Bitcoin => eco-disaster

[12DrinkMore]

21 minutes ago, mjnaus said:

 

For the same reason my billion Zimbabwean dollars don't have any intrinsic value (other then the paper it's printed on).  May I suggest you have a peak in the dictionary and look up the meaning of "intrinsic value"?

 

Although some currencies have some value in the sense that they are a medium of exchange to acquire other things of value or as a store of value (both of which are based upon trust, hence the point I made in my previous point).

 

The only intrinsic value your 1,000baht note has, is that of the paper it's printed on...

 

A THB 1,000 note is not "just a piece of paper", which is a definition you are applying. It is a currency note issued by Thailand as part of the legal tender system. We are discussing the intrinsic value of a legal tender note, not the intrinsic value of a piece of paper.

 

In Thailand no-one is allowed to refuse to accept a THB 1,000 in good condition as payment for goods/services or a debt. This is a legally enforceable obligation and nothing to do with trust. Ultimately if someone continued to refuse the note as payment he would be in court and forced to do so. That is not trust, that is the power of the State coming down to assert its might over the population.

 

I think it is self-evident that if you burn a THB 1,000 note you have definitely lost something, 

 

There is not a single place on the planet where you can legally enforce the acceptance of Bitcoin as a payment for anything. Even the exchanges are not legally bound to accept Bitcoin. They simply offer you a service to buy or sell, which they are totally able to refuse to provide. Indeed, they would be within their rights to insist that the transaction costs are paid in the local sovereign currency and not Bitcoin.

 

Zimbabwe is a basket case and of no relevance to any reasonable discussion.

 

[khunken]

8 minutes ago, 12DrinkMore said:

 

Thanks for a decent reply.

 

There maybe a few small companies pepared to take the volatility risk, but most will want to secure the currency so they can pay bills,

 

Options and futures have developed from their original use into speculative instruments, but there are still a large number that are used as insurance against adverse prices. The vast majority expire worth nothing.

 

I don't think that a comparison between investment banks and hedge funds activities and craptos can be made. Options always have two knowledgable counterparties and there is always liquidity. I also agree that far too munch energy is wasted on speculation and unnecessary trading.

 

This is not really where I want to go into the subprime crisis, except to say that it is a good example where governments, central banks and investment banks moved rapidly around the globe in  a concerted action to limit the damage. There will be no-one there when Bitcoin has a liquidity crisis.

 

Yes Options and futures have developed into speculative instruments. Futures are still used for currency & commodity hedging but options were purely a means for companies to reward their employees as well as a virtual contract to keep them in future. That is a very small use for them nowadays and the explosion of options for speculation does not lead to both sides being knowledgible.

 

A Bitcoin collapse is nothing like the sub-prime crisis. For the former speculators get hurt as is the risk in any speculative trading. For the latter, many individuals, pension funds, economies etc got badly hurt as a result of others' speculation.

 

Bitcoin and other cryptos are not anything like a real eco disaster - certainly not any more so than algo trading, which you seem to downplay the sheer size of the resources they consume. Much as I dislike saying so, all commercial computer systems have been an eco disaster in that they consume vast quantities of electricity and have eliminated millions of jobs.

[mjnaus]

2 minutes ago, 12DrinkMore said:

A THB 1,000 note is not "just a piece of paper", which is a definition you are applying. It is a currency note issued by Thailand as part of the legal tender system. We are discussing the intrinsic value of a legal tender note, not the intrinsic value of a piece of paper.

 

In Thailand no-one is allowed to refuse to accept a THB 1,000 in good condition as payment for goods/services or a debt. This is a legally enforceable obligation and nothing to do with trust. Ultimately if someone continued to refuse the note as payment he would be in court and forced to do so. That is not trust, that is the power of the State coming down to assert its might over the population.

 

I think it is self-evident that if you burn a THB 1,000 note you have definitely lost something, 

 

There is not a single place on the planet where you can legally enforce the acceptance of Bitcoin as a payment for anything. Even the exchanges are not legally bound to accept Bitcoin. They simply offer you a service to buy or sell, which they are totally able to refuse to provide. Indeed, they would be within their rights to insist that the transaction costs are paid in the local sovereign currency and not Bitcoin.

