisis, and then they'd get blamed if they modelled it wrong. It's better to say that financial crisis are an unpredictable shock to otherwise perfect markets.
Re:Look I'm sure they'll only create a few extra by repapetilto · 2012-01-20 21:42 · Score: 4, Interesting

It is relatively easy to spot debt bubbles. I predict here that higher education is next.
Re:Look I'm sure they'll only create a few extra by AuMatar · 2012-01-20 22:08 · Score: 2

Advertising is the next bubble. Advertising budgets are relatively fixed, but the number of companies chasing those dollars are growing at an expanding rate. The dot com crash will be followed by the mobile app crash and web 2.0 crash in the next few years.

--
I still have more fans than freaks. WTF is wrong with you people?
Re:Look I'm sure they'll only create a few extra by repapetilto · 2012-01-20 22:24 · Score: 1

Interesting, who is loaning these companies money?
Re:Look I'm sure they'll only create a few extra by Hognoxious · 2012-01-20 22:57 · Score: 1

Queue the Global Financial Crisis
Can't I take a number and come back later?

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:Look I'm sure they'll only create a few extra by timeOday · 2012-01-21 09:01 · Score: 1

Speaking of which, I keep meaning to ask the "Buy Gold!" crowd for their latest prediction on when to expect hyperinflation.

People that pay for online currencies by Anonymous Coward · 2012-01-20 12:52 · Score: 0

...deserve the eventual meltdown that will come.

will they make the movies available online? by Anonymous Coward · 2012-01-20 12:53 · Score: 0

It's all fine and dandy if they allow me to buy a movie with FB credits (downside is that i'll have to make an account, oh well), but then, will it be available on day 1? can i watch it on my computer (or whatever internet connected box i happen to have)?

If the answer is yes, that's fantastic. If no...:( sorry Hollywood, tough luck on this one. Aint gonna see any $ from me then.

Re:will they make the movies available online? by Bucky24 · 2012-01-20 13:04 · Score: 1

If it's anything like a Zynga game, then you'll have a certain amount of energy. When you watch the movie you use up energy, and when its gone you have to wait until the next day to watch more of the movie. But you can buy more energy for a cheap price.

It's not realistic to expect us to be able to BUY movies with facebook credits. They'd make much more money by charging a lower "per view" fee.

--
All the world's a CPU, and all the men and women merely AI agents

Contra effect by ackthpt · 2012-01-20 12:54 · Score: 1

If Facebook told me to buy something then I'd be more skeptical than ever about it. Could be a good thing or bad thing, but I don't see Facebook as my consumer advocate or advisor.

More like an idiotic social networking site which constantly nags me about things and notices and I try adblocking the pop-ups, which invariably makes it all worse, but I don't really care.

--

A feeling of having made the same mistake before: Deja Foobar

don't let the IRS find out by a2wflc · 2012-01-20 12:55 · Score: 2

Facebook will have to send a 1099 to everyone who earned credits this year and we'll have to pay taxes. My bank sent me one saying I earned $17 in interest. If I earned enough credits to buy 2 movies they'd probably be worth more than that and I'm sure the IRS would want their cut.

Re:don't let the IRS find out by Anonymous Coward · 2012-01-20 15:43 · Score: 0

They would first need to tax the Frequent Flyer points employees earn on business trips before they tax Facebook credits.

Nothing like a CB by Anonymous Coward · 2012-01-20 12:55 · Score: 0

They can't issue credits by fiat. Their credits only have value because they're backed by goods and services whereas CB money is issued in large multiples of foreign reserves and/or hard assets held by the bank. Also CB money is required to be accepted as legal tender, etc.

Saying that FB is becoming a CB because you can redeem game credits is like saying that a cereal is a CB because they have coupons.

Another distinction is that a "run" on FB credits would bankrupt FB if they over-issued. A run on CB money causes hyperinflation which is like bankrtupcy; but not quite the same.

Re:Off-topic by Bucky24 · 2012-01-20 12:58 · Score: 0

I strongly suspect that the changing article types are due to a changing demographic of people who visit the site. As it says "this site is powered by your submissions". However, I can understand that it didn't used to be this way (I have only been here for about a year so I wouldn't know). Why not create that "new slashdot-type site" yourself? I'd certainly visit it.

