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  1. Daniel
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    Daniel I'm sure you've heard the rumors. Founder Staff Contributor

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    bitcoin: is it money? will it be regulated? is it the future of currency?

    Discussion in 'Debate Room' started by Daniel, Nov 19, 2013.

    That's right, bitcoin.

    I've been following bitcoin for years, almost bought some when it was around $10, and should have, I'd be rich.

    Bitcoins been getting a lot of exposure recently since it's been covered by some mainstream media outlets and due to Congressional hearings about it. It looks like the U.S. government wants to control, regulate, and perhaps tax bitcoin, which kind of goes agains some of the underlying principles of bitcoin.

    What are your thoughts in bitcoin? Does it have any real value? Will the U.S. government succeed in regulating or destroying it? Does it, or other decentralized quasi-anonymous digital currencies, have the potential to become a dominate currency, perhaps even more commonly used than the U.S. dollar?

    Image a world where governments couldn't control how much money was printed, couldn't compulsorily tax their citizens, and where transitions could be done anonymously and instantaneously from/to anywhere around the world.
     
  2. Andrae Smith
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    Andrae Smith Gone exploring... in the inner realm... Contributor

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    I don't know anything about bitcoin, but this certainly gives me an interesting research assignment. I can't say whether it would replace the U.S. dollar (though I speculate that the dollar will be replaced by something in he not-so-distant future), but if It is gaining popularity and power, I'm certain gov'ts will fight very VERY hard to control it. I can't imagine a world in which the people of the internet are in charge of their money. I'm assuming there are some huge implicit pros and cons especially concerning national economies.
     
  3. Wyr
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    Wyr Active Member

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    I'll admit to only having a vague understanding of what bitcoin is (my fiance tried to explain it to me but when he talks about computer stuff for too long my eyes just sort of glaze over.) But if it has the potential to bring about a world like you described in your last statement- holy crud! I need to install a bomb shelter and start stocking up on non-perishables. :eek:
     
  4. Daniel
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    Daniel I'm sure you've heard the rumors. Founder Staff Contributor

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    I agree. People having complete control of their money is probably the worst fear of all governments. I suspect they'll stop at nothing to control it; it could be too late though, bitcoin has been gaining traction and other virtual currencies are starting to emerge. I also think the dollar is likely to collapse or be replaced by another currency. To me, bitcoin seems like a revolutionary solution that would benefit humanity as a whole.

    Could you imagine what a world would look like where people and not governments are in control of currency? I think it'd almost certain lead to progress for humanity.

    For the sake of this discussion, I'll give a brief overview of bitcoin. I'm by no means an expert myself, but I understand the basics.

    bitcoins are a digital/virtual currency that can be transferred anywhere, worldwide. They're stored in a digital, encrypted "wallet" with an encrypted key. Bitcoins are created through people "mining" them by using CPU power, and there's a limited number of bitcoins that can ever be created. They are quasi-anonymous in that they can be traced unless the user takes precautions to hide their use.

    In sort, bitcoin's a decentralized peer-to-peer currency. The network of users confirms the bitcoin balances and transactions. There's no single person or group that controls bitcoin, which will potentially allow it to escape regulation and government control.

    I think that's a simple run-down, I'm sure I probably missed some key points, but hopefully this gives a good basis on bitcoin.
     
  5. Andrae Smith
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    Andrae Smith Gone exploring... in the inner realm... Contributor

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    From what I've found so far, you hit the nail on the head in explaining bitcoin. As to it being a revolutionary solution, I think it has great potential o be a lot of things. It gives a lot of people, businesses, and nations the capacity to really gain a foothold over their finances and somewhat eliminate the classism created though he financial hierarchy we have now. With no one controlling all of the money, no one is given power over everyone. At he same time it raises the question of what will happen to the major corporations that currently control the money and production supplies? Another question is how do you keep it safe from hackers and thieves? How do you keep it out of the hands of criminals?

    My biggest concern, though, is if it is entirely digital, how is it possible to support it or give it value? Our current fiat system is not backed by any natural resources, so in that sense, it fits into what we are used to. But I think if any currency is to have any real value, it should be backed by something. I mean I suppose this eliminates that need, but I don't quite like that.

    Still it seems like it is just innovative enough to push us in the right direction, especially considering that the current currency is headed towards failure (presumably).
     
  6. GingerCoffee
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    GingerCoffee Web Surfer Girl Contributor

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    The talk around here recently buzzed about the arrest of Silk Road. One of the drug dealers was a local here in my town.

    I channel surfed past the Congressional hearings today on the matter of virtual currency, but the chairman of the committee went on too long and I lost interest.

    I wasn't surprised to later read, Senate Hearing Is a BitCoin Lovefest.
     
  7. mammamaia
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    mammamaia nit-picker-in-chief Contributor

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    why?... by whom/what?... and with what?
     
  8. DPVP
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    DPVP Active Member

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    its certainly interesting from a speculation stand point, witch currently is driving a lot of its current value. i have alwase found FX interesting, and have been fallowing this for a while. one interesting part is that with the diminishing returns on the mining currency.

