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Race To Mine Bitcoins Drives Enthusiasts Into the Chip Making Business
holy_calamity writes "MIT Technology Review looks at the small companies attempting to build dedicated chips for mining Bitcoins. Several are claiming they will start selling hardware based on their chips early in 2013, with the technology expected to force many small time miners to give up. However, as happened in the CPU industry, miners may soon be caught in an expensive arms race that pushes development of faster and faster chips."
An unregulated currency plagued by theft and controlled by an elite cabal of basement-dwelling enthusiasts who can afford the thousands of dollars worth of hardware to drive smaller players out of the market. I'm sure nothing will go wrong.
If mining Bitcoins was so profitable why would they want to sell the chips? Wouldn't they be better off keeping these chips and mining the Bitcoins for themselves?
Bitcoins is nothing but pyramid scheme that rewards the initial "inventor". The activity is nothing but nerd-gold mining, and unlike gold, it is actually even less useful.
Market pushes for people to make better and better products, what could possibly be wrong with an arms race in processors?
Given that ALL of our current currencies are fiat currency, I guess we still have to wait for your prediction of "unattractive in the long run".
Or maybe you just don't have any clue.
Walking about SC12 this, like many years there are literally hundreds of FPGA vendors that build some what custom hardware that would mine bit coins extremely efficiently. I can understand some hobbyist chip designer looking to do something interesting for the heck of it, but really, there's already a huge cache of available products on the market that have been through the ringer and are well tested to perform this exact type of work load.
Anything that results in research and production of faster and more efficient hardware is always a good thing, even if it came from this.
I never see bitcoin news in any other media and it gets far too much coverage here than it actually deserves.
The problem with Bitcoins is the same problem with any fiat currency. Essentially, they have no value other than the notional one which mindshare attaches to them. This makes them unattractive in the long run. Additionally, we have little assurance about their integrity, and you can bet that various world governments and private entities are working hard to break the whole system.
I'll keep converting my carnival tickets into precious metals, and leave the bitcoins alone.
What makes you think gold should be worth as much as it is? It's just been a valuation bubble on a very long time scale.
> you can bet that various world governments and private entities are working hard to break the whole system
I doubt it. They know they are junk too.
Precious metals (like Gold and Silver) have no value other than the notional one which mindshare attaches to them.
E.g. If people suddenly decided en-masse that Gold made crap jewellery then there would be no reason to buy it (it's not the best conductor, and there are cheap ways to make good conductors not corrode).
They are no different from money. ANYTHING at all only has value because people assign value to it.
Food has more value than anything else, because it is necessary to survive. Gold is no more necessary than Pokemon cards.
During the Gold Rush, it was the tool and equipment suppliers that made out filthy rich, not the miners (except for a lucky few).
Life is not for the lazy.
Is bitcoin that virtual currency where users lost heaps of cash a few years ago when its value crashed big time? I don't mean to be trolling (well, I actually do), but are there really people who still actually believe in this thing with built-in deflation?
Notional value is THE only value.
Metals have intrinsic properties. How those properties are valued are entirely subjective, and carries no other value than the notional one which mindshare attaches to them. They're only given meaning because at this day and age those properties are sought after. And I can agree with you that we'll probably need good conductors for a good amount of time. But parallel to this, the Bitcoin protocol also has intrinsic properties, some of which are valued higher and higher in a world where privacy diminishes.
In a post-apocalyptic world I would have no primary need for either gold, nor Bitcoins.
if you can buy the hardware on credit,
1. use the hardware to mine new BitCoins
2. pay back the hardware vendor with your BitCoins
3. ???
every utopia and cult has enthusiasts who drive everything forward by force of their will
eventually the bubble pops
give it time
myself, i think there is something interesting going on in this niche, but i don't think any one has figured out what that useful thing will be yet
mining bit coins is definitely not what is interesting, profitable, or useful
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
thinking all the stupid articles about bitcoin have stopped.
You want a real currency? they're called gold and silver. They have lasted thousands of years, and will last thousands of years more, short of us figuring out a way to create them in the lab.
Not a stable currency for long.
http://www.planetaryresources.com/
Except that gold and silver have been hoarded by a select few individuals for the sole purpose of flooding the markets and devaluing other's gold/silver so they can acquire more of it.