--
All the world's a CPU, and all the men and women merely AI agents

Central bank returns to Frisco by Anonymous Coward · 2012-01-20 13:02 · Score: 0

On Bloomberg today it was reported Facebook is shopping partners for online gambling. That is a well known business for laundering and earning money on a large scale. That combined with currently unregulated creation of money online, makes for a realistic realization of this otherwise silly post.

What would be ironic and even likely is Facebook cash would become more stable than dollars, comparable to Swiss Francs, Australian and Canadian dollars.

The banking center may be returning to San Francisco from which it was strong a couple of decades ago. Please don't put a Farmville character on the currency, er coupon!

JJ

No, and here's why. by MrEricSir · 2012-01-20 13:02 · Score: 5, Insightful

Betteridge's Law of Headlines is an adage that states, "Any headline which ends in a question mark can be answered by the word 'no'".

--
There's no -1 for "I don't get it."

Re:No, and here's why. by Anonymous Coward · 2012-01-20 13:36 · Score: 0

Slashdot Times
"Can all headlines be answered with the word no?"

Harry Potter and The Dark Knight? by Anonymous Coward · 2012-01-20 13:06 · Score: 0

I don't remember that one...

That's it, that's the end of Slashdot by Anonymous Coward · 2012-01-20 13:08 · Score: 0

I've always wondered what it would take for me to finally quit spending time viewing this site.

This article is the answer to the above question.

If this was the old days when stuff was printed, I wouldn't even
use Slashdot to wipe my ass.

Adios, idiots.

Re:That's it, that's the end of Slashdot by T.Hobbes · 2012-01-20 13:21 · Score: 1

slashcode is free
Someone should start something anew. Run it themselves, like Taco used to do.
I don't have the energy or time or personality to run the thing, but I'd be a happy viewer and contributor.
There's enough of a market for it it to pay for the running costs. Someone just has to step up.

Re:Off-topic by larry+bagina · 2012-01-20 13:17 · Score: 0

Can anyone recommend a new slashdot-type site, hopefully one run by individuals (like slashdot used to be in the CmdrTaco and Hemos days), and dealing with tech, rather than social media froth and global warming bullshit?

hehe, reminds me of an old joke:

Q: Is CmdrTaco gay?
A: Hemos certainly is!

But seriously, I remember reading slashdot back in 99 or 98. Hell, I didn't realize until my first post that Anonymous Coward was the guest account and not a an incredibly stupid individual. I don't want to put on the rose-colored glasses, but I feel like slashdot has declined. Part of that is that linux is now more mainstream and mature so development on cool shit has stagnated (and don't forget endless September), but there's enough cool shit happening that we don't need "Is $x?" (where $x is retardedly stupid) stories or garbage like that.

--
Do you even lift?

These aren't the 'roids you're looking for.

Legolas called by Anonymous Coward · 2012-01-20 13:17 · Score: 0

He wants his long bow back.

Brings a whole new meaning to the term... by Anonymous Coward · 2012-01-20 13:34 · Score: 0

Friendly neighborhood bank.

Seriously, it'll make money off your friendships, and that's just a bit squicky.

Are they paying tax? by hawguy · 2012-01-20 13:43 · Score: 1

Is someone paying tax on these transactions?

Lately Credits have become more intriguing. Warner Brothers this summer offered movie-goers a chance to watch Harry Potter and The Dark Knight for 30 Credits apiece. Miramax and Paramount countered with film-viewing offers, too

This sounds like a barter transaction:

http://www.irs.gov/businesses/small/article/0,,id=215975,00.html

Exchanges occurring through a barter exchange are reported to IRS on Form 1099-B and show the value of cash, property, services, credits or scrip added to your account by the barter exchange.

Facebook needs to be megauploaded. by Anonymous Coward · 2012-01-20 13:46 · Score: 0

You know I'm right.

Sorry but that's not "functioning beautifully" by Sycraft-fu · 2012-01-20 13:49 · Score: 2, Insightful

If it works for you, that's fine, I won't tell you not to use it. However that your tiny game (one I've never heard of, and I'm rather in to games) uses it means jack and shit. I can buy -nothing- I want with bitcoins, not a single thing. Anything I can think of that I'd desire which is sold by someone who takes bitcoins as payment.

Also are your players really using it as a currency? I doubt it, they are using it as chips just like at any other casino. As in they buy them as needed, play with them, and then cash out when they are done. That isn't what you do with a currency. A currency is something used for general transactions, and something you hold on to. When people talking about "having savings" they mean "having currency held in reserve".