    As for the a new global reserve currency, Who? the Euro zone has debt and tax collection issues combined with mixed economic prospects, Pound denominated assets are to small a part of the global game, Japan has the highest debt to GDP ratio, and the Communist government is to hevey handed with the RMBI to make anyone comfortable using that as a reserve.

    if bitcoin become the global reserve currency i dont really see what it would change things for the US monitary policy. most US monetary policy is based on OMO fallowed by Fedfunds rate.
     
  9. Cogito
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    Cogito Former Mod, Retired Supporter Contributor

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    Like any other medium of exchange, there will always be exchange rates and conversion fees.

    One thing that will stunt its growth is its increasing use in criminal transactions, such as the recent flood of ransom demands connected with the CryptoLocker malware. Governments can fight such enterprises by making it harder to convert it to more negotiable currencies.
     
  10. Andrae Smith
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    Andrae Smith Gone exploring... in the inner realm... Contributor

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    That's a fair question, but one I cannot answer because I don't know. I just don't think the current financial system will hold. :/
     
  11. Wreybies
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    Wreybies The Ops Pops Operations Manager Staff Contest Administrator Supporter Contributor

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    There's actually nothing new about the use of community currency, and that's all Bitcoin is. There are plenty of non-virtual examples within just the U.S. alone because there is nothing expressly illegal at all about using it here. But such currency, like all currency, is worth only what people believe it to be worth and that sense of worth has to come from somewhere. Even when money was based on precious metals, it was the same thing. Gold is pretty and people talk about its "intrinsic value", but that value is as arbitrary as any. You cannot eat it, drink, burn it for warmth, and there's definitely not enough of it to consider it a material for shelter. Its value is actually quite arbitrary, but people need to feel that its somehow different than other materials because without that the only system of economy that has any real uncontested meaning is straight barter.

    Bitcoin neither benefits from being backed by the narrative of a tangible item with "intrinsic" value, nor does it benefit from having any sort of entity (nation/economy) with which it can be related, thus co-opting the security that entity imbues. There's no "place" where it's the coin of the realm where its acceptance is guaranteed (no matter how far away that realm might be).

    In short, I don't think it's about to knock government issued currency out any time soon. It's interesting, but as a paradigm I feel its going to fall prey to the more mundane aspects of the human condition that people never calculate into the equation. Like the electric car. The technology has been around since the very beginning of cars to create an electric car, but it was never about can one be made. Of course one could be made, but so many other things were in the way, not least of which were familiarity with what we already had (internal combustion) and groin consumerism. Electric is cool, but it ain't sexy. ;)
     
  12. mammamaia
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    mammamaia nit-picker-in-chief Contributor

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    what makes you think that?...
     
  13. Wreybies
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    Wreybies The Ops Pops Operations Manager Staff Contest Administrator Supporter Contributor

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    Probably the fact that U.S. forum members in their late teens were between 9 and 12 years old when the current economic situation of the U.S. really hit the fan. It's been a huge part of the cultural conversation since before they were young adults to the present day. I don't mean that as an insult to younger members. The same thing affected me when I was a young person and we went through the Energy Crisis of the 70's. It was so much a part of the cultural conversation, so everywhere, that it seemed like everything was unstable and sure to collapse. Then the 80's came and we regrouped financially and the cultural conversation shifted to The Big Red Button in the offices of Reagan and Gorbachev and I lost sleep thinking about nuclear bombs vaporizing me and my family. When you're young the cultural conversation can be very loud when you haven't created filters for it yet.
     
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  14. erebh
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    erebh Contributing Member Contributor

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    I've seen these bitcoin stories around for a while and although I've looked them up a few times I'm still none the wiser so I'm glad to see this here.

    If the "Dummy's Guide" asked you your opinion how would you answer these questions?
    A) How do you buy them?
    B) How can you spend them?
    C) How are they valued in terms of investment?
     
  15. erebh
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    erebh Contributing Member Contributor

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    Wasn't there talk of a collusion between Hussein and Gaddafi to turn the world currency from the US Dollar into the Gold African Dinar apparently leading to both their deaths? Please don't think I'm hi-jacking this thread into a CT.

     
  16. NigeTheHat
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    NigeTheHat Contributing Member Contributor

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    A) There's a few exchanges you can use. Stick 'bitcoin exchange' into Google and you'll find a few of them.
    B) Some shops and businesses take them. Most people don't have them to spend like currency, though - they hold them in the hopes of the price going up.
    C) Ahahahahaha. There's not very many of them and the market is full of speculators, so the prices bounce around like kangaroos on speed. The exchanges aren't even particularly consistent - recently you could buy a coin on one exchange and sell it on another for almost $100 profit.

    In terms of how they're valued, like any other exchange-traded good it's just what people are prepared to pay for them. There's nothing inherent in them that gives them value.
     
