The thing is that those Bitcoins are theoretically worth that much. Actually getting that much in terms of Euros or Dollars from selling it is another question.
Speaking of inflationary pressure on bitcoin, some people think the US Government should establish a “strategic bitcoin reserve.” (Policy papers here and here and a New York Times article on the idea is here.) Trump is apparently warming to the idea. It’s possible that those advocating this idea already hold lots of bitcoin.
The weakness of that analogy is that unclaimed lottery winnings roll back into the pot for the next drawing. In theory, every dollar in the lottery system’s pot will eventually be awarded.
A lost crypto wallet is effectively and irretrievably gone forever. And that portion of the coinspace is locked out.
sigh as I alluded above, any bank account will require you to maintain documents to prove your identity. You can lose your documents. Someone can steal your identity documents and empty your bank accounts, not just one account, all your accounts. It is exactly the same thing.
Okay then, thanks for stopping by and sharing your highly-informed opinion! We’re definitely all bitcoin fanatics, definitely not normal people trying to help you gain the absolute minimal understanding of this thing that you have such strong opinions about.
Do dollars have utility? If dollars have utility, then bitcoin has utility, because you can convert bitcoin to dollars. OTOH if dollars have no utility, then you’ve not meaningfully contrasted them to Bitcoin.
Again, there are lots of legitimate criticisms of bitcoin, but “they have no inherent utility” is not one of them. Neither is “you need to prove your identity to access it, and identity credentials can be lost.” Both of these limitations apply to dollar-denominated savings accounts.
Feel free to criticize, but at least base the critique on something other than vibes. Or at least recognize that fiat currency itself is nothing but government-issued vibes.
OK. Dollars are backed by a government and an economy, and we have long histories with those and price them accordingly (ie, USD vs Argentine Peso). Bitcoin is backed by what? Current market whims? And until/unless governments start to accept them in significant numbers, they can never go that last mile. That is, I can’t pay my tax bill with them unless I first convert, again at the whim of the market.
If I were selling you my car, why on earth would I take BTC except if I’m speculating the value would go up?
Add to that no obvious utility beyond currency, and the whole thing seems like a stupid and speculative bubble. They’re like Beanie Babies. They exist, and lots of people want them, at the moment.
It’s not so much the utility (or lack thereof) I have a problem with. It’s the wastefulness. It doesn’t take exponentially increasing amounts of computer power and electricity to create a new dollar. That’s the contrast.
I keep thinking they’re buried right next to a cache of Atari E.T. the Extra Terrestrial games.
I suppose if I lost every single document that might identify me, forgot my SSN, and also sanded off my fingerprints and face, then yeah, I might have trouble proving my identify to anyone. That seems like a rare and unlikely scenario though.
But if bitcoin wallets are as recoverable as my access to my conventional bank account is, then why is this guy trying to hard to recover a 10-year-old hard drive from a landfill, and why is this woman lamenting the incineration of her cryptowallet?
If they were, then they would have been found:
Correction - dollars are backed by faith in a government’s ability to pay its debts, and demand for a means to trade on that faith. There is an elaborate accounting system behind it, but it all reduces to faith.
Bitcoin doesn’t require any faith. No person or government can devalue it. That’s not faith, it’s a fact. That fact makes it attractive as a store of value, which leads to demand for it as a store of value. Demand drives up price, the price of Bitcoin has overall appreciated over time. So it’s backed by a social desire for a means of exchange that can’t be faked or manipulated or corrupted.
Like Faberge eggs, but instead of the social waste of a jeweler making fancy expensive eggs that common people can’t trade, it’s just math.
Because BTC can be converted to dollars, and you seem to like dollars? That’s a minimum, but people transact all sorts of things in Bitcoin. Sell your used car for $5000, buy 10 Amazon gift cards if you like.
Similar to the US Dollar, or formerly the Argentine Peso.
All of these things are fakeable! Your fingerprints are compared against a digital record stored somewhere you have absolutely no knowledge of!
Every form of banking requires its participants to authenticate themselves! Identity documents can be lost or faked! Bitcoin only requires one that can’t be faked, and the owner has full control. You can make copies and put it in a vault. You can put it on a sticky note behind your sunvisor. How smart you want to be is up to you, but people being dumb isn’t the fault of the tech.
To clarify terminology used here, “inflation” of a currency means it is worth less. Bitcoin, with it’s limited supply is inherently deflationary, because as fewer bitcoins are available, each one will be worth more to meet the same demand. So loss of bitcoin will be deflationary at first. But, as stated above, eventually fewer bitcoins will be inflationary as the demand for them drops.
