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Bitcoin

Opening Argument

Persuade me bitcoin isn't dumb.
northsouthkorea

Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


- David Ricardo

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  • DrCerealDrCereal 99 Pts
    edited November 2017
    Medic said:
    Persuade me bitcoin isn't dumb.
    What do you mean by "dumb"? Bitcoin does not have an intelligence to measure.
    Bis das, si cito das.
  • Reasonable enough. I'll break it down into two areas of contention.

    1.) incapable of being used as a currency

    2.) is too volatile as an investment
    DrCerealGhosty

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • Medic said:
    Reasonable enough. I'll break it down into two areas of contention.

    1.) incapable of being used as a currency

    2.) is too volatile as an investment
    I don't really see why you think it couldn't be used as a currency, but I completely agree that it's too volatile to invest in.
    Bis das, si cito das.
  • Doesn't fulfil the three basic roles of money.

    Righto. Let's start by examining the three roles of money (as any intro to economics class will teach you).

    These are:

    - Medium of exchange (in other words, it replaces barter as a mutually agreed upon means of exchange - instead of me swapping 400 cows for a Toyota I can agree that it costs $40,000)

    - Store of value (it needs to hold its value over time) - here's where the problems really begin for BTC

    - Unit of account (Prices are information - they carry meaning about the costs etc involved in the production of the good/service - for instance, if the price (information) of wood goes up, the price of pencils will go up. The pencil, in other words, carries the information (facilitated by money) that the price of wood has gone up)

    Let's quickly examine why BTC doesn't fit two of these.

    Medium of exchange
    BTC actually does pretty well here. The clever design of it means that it can be used as a means of exchange between two parties with mutually agreeable terms. It's very moneylike. Further, it's anonymous which is a very money-like quality which facilitates transactions.

    The issue here is the transactions are usually not those of a "good" nature - BTC is often used by criminals seeking a less-monitored (not implying that such currencies as the dollar are indeed monitored). The FBI states that it can at least to some extent follow up on this but the prevalence of this as an easy means of exchange for criminals (which is its primary function in this way) [1]. Therefore, its fulfilment of this means essentially that it's an easy target for those you probably don't want to be giving agency to.

    Store of value
    Here begin the problems with BTC as a currency. We can divide these into two easy problems for ease of access for those who haven't done economics.

    First, it's volatile.

    Fiat currency (which is the alternative) is broadly based (massive oversimplification here) off the stability of a government - in other words, the value of the dollar is predicated upon the understanding that the US government is highly unlikely to collapse. 

    Here's a quick story from today (11/29/17) that shows the volatility of the coin. [2] After making huge gains in the day, it then sharply dropped by two thousand dollars. Such crashing in value would be enough for any regular currency to be instantly discarded. I could quote more but I think the point is made - that BTC isn't a stable store of value.

    (As a side note, it's interesting that BTC is usually measured in terms of the dollar. This is because the dollar is a stable store of value and therefore suitable for use as a currency)

    Consider, therefore, that for as long as people around the world think in terms of pounds or dollars or euros then BTC will have serious troubles establishing itself as a reputable means of account.

    Second, it's deflationary.

    This means that it tends to "decrease in value". This seems idiotic - today (11/29/17) BTC had hit a high of $11k per coin. How can we understand this? Simple.

    First, BTC has a "cap" on the number of coins that can be in existence - [3] 21 million coins. This sounds great - it avoids inflation, right? Perhaps, but there's a reason that central banks usually aim for an inflation target of roughly 2% pa and that's because wages are sticky. What this means is pretty simple - it's hard for companies to pay their workers less. This can be because of unions, or even simple personal attachment and the idea that the person whose wages are cut will hurt. Therefore, a small amount of inflation essentially "allows" the pay cheques of workers whose wages don't rise in line with the inflation to be cut, bypassing the stickiness of wages. However, if, as BTC always will (the number of BTCs that can be mined each year halves until the cap) the currency is inherently deflationary (in other words, given that the price will always increase assuming demand remains static), which means that the price of everything else, like books and houses and cars will decreases in BTC terms and therefore deflation occurs. This sounds good but it sucks - prices will generally fall which means that workers (who, remember, have sticky wages) will become more costly for companies to keep. Those who are employed tend to hoard money (either by investing it in stable things like gold or houses or by literally stuffing it under a mattress) and as such companies find it even harder to hire workers.