Re:Sorry but that's not "functioning beautifully" by beltsbear · 2012-01-20 17:43 · Score: 2

Last month I sold my older iPhone and a laptop for BitCoin and today I bought Home Depot gift cards and converted some to USD in my bank account. On the Home Depot cards no fees were paid so 100% of the money stayed out of paypal and ebay hands. On the converted Bitcoins to USD I paid 25 cents to Dwolla and .5% to MTGOX.
Re:Sorry but that's not "functioning beautifully" by repapetilto · 2012-01-21 00:13 · Score: 1

I don't like giving my info to some online poker site (who would?). If they accept bitcoin I don't have to.
Re:Sorry but that's not "functioning beautifully" by Anonymous Coward · 2012-01-21 00:27 · Score: 0

I bought Home Depot gift cards and converted some to USD in my bank account.

Bullshit, companies don't redeem gift cards for cash.
Re:Sorry but that's not "functioning beautifully" by OxfordLlama · 2012-01-21 06:33 · Score: 1

I think the statement was poorly worded, and he meant he bought some Home Depot gift cards, and converted some extra Bitcoins to USD.
Re:Sorry but that's not "functioning beautifully" by Dwonis · 2012-01-21 17:57 · Score: 1

Home Depot might not, but if you can find somebody who wants a Home Depot gift card, you can sell it to them for Bitcoins.
Re:Sorry but that's not "functioning beautifully" by phungus · 2012-01-21 19:57 · Score: 1

I just paid for school supplies with my bitcoins, though I would have rather used dollars had I any available.
You can buy anything on the internet that takes a credit card for bitcoins by using someone else to purchase it for you. Those people exist within the Bitcoin community. Make use of the Web-of-Trust and GPG authentication tools and always keep learning.

IPO imminent by slasho81 · 2012-01-20 13:52 · Score: 5, Insightful

I clicked through to TFA. I know, what was I thinking...

This is a guest post by Peter Vogel, co-founder of Plink, which lets consumers earn Facebook Credits for dining out and shopping online.

So, a co-founder of a business based on Facebook Credits thinks they're super-important and could be equivalent to actual money. Right. Next ridiculous story, please.

I expect more stories inflating Facebook's perceived worth to be pushed to the mainstream media in the coming months as Facebook's IPO is imminent.

Re:IPO imminent by Anonymous Coward · 2012-01-20 14:42 · Score: 0

I expect more stories inflating Facebook's perceived worth to be pushed to the mainstream media in the coming months as Facebook's IPO is imminent.
*BINGO* !!!!!! DING DING DING YOU WIN A PRIZE !!!! 100 Facebook Credits!

Re:Off-topic by Bill,+Shooter+of+Bul · 2012-01-20 13:58 · Score: 1, Funny

Uhm, Hot grits and the horse you road in on, you Emac on windows viewing AOL using poopy pants!

Is that better?

Unfortunately I only troll at a 2nd grade level.

--
Well.. maybe. Or Maybe not. But Definitely not sort of.

Thanks for pointing that out by Anonymous Coward · 2012-01-20 13:59 · Score: 0

Thanks for pointing that out, after "Ponzi Scheme", "Pyramid Scheme" is one of those terms people seem to leap to whenever they feel there's a scam but aren't quite sure what it is.

Plastic money for plastic values by Anonymous Coward · 2012-01-20 14:04 · Score: 0

Note that this virtual currency is being used to 'buy' immensely stupid things from an artificial engineered culture (games and entertaintment with very little cultural value). The wet dream of the Ayn Rand psychophants of this world

Trust facebook? by reboot246 · 2012-01-20 14:17 · Score: 3, Insightful

I trust facebook even less than I trust the U.S. government, and I don't trust government at all.

God forbid facebook ever becomes a central bank!

Re:Trust facebook? by Anonymous Coward · 2012-01-21 00:05 · Score: 0

Well, we all know facebook are evil, but I don't think they're quite evil enough to become a bank.

And, with perfect investing prowess... by NotQuiteReal · 2012-01-20 14:18 · Score: 3, Insightful

That $10 in 1998 invested in HANS (the Hansens natural soda company, at the IPO) turned into over $2,000 before it was bought by MNST (Monster Bev co.) and tripled from there.