 

It's a lovely little writeup you've got here, however it does not do anything to indicate the intrinsic value of your 1,000baht note. Again, I'd suggest you look up the meaning of "intrinsic". 

 

You have lost something; only if you believe/trust in the value it has. Hence the difference between intrinsic value and perceived value. If you were to find yourself in a hypothetical country on the other side of the world that does not accept your 1,000b as legal tender and does not have banks to change it into other currency or something of "value", your 1,000b is now worth nothing more than the paper it's printed on. No intrinsic value... get it?

 

Anyways, we can debate this all day. I'd venture a guess and say most people would agree that money has zero intrinsic value. However, if you like to think it has, by all means. 

[12DrinkMore]

3 minutes ago, khunken said:

Yes Options and futures have developed into speculative instruments. Futures are still used for currency & commodity hedging but options were purely a means for companies to reward their employees as well as a virtual contract to keep them in future. That is a very small use for them nowadays and the explosion of options for speculation does not lead to both sides being knowledgible.

 

A Bitcoin collapse is nothing like the sub-prime crisis. For the former speculators get hurt as is the risk in any speculative trading. For the latter, many individuals, pension funds, economies etc got badly hurt as a result of others' speculation.

 

Bitcoin and other cryptos are not anything like a real eco disaster - certainly not any more so than algo trading, which you seem to downplay the sheer size of the resources they consume. Much as I dislike saying so, all commercial computer systems have been an eco disaster in that they consume vast quantities of electricity and have eliminated millions of jobs.

 

Hi,

 

Agreed. Banking crisis have always been extremely bad for the wide economy, hitting innocent people.

 

Technological revolutions have caused disruptions for centuries. So far the human race has always survived and progressed to a wealthier and "better" state. Old jobs disappear and new jobs are created. I am not totally convinced that this time will be the same. It is an interesting subject. But humans are incredibly inventive, so I am optimistic that solutions will develop.

 

Even if it is pseudo-work in a cyber-universe, as long as the people feel they are occupied and doing interesting things, they will be happy. 

 

 

 

 

 

[khunken]

11 minutes ago, mjnaus said:

 

It's a lovely little writeup you've got here, however it does not do anything to indicate the intrinsic value of your 1,000baht note. Again, I'd suggest you look up the meaning of "intrinsic". 

 

You have lost something; only if you believe/trust in the value it has. Hence the difference between intrinsic value and perceived value. If you were to find yourself in a hypothetical country on the other side of the world that does not accept your 1,000b as legal tender and does not have banks to change it into other currency or something of "value", your 1,000b is now worth nothing more than the paper it's printed on. No intrinsic value... get it?

 

Anyways, we can debate this all day. I'd venture a guess and say most people would agree that money has zero intrinsic value. However, if you like to think it has, by all means. 

That is a false argument. 12DRinkMore is quite correct about the intrinsic value of any currency note that has value guaranteed by a bank or country. Just because you cannot exchange it in some god-forsaken place doesn't take away from its true value. One would just hold it until later and use or exchange it where it is accepted.

[mjnaus]

5 minutes ago, khunken said:

That is a false argument. 12DRinkMore is quite correct about the intrinsic value of any currency note that has value guaranteed by a bank or country. Just because you cannot exchange it in some god-forsaken place doesn't take away from its true value. One would just hold it until later and use or exchange it where it is accepted.

 

Fine. 12DrinkMore and yourself are right. Wikipedia, myself the rest of the world who know fiat currency has no intrinsic value have it backwards:

 

"Fiat money is a currency without intrinsic value established as money by government regulation. It has an assigned value only because the government uses its power to enforce the value of a fiat currency. It was introduced as an alternative to commodity money and representative money"

[speedtripler]

8 minutes ago, khunken said:

That is a false argument. 12DRinkMore is quite correct about the intrinsic value of any currency note that has value guaranteed by a bank or country. Just because you cannot exchange it in some god-forsaken place doesn't take away from its true value. One would just hold it until later and use or exchange it where it is accepted.

