Would you buy bitcoin if it was linked to major currencies?

I would love to buy some but the whole thing seems stupidly unpredictable.. There are two types of people who buy bitcoins, investors who never want to spend any of it and those who want to use it.

Surely if the currency was valued as an average of the dollar, pound, euro and singapore dollar, it would satisfy the needs of the latter group and give the currency stability.

This is an interesting video that made me wish I could buy them but I'd never hold any amount of wealth in them.. I just want to use them.

http://www.guardian.co.uk/technology/video/2013/apr/26/bitcoin-currency-moves-offline-berlin-video

srsly78

The market decides the rate, how would you enforce such a peg?

Historically pegged currencies always come to grief, see the punt and the peso etc.

Nika Bolokov

The problem with valuing it against the average of a basket of currencies is that the value arrived at may not reflect the inherent demand for it, thus a black market would develop. Also with no centre of control its impossible to fix a price.

srsly78

Op have a read of this: http://en.wikipedia.org/wiki/Fixed_exchange_rate

I understand the economics of it and the complete lack of ability to do it with bitcoin.. The question is, would you be more inclined to buy it if it was pegged? I can't justify it without it being valued against something.

srsly78

It would be even worse if it was pegged. The black market would dictate the real price anyway, as Nika has already said.

corkonion

Deleted User wrote: »

I understand the economics of it and the complete lack of ability to do it with bitcoin.. The question is, would you be more inclined to buy it if it was pegged? I can't justify it without it being valued against something.

its not pegged. if you cant justify buying it, then dont

Seachmall

I had some bitcoin a while back which I cashed in for about €450. A couple of months later it would've been worth in or around over €1500. Absolutely gutted I was. Don't know what the value would be now, probably even higher (although there was a dip a week or two back).


I know absolutely nothing about economics but I do know you should remortgage your house and purchase bitcoin.

It's the safe investment...

srsly78

srsly78 wrote: »

It would be even worse if it was pegged. The black market would dictate the real price anyway, as Nika has already said.

I think the "real price" is meaningless. Everything you buy online with bitcoins is pegged against the dollar.. The sellers don't say "I want 5 bitcoins". They say "I want $5 worth of bitcoins".

In between that, it's just chance on which way the market will swing which is why I'd never buy a TV with it..

I don't see the point in making it a speculative currency if people are always going to bring it back to their own currency. For me, it's either just another stock or it's something I can use in the way it was meant to be.. Anonymous and safe.

Jawgap

I know it's promoted as a currency, but it seems to behave like an investment.

People seem to be holding them in the expectation they'll rise in value, but you'd never do that with a Euro, but you would with a gold sovereign......


........or maybe I just don't get it

If was a currency I'd use it, but I'd never buy into it as an investment.

srsly78

Deleted User wrote: »

I think the "real price" is meaningless. Everything you buy online with bitcoins is pegged against the dollar.. The sellers don't say "I want 5 bitcoins". They say "I want $5 worth of bitcoins".

In between that, it's just chance on which way the market will swing which is why I'd never buy a TV with it..

I don't see the point in making it a speculative currency if people are always going to bring it back to their own currency. For me, it's either just another stock or it's something I can use in the way it was meant to be.. Anonymous and safe.

The prices (exchange rate) on silk road are fixed at the time you buy, but they float the rest of the time.

Jawgap

Jawgap wrote: »

I know it's promoted as a currency, but it seems to behave like an investment.

People seem to be holding them in the expectation they'll rise in value, but you'd never do that with a Euro, but you would with a gold sovereign......


........or maybe I just don't get it

If was a currency I'd use it, but I'd never buy into it as an investment.

Well that's what I want from it.. My brother owes me a few hundred dollars. I'd love to be able to accept a bitcoin alternative that would allow me to take it from him, have faith in its value and then use it months later and it be worth the same.

Put it like this, when the price of bitcoin shot up over $200, anyone processing automatic payments pegged to the dollar that day would have lost half of that money the next day. It discourages actual use of the currency and just leaves it as a stock.