Cool - your $10 in cybergold could be about 6 grand now, if you played your cards right!

Of course, if you left that tenner in your coat pocket, you can only get about $7.50 1998 equivalent worth of stuff...

--
This issue is a bit more complicated than you think.

Re:And, with perfect investing prowess... by CastrTroy · 2012-01-20 14:52 · Score: 2

Depends what you are buying. You can get a much better calculator for $10.00 now than you cold in 1998. For $10 you could get a 4 GB USB stick. Do you know how many floppy disks you would have to buy to get 4 GB. A lot more than $10 worth. Sure if you're buying food you might get less, but many things have come down in price.

--

Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
Re:And, with perfect investing prowess... by Bill,+Shooter+of+Bul · 2012-01-20 16:02 · Score: 4, Insightful

Left it in my coat pocket? Heck no, I was a college kid back then. It was the end of the school year, and I was pretty much broke. That $10 was enough to buy food for two weeks!

--
Well.. maybe. Or Maybe not. But Definitely not sort of.
Re:And, with perfect investing prowess... by billcopc · 2012-01-20 16:10 · Score: 2

Jack Daniel's isn't food, brah.

--
-Billco, Fnarg.com
Re:And, with perfect investing prowess... by Anonymous Coward · 2012-01-20 16:56 · Score: 0

but many things have come down in price.
Technology. Nothing else.
(also since iPad 2 is 2x the speed of iPad 1, it counts as 50% of the price for government inflation calculation purposes, while food skyrockets. Yay.)
Re:And, with perfect investing prowess... by repapetilto · 2012-01-20 21:48 · Score: 1

Which leads to the question... why do people buy tech products now if they are going to be cheaper later?
Re:And, with perfect investing prowess... by Hognoxious · 2012-01-20 23:06 · Score: 2

http://ecx.images-amazon.com/images/I/41FB6IAL6LL._SL500_AA300_.jpg
http://www.vinaglobo.de/shop/show_product.php?products_id=780&language=en&SESS=18a623b7248011172901eb8b834ec8c4
I suspect it might not be healthy to subsist on these alone, though...

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Re:And, with perfect investing prowess... by sourcerror · 2012-01-21 00:33 · Score: 3, Informative

Because they don't live forever? Because they have problems that have to solved now, not 10 years later. Because they want to be entertained now, not 10 years later. Why buy a concert ticket for tomorrow, if I have no use for it the day after tomorrow?
Re:And, with perfect investing prowess... by repapetilto · 2012-01-21 00:46 · Score: 1

That sounds like the correct use of money. In contrast to basically being forced to spend it ASAP (if you are rational) due to inflation.
Re:And, with perfect investing prowess... by johnsnails · 2012-01-21 01:34 · Score: 1

is that true about the iPad? I always wondered how technology was factored in. I was told that basically a computer is a computer so whilst u might get more bang for ur buck inflation just treated different generations of technology the same... if that makes sense...
Re:And, with perfect investing prowess... by Anonymous Coward · 2012-01-21 04:00 · Score: 0

Do you know how many floppy disks you would have to buy to get 4 GB. A lot more than $10 worth.
Around 2700 floppies for 4GB, apparently.
At US $4.00 for a box of 10, that would cost $1080.
Re:And, with perfect investing prowess... by djlowe · 2012-01-21 04:03 · Score: 1

Jack Daniel's isn't food, brah.
It is if you use it in your stews (de-glaze the pan you use to partially cook the stew beef), BBQ sauce (just a smidgin while you're cooking it)... and, of course, reserve "some" for taste testing, to ensure product quality *grin*
Re:And, with perfect investing prowess... by timeOday · 2012-01-21 08:48 · Score: 1

...why do people buy tech products now if they are going to be cheaper later?
How about spending money to make more money? Do you think anybody at Bank of America regrets investing millions to create computerized banking in the 1950s? Of course they could have got banking computers cheaper if they'd waited around for the competition to do it first. Some "savings" that would have been.
As for entertainment, it's all relative. In its day my Atari 2600 was just as fun as my XBox 360 is now.
Re:And, with perfect investing prowess... by Anonymous Coward · 2012-01-23 02:09 · Score: 0

You forgot the $15 fee for the initial trade...
Re:And, with perfect investing prowess... by billcopc · 2012-01-24 04:55 · Score: 1

Hehehe... ok, ok :)
Still, it's more of a condiment than a main course. At least for those of us who are:
1. Past the age of 21
2. Gave up on the rock band
3. Have to be up in the morning for work.