    The end result of all this deflation, which is inevitable under BTC because of the fixed number that can exist is higher unemployment.

    BTC is not a store of value.

    Unit of account
    BTC runs into a lot of the same problems as it did before here - prices of BTC are not determined in the way that a usual currency would be - they're mostly determined by those who are attempting to get into BTC as a means of making money. This is really, really bad. This essentially means that the price of something in BTC is determined by supply and demand, which is fine, but it also has the "investment factor" tacked on to it. In other words, BTC's nature as a secondary currency will inevitably lead it to mask or hide the information that is being sent and contained within the price and as such it is unsuitable as a unit of account.

    Let's quickly go over what we've learnt.

    1.) Bitcoin does fine as a medium of exchange - but not for the kind of people you really want it to
    2.) Bitcoin is too volatile and too deflationary to act as a stable store of value
    3.) Bitcoin is not suitable as a unit of account.

    It's clear that BTC is not suitable as a currency. 

    Note: BTC isn't fungible either, so it's pretty bad as a means of exchange.
    DrCerealnorthsouthkoreaBaconToesEdril

    Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. By stimulating industry, by regarding ingenuity, and by using most efficaciously the peculiar powers bestowed by nature, it distributes labour most effectively and most economically.


    - David Ricardo

  • Bitcoin is a horrible investment. The virtual currency went over $11,000 recently and dropped 18%. Their may be no central control over the virtual currency and not that many stores support it possibly.
  • It's kind of fun to do the impossible
    - Walt Disney
  • It's interesting that Bitcoin network uses more than 9 times of daily Us household consumption of electricity just for one transaction. Bitcoin uses more electricity than country of Ireland.
    https://www.cryptocoinsnews.com/why-bitcoin-spending-more-electricity-than-159-countries-is-positive/

    What's more interesting though that many experts argue that it's actually good, as it demonstrates value of bitcoin currency 
    Live Long and Prosper
  • Bitcoin has been around for awhile and has been the only currency trusted on the dark web. It is the safest type of money out their. Bitcoins are a one to one system of money. It is the safest and the most hack resistant currency thous so far. Bitcoin is like the stock market it goes up and it goes down. The 100 dollar bill might not go up or down in value but the things we buy do. As the market gets better the 100 dollar bill with be of much greater value as it can buy the same thing as before but more of it. When the market goes down the 100 dollar bill losses face value. Bitcoin is created by solving mathematical equations and formulas using near super computer power or even a super computer. Bitcoin is not printed but created by solving such algorithms,equitation, and formulas, this is called mining for bitcoins. I do not mine as the cost for one of these computers not including all the upgrades and extensions I would need would cost a fortune. As bitcoin is better understood the more places will accept it as a standard form of currency. Some bars and a few other businesses accept bitcoin already. @Medic

    https://www.coindesk.com/information/what-is-bitcoin/
    https://bitcoin-made-easy.com/@Medic
    https://www.lifewire.com/big-sites-that-accept-bitcoin-payments-3485965
    https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/

    If busincess are already taking it as a payment I would be able to safely say it is now a type of currency. 

    ~NathanAllen, Be yourself let no one tell you who you are. 
  • Hahaha I will laugh my head off if you all end up scammed because the unregulated idiots running this currency decide to screw you over! LOL
    I come to debate, I stay to troll,
    I leave to think, I return to brawl.
  • I think that it is a dumb form of currency. First of all, buying and spending Bitcoins takes forever. Also, with digital currency starting to take over, hackers will be hacking accounts left and right with the login just being a username and a password. Also, the site could be easily shut down, or something could happen and you could lose everything in your Bitcoin wallet. For example, if you're saving your Bitcoins up so that you can buy something really special for your girlfriend anything could happen to all of those Bitcoins. Someone could hack your account and make you send all of your Bitcoins to the hacker's account. If Bitcoin were to get enough complaints and people saying that it is dumb or that something happened to their Bitcoins that the site could get shut done permanently or temporarily.
  • I will make my argument really simple.  Bitcoin has been a fantastic investment for early adopters. If you bought it early on for $10 and sold this month for 18k, I cannot call that anything but a brilliant move.  Whem couple years ago many were having a similar discussion on ridiculousness overvalue of bitcoin at $600, those who bought it and gained 30 fold return look pretty smart of lucky to me.
    I am not saying that it's a good investment right now, but I am saying that it shouldn't be dismissed as a dumb decision.
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