Author Topic: Do you think Bitcoin is a safe store of value?  (Read 84253 times)

value-is-what-you-get

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Re: Do you think Bitcoin is a safe store of value?
« Reply #10 on: March 30, 2013, 09:59:46 AM »
I wouldn't touch these at $90.  I saw the value of bitcoin drop 80% in a few days last year. 

How does anyone feel about the very limited supply of bitcoins?

See chart below:

http://en.wikipedia.org/wiki/File:Total_bitcoins_over_time.png

Seems that chart is a perfect reflection of the US money supply graph in the line y=x .  It follows that bitcoin value in US dollars must increase.  Logically that is.  As far as faith in currency, that s another matter.


prunes

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Re: Do you think Bitcoin is a safe store of value?
« Reply #11 on: March 30, 2013, 11:29:57 AM »
Off topic but the blog self evident has been doing a great series of pieces on how Bitcoin works https://self-evident.org/?p=982

Mark Jr.

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Re: Do you think Bitcoin is a safe store of value?
« Reply #12 on: March 30, 2013, 07:13:42 PM »
Are you worried about being able to move bitcoins to hard cash?  Was looking at cash payment conversions and it seems like its difficult to actually get $1 bills in your pocket.  paypal will give you a hassle by freezing your account from my understanding and also there is a problem with chargebacks. 

As I mentioned earlier, a digital currency is viable so long as there exist fairly liquid out-exchange providers. There are a few bitcoin exchanges in existence already and a few are even dabbling in debit cards. I heard something about a bank in the US creating a bitcoin credit card and apparently a bitcoin ATM launched - in Cyprus of all places (this isn't as nuts as it sounds, I remember e-gold doing very well in Argentina during the currency collapse there)

Paypal has never been a viable exchange mechanism (paypal to e-gold, etc was pure suicide) as that's not the business they're in and their TOS specifically exclude using paypal to convert currencies, etc.
 
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What are your thoughts if I said it looks like a Ponzi scheme?  Looking at comments in articles I seems like its real easy to get the bitcoins but once someone starts asking how to cash out people get real defensive. 

A ponzi pays out early investors with proceeds from the later investors. This is something different, there are no "early investors" who are getting paid out by later ones. There are early adapters who started mining when the complexity level was a lot lower, and thus amassed bitcoins with a lot less CPU (and thus at a lower cost), but their ROI on that isn't based on later investors giving them money, it's based on the value of bitcoin as a currency itself gaining steam.

Parties tend to be very wary of all sizable transactions as they are typically unable to be repudiated.

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I think there are 13 million bitcoins outstanding right now.  What is keeping whoever is responsible, from issuing more bitcoins to himself cashing out and crashing the market?

You need to understand the math behind bitcoin, you can't simply "issue yourself bitcoins", you need to come up with a hash value that corresponds to a "valid hash" and to do that takes immense computational power (this is called "bitcoin mining") - further, there is an upper limit of 21 million coins, at which point the keyspace is exhausted and no further bitcoins will be produced, this limit will be reached in the year 2140 or so.

Your trepidation about operators "simply issuing themselves more bitcoins" can't happen, contrast with our current monetary system, in which that's exactly what happens. Therein lies one of the attractions behind bitcoin, it cannot be manipulated the way our fiat currencies routinely are.

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At the end of the day people are assigning value to a packet of data.  I am having a hard time seeing how this is a viable alternative.  Wasn't there somekind of e-currency during the internet bubble day that crashed and burned?

There are two things here: people assigning value to a packet of data, which as I mentioned, is pretty well what everybody does every day, all the time with the current monetary system. There are no fiat currencies in the world which are backed by anything tangible, thus everybody is assigning value to packets of data all the time.

Number two: yes, there certainly were a bunch of e-currencies that collapsed for various reasons. E-gold is still limping along but a shadow of its former self, Liberty dollar (silver backed DGC) got shutdown by the feds I think, there used to be one called e-bullion which seems to be toast. There were also a number of "real world" fiat currencies which have gone up in smoke over the last couple decades as well, probably with a few more to go :)

wachtwoord

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Re: Do you think Bitcoin is a safe store of value?
« Reply #13 on: March 31, 2013, 07:43:13 AM »
Since I discovered Bitcoin 2 years ago I have really liked the concept of a cryptocurrency. I believe in time one or more cryptocurrencies will replace fiat currencies. And no, cryptocurrencies aren't even remotely comparable to e-gold, if you believe that you haven't investigated it sufficiently.