--
-Billco, Fnarg.com
Re:And, with perfect investing prowess... by Bill,+Shooter+of+Bul · 2012-01-24 12:30 · Score: 1

Hey, I'm required to *be* at work. Anything more is at my discretion.

--
Well.. maybe. Or Maybe not. But Definitely not sort of.

Movies for money by GillyGuthrie · 2012-01-20 14:18 · Score: 1

Warner Brothers this summer offered movie-goers a chance to watch Harry Potter and The Dark Knight for 30 Credits apiece.

is it just me or does it seem like Facebook was wooed by Warner Brothers here

Re:Movies for money by Anonymous Coward · 2012-01-20 17:53 · Score: 0

This is weird .. I thought I had seen all the Harry Potter movies but I have not seen this or even heard of it before ?
Is this a rip off by DC comics

Facebook has been a central bank... by wbr1 · 2012-01-20 14:54 · Score: 1

...where idiots are stored for years.

--
Silence is a state of mime.

Wait wait people give REAL money for credits??? by WOOFYGOOFY · 2012-01-20 14:56 · Score: 1

No way. I admit I saw the dark side of FB early on and opted out (thank gawd) and I don't know anything that doesn't bubble up to the level of NPR but.. people exchange real money for fucking FB "credits".

Before I get into a a snark-guffaw endless loop, this is so? Zuckerberg is printing funny money at will and separating douchebags from real money in exchange?

Surely no one is that stupid.

Re:Wait wait people give REAL money for credits??? by broknstrngz · 2012-01-21 01:56 · Score: 1

In the UK you can buy Facebook credits at every Tesco supermarket. I'm sure others sell them too.
Re:Wait wait people give REAL money for credits??? by WOOFYGOOFY · 2012-01-21 02:24 · Score: 1

Wow.
And I don't mean World of Warcraft.
Re:Wait wait people give REAL money for credits??? by broknstrngz · 2012-01-21 09:28 · Score: 1

Yes, it's really disturbing. Everytime I shop there I see people buying them.
http://www.guardian.co.uk/technology/2010/nov/19/facebook-credits-game-tesco
Re:Wait wait people give REAL money for credits??? by knorthern+knight · 2012-01-22 14:57 · Score: 1

This is similar to buying bus tickets or tokens from the local convenience store; or tickets from Ticketmaster to a rock concert. In each case, a 3rd party sells you a ticket (physical or virtual) or some goods or services. Question... in Canada, there is a GST (Goods and Services Tax), and most provinces have a PST (Provincial Sales Tax). For administrative convenience, the 2 taxes are combined in some provinces as HST (Harmonized Sales Tax). So will each transaction be subsect to sales taxes in Canada? What about the US?

--

I'm not repeating myself
I'm an X window user; I'm an ex-Windows user

iTunes Bank by Anonymous Coward · 2012-01-20 14:57 · Score: 0

I would think it would more likely that Apple would evolve into this role seeing how it already has millions of accounts linked to credit cards. And if the upcoming iPhone 5 supports mobile payments it will make them even more of like a bank. They could also extend mobile payments to be allowed between individuals as well as for purchases and there you have it... the bank of Apple.

What... no BitCoin story today? by zedrdave · 2012-01-20 15:02 · Score: 1

What happened? Taking a rest from hyping up stale BitCoin stories in order to sell us glorified corporate loyalty program points instead?

Ya, right by dilvish_the_damned · 2012-01-20 15:15 · Score: 3, Insightful

When people start accepting Facebook dollars as part of their salary then it will be a real currency. Until then it will be a promotional gimmick, just a bit more complicated than Marlboro boxes.

--
I think you underestimate just how much I just dont care.

silver certificates by KingAlanI · 2012-01-20 15:52 · Score: 1

I suppose it doesn't make sense to keep an offer going indefinitely, the US government did give plenty of warning before they stopped redeeming them, and many people did redeem them towards the end.
That and any other old US currency is still legal tender at face value
Of course, the metal coins kept value in the collector/bullion market in a way that paper certificates didn't.

--
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.

of all the sites.. by JustNiz · 2012-01-20 15:59 · Score: 1

I would NOT trust with my money, it would be Facebook.