Without it being pegged, only fools would use it for real world transactions. I'd never accept payment of my brother in bitcoins. I can't look at any factors to determine what it will be worth when I want to use it.

If products aren't sold as actual bitcoins, then its worthless. Only when there is enough security that I know a TV is worth 50 bitcoins is it worth something. If everything is still $/bit coin exchange rate, then what's the point in holding any of it except for investment.

srsly78 wrote: »

The prices (exchange rate) on silk road are fixed at the time you buy, but they float the rest of the time.

Doesn't seem smart to me. By the time it arrives, I could have been a euro millionaire instead of buying my ounce of weed.

Seachmall

Deleted User wrote: »

I think the "real price" is meaningless. Everything you buy online with bitcoins is pegged against the dollar.. The sellers don't say "I want 5 bitcoins". They say "I want $5 worth of bitcoins".

In between that, it's just chance on which way the market will swing which is why I'd never buy a TV with it..

I don't see the point in making it a speculative currency if people are always going to bring it back to their own currency. For me, it's either just another stock or it's something I can use in the way it was meant to be.. Anonymous and safe.

Most places that require payment through bitcoin have a fixed bitcoin price, the ones that accepted more traditional currencies will naturally enough vary the bitcoin price depending on the dollar (or euro) value.

srsly78

Deleted User wrote: »

Doesn't seem smart to me. By the time it arrives, I could have been a euro millionaire instead of buying my ounce of weed.

What is the problem exactly so long as your weed arrives for the agreed price? If you didn't want the weed then you shouldn't have ordered it!

Obligatory: Say no to drugs mkay?

srsly78

srsly78 wrote: »

What is the problem exactly so long as your weed arrives for the agreed price? If you didn't want the weed then you shouldn't have ordered it!

Obligatory: Say no to drugs mkay?

You don't see a problem in "real money" being so volatile? I think it makes the currency unusable in day to day life.. A bitcoin exchange gets hacked and the value drops 90% in one day. How does that promote the idea of a usable decentralised currency.. It's just retarded. Why would anyone keep a few thousand euro in the currency for any reason other than investment?


Without it being a usable currency, its bubble will burst and that's it gone. People only hold it as an investment.

srsly78

You yourself just gave an example of how it's usable despite the volatility - the exchange rate gets fixed at time of purchase on silk road.

Just smoke your weed man.

srsly78

srsly78 wrote: »

You yourself just gave an example of how it's usable despite the volatility - the exchange rate gets fixed at time of purchase on silk road.

Just smoke your weed man.

So the currency makes me buy it five minutes before the transaction and sell anything that's left over it five minutes after the transaction because I'm not interested in speculation.

I want something that I can hold just like cash.. I buy it now and without worry, can use it again in the future. Guess it's a long way off. Which brings it back to original question, would more people buy, hold and use it if it was pegged and worth something?

seamus

Deleted User wrote: »

You don't see a problem in "real money" being so volatile? I think it makes the currency unusable in day to day life.. A bitcoin exchange gets hacked and the value drops 90% in one day. How does that promote the idea of a usable decentralised currency.. It's just retarded. Why would anyone keep a few thousand euro in the currency for any reason other than investment?

That's not so much a fault with the currency itself, just a fault with the implementation.

It's a teething problem really, a symptom of this being something so ridiculously new that you have a number of people operating exchanges who probably shouldn't be.

The issue stems from the fact that it's not country-specific and so will always need to be converted to local currencies. This is what creates the instability. If it gets larger, and wider acceptance along the lines of NFC payments at terminals and such, its value may become more stable as people stop converting it to local currencies and actually using it as a currency.

It's a possibility, but I don't know if it will occur or if bitcoin will collapse in value. I'm sure when paper money first appeared to replace coinage, people were very skeptical and resistant - at least coins had an intrinsic value if the currency collapsed. This is the next step; moving to a completely non-physical currency with zero intrinsic value.

I can't see the majority being willing to use it day-to-day for a long time.