With Bitcoins, this not as easy.
I was mining bitcoins with two AMD Radeon 9790 cards and was barely turning a profit. The problem is that the electricity cost to run the computer and the video cards is very expensive. It tripled my electricity bill. Then the difficulty was doubled, now I'm making negative profit. There is very little chance that if I continued to mine, the bitcoins I have in my wallet would ever become worth enough to make the money back. The same is true for everyone else: The more GPU's you add the more electricity costs and so you need so much hardware to break even that you'll never go into profit. The only hope is that you're one of the lucky few first people to receive one of the ASIC units from the two companies that claim to be close to shipping. Of course neither of those companies has actually shown a working unit even though they've taken thousands of orders (including two orders from me, one to each company).
Except of course for the fact that most precious metals have very limited inherent value beyond the psychological "ooooh shiny" which essentially makes gold not a whole lot different than a fiat currency. In the event of the total breakdown of civilization you could at least burn the money for warmth.
Precious metals are just as worthless as fiat currencies in most scenarios where a collapse occurs. Unless there's another fiat currency to exchange your lump of gold for, it won't do you any more good than paper money. No one will want it and you won't be able to easily exchange it for anything that's actually useful. Any currency is just a proxy for the idea of wealth. If shit hits the fan hard enough that the several local currencies become heavily devalued, it will probably happen on a global scale as everything is so intertwined at this point.
Precious medals will eventually become valuable again over a long enough period of time, but they won't guarantee that you'll see that time. Depending on the severity of the collapse, means of protecting yourself, food, and other basics to ensure survival are far more valuable, but knowledge is probably the most valuable currency available. What good is a mound of money if you're dying and don't know how to stop it?
Precious metals suffer from the same problem as any other form of currency: it's only as valuable as everything considers it to be or as someone will pay to use it to produce something else.
Seeing as how computing power devoted by miners ramps up difficulty levels, won't this just create a self suppressing feedback loop?
Bitcoin has no guns or government treasury to back up its value.
Maybe you forgot that.
Not a stable currency for long.
http://www.planetaryresources.com/
Meh.
Asteroid miners hunt for platinum, leave all common sense in glovebox
Gold has plenty of intrinsic value. It's a great electrical conductor, and it's non-reactive to practically everything.
Except that gold and silver have been hoarded by a select few individuals for the sole purpose of flooding the markets and devaluing other's gold/silver so they can acquire more of it.
With Bitcoins, this not as easy.
Really then why does it have the same features you talk about here then.
http://www.technollama.co.uk/a-look-at-the-bitcoin-network-transaction-history
How does selling off large amounts of something to lower the price lead to you getting more of it. Buying back your stake that you sold off will bring the price back up.
their business model seems sound if they can keep their expenses low enough.
after all- who makes more money, [small expensive microbrew] or Anheuser Busch
Snowden and Manning are heroes.
Guns and government don't uphold the value of a currency. Trust does.
"First they ignore you, then they laugh at you, then they fight you, then you win."
Bitcoin is halfway there!
http://en.wikipedia.org/wiki/Tulip_mania
copper jacketed lead is much more valuable in a SHTF situation
Snowden and Manning are heroes.
Are you joking? Tell this to the people in Argentina, India, Brazil, etc etc. The folks who had precious metals were much better off than the losers holding carnival tickets.
Precious metals may have been simply magically valuable in the olden days, but their modern prices are based upon their uses in industry. Regardless of how the value is set, you can't argue with their being the sole known good unit of exchange, worldwide, for thousands of years.
Your argument collapses totally when you consider that you haven't provided alternatives for precious metals. You say "knowledge" is better than gold and silver? Sure, it is useful, but it's hardly an effective, known good, convenient unit of exchange.
Obviously only fools advocate precious metals to the exclusion of food, firearms, etc. but they are an essential component of both a societal collapse scenario, as well as the more mundane currency erosion that we have seen in the US dollar over the last few decades.
Precious metal prices are set based mainly upon industrial demand these days. Silver is unbeatable in many medical applications, and both gold and silver have wide application in radio and electronics. Additionally, they have both provided very effective insulation against inflation, which has been running rampant in the USA for decades.
Paper is cheaper by the ream down at Office Depot if you merely want to burn it.
How about protecting your worth over a long time scale, no SHTF scenarios included?