  17. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    Bitcoins are 'mined' by groups of people coupling their CPU (though most use the GPU because of the stress mining puts on it and if you fry your CPU...well your computer won't work whereas you can replace a GPU with a new graphics card.) into a conglomerate that helps to solve really difficult equations. The first group to solve the equation gets a bitcoin for it.
     
  18. Andrae Smith
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    Andrae Smith Gone exploring... in the inner realm... Contributor

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    That is a very good point. Not exactly what I was thinking, but a worthy explanation nontheless and certainly worthy of thought.

    @mammamaia My thoughts stem from the fact that our money is not truly based on anything That is, it has no backing beyond iself and that is subject to the whims of private banks and corporations, who play with the economy like it's a game. The U.S. government doesn't even own it's own currency. Why is the gov't paying private banks interest to use it's own currency??? As I see it, our economic system is flawed in that it set up to establish a hierarchy, that cannot (or should not) hold. I wish I could explain further, but I really can't It's been a long time since I looked into any of it.
     
  19. Wreybies
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    Wreybies The Ops Pops Operations Manager Staff Contest Administrator Supporter Contributor

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    That's not exactly correct, Andrea. All money is fiat these days. There is no major currency that is backed by tangibles, and the truth is, "backed by tangibles" is a false narrative because the tangible itself has arbitrary value. It's an arbitrary piece of paper backed by an arbitrary lump of something. That's at least a part of why nations went away from that system. That, and the fact that when a tangible (gold) is finite in quantity, but the economy keeps growing and there are more and more people involved in the economy, there quickly comes a point where there's not enough of the tangible to back all the currency in circulation, and even if there were, that would become a self-negating value structure because how can you base precious value on a commonly found tangible. That would be like backing money with sand, literally.

    What backs any currency these days is trust. Trust in the nation that issues the currency, trust in that nation's economy, trust in that nation's industry power, and to some extent for larger nations, trust in that nation's military strength.

    Our monetary system is not the problem. The problem is that there are certain parts of any economy that are foundation points that really cannot be messed with or the whole thing falls apart. The housing market and all of its associated financial aspects is one of those foundation points in America. An unprecedented thing happened. That foundation point was allowed to be fucked with, and all of those who fucked with the system got away with it, because even at they're poorest point, they were super-league rich compared to the likes of you or I.

    How our money works isn't an issue. Ignorance is the issue. The average Joe/Jane doesn't know how our economy works. Joe doesn't understand that what looks like an amazing opportunity is in fact disaster's calling card. Joe doesn't know how to recognize that there is nothing in the least bit real about a little cookie cutter 1400 square foot, plain, no frills, stucco house in Central Florida being valued at well over half a million dollars and that there is something deeply wrong with Joe getting approved for a loan on that house based on his $35,000 a year salary.

    You mention that our economy is set up to establish a hierarchy. Of course it is. Everything humans do always has the paradigm of hierarchy as a facet. Always. That's a hardwired part of being a homo sapiens. We are pack animals in the way that wolves are pack animals. We recognize, create and seek out hierarchal structures. Alphas, betas, gammas and so on. It's in our nature, in our lizard brain. The opposite of economic hierarchy is communism. And I'm sure you know the cliché of communism: Looks great on paper, looks like shit when humans try to out it into practice.

    It doesn't work for us because we're not that kind of animal.
     
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  20. mammamaia
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    mammamaia nit-picker-in-chief Contributor

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    i agree that money of any kind makes no more sense than does ownership of land and objects being determined by a piece of paper, or other illogical idiocies like royalty, marriage governed by law, and sex having become a major recreational activity...

    but that's the system humans set up when, thanks to a proclivity to procreate, there were too many of them for the barter system to continue working... now, with over 7 billion on the planet, there doesn't seem to be any viable alternative...
     
  21. Duchess-Yukine-Suoh
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    Duchess-Yukine-Suoh Girl #21 Contributor

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    No offense, but you have kids, don't you?

    I think bitcoin is just a fad, like 3D TV.
     
  22. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    Technically bitcoins are backed by the computer equations that get solved.
     
  23. NigeTheHat
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    NigeTheHat Contributing Member Contributor

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    That's not what 'backed' means, here - the equations are just a way of limiting the supply. Bitcoins don't represent the value of the equation.
     
  24. Lewdog
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    Lewdog Come ova here and give me kisses! Supporter Contributor

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    No but they represent that the equation has been solved. No it's not the same as being backed by gold or any other precious physical commodity, but the answer to the equations are a virtual commodity.
     
  25. Wreybies
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    Wreybies The Ops Pops Operations Manager Staff Contest Administrator Supporter Contributor

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    But for a commodity to have any power to back a currency, traditionally, said commodity has to have universal and wide ranging value, hence the reason commodities have traditionally been things like raw natural products: agricultural produce like corn and rice; metals like iron and copper and of course precious metals; wood, petroleum, etc. Things that participants in the marketplace can't really, en masse, say, "Well, I can do without that, so it's worthless to me."
     
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