I would recommend anyone to read http://evoorhees.blogspot.nl/2012/04/bitcoin-libertarian-introduction.html

And I'm not buying any at $90 as well, mainly because I find it impossible to value them (therefore they likely don't belong on a value investors forum as it's speculative at any price).
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Mark Jr.

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Re: Do you think Bitcoin is a safe store of value?
« Reply #14 on: March 31, 2013, 07:49:34 AM »
Since I discovered Bitcoin 2 years ago I have really liked the concept of a cryptocurrency. I believe in time one or more cryptocurrencies will replace fiat currencies. And no, cryptocurrencies aren't even remotely comparable to e-gold, if you believe that you haven't investigated it sufficiently.

I agree that they are very different, the failure of e-gold from an FBI shutdown of a few key accounts compared to the impossibility same for bitcoin makes that clear.

But there are similarities in adaptation and implementation insofar as digital currencies go, especially as compared to fiat currencies.

compoundinglife

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Re: Do you think Bitcoin is a safe store of value?
« Reply #15 on: March 31, 2013, 08:56:01 AM »
I would not consider it a safe store of value primarily because I think its hard to determine what the future holds for bitcoin. It is gaining traction but I can't really say what the state of it will be in 5-10 years.

I have considered buying one of the new ASIC based mining rigs since it seems likely in the near term you could arb the costs of the miner fairly quickly.

CONeal

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Re: Do you think Bitcoin is a safe store of value?
« Reply #16 on: April 03, 2013, 08:38:23 AM »
Less then a week and this is up to $140 from $88. 

rkbabang

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Re: Do you think Bitcoin is a safe store of value?
« Reply #17 on: April 03, 2013, 08:38:43 AM »
The poll asks if bitcoin is a safe store of value. To which I answered "No". Your first post asked "Would you ever consider holding/trading Bitcoins?"   I have considered it, but haven't done so yet.  I've been watching bitcoin since the exchange value was well below $1, but have done nothing but watch.  If bitcoin catches on it will be worth many many multiples of where is now, because there will never be more than 21Million bitcoins in existence.  People will be trading with small fractions of a bitcoin for most items.  What has stopped me is that I am not convinced of the safety of the whole thing.  There are flaws in the way bitcoin works that I'm not comfortable with.  When Uncle Sam wants it to stop they will stop it.  One such flaw off the top of my head is that everyone needs to keep a copy of the blockchain on their computers for bitcoin to remain decentralized.  This blockchain contains every bitcoin transaction.  I won't even get into the fact that this file is already huge and will grow significantly over time.  But hackers have already done things like structure transactions in such a way as to encode pictures in the blockchain.  What if someone did this to encode childporn into the blockchain?   This would effectively shutdown bitcoin as a legitimate currency, as no one would want to be caught with this file on their computers.  I've read about other flaws, but this is the easiest one to pull off for anyone who wants to shutdown bitcoin and drive it permanently underground.  I hope something like bitcoin will eventually become a replacement for government money, but I don't think bitcoin is quite robust enough to manage it.

stahleyp

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Re: Do you think Bitcoin is a safe store of value?
« Reply #18 on: April 03, 2013, 08:52:41 AM »
http://www.valuewalk.com/2013/04/bitcoins-soar-over-140-this-is-one-bubble-thats-inflating-fast/


Beats the returns of the s&p 500 in total for 70 years...in only 4 years.  Crazy.
Paul

wachtwoord

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Re: Do you think Bitcoin is a safe store of value?
« Reply #19 on: April 03, 2013, 03:48:15 PM »
  There are flaws in the way bitcoin works that I'm not comfortable with.  When Uncle Sam wants it to stop they will stop it.  One such flaw off the top of my head is that everyone needs to keep a copy of the blockchain on their computers for bitcoin to remain decentralized.  This blockchain contains every bitcoin transaction.  I won't even get into the fact that this file is already huge and will grow significantly over time.  But hackers have already done things like structure transactions in such a way as to encode pictures in the blockchain.  What if someone did this to encode childporn into the blockchain?   This would effectively shutdown bitcoin as a legitimate currency, as no one would want to be caught with this file on their computers. 

Only full nodes need to store the full blockchain (I run a full node) and the blockchain is only ~8GB. It won't really be a problem. Also, the illegal content in the blockchain might be a problem although I do not believe a judge is going to convict anyone of child pornography possession if it is included in the blockchain and millions of people have it on their computers for a completely different purpose. Please read https://en.bitcoin.it/wiki/Weaknesses for a summary of all weaknesses, discussion of things that are unlikely to be weaknesses and pure myths.
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