Pretty soon we won't be able to tell the counterfeit bitcoins from the real ones!
Sorry, but gray text on gray background is making my eyes bleed.
Actually nearly all money in circulation is created as debt, which must be repaid with interest (that was created as debt that must be repaid with interest). Governments printing a little money (say enough to pay for their entire non-capital, non-military budget AND eliminate poverty) would probably help the economy so long as it was done quietly. In countries with a high currency due to a single resource being exported the effect could be even bigger. Of course this only works in countries that have their own currency (so not most of the eurozone) and the central bank is not a privately held cartel (so not the USA)
Bitcoin has a built in limit and a built in "profitability scale" for its mining. The faster you mine the less profitable it is. Unless you could jump WAAAY ahead of the curve (as some early adopters did) you won't be able to make money mining.
Bitcoin needs people to spend it, not mine it, and thats a difficult problem which can't be solved without top-down (gov't) influence. People have to psychologically learn to accept bitcoins, and that wont happen unless they are made to.
There are a lot of benefits to bitcoins, but I think they will remain an, at-most, black-market currency.
When it comes to digital currency, Timekoin already solved the issue of needing powerful hardware just to use it or prevent someone with a ton of processing power from owning the currency. I'm really surprised bitcoin is able to maintain the pace that it does since it requires faster and faster machines just to process transactions. Seems like an awful waste of power and resources for something that is already done better elsewhere in other open source projects.
Precious metals may have been simply magically valuable in the olden days, but their modern prices are based upon their uses in industry.
Are you joking? Yes, gold and silver and such are useful in industry, but do you seriously claim that the massive spike in precious metal prices in the past few years is the result of increasing industrial demand???
Obviously only fools advocate precious metals to the exclusion of food, firearms, etc. but they are an essential component of both a societal collapse scenario,
It really depends on how far the collapse goes. In the true survivalist scenario that most precious metals fanatics champion, "shiny rocks" aren't likely to be any more valuable than "green pieces of paper." A collapse big enough to destabilize all the global currency markets will likely drive technological production into the toilet, meaning any of your inherent industrial value for precious metals will go down down to nil too.
On a small scale, barter will rule. In larger communities, the only reason why gold (or some other metal) would emerge as a de facto currency in that scenario is if the people who had the guns or food or whatever happen to like it. If those people were rational, they wouldn't be taken into the mystical "shiny rock" theories of the ancients...
But... who are we kidding? The people who will have the guns and food and stuff will be the same wackos who are stockpiling gold, so you guys are trying to create a self-fulfilling prophecy. You want to corner the new fiat currency, which just happens to have a long history... if I were in charge of one of your survivalist camps, I'd advocate choosing some other useless and less expensive random "commodity" to stockpile along with your guns and food. Why the heck would you spend the money to buy precious metals at today's prices if you plan to force everyone to accept your new fiat currency in the event of a collapse? Choose something random that's rare but cheap... and just buy up all of it. WHEEE... instant currency!!
as well as the more mundane currency erosion that we have seen in the US dollar over the last few decades.
Bah... where the heck were you in the early 1980s, when all those gold prices plummeted? Sure, right now the "shiny rock" strategy seems to be edging out the "green pieces of paper" strategy, but I would bet a substantial amount of my life savings that people will stop liking those "shiny rocks" AGAIN at some point in the next couple decades, and all that "inherent value" of a non-fiat currency will go down the drain.
Even if your survivalist scenario were true, I think the chances are far greater that we'll see more cycles of precious metal prices to come before we get that collapse... making investment in those shiny rocks not very great as a long-term strategy.
Bitcoins don't just require an investment of cpu/gpu time and electricity. They also require an investment in disk space as well. I finally got around to seriously mining on a 3 year old video card, mostly just to experiment and finally see what the fuss was about, while getting a bit of 'free' heating for the house out of my videocard.