Fiat money in many cases is literally not worth the paper its printed on

In Venezuela now, it's  more cost effective to wipe your ass with bank notes because they are a lot cheaper than toilet paper

This has been repeated throughout history in Germany, Russia, Zimbabwe,  etc 

 

Nearly every time governments have been given free reign  to print money out has resulted in hyper inflation and worthlessness of the currency.... 

 

Google the weimar republic and you can see what the eventual results will be of this path of money printing the world is engaging in even today

[khunken]

9 minutes ago, mjnaus said:

 

Fine. 12DrinkMore and yourself are right. Wikipedia and the rest of the world are wrong:

 

"Fiat money is a currency without intrinsic value established as money by government regulation. It has an assigned value only because the government uses its power to enforce the value of a fiat currency. It was introduced as an alternative to commodity money and representative money"

I take back what I said about intrinsic value. You are right that fiat money has no intrinsic value. It does however have true value or value that has a guaranteed worth in purchasing goods & services.

[mjnaus]

1 minute ago, khunken said:

It does however have true value or value that has a guaranteed worth in purchasing goods & services.

There's only perceived value, nothing more. You might call this "true" value or whatever else floats your boat. Nevertheless, it's hardly "guaranteed". If this value is guaranteed, than why is my dollar worth less every day/week/month/year? 

 

A currency's perceived value only exists by grace of the trust people have in that currency. Once that trust goes, so does the currency. Governments and banks can and will bent over backwards to maintain that trust, however as history clearly shows, there are no guarantees and currencies do come to an end. 

[taiping]

If the OP is so concerned about the perceived environmental impact of bitcoins, then perhaps he could get off his arse and do somewthing about all the plastic trash littering Thailand. Sounds like he's been listening to the British Bullshit Corporation or the Cartoon Nitwit Network.

 

[Mansell]

Somebody said something about avoiding taxes. A friend involved in crypto currencies said that you are now asked if you are holding any crypto money when entering the USA....scary. You can also go on all day about the semantics of currencies etc. but the reality is that people jump into gold and silver when things look dire with currencies. But what about in the late sixties and early seventies when countries without warning devalued their currencies.....Britain and France, and maybe America did this at least once......could this happen with the crypto currencies? Who is controlling them? I just know it is not me. 555

[lkn]

5 hours ago, 12DrinkMore said:

So far, after listing a few, IMO, valid criticisms against Bitcoin, the only arguments for it have been ad hominem and "I am making money, boo sucks to you because you ain't", and now "tax avoidance".

In the other thread, where some people recommended to invest retirement funds in bitcoin, I posted a link to this article, sure, he gets the number of years wrong, and transaction fees are higher than stated, but otherwise it’s a thorough look at what not only bitcoin can be used for, but blockchain technology in general: https://hackernoon.com/ten-years-in-nobody-has-come-up-with-a-use-case-for-blockchain-ee98c180100

 

I would love for someone pro-blockchain to refute that article, but as you have noticed, the bitcoin bulls are more about ad hominem attacks or whataboutism.

 

I do have a friend who has been into bitcoin since the early beginning, has a VISA card backed by bitcoins (although probably not anymore), he’s a sane person, and I think we agree pretty much 100% about the problems with bitcoin.

[punchjudy]

The Bitcoin believer's remind me of the brainwashing that goes in religious cults.

 

creating these currencies is a good business to be in?.........punters willing to pay hard cash for strings of data.

 

"The number of cryptocurrencies available over the internet as of 31 December 2017 is over 1381 and growing"

https://en.wikipedia.org/wiki/List_of_cryptocurrencies

 

 

[dutchberliner]

lol the world could learn from bitcoin when it comes to energy efficiency. bitcoin miners go to areas with a (renewable) electricity production surplus. In those areas they have the choice of letting the electricity run of into the ground or mine bitcoins with it (to create jobs and tax revenue). That does not seem like a tough choice.

Furthermore, plenty of bitcoin mining innovations are being used in devices like light bulbs to save ....electricity! 

 

Power usage is just the latest bullshit excuse to dismiss bitcoin.

