The first Bitcoin post on HN

Re:The first Bitcoin post on HN by jk4930 on Tuesday November 19, 2013 @01:34PM (#6763293)

The costs of producing BTC or USD are not their backings. You can't exchange your BTC back into electricity.

The USD (and usually most other currencies) aims to be indirectly backed by the corresponding amount of goods they represent within the currency zone and their legal status.

BTC isn't even indirectly backed. It just exists. And that's okay for its purpose.

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Re:The first Bitcoin post on HN by digitailor on Tuesday November 19, 2013 @01:46PM (#6763393)

Re your comment about currency production costs: A spike in electricity costs would directly effect existing bitcoins' value. A spike in cloth paper prices would not cause a meaningful change in the value of already-printed dollars. And the price of the dollar would spike with electricity costs indirectly. They're not the same, it's an invalid comparison that neatly evades their inherent technological and conceptual differences.

"Store of exchange-value" != currency, and BTC is currently behaving best in that role. Admirably, really- see how it's spreading like hotcakes in China. That's as a store of exchange value, not a currency.

You can't turn your gold "back into" ore or your diamonds "back into" carbon. The cost of an airline ticket is mostly determined by the current price of fuel.

When BTC starts to be used as a currency in earnest we can revisit the issue. Although at that point, you will be able to exchange your BTC back into electricity or other commodities through speculation or arbitrage. Which you can actually do directly right now if you know the right people, anyway. Profitably.

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Re:The first Bitcoin post on HN by Nursie on Tuesday November 19, 2013 @02:50PM (#6763905)

>> A spike in electricity costs would directly effect existing bitcoins' value

How?

Please explain?

It makes mining more expensive, and some people may be switched off mining as a result, but the same number of BTC will be made.

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Re:The first Bitcoin post on HN by splintercell on Tuesday November 19, 2013 @04:13PM (#6764510)

That means the rate of inflation of bitcoins will slow down, thereby causing a spike in the value of existing bitcoins.

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Re:The first Bitcoin post on HN by Nursie on Tuesday November 19, 2013 @05:07PM (#6764849)

>> That means the rate of inflation of bitcoins will slow down, thereby causing a spike in the value of existing bitcoins

Nope, the rate of bitcoin generation is fixed, it's nothing to do with how many people mine or what the hash rate is.

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Re:The first Bitcoin post on HN by Groxx on Wednesday November 20, 2013 @03:22AM (#6766913)

For up to about two weeks, until it adjusts to the new, lower norm, and de/inflation continues at the same rate as before. But technically true over that period, yes.

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Re:The first Bitcoin post on HN by moocowduckquack on Tuesday November 19, 2013 @01:50PM (#6763419)

You can't exchange your BTC back into electricity.

Huh? Why not? Surely you could just buy some solar panels with bitcoins, or convert them to another currency and then buy electricity from the grid.

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Re:The first Bitcoin post on HN by philwelch on Tuesday November 19, 2013 @02:22PM (#6763680)

By that reasoning, I can convert my USD into donuts, and hence the USD is backed by donuts, hence the term "dollars to donuts".

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Re:The first Bitcoin post on HN by moocowduckquack on Tuesday November 19, 2013 @02:44PM (#6763854)

Well, it is partly backed by donuts, along with any other commodities or instruments of value that it can be easily exchanged with.

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Re:The first Bitcoin post on HN by philwelch on Tuesday November 19, 2013 @03:30PM (#6764208)

Which really puts the lie to the idea of currency being "backed by" a scarce resource at all, which is the main premise of goldbugs. I'm totally okay saying that a currency is backed by the entire economy of goods being exchanged for it myself.

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Re:The first Bitcoin post on HN by jk4930 on Tuesday November 19, 2013 @03:51PM (#6764364)

The meaning of a backed currency is that it's backed by the issuer with a specific commodity (or service). You can go to the issuer and exchange the money ("symbol of value") into the real thing ("value").

With BTC you can't go to some miner (=issuer) and exchange it back into the electricity that was used to produce it.

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Re:The first Bitcoin post on HN by notahacker on Tuesday November 19, 2013 @03:28PM (#6764201)

But I can't expect that I will be able to exchange the BTC for a fixed amount of electricity, which is the same as the fixed amount of electricity I originally exchanged for BTC. Hence BTC is not convertible, and not "backed"

I can buy gold with the US dollar, but it doesn't mean the US dollar is backed by gold.

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Re:The first Bitcoin post on HN by DanBC on Tuesday November 19, 2013 @01:53PM (#6763442)

That's a tortuously inefficient way to get electricity.

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Re:The first Bitcoin post on HN by moocowduckquack on Tuesday November 19, 2013 @02:07PM (#6763541)

Surely it is just what bitcoin miners have been doing anyway, the difference remaining being their profit.

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