Long story short: 3 months of mining on a 'low-end' card (70~MH/s) has netted me a total of ~0.25 BTC. At current rates that's around 3 dollars worth of bitcoin (assuming a 12 dollar rate, I've seen it from the low 11s to mid 12s in the past month or so.). Mining is already cost ineffective for anyone who's not running cutting edge hardware, and worst yet wastes huge amounts of disk space to verify the blockchain (I'm up to ~5.5 gigs for the current blockchain, and there's still another.. 17 million BTC to go before mining is exhausted, not including what would happen if there was tons of BTC transfers to verify) And in order to 'recieve' your bitcoins you need to have a complete blockchain image to pick them out of, which will then show how many BTC you have. You would probably at current mining levels be better off brute forcing passwords to miner's accounts, BTC recieve keys (since unless you spent them they're all waiting in the blockchain for someone to swipe.). or running exploits against either the BTC exchanges or miners to gain access to pre-mined coinage.
While it's a cool experiment in alternative currency, it's just as intangible as fiat currency and unfortunately requires the processing capacity of a large base of miners to stay ahead of the 'pure processing' curve for BTC theft (If someone were ever to have more processing capability than the Bitcoin network itself, they could essentially hijack the entire blockchain and claim their fork as legit due to having more 'legitimate work' processed than the actual network did, at which point the currency will collapse. This isn't likely to be much of a problem while mining demand is still high, but unless the worth of bitcoins goes up to match the cost of electricity, fewer and fewer people will be mining heavily, which will lower the barrier to hijacking the blockchain.
The fact that more people didn't flag the potential abuse case in this (it was actually in one of the security reviews of bitcoin a year or two back), and consider how/when it could happen, just shows how shortsighted so many of the bitcoin miners are in their quest for 'free' money. Much like the gold rush there's a limit on return for when it's worth making the trip, and for bitcoin that point is already past for all but the most well funded expeditions.
Precious metals are just as worthless as fiat currencies in most scenarios where a collapse occurs. Unless there's another fiat currency to exchange your lump of gold for, it won't do you any more good than paper money. No one will want it and you won't be able to easily exchange it for anything that's actually useful.
I call bullshit on this, people have continued to value gold through many centuries, through two world wars and many a nation's collapse. No matter what kind of WW3 or global economic meltdown you predict it is extremely probable that people will continue to value gold. If you're one of the people with plenty supplies and guns looking to make yourself rich, what are you going to trade for to have when society recovers and neither food nor water nor bullets are very valuable anymore? Money is clearly not an option. Neither land nor property is good because you never know if they'll honor deeds or ownership and you can't easily hide it or take it with you if you need to flee. Physical gold is excellent in all those respects..
It is simply a matter of supply and demand, desperate people who need goods now and profiteers looking to get rich and precious metals are their best way of doing it. Of course you can't expect a fair deal but I'd still take having precious metals and jewelry to trade over just about anything else, it's one of the most liquid assets you can have during a war. There's almost certain to be someone offering you something useful for gold, thus everybody who can spare anything is willing to take gold as payment. Of course you need real, actual gold - not gold certificates for gold bullions in a vault somewhere that may or may not be honored like most people invest in when the invest in gold.
Live today, because you never know what tomorrow brings
The US treasury is not a privately held cartel lol.
Seriously, delete the rothman lizard people conspiracy videos from your HTPC dude.
Excuse the Unicode crap in my posts. That's an apostrophe, and slashdot is busted.
What has always bugged me about bitcoins is just how pointless those calculations are.
Why not use them for the good of humanity? Why not link with projects like seti, @folding or other?
Surely the technical hurdles aren't that high, and instead of causing localized heating (cpu) just to get a hash value, one would benefit society too?
TODO: 753) write sig.
From a society-level point of view I see a business model which consumes resources for hardware, energy for operating the hardware, and man-hours spent planning and operating the mining setup. And what is created? Nothing at all. Just some half-random redistribution of wealth based on a dubious scheme. Participating in this type of setup seems about as good an idea as being in the bottom 1-2 layers of a pyramid. May I suggest visiting a casino instead; probably a lot more fun, and consumes less of the planet's resources.
after all- who makes more money, [small expensive microbrew] or Anheuser Busch
Stipulated. However, that's not the point of the article. To use your analogy, yes, the incumbents are the microbrew and the startup (Planetary Resources) is contending they can make money using the Anheuser Busch model. Great, except their "startup" model requires that they *start* with Busch's massive market level in order to be able to turn a profit—and furthermore there's currently there's only demand for perhaps twice as much "beer" in the whole world as the single, incumbent microbrew currently makes.
Practically speaking, who's going to finance that?