 

It's mainly used by people that suffer from a condition that we bitcoin hodlers like to call HOMO (hate of missing out;)

[12DrinkMore]

2 hours ago, mjnaus said:

 

Fine. 12DrinkMore and yourself are right. Wikipedia, myself the rest of the world who know fiat currency has no intrinsic value have it backwards:

 

"Fiat money is a currency without intrinsic value established as money by government regulation. It has an assigned value only because the government uses its power to enforce the value of a fiat currency. It was introduced as an alternative to commodity money and representative money"

 

Thanks for continuing the discussion. It is very rare for posters, under the anonymity of the internet, to hold an argument. 99% simply issue an opinion and never come back, or others issue a "f6ck you" and disappear. The incredibly useful art of the conversation and argument is disappearing. 

 

Wiki has a rather simplistic view of the money creation process.

 

Is 1,000 Baht in a bank account the same as 1,000 Baht in banknote form?

 

What is backing the deposit?

 

What is backing the banknote?

 

Wiki talks about the intrinsic value being the "value" of the metal in a coin. That is also a difficult concept, what is a 15 kg lump of gold worth to a drowning man in the middle of the Atlantic?

 

I think that the definition of the "intrinsic value" means more than just the atoms and molecules. Maybe we need to determine that?

 

[12DrinkMore]

2 hours ago, speedtripler said:

Fiat money in many cases is literally not worth the paper its printed on

In Venezuela now, it's  more cost effective to wipe your ass with bank notes because they are a lot cheaper than toilet paper

This has been repeated throughout history in Germany, Russia, Zimbabwe,  etc 

 

Nearly every time governments have been given free reign  to print money out has resulted in hyper inflation and worthlessness of the currency.... 

 

Google the weimar republic and you can see what the eventual results will be of this path of money printing the world is engaging in even today

 

I am not arguing that gross mismanagement by the government can destroy the currency. There are different reasons, but in many cases massive and unrepayable foreign debt was involved.

 

If a country owes foreign debt and cannot earn it through exports, it will resort to printing its own currency and buying foreign currency. This has always ended in massive devaluation of the sovereign currency.

 

In the case of Germany it was a deliberate act by the allied forces to punish and destroy Germany. They insisted on huge penalties to be repaid in Dollars and simultaneously confiscated Germany's means of production and earning foreign currency. It started the chain of events leading to the second world war.

[dutchberliner]

8 hours ago, 12DrinkMore said:

 

You are confusing blockchain alogorithms with craptos.

 

The blockchain technology can be applied to other applications and will live on.

 

Craptos will not.

 

 

So how do you suggest a blockchain can achieve decentralisation if not for an asset token incentivising miners to secure the network and process transactions? 

 

Without an asset token (like bitcoin) securing it, your 'blockchain' would in fact just be a slow cumbersome database. 

 

Censorship resistance and immutability through decentralisation are the unique selling points of bitcoin. That's why most BAAS (blockchain as a service) companies anchor their private chains to the bitcoin blockchain to prove immutability, to prove that they can be trusted. The link below explains it pretty well. Bitcoin will soon be used to secure the property stock of entire nations! 

https://www.forbes.com/sites/laurashin/2017/02/07/the-first-government-to-secure-land-titles-on-the-bitcoin-blockchain-expands-project/#29aa0574dcdc

[12DrinkMore]

2 hours ago, mjnaus said:

There's only perceived value, nothing more. You might call this "true" value or whatever else floats your boat. Nevertheless, it's hardly "guaranteed". If this value is guaranteed, than why is my dollar worth less every day/week/month/year? 

 

A currency's perceived value only exists by grace of the trust people have in that currency. Once that trust goes, so does the currency. Governments and banks can and will bent over backwards to maintain that trust, however as history clearly shows, there are no guarantees and currencies do come to an end. 

 

Inflation is a poorly understood phenomena. I don't think anybody has a coherent explaination why it happens. But your Dollar is still worth a Dollar, the price of other goods has changed. At any time there are goods becoming more expensive, but others are becoming cheaper.

 

I guess you are not complaining about the price of computers, TV's, mobile phones, air travel, clothes and more than a few others. Agaist all those goods your USD can buy a helluva lot more compared to 10 years ago.

 

[Orac]

lol the world could learn from bitcoin when it comes to energy efficiency. bitcoin miners go to areas with a (renewable) electricity production surplus. In those areas they have the choice of letting the electricity run of into the ground or mine bitcoins with it (to create jobs and tax revenue). That does not seem like a tough choice.
Furthermore, plenty of bitcoin mining innovations are being used in devices like light bulbs to save ....electricity! 
 