Value by Anonymous Coward · 2012-01-20 16:23 · Score: 0

It's all in our head.

700 years ago folks would be aghast at what PAPER can now buy.

law covering currency / giftcards / scrip / truck by Joe_Dragon · 2012-01-20 16:25 · Score: 1

law covering currency / gift cards / scrip / truck may apply to this.

And facebook trying to act like paypal may end up badly + there may be some irs audits / back taxes as well.

Foreshadow by antiobjects · 2012-01-20 16:26 · Score: 1

One day someone is going to figure out a good way to create and manage a non-sovereign digital currency, and it's going to be a big deal.

Credits? How mundane... by Tau+Neutrino · 2012-01-20 17:08 · Score: 1

If only they'd call them Quatloos, I'd grab some for sure.

--
Lemmings are silly; dinosaurs are extinct.

Facabook shall cometh! by Anonymous Coward · 2012-01-20 17:11 · Score: 0

Facebook shall ruleth every aspecth of thy lives and the Facebook accounth shall be the mark of the beast. A man shall have no business without a Facebook account, no social life without one. O'mighty Zuckenberg beware of the Anti-Christ popping up from thy network, also the seventh headed beast, one of which reminds of the Bieber to ravish the innocent. And ith shall be so that those who resist the network shall be covereth with hot grits, alongth with the Portman feeling the hot wrath of the beast.

That will go well by Jason+Straight · 2012-01-20 17:35 · Score: 1

Mark can print up as many credits as he wants for himelf and friends = inflation

The government isn't going to allow that crap, they want people using dollars (which are taxed). They don't like competition.

Porn? by Anonymous Coward · 2012-01-20 17:37 · Score: 0

Might work in the porn industry. Get porn credits with your registration downloads and uploads and use them to go see Harry Potter!

Re:Porn? by Anonymous Coward · 2012-01-20 23:21 · Score: 0

Check out cam4.com tokens. Oh yes you probably have. Exchangeable for cash too and accepted by camwhores around the world.

Ummmm... by Anonymous Coward · 2012-01-20 19:49 · Score: 0

Is this an add? It seems like a purposely designed slashdot story to get people to try and get fictional facebook coins.

That's not a central bank by Anonymous Coward · 2012-01-20 21:52 · Score: 0

That's just a bank.

There is value in credits by thetoadwarrior · 2012-01-20 22:28 · Score: 1

Businesses I think will start doing things like using credits because they can hide the cost difference between nations or hide price increases. Something can cost 10 credits forever but what it costs to get those 10 credits will change and what we pay in the UK may be different to what Americans pay.

That is why I don't like credits, MS points, etc. I wish people would avoid them.

Jews... as usual... by Anonymous Coward · 2012-01-20 22:44 · Score: 0

"Warner Brothers this summer offered movie-goers a chance to watch Harry Potter and The Dark Knight for 30 Credits apiece. Miramax and Paramount countered with film-viewing offers, too."

Oh look, the first to get in on it is the JEW-owned film industry! So their JEWISH friend Zuckerberg can make more money, and so can they JEW owned Hollywood, with their crap films, that the stupid public still insist on paying good money to go and see...

Don't worry, the financial system will completely collapse this year, thanks to the JEWS, you know, the people you think are eternal victims and suffer from 'anti-semitism'.

The Jews own the media, which means the Jews decide EVERYTHING you've ever seen on TV, film, or read in a book, newspaper or magazine.

Think about it.

Trade forex like a pro! by Hognoxious · 2012-01-20 22:50 · Score: 1

I was expecting a link to some scammy website like the ones that advertise on CNN/BBC World.

--
Confucius say, "Find worm in apple - bad. Find half a worm - worse."

Facebook's privacy policies work against them by Anonymous Coward · 2012-01-20 23:01 · Score: 1

I will never trust Facebook with my money. They have shown over the years that they have no respect for the privacy of their users.

Re:Off-topic by repapetilto · 2012-01-21 00:22 · Score: 0

Don't let the door hit the horse you rode in on then. Problem solved.

No. They never will become a central bank. by Anonymous Coward · 2012-01-21 01:24 · Score: 0

Banks are subject to regulation. This is why Paypal is not a bank.