As I understand it, no matter the speed of calculating, there are only a set number of bitcoins given out per time, for one year this is 1,310,400 BTC, which are currently worth $13 so roughly $17M total will be awarded. Your amount is only based on what percent of the mining force you represent, it will never go over this. So lets say butterfly could dominate and take 50% of the computational force (which is highly unlikely since there are 5 companies making ASICS and the huge stock of FGPAs and GPUs still online), regardless this would bank them perhaps $8M. Making a HUGE assumption the exchange rate of BTC doesn't fall, which I think it will (explained below). In threads on butterflys website you can read that they have already sold 20k units, and are expecting 2 more rounds of 30k units each, at $150/pop this is $13.5M, already over what they would expect to make mining themselves. Note manf costs are irrelevant in comparisons since butterfly has to make the units if they keep themselves or if they sell them.
I think the exchange rate price is going to tank for 2 reasons, first it will take a while for the difficulty to catch up with the new onslaught of computing power, as is always the case since it is adjusted once per week, during this time there will be a flood of BTC on the market driving the price down. Secondly you will see a huge shift of BTC production from small groups with GPUs to much larger capital intensive groups with ASICS, this is not a graphics card you are using in your spare time, this is a custom built piece of hardware built solely for the purpose of speculating on mining bitcoins, and is worthless otherwise. This will vastly reduce the population mining BTC and thus reduce the number of people using and interested in BTC. As the BTC mining industry ramps up it may be the very thing that unravels interest in BTC. Coupled with more BTC for sale it could crash the market, again.
I'd advocate choosing some other useless and less expensive random "commodity" to stockpile along with your guns and food.
Suddenly, the bottle cap currency in the Fallout series makes perfect sense.
The Federal Reserve bank is.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
One is a shiny rock, and the other is a cool crypto trick. If shit hits the fan, you can't eat either of them. Until then, there are plenty of people more than willing to trade other currencies for them and vice versa.
I call bullshit on this, people have continued to value gold through many centuries, through two world wars and many a nation's collapse. No matter what kind of WW3 or global economic meltdown you predict it is extremely probable that people will continue to value gold. If you're one of the people with plenty supplies and guns looking to make yourself rich, what are you going to trade for to have when society recovers and neither food nor water nor bullets are very valuable anymore?
There has never been a global meltdown of that level. If our economy ever collapse to the point where you need to protect your food with guns, there will not be a fucking recovery. That will be the end of humanity, and you guns and food will just buy you life for an extra year or two.
In that case low diversity presents a danger.
The US treasure is not a privately held cartel. It also doesn't print money.
The US Federal reserve IS, and DOES. To quote Wikipedia ". The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers. "
http://en.wikipedia.org/wiki/Federal_Reserve_System
So, while what you said is true, its irrelevant. The people who make the money, are bankers. Banks are insolvent. The Feds job is to keep banks afloat. The banks benefit. Banks are privately owned. Etc. Etc Etc.
I'd start selling my guns and bullets for protection, with a semi-feudal system to keep order ... you already have wealth in the form of non perishable commodities, moreover a lot of that wealth is fine grained and easy to trade (bullets make excellent currency if they are in limited supply). You'd have no pressing need for gold, but you would have a pressing need for security ...
Which means that because there is no pressing need for it, it will devalue immensely ... the fact that it will likely hold some value is not denied, that it's a very good investment for the eventuality of societal collapse is disputed. You can earn a lot more gold by stock piling non perishable necessities and taking the gold people sew into their clothes after the collapse than you can get before the collapse.
They might be proof against inflation, but I'd hate to have borrowed the value of my house in troy ounces a decade ago. I'd be bankrupt.
US treasury is not the US' central bank, the Federal Reserve is.
Race To Mine Bitcoins Drives *Opportunistic Businesses* Into the Chip Making Business... There, fixed it for you.
Bitcoin is susceptible to having the block chain taken over by authorities, some of whom have built up significant processing power.
It's too bad about this whole thing since BTC is more stable the more people are doing the cryptography. It was however predictable with a deflationary (less being produced over time) and obviously dedicated hardware being developed.
Oh and for those who don't know on December 1st the amount of BTC entering the market was cut by 50%... so far price increase is about 20%
Google is useful, and GP is correct. The US Department of Treasury is not a bank at all, let alone the central bank. Per Wikipedia:
Precious metals have one major advantage over fiat currency: they're immune to government-driven hyper-inflation. Bitcoin has the same advantage.