Power usage is just the latest bullshit excuse to dismiss bitcoin.
 
It's mainly used by people that suffer from a condition that we bitcoin hodlers like to call HOMO (hate of missing out;)

This article seems to disagree

https://www.bloomberg.com/news/articles/2017-12-15/turning-coal-into-bitcoin-dirty-secret-of-2017-s-hottest-market?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social


Sent from my iPad using Thailand Forum - Thaivisa mobile app

[12DrinkMore]

40 minutes ago, Mansell said:

could this happen with the crypto currencies? Who is controlling them?

 

Yes, indeed I don't think anybody has even argued the case that craptos will be a reliable store of value.

 

The balance of buyers and sellers is currently determining the price. If you are in there, then your transactions will affect it in some minute way.

[dutchberliner]

2 minutes ago, Orac said:

This article is a fine example of cherry picking to create a certain narrative (bitcoin bad!)

 

Their little map only shows maybe 40% of bitcoin mines in china and conveniently ignores the ones using hydro and wind. It also ignores the mines in iceland, washington state, georgia, tibet, chile that run on renewables.

 

I am not claiming that bitcoin is running on 100% renewable. I am merely saying that bitcoin miners are adapting to the renewable era in a much more efficient and faster way.

Other industries lobby to build new power plants so they can stay in a certain area. Bitcoin miners move to areas with power surplus and poor infrastructure. Lessons can be learnt from this. 

 

2 minutes ago, Orac said:

 

 

This article seems to disagree

https://www.bloomberg.com/news/articles/2017-12-15/turning-coal-into-bitcoin-dirty-secret-of-2017-s-hottest-market?cmpid=socialflow-twitter-business&utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social


Sent from my iPad using Thailand Forum - Thaivisa mobile app

 

 

[12DrinkMore]

24 minutes ago, dutchberliner said:

lol the world could learn from bitcoin when it comes to energy efficiency. bitcoin miners go to areas with a (renewable) electricity production surplus. In those areas they have the choice of letting the electricity run of into the ground or mine bitcoins with it (to create jobs and tax revenue). That does not seem like a tough choice.

Furthermore, plenty of bitcoin mining innovations are being used in devices like light bulbs to save ....electricity! 

 

Power usage is just the latest bullshit excuse to dismiss bitcoin.

 

It's mainly used by people that suffer from a condition that we bitcoin hodlers like to call HOMO (hate of missing out;)

 

Nonsense, the miners go where it is cheapest, renewable or not. It is easy to transport electricity to other areas, that is its huge advantage as a power source. I am unaware of huge numbers of jobs being created through Botcoin mining, and the tax issue is one which the tax authorities are lookng hard at, as Bitcoin is more a way of avoiding tax rather than paying more tax.

 

Please tell me where light bulbs have been improved through Bitcoin mining. Never heard of that.

 

[timendres]

Putting aside the arguments over "intrinsic value", there is a legitimate reason why the fiat currencies will not be replaced by Bitcoin: contractual obligation.

 

If one looks closely at a USD, they will see that it is in fact a "Federal Reserve Note". It is a note that represents debt. All FRNs come into existence as debt. The US government cannot "print" dollars. They can only tax them from citizens, or borrow them. They can, constitutionally, mint gold and silver coins, and they do, but their "face values" have become somewhat meaningless in the modern day.

 

But more to the point is that trillions of dollars of contracts exist that are denominated in FRNs. In other words, if I have a mortgage on my home with my local bank, the mortgage contractually obligates me to pay that debt with Federal Reserve Notes. Bitcoins will not be accepted. My income tax bill must be paid with FRNs. My salary is defined in FRNs. My student loan must be repaid with FRNs. These trillions of "dollars" of contracts are, in a very real way, determining the "intrinsic value" of a FRN. Intrinsic in the sense of demand.

 

Bitcoins have no such "value". Of course they can be converted into FRNs, but only at the current "bid".

 

Bitcoins, like gold, stocks, and tulips, have purely fictional value. This is why, of course, they are quoted in USD and other fiat currencies! I am continually amazed by how the Bitcoin fanatics overlook this simple observation.