Seachmall

Deleted User wrote: »

You don't see a problem in "real money" being so volatile? I think it makes the currency unusable in day to day life.. A bitcoin exchange gets hacked and the value drops 90% in one day. How does that promote the idea of a usable decentralised currency.. It's just retarded. Why would anyone keep a few thousand euro in the currency for any reason other than investment?


Without it being a usable currency, its bubble will burst and that's it gone. People only hold it as an investment.

It makes it unusable if you're transferring between $ and BTC, but if you're trading exclusively in BTC then the $ value is irrelevant.

If I bought 100BTC at $10 per BTC and cease trading in $ then it doesn't matter to me if the $ value skyrockets or drops. Likewise it doesn't matter to me if the Naira (Nigerian currency) skyrockets compared to the € because I don't trade in Naira.

If anything it's volatileness when compared to traditional currencies just entices people to actually contribute to the BTC community if they want to utilise it, i.e. earning BTC to buy goods or services by providing services or goods.

af_thefragile

Deleted User wrote: »

You don't see a problem in "real money" being so volatile? I think it makes the currency unusable in day to day life.. A bitcoin exchange gets hacked and the value drops 90% in one day. How does that promote the idea of a usable decentralised currency.. It's just retarded. Why would anyone keep a few thousand euro in the currency for any reason other than investment?


Without it being a usable currency, its bubble will burst and that's it gone. People only hold it as an investment.

Its a use able currency as long as sellers are willing to deal with it.
No one can stop sellers from dealing in bit coins. It has many advantages that its not taxed, your bank won't charge a fee for international transactions, its very informal so difficult to track although bit coin does keep logs of every transaction. The way it is designed, its value should theoretically remain stable.

Although right now people are hoarding it hoping its value goes up in the future and they'll make a nice profit off it. This is driving a bubble as more and more people look to hoard bit coins and its demand is increasing driving up its value. But the clever thing about bitcoins is its supply is limited so no one can go hoarding bit coins. Bit coins are released at a set rate and although there is a race to mine bit coins going on, they can't mine it any faster than the rate at which bit coins are designed to be released. This keeps the supply limited which in theory should keep its value stable.

Truth is no one can predict what the future holds for bit coins. Economics can make predictions but at the end of the day they're just predictions are economic predictions are often wrong.

One can assume more vendors and private sellers will prefer to deal with bit coins in the future as its hassle free and as long as there are sellers willing to accept bit coins as a form of currency, bit coins will remain as a valuable form of currency.

af_thefragile

seamus wrote: »

That's not so much a fault with the currency itself, just a fault with the implementation.

It's a teething problem really, a symptom of this being something so ridiculously new that you have a number of people operating exchanges who probably shouldn't be.

The issue stems from the fact that it's not country-specific and so will always need to be converted to local currencies. This is what creates the instability. If it gets larger, and wider acceptance along the lines of NFC payments at terminals and such, its value may become more stable as people stop converting it to local currencies and actually using it as a currency.

It's a possibility, but I don't know if it will occur or if bitcoin will collapse in value. I'm sure when paper money first appeared to replace coinage, people were very skeptical and resistant - at least coins had an intrinsic value if the currency collapsed. This is the next step; moving to a completely non-physical currency with zero intrinsic value.

I can't see the majority being willing to use it day-to-day for a long time.

Again issues arise if you're looking to convert bit coins to another form of currency or another form of currency into bit coins. If vendors deal simply in bit coins without needing to convert it into other currencies, then it works just like any other form of currency and is just as volatile as any other form of currency. If US financial market collapses tomorrow, then suddenly all the dollars I've saved up will be worth very little.
That's the problem with fiat currency. It has zero intrinsic value and its value is only representative of the state of the financial market bit is backed by. Market crashes, currency value goes with it.

Bit coin is different because its vale isn't backed by any particular country's financial market. It is a global form of currency and because its supply is so strictly regulated, its designed to not suffer from any inflation or deflation in theory. But bit coin is also a fiat currency with zero intrinsic value. If suddenly people lose faith in it say after a major security hack or program crash, then its value will quickly plummet.