Gold by gearloos · 2012-01-21 01:59 · Score: 1

""Facebook's 27-year-old founder, Mark Zuckerberg, isn't usually mentioned in the same breath as Ben Bernanke, the 58-year-old head of the Federal Reserve" -- And that might be because there is a reason the US (at least, among others) Use Gold to back their currency. It helps to stabilize inflation, deflation, basically it means the dollar won't be worth 10 cents overnight. Read about it some time.

--
"Computers are a lot like Air Conditioners" "They both work great until you start opening Windows"

Re:Gold by 0123456 · 2012-01-21 08:12 · Score: 1

And that might be because there is a reason the US (at least, among others) Use Gold to back their currency. It helps to stabilize inflation, deflation, basically it means the dollar won't be worth 10 cents overnight. Read about it some time.
Uh, the US government hasn't backed the dollar with gold in 40 years. That's why the dollar has lost 99% of its value since the Federal Reserve was created.
Central banking was pushed by the 'progressives' precisely because a gold-backed currency prevents governments from creating new money out of nothing. You don't need a central bank when you have gold-backed currency, because anyone with gold who people trust can issue it.

Facebook Army by vertere6 · 2012-01-21 02:14 · Score: 1

Doesn't every major currency issuer need the explicit backing of a large and expensive army? The USD in many ways would be a joke if it wasn't for the fact we've got the biggest hammer.

Re:Facebook Army by flaming+error · 2012-01-21 03:14 · Score: 1

We're borrowing money to make our hammer payments. That's not "backing," it's recursion.

Movies for virtual currency. by dbreeze · 2012-01-21 02:17 · Score: 1

How does an industry get away with pushing a maximum copyright agenda for a product they'll "give" away.....?

--
When the king heard the words of the Book of the Law he tore his robes.2Kings22:11

Moot... by CohibaVancouver · 2012-01-21 03:55 · Score: 1

Unless people are also being paid for work in "credits" the comparison is worthless. The credit is still pegged to the dollar and you still 'buy' them.

Facebook Entirely Unlike a Central Bank by MSTCrow5429 · 2012-01-21 05:05 · Score: 1

A central bank is a State sanctioned central planning monopoly, artificially adjusting the monetary supply and rate of interest; this is not Facebook.

--
Slashdot: Playing Favorites Since 1997

Financial friction by Anonymous Coward · 2012-01-21 06:07 · Score: 0

This is yet another form of friction to prevent people from exiting the Facebook system. Rather than maintaining users through network effects, this imposes a financial barrier to leaving.

Why do people continue to use Facebook?

Finally! Social Justice! by Anonymous Coward · 2012-01-21 08:19 · Score: 0

Great! An easy way for coach potatoes to earn a living... play games on facebook for credits you can use in a grocery store, game store or movie theater. Meanwhile, the -real- world still has to be run by people who actually do some kind of WORK in order to actually pay for all the stuff the coach potatoes are buying up with non-existent money. Seems to me a great way to level-the-playing field with regard to "social equality" and "distribution of wealth." Let the games begin.

Re:Off-topic by 1s44c · 2012-01-21 10:21 · Score: 1

Can anyone recommend a new slashdot-type site, hopefully one run by individuals (like slashdot used to be in the CmdrTaco and Hemos days), and dealing with tech, rather than social media froth and global warming bullshit?

I've been on this site since before my 100k level account was registered and have a special place in my heart for it, but looking at the homepage, 8/10 of the stories are shite I don't care about. Maybe I'm getting old, but I don't think that's it.

I miss the trolls.. GNAA, Trollaxor, OOG THE CAVEMAN...

These days, all you can hope for is the odd story about something interesting, with ernest or intentionally-funny comments. None of the pizzaz of the olde days.

So, recommendations? Comments? Questions?

Fire away.

This guy has a point.

Now mod me to hell.

When people lose confidence in Treasuries by Colin+Smith · 2012-01-21 18:51 · Score: 1

The popping of the Treasury bubble is pretty much the event which will cause both stocks and more particularly commodities to increase. The bond market is several times that of the stock market and the stock market is many times larger than the commodity market. The result will be inflation as the money bids up raw materials.

For example the USG inability to roll existing debt due to the debt ceiling. Inability to roll due to China selling. Inability to roll the debt simply due to the realisation that a 10% of GDP deficit is never going to change.

--
Deleted

Slashdot Mirror

Is Facebook Becoming a Central Bank?

232 comments