 

The simple truth is that all "assets" have "relative" value. Even FRNs. The question one must ask is, how solid is the relative value and relative to what?

[12DrinkMore]

16 minutes ago, dutchberliner said:

So how do you suggest a blockchain can achieve decentralisation if not for an asset token incentivising miners to secure the network and process transactions? 

 

Without an asset token (like bitcoin) securing it, your 'blockchain' would in fact just be a slow cumbersome database. 

 

Censorship resistance and immutability through decentralisation are the unique selling points of bitcoin. That's why most BAAS (blockchain as a service) companies anchor their private chains to the bitcoin blockchain to prove immutability, to prove that they can be trusted. The link below explains it pretty well. Bitcoin will soon be used to secure the property stock of entire nations! 

https://www.forbes.com/sites/laurashin/2017/02/07/the-first-government-to-secure-land-titles-on-the-bitcoin-blockchain-expands-project/#29aa0574dcdc

 

I have never said that the blockchain technology is worthless.

 

In this case the Bitcoin platform is being proposed as a solution to securing land titles. Indeed such applications are numerous.

 

This does not mean that Bitcoins will become more valuable. They are not involved in this.

 

An investment in the technology with the right platform could do very well, but with a couple of thousand platforms around, which one are you going to chose?

 

 

[dutchberliner]

This does not mean that Bitcoins will become more valuable. They are not involved in this

 

Bitcoin is not only involved, it's essential. The bitcoin network can not function without the bitcoin token. a token empowers a decentralised public blockchain and only by using such a chain the private chains can prove to us 'the people' they they can be trusted. Without this 'bitcoin' trust we would just be switching trust from a civil servant at the land registry to some company running a private blockchain. that is still far from ideal, the goal is to no longer having to trust on humans!

 

As to which one the market chooses, how about the best one? As in the most decentralised, censorship resistant and immutable, in that arena bitcoin is king! google companies like Tierion, Chain, Bitfury, Factom, Filamont or chromaway. They all anchor to the bitcoin blockchain to prove immutability.

 

I see no real competition for bitcoin in this field. Most other coins have squandered cryptos unique selling points to accommodate users wishes. Those wishes (low fees through fast block times and large blocks) will set an unstoppable centralising force in motion as soon as these coins start experiencing heavy load on their chains.

 

Personally I regard proof of immutability as the blockchains killer app. It has the power to eradicate fraud and corruption by increasing the chance of getting caught to 100%.

 

Governments utilizing bitcoin for this purpose will galvanize bitcoin's position as a store of value and protect bitcoin from government regulation. How can one government ban it when another is using it to tackle corruption?

 

 

 

[12DrinkMore]

53 minutes ago, timendres said:

Putting aside the arguments over "intrinsic value", there is a legitimate reason why the fiat currencies will not be replaced by Bitcoin: contractual obligation.

 

If one looks closely at a USD, they will see that it is in fact a "Federal Reserve Note". It is a note that represents debt. All FRNs come into existence as debt. The US government cannot "print" dollars. They can only tax them from citizens, or borrow them. They can, constitutionally, mint gold and silver coins, and they do, but their "face values" have become somewhat meaningless in the modern day.

 

But more to the point is that trillions of dollars of contracts exist that are denominated in FRNs. In other words, if I have a mortgage on my home with my local bank, the mortgage contractually obligates me to pay that debt with Federal Reserve Notes. Bitcoins will not be accepted. My income tax bill must be paid with FRNs. My salary is defined in FRNs. My student loan must be repaid with FRNs. These trillions of "dollars" of contracts are, in a very real way, determining the "intrinsic value" of a FRN. Intrinsic in the sense of demand.

 

Bitcoins have no such "value". Of course they can be converted into FRNs, but only at the current "bid".

 

Bitcoins, like gold, stocks, and tulips, have purely fictional value. This is why, of course, they are quoted in USD and other fiat currencies! I am continually amazed by how the Bitcoin fanatics overlook this simple observation.

 

The simple truth is that all "assets" have "relative" value. Even FRNs. The question one must ask is, how solid is the relative value and relative to what?

 

Hi,

 

Sorry, but I have to disagree.