Advantage of bit coin is its not tied to one financial market thus it should remain unaffected by regional market collapses.
Disadvantage is that it is a virtual fiat currency with zero intrinsic value and it only has value as long as sellers are willing to deal with it.

Boom__Boom

Seachmall wrote: »

I know absolutely nothing about economics but I do know you should remortgage your house and purchase bitcoin.

It's the safe investment...

How are things in the Department of Finance these days?

Seachmall

Boom__Boom wrote: »

How are things in the Department of Finance these days?

Fucking epic. Did you know "Euro" (like the currency) was derived from the word "Europe"?

We learned that yesterday, mind blowing shit!

Allyall

Apparently (rumour has it) the guy that created bitcoin is Irish. Probably was thinking of investing all of his eircom share profits in it.
Bitcoin shot up in the last year or two, but still risky.

Yeah, if i had the cash i'd risk investing in them, regardless of linked to major currencies.

Blisterman

I don't see the point of your proposal OP. If you wanted an average of the dollar, pound, euro and singapore dollar, you could just split your savings between them, rather than use some new currency which barely anybody accepts.

sock puppet

seamus wrote: »

That's not so much a fault with the currency itself, just a fault with the implementation.

It's a teething problem really, a symptom of this being something so ridiculously new that you have a number of people operating exchanges who probably shouldn't be.

The issue stems from the fact that it's not country-specific and so will always need to be converted to local currencies. This is what creates the instability. If it gets larger, and wider acceptance along the lines of NFC payments at terminals and such, its value may become more stable as people stop converting it to local currencies and actually using it as a currency.

It's a possibility, but I don't know if it will occur or if bitcoin will collapse in value. I'm sure when paper money first appeared to replace coinage, people were very skeptical and resistant - at least coins had an intrinsic value if the currency collapsed. This is the next step; moving to a completely non-physical currency with zero intrinsic value.

I can't see the majority being willing to use it day-to-day for a long time.

A derivatives market for bitcoins would reduce the volatility too.

G Power

i'd buy into it if it stayed the fcuk away from FIAT currencies!!

Seaneh

I did some bitcoin mining a few years ago, just running a background program and leaving my laptop running all the time, made a 12% share in a block over about 2 weeks, which was worth a few hundred quid ( a block is 25 coins, at the time it was worth a few grand).

I got bored of the whurr of my laptop fan running all the time and having to make sure the stupid thing hadn't crashed and restarting it every few hours and gave up.

Nowadays you'd need a dedicated server to make any % share in a block, but 4-5 years ago it was easier because there were less people doing it...

KyussBishop

Here is a great article on bitcoin, explaining in detail its faults:
http://yanisvaroufakis.eu/2013/04/22/bitcoin-and-the-dangerous-fantasy-of-apolitical-money/

You would be mad to use bitcoins for purposes other than as an anonymous transactional currency (and even then, it is hard to be truly anonymous with them).

hatrickpatrick

I'm mining and earning bitcoins through offers etc not because I want the money necessarily, I'm fully aware that the value could plummet in the morning, but because I fully support the concept of an interest-free currency for which it's impossible to create credit and which is not controllable or regulatable by any government or central bank. Absolutely fed up with our current crackpot monetary system which is holding back progress, may Bitcoin be the first step in human beings coming together and agreeing to subvert the established system which is solely designed to concentrate all the power in the hands of a tiny number of individuals.

Bitcoin is mathematical, decentralized, and so far seems to be impervious to hijacking by outside parties. Some day, when crypto currencies gain enough traction, gone may be the days when central bankers and vested interests control the economy.

Death and Taxes

Deleted User wrote: »

I would love to buy some but the whole thing seems stupidly unpredictable.. There are two types of people who buy bitcoins, investors who never want to spend any of it and those who want to use it.

Surely if the currency was valued as an average of the dollar, pound, euro and singapore dollar, it would satisfy the needs of the latter group and give the currency stability.