You are wrong. The Bureau of Engraving and Printing prints money and the Mint produces coins. The Fed does NOT. I work(ed) for it and we just move it between commercial and private banks, physically and electronically. Thanks for reading our wikipedia page in full.
Guns and government don't uphold the value of a currency. Trust does.
If you can pay your taxes with it, then it has real value.
If you can manufacture things with it, then it has real value.
If you can eat it, then it has real value.
If you can't do any of those things with it, then it has only speculative imaginary value.
"His name was James Damore."
What makes you think gold should be worth as much as it is?
The fact that people are willing to pay that much for it without a fiat market distortion influencing the demand either direction.
"His name was James Damore."
They don't work with dollar bills and coins, they work with bonds.
http://www.peakprosperity.com/crashcourse/chapter-8-fed-money-creation
I'll keep converting my carnival tickets into precious metals
What value do your "precious metals" have other than what the mindshare attaches to them?
Precious metals may have been simply magically valuable in the olden days, but their modern prices are based upon their uses in industry.
There is no fucking way you can say, with a straight face, that the market price of gold is due solely to it's limited use as a semiconductor.
And yet, they are very susceptible to speculation-driven hyper inflation.
I thought BitCoin was dead ... a failed social experiment in monetary systems with no centralized clearance house. I was under the impression that BitCoin was an abysmal failure.
Gold and silver are completely dependent on people wanting them due to the "OOOO, Shiny!" factor. If people don't want them for that, they do have some industrial uses, but nowhere near the value that they are now.
Why does anyone imagine a Bitcoin has any intrinsic value? Just because it's hard to compute? It's very difficult to construct an enormous ball of twine and yet that has no value as legal tender.
What value do your "precious metals" have other than what the mindshare attaches to them?
Gold is valuable because of its fantastic suitability for currency. All the alternative materials you could use for currency (leaves, sea shells, acorns, corn, rice, silver, fur, etc.) are inferior to gold in one or more aspects. This makes gold a very attractive material, and a valuable one.
And yes, trade is that important.
sigs are hazardous to your health
Associating monetary value with computing cycles would eventually incentivize the development of faster and better technology.
I just hope that whatever these guys come up with will also have applications in the real world.
"Gold is valuable because of its fantastic suitability for currency."
Ah yes - you mean how easily transportable it is? How simple to send anywhere on earth? How impossible to forge? How infinitely divisible into units of usefully small value, for common purchases? And so on... satisfying any requirement of the 'perfect currency' that one might imagine?
Oh wait... gold is an ABSOLUTELY FUCKING AWFUL currency. And in a technological society, it's even worse than that.
Precious metals are just as worthless as fiat currencies in most scenarios where a collapse occurs. Unless there's another fiat currency to exchange your lump of gold for, it won't do you any more good than paper money. No one will want it and you won't be able to easily exchange it for anything that's actually useful.
Typical pathetic FUD about Precious Metals.
For the last 5000 years there has always been a significant number of people who would happily exchange your gold for other goods.
When the USA collapses (not if) then you would probably be right in saying its not possible to trade PMs with the local hicks. You will probably need to get yourself and your PMs over to China or India or Turkey where they will happily exchange your PMs.
I do agree that investing in survival equipment and food etc could be a better option than buying Precious Metals.
I had to try to explain to my mom what Bitcoin is and why it was created and how (if rarely) it is actually used for real world purchases. Even though I just have a passing familiarity with it from reading /. I know more than the average watcher of "The Good Wife". ;>)
the rothman lizard people
What? The Rothschilds and the Mothman had viable offspring? We're all DOOMED!
> companies attempting to build dedicated chips for mining Bitcoins
There were artisans specializing in construction of arcane symbols decorated vials, retorts and crucibles for alchemists. Porcelain came out of that effort.
One must wonder if there will be a beneficial or harmful side effect of Bitcoin-induced chipmaking?
If you can pay your taxes with it, then it has real value.
If you can manufacture things with it, then it has real value.
If you can eat it, then it has real value.
If you can't do any of those things with it, then it has only speculative imaginary value.
So dollars have only speculative imaginary value for me? (Note i'm not paying my taxes in dollars)
You retard.