 

FRN are indeed issued without any debt attached to them. Also Bernanke/Yellens trillion or so of USD's under QE was issued without any debt attached to them. However, FRN are less than 3% of the number of USD's that exist in bank accounts. All of those USD's are back by debts.

 

The money creation process is poorly understood among the population and only in the last couple of years has it been really openly disussed and published. The media, politicians and text books are still unclear and inaccurate on this. They go on about Fractional Reserve Banking and lending out deposits. Both of which are inaccurate. Or worse, lending out from reserves, which is not even possible.

 

Here goes, a quick example. I have already spent the entire aftenoon and evening here......

 

When you borrow from a commercial bank, two things happen.

 

1. You sign a debt contract in USD's.

2. The bank creates a deposit in your deposit account in USD's.

 

Notes

 

a. The bank owes you that deposit. It is a debt from the bank to you.

b. The deposit did not come from anywhere. It was created from nothing. The bank does not scramble around trying to find the money elsewhere from somebody  else. It is very important to understand this.

 

Now, you are required to repay the bank loan, which is denominated in USD's. FRN are also denominated in USD's.

 

There is no reason why a bank USD should be equal to a FRN USD. A bank could theoretically charge for accepting FRN, which indeed they often do for large quantities of coins. But to keep things simple, the USD that the banks create is treated exactly equivalent to the FRN USD that the Fed issues, and 97% of the USD's in existence are created by the commercial banks and not by any government body.

 

[speedtripler]

30 minutes ago, timendres said:

Putting aside the arguments over "intrinsic value", there is a legitimate reason why the fiat currencies will not be replaced by Bitcoin: contractual obligation.

 

If one looks closely at a USD, they will see that it is in fact a "Federal Reserve Note". It is a note that represents debt. All FRNs come into existence as debt. The US government cannot "print" dollars. They can only tax them from citizens, or borrow them. They can, constitutionally, mint gold and silver coins, and they do, but their "face values" have become somewhat meaningless in the modern day.

 

But more to the point is that trillions of dollars of contracts exist that are denominated in FRNs. In other words, if I have a mortgage on my home with my local bank, the mortgage contractually obligates me to pay that debt with Federal Reserve Notes. Bitcoins will not be accepted. My income tax bill must be paid with FRNs. My salary is defined in FRNs. My student loan must be repaid with FRNs. These trillions of "dollars" of contracts are, in a very real way, determining the "intrinsic value" of a FRN. Intrinsic in the sense of demand.

 

Bitcoins have no such "value". Of course they can be converted into FRNs, but only at the current "bid".

 

Bitcoins, like gold, stocks, and tulips, have purely fictional value. This is why, of course, they are quoted in USD and other fiat currencies! I am continually amazed by how the Bitcoin fanatics overlook this simple observation.

 

The simple truth is that all "assets" have "relative" value. Even FRNs. The question one must ask is, how solid is the relative value and relative to what?

If  gold only has fictional value, then central banks around the world are obviously not as smart as you lol

[mjnaus]

48 minutes ago, timendres said:

Putting aside the arguments over "intrinsic value", there is a legitimate reason why the fiat currencies will not be replaced by Bitcoin: contractual obligation.

 You could have saved yourself the trouble, as nobody in this thread has argued that Bitcoin or any other crypto will replace fiat currencies anytime soon, or at all for that matter.

[12DrinkMore]

16 minutes ago, speedtripler said:

If  gold only has fictional value, then central banks around the world are obviously not as smart as you lol

 

There is much ignorance among the populations.

 

Gold is a commodity. There is too much emotional baggage attached to gold for the Central Banks to sell it off. It would cause an outcry and Peter Schriff, Ron "audit the Fed" Paul etc would simply create too much hot air.

 

Better to leave it as it is.

 

The Central Banks do not need it anymore, it is a pain in the bum for them to look after. Germany got a bit of a nationalistic boost by "repatriating the gold" but so what? They are running a trade surplus and even just started reducing their national debt.

 

Maybe a few tin pot republics could stabilise their economies with it, but basically it is just another tradition.

 

"We've got it, because we've always had it."

 

[dpdp]

Who cares ? As long as I am rich I don't care this world and its people.