That is the question I have. Let’s say he dug and found it. Can he unlock his wallet and convert those bitcoin into nearly $1B US dollars? Or, is it like the stock market and he has to wait for enough folks to come along and buy them? And is there the demand out there for people to buy up that amount? What is the amount of buying and selling of Bitcoin each day?
It’s both, basically. About US $39 billion of Bitcoin was traded yesterday. Unloading a billion dollars in BTC would be complicated and couldn’t be done in a day.
But I mean, let’s not forget, some sellers will accept Bitcoin for a house purchase. There are many ways to realize that value.
Thanks for the info. I didn’t have a clue of what a days worth of trading looked like. Much larger than I would’ve thought.
That’s the part I don’t get, and that I disagree with. Dollars are not backed by faith. They are backed by all the economic output of all the taxpayers who give value to those dollars. The dollars I pay to the government have value because I earned them by doing an economically productive activity (providing medical care to sick people). The same goes for all the dollars the government collects. They have value because someone earned that dollar by creating something of value, whether it be flipping burgers at McDonalds, entertaining people by being the starting quarterback for the Dallas Cowboys, and everything in between those extremes. The only place the faith comes in, as far as I can tell, is faith that the government isn’t going to bring so many new dollars that current ones will lose so much value than it’s no longer worth doing things of value to try to earn them (the infamous hyperinflation from Weimar Germany, Venezuela, Zimbabwe, etc.). But even in those places and situations, there was still the underlying economic output of the things of value created by the ordinary Germans, Venezuelans, Zimbabweans, etc.
With bitcoin there’s no such underlying value. The only value I see is that people are willing to trade them for other currencies.
It’s the expected output, plus the expectation that the US government will honor its outstanding obligations. Dollars are a claim on future production.
A lot of bitcoin discourse revolves around dumb, superficial conversations around aesthetics “it’s just beanie babies” or convenience. But the actual, core, argument is about what kind of society we want to live in.
If anyone wants a real critique of Bitcoin, it’s this: a well-governed society requires a managed monetary policy, part of which involves balancing the supply of money against claims on GDP. Bitcoin cannot meet this need, simply by its hardwired deflationary design.
Society is better when a democratically legitimate government has the ability to manipulate the supply of money, so that’s why I don’t support replacing the dollar with Bitcoin. But that’s not to say Bitcoin (or any other cryptocurrency) has no place at all.
But isn’t money, when we look at what it fundamentally is, simply a way of keeping track of wealth / things of value? A $50 bill might be used to represent a tank of gas, or a visit to the doctor, or 5 cheeseburger combo meals at Whataburger, and so on. The reason that little green paper with a picture of Grant on it has value is because people who produce that tank of gas, flip those burgers, and so on, expect to be able to trade that value for something else that they might need that is completely unrelated to the person purchasing their product / service. So it’s convenient because we all agree on that means of exchange. Compare that with Monopoly money, which has no value because it isn’t earned by things that other people value, but by playing a game which doesn’t really matter to anyone. It seems to me that Bitcoin is more like the Monopoly money, because it was generated by a computer that solves some sort of problem that doesn’t really provide value of any kind other than keeping track of the bitcoins (at least that’s my understanding of how the basics of bitcoin work). There’s no underlying goods or services or anything else of value being produced and exchanged. It makes no sense to me.
If I told you BTC were NOT convertible to dollars, would you want them? Would most people?
And saying they can’t be devalued by a government, well, OK. But they can be devalued by the market, and I don’t see how that’s better.
And regarding things like Beanie Babies, the dollar has outlasted those by orders of magnitude. I remain unconvinced this isn’t some kind of fad.
Is there any way to tell how much of the BTC trades are for investment purposes versus goods and services? How much of that $39B was traded to pay for something in the real world, like a house, car, groceries, landscaping, etc? It seems to me that most of the trades are for investment purposes. It’s people buying and trading BTC with the hopes that the price will go up. I hardly hear of BTC used as a form of payment. Of the trades for payment of goods and services, most seem like they are for illicit purposes, like drugs, ransom, human trafficking, etc. I’m sure that houses have been purchased with BTC, but even in that case, I wonder if it was some form of money laundering. That’s not to say that all BTC purchases are for something illicit, but it sure seems like that’s what it’s virtually always used for.