There's always folding@home. But curing cancer is not as fun as getting free money so no one cares.
Are you being deliberately obtuse? It's quite clear that when people refer to the Fed "printing money" they don't literally mean running printing presses or forging coins out of molten metal. They are referring to the process by which they type a new balance into their own accounts and then proceed to use it for, eg, buying bonds. This is creating money from nothing and we use the term "printing" to refer to it, as that's a simple metaphor everyone can understand.
Sure sure, Congressman.
If you can pay your taxes with it, then it has real value.
If you can manufacture things with it, then it has real value.
If you can eat it, then it has real value.
If you can't do any of those things with it, then it has only speculative imaginary value.
So dollars have only speculative imaginary value for me? (Note i'm not paying my taxes in dollars)
No.
The fact that someone else needs the currency to pay debt or taxes, means it can have real value, even if you will not be using it, it will be worth to someone else.
And if the Fed had Staples print the physical money you would claim that Staples is the money printer, right?
Is non-literal terminology really that complicated for you? When the Fed increases the number in an account balance in exchange for the ownership of, say, some treasuries we call that money printing. This is Economics 101, heck it might be in Economics 001.
So dollars have only speculative imaginary value for me? (Note i'm not paying my taxes in dollars)
Yes.
The only thing YOU can do with dollars is trade them with other people according to arbitrary exchange rates based on fluctuating speculative value. To others they have real value because they can pay taxes with them.
Bitcoin is inherently flawed. It costs more electricity to generate a coin than the coin is worth. In the real world where you are performing work, that has intrinsic value... that is, the work you perform ( and the energy you expend ) benefits someone or something else. The generation of a bitcoin itself has no value, except ironically in devaluing existing bitcoins. The costs of electricity and computation far outweigh the value of a bitcoin ( on average, since it is technically possible to randmly generate a coin fairly early on ). So, unless you are generating your own electricity through some low cost means, anyone generating bitcoins legally is losing money.
Creating a CPU to perform this calculation with a lower cost may cause you to lose less money when mining, but you are still losing your generation is also devaluing the currency.
I don't agree. The value of something is determined entirely by what you are willing to pay/barter/exchange/whatever for it. Period. Full stop. Forget about supply and demand, and all the other "rules" that we use to quantify the price. It doesn't matter what anyone else thinks it's worth; you alone determine what you will pay for it. For many people trust can be every bit as valuable, or more than dollars, yen, coco beans, or old bottle caps. Conversely, there are people who don't give a fig for trust, and place much more value on having shiny rocks, bits of paper, or what have you.
TLDR: Just because you don't value it, doesn't mean others don't. One man's junk is another's treasure.
Except that bitcoins are actually scarce compared to all other monetary systems. In fact, bitcoin is the world's first, truly deflationary currency, something your PMs are not. Once 21 million bitcoins have been created, there will absolutely, mathematically provably not be any more. But, we'll always be mining new gold from the earth, other plantets, and through nuclear fusion.
It doesn't have to come to that... this guy makes an interesting observation http://www.youtube.com/watch?v=0XxWGBjGMco
Comments like this are why I added "(sorry to sound crackpot)"
It is a great shame that any discussion of novel monetary policy which mentions the ownership of the Fed as a limiting factor gets accused of being associated with schitzophrenic delusions and/or anti-semitism.
The US Federal Reserve Bank is literally a privately held cartel. This is a statement of fact, and it has monetary policy implications. My original comment was about a specific method of quantitative easing which would be more difficult without a national currency or with a privately held central bank. This is not a conspiracy theory, it is monetary policy.
Most money now does enter circulation as bank account balances countered by interest bearing loans. This is a very usefull system. Without it I and probably the vast majority of people in the western world would not own any real estate. Sadly though it has nasty side effects in a contracting economy. This is not a conspiracy theory, it is economics.
When people say "printing" in this context they really mean creating.
The Bureau of Engraving and Printing and the Mint produce the physical manifestations of money but they don't legally become money until they are issued.
The fedral reserve creates money, that money may be either in the form of numbers in a database or in the form of notes that are printed by the Bureau of engraving and printing.
The treasury also creates money (but in much smaller quantities) by issuing coins produced by the mint.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
as well as the more mundane currency erosion that we have seen in the US dollar over the last few decades.