This is an interesting video that made me wish I could buy them but I'd never hold any amount of wealth in them.. I just want to use them.

http://www.guardian.co.uk/technology/video/2013/apr/26/bitcoin-currency-moves-offline-berlin-video

If it was linked to the Dollar/Euro/pound then why bother with it? Why not just use the established currencies that it was linked this to?

srsly78

WileyCoyote wrote: »

If it was linked to the Dollar/Euro/pound then why bother with it? Why not just use the established currencies that it was linked this to?

Because Silk Road does not accept Euros duh.

hooradiation

Oh dear, bitcoins

Bitcoin [noun]
a mixture of magic and flimflam, designed to appeal to stupid people

EclipsiumRasa

Are we talking about a major currency that has a centralised bank and can devalue the currency, or something like the Euro?

In any case I'd buy it if I was intending to use it for an entirely legal morally wholesome internet transaction and either it was the best option or there were no other alternatives. So, basically I'd treat it like Paypal*.

*Except not feel so dirty or so much self loathing afterwards.

Spunge

i meant to buy in 1k in december but it was such a pain in the ass and the bank was always closed when i finished work so i ended up not buying in til aprill 11th.

the day it dropped frmo 266 to like 50.

would have had 20k if i invested when i first intended, instead i was down 1200. but gained some of it back trading but had to sell of all my coins to pay a debt.

now i have no coins and im at a loss

wouldnt mind just sitting on the 10 coins i had like for a few months. seeing where it goes, but im scared to buy in again.

Therightway

Stop thinking short term spunge,
Think BTC worth, not Btc value in €

hatrickpatrick

hooradiation wrote: »

Oh dear, bitcoins

Bitcoin [noun]
a mixture of magic and flimflam, designed to appeal to stupid people

That pretty much sums up all major currencies worldwide. The only difference is they are "backed" by government - fat lot of good that's done them. What does it even mean? Backed by what? They're no longer tied to anything meaningful so how are they any less "real" than bitcoin?

Blisterman

Blisterman wrote: »

I don't see the point of your proposal OP. If you wanted an average of the dollar, pound, euro and singapore dollar, you could just split your savings between them, rather than use some new currency which barely anybody accepts.

I want what the currency can offer.. I live in VN so my banking options are severely limited and the banks could collapse at any time. If I keep reading articles where the advocates of the currency always talk about its apparent positives, then I at least expect to be able to hold some significant value in it. I couldn't buy 10k of it tomorrow and expect to relax and feel like it's safe

It's destined to fail unless it can be stabilized. If it doesn't have any underlying economic variables, it needs to borrow them.

opinion guy

I don't know what a tracker mortgage is ??

Del2005

hatrickpatrick wrote: »

That pretty much sums up all major currencies worldwide. The only difference is they are "backed" by government - fat lot of good that's done them. What does it even mean? Backed by what? They're no longer tied to anything meaningful so how are they any less "real" than bitcoin?

Currencies aren't backed by governments. They are backed by independent central banks, who loan the money they make up to governments.

Spunge wrote: »

wouldnt mind just sitting on the 10 coins i had like for a few months. seeing where it goes, but im scared to buy in again.

Do you sit on your € hopping it'll increase in value compared to £ or $? It's the same principle.

Del2005

Del2005 wrote: »

Currencies aren't backed by governments. They are backed by independent central banks, who loan the money they make up to governments.

Pretty sure they're backed my governments.

Del2005

Deleted User wrote: »

Pretty sure they're backed my governments.

It's more the other way around, they back governments by loaning them money.

belcampprisoner

stay away from bitcoins its total scam one day the house of cards is going to fall

Del2005

Del2005 wrote: »

It's more the other way around, they back governments by loaning them money.

Maybe our definitions of "back the currency" are different.. What exactly do you mean?

hatrickpatrick

Del2005 wrote: »

Currencies aren't backed by governments. They are backed by independent central banks, who loan the money they make up to governments.