Bah... where the heck were you in the early 1980s, when all those gold prices plummeted? Sure, right now the "shiny rock" strategy seems to be edging out the "green pieces of paper" strategy, but I would bet a substantial amount of my life savings that people will stop liking those "shiny rocks" AGAIN at some point in the next couple decades, and all that "inherent value" of a non-fiat currency will go down the drain.
Even if your survivalist scenario were true, I think the chances are far greater that we'll see more cycles of precious metal prices to come before we get that collapse... making investment in those shiny rocks not very great as a long-term strategy.
In support of this point, gold actually has a rather poor long-term track record. Gold investing on a personal scale is useful only as speculation due to price volatility, and is not good for actual long-term investing.
http://www.nobelprize.org/nobel_prizes/economics/laureates/2012/
https://www.google.com/webhp?sourceid=chrome-instant&rlz=1C5CHFA_enBR505BR505&ion=1&ie=UTF-8#hl=en&safe=off&tbo=d&rlz=1C5CHFA_enBR505BR505&output=search&sclient=psy-ab&q=there%20is%20no%20nobel%20prize%20for%20economics&oq=&gs_l=&pbx=1&fp=ca4c450a0550195d&bpcl=39650382&ion=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.&biw=1920&bih=1062 Sorry dude, but a *bitcoin bank* has just been licenced in Europe, so I don't have the time nor the interest to keep educating zombies. http://www.reddit.com/r/Bitcoin/comments/14e048/bitcoincentral_first_exchange_licensed_to_operate/
You're neglecting market irrationality/crowd psychology. If you drop the bottom out of a market by selling massively, many *others* will race to sell as well hoping to avoid larger losses after the market crashes further.
Once the floor drops out, the investors attempting to corner the market place a huge order all at once to buy back their position *and* most of the rest on the market before the price corrects upward. It's very risky and often blows up in their face. I believe it was attempted once in the 1980's wrt silver and failed.
TLDR: Just because you don't value it, doesn't mean others don't. One man's junk is another's treasure.
Translation: free trade can make everyone better off.
"His name was James Damore."
except when shit hit's the fan, people resort to using gold and silver as currency. of course if shit REALLY HITS THE FUCKING FAN and there's no society left, then yeah, sure neither will do you as well as water food and ammo. Such is life..
that's different from bitcoin or any other currency? Please tell me how many currencies you could hold today and had value even a hundred years ago. Then up that to 500. I'm not aware of any currency that has survived 500 years, except precious metals..
Precious metals have one advantage over fiat currencies. There is a physical limit to how much can exist and the rate at which it can be discovered.
One of the problems with government controlled fiat currency is that there is always a risk that the people in charge of the printing press decide that the profit from printing themselves a bunch of money is worth the destruction of the currency.
It's not possible to effortlessly create a bunch of gold for yourself , or mine a bunch of bitcoins. These things require effort to do. That limits the rate of new gold/bitcoins. The only thing limiting the rate of new dollars is politicians and bankers balancing current profit (how much money they can create for themselves now) against future profit (i.e. the money they can make if the US economy doesn't collapse).
The gold standard was a pseudo limit in the sense that the government couldn't create as simply many dollars as it wanted, because people could turn in their dollars for gold if they lost trust in the dollar. This was only a pseudo limit, because nothing forced the government to honor the gold standard if there was a run on the dollar.
The disadvantage of precious metals is that they are not convenient to carry around with you. Bitcoin provides the best of both worlds. It requires work to produce (like gold), but is easy to carry with you (like a credit card).
Hum, if you'd remortgaged your house 10 years ago and bought gold, you would have seen a 400% yield over the last decade while the compound interest would have cost you around 50%. You'd be rich, not bankrupt.
I do love it when Slashdot tries to talk economics.
Maybe I didn't make that clear enough.
Gold is a deflationary currency, it's one of the many reasons it makes a crappy primary currency. To give my example better clarity. Let's say I bought my house 10 years ago for 100,000 worth of gold, by that I mean that the unit I paid in and the unit I borrowed in were troy ounces not dollars. My loan today would be, by your own reasoning, the equivalent of about 400,000 without even taking into account the compound interest on the loan(which as a note is also in troy ounces and so has increased 400% over the same period of time.