Ok but again what does that even mean? All modern currencies are fiat currencies, there's nothing "real" to back them up.

srsly78

hatrickpatrick wrote: »

Ok but again what does that even mean? All modern currencies are fiat currencies, there's nothing "real" to back them up.

Nuclear weapons and armies etc back them up. Sovereigns have a monopoly on violence.

KyussBishop

What ensures the value/demand for fiat money, is that the money is the only way to pay taxes in its country of origin, which means you can not avoid it where you need to pay taxes.

Money doesn't need to be 'backed' by any physical commodity, that is just a waste of resources - it's a massive waste of productive effort to dig up gold out of the ground, and put it into another hole in the ground (a bank vault), when you can just have someone type a few digits onto a computer at the central bank, and when that productive potential could be put to better use.


Money is supposed to be used, to unlock the full productive potential of economies (which basically translates into providing full employment); when you have anything less than this, money is restricting the economy, instead of unlocking its full potential.

To unlock the full productive potential of an economy, all the time, you basically need a central authority with control over the money supply; if instead, you have a money supply which grows too slowly (like gold/bitcoin), you can not unlock the full productive potential of an economy (money becomes a restriction), and if you have a money supply which grows too quickly (like more abundant metals), you get too much inflation and instability.


There is no commodity or non-political way of setting the money supply (including 'independent' central banks), which allows the permanent unlocking of an economies full productive potential; this is why fiat money will always be the way things are done, going into the future.

hatrickpatrick

KyussBishop wrote: »

Money is supposed to be used, to unlock the full productive potential of economies (which basically translates into providing full employment); when you have anything less than this, money is restricting the economy, instead of unlocking its full potential.

But that's exactly what's happening right now with established currencies. We still have the ability and need to produce as much food and equipment as we did pre-2008, but the entire currency system has fallen apart and central banks are refusing to take the necessary steps to fix them, in part because of political interference (for example - let's be honest about this - the German government says jump and the ECB says how high).

I like Bitcoin because that kind of crap is never going to happen with it, and also because when it's generated, it's not generated as a loan with interest, so there's unlikely to be an inherent boom and bust nature to it when non existent debts are called in and the whole game of musical chairs collapses.

Obviously it's not perfect by a long shot but at the very least I'm hoping it opens a wider debate about how idiotic our current system of currencies is and the idea that it doesn't have to be set in stone, we can come up with something better.

KyussBishop

I agree totally, the current fiat currencies are being mismanaged (and that with the ECB, Germany largely has the greater say), but the problem is, you must work with the fiat currencies (promoting reform of them), because a countries sovereign currency is the only stable and democratic way to unlock the full productive potential of economies.

Bitcoin is useful as a potentially-anonymous transactional currency, but it already effectively has 'interest' deducted, because that's what automatically happens with a deflationary currency: The people hoarding bitcoins, see an increase in value of their bitcoins, which is effectively 'taxed' off the back of economic activity.

There also is a boom and bust, because bitcoin is being used expressly for speculation, where the richest bitcoin hoarders can inflate and pop the market, to make speculative profits; that's not sustainable.


Repeating my original point though: Alternative currencies can't solve our current problems, because what is needed is for a reform of sovereign currencies (putting them to use for public purpose, to unlock permanent full employment); alternatives are interesting, certainly, but all the economic solutions go back to fiat money and monetary reform.

Again, in short, for a stable currency able to unlock permanent full employment, in a democratic way, you need a government controlled fiat currency; these alternatives can not provide that.

anhedonia

It kinda makes me wish I hadnt quit partying, as I look at the silk road setup and almost drool over the quality product coming out of the Netherlands. Or maybe I got out just in time :')

Spunge

Del2005 wrote: »

Currencies aren't backed by governments. They are backed by independent central banks, who loan the money they make up to governments.



Do you sit on your € hopping it'll increase in value compared to £ or $? It's the same principle.

considering it had a 2000% price increase in the last 4 months i wouldnt say its the same. but now back to about 1000%