Re:For Sale: 29,656.51306529 Bitcoins
by bumbledraven on Thursday June 12, 2014 @07:35PM
(#7886648)
For any remotely plausible definition of "worthless," bitcoins are just as worthless as any representative money, which inclues fiat money (like a USD) and commodity-backed money (like a gold certificate).
The US government is a powerful entity that levies taxes and accepts tax payments only in dollars. Gold has various uses in industry and fashion and therefore a certificate entitling one to ownership of gold would have some value independent of gold's use as a currency. None of these are true for bitcoin.
> The US government is a powerful entity that levies taxes and accepts tax payments only in dollars.
Right. That's just a more detailed explanation for why most people are willing to accept USD in exchange for their goods. There are similarly detailed explanations for why people are willing to accept bitcoins. The reasons are different, but they still (obviously) exist. If no reasons existed, then people would not be willing to accept bitcoins in trade.
Re:For Sale: 29,656.51306529 Bitcoins
by pessimizer on Thursday June 12, 2014 @08:15PM
(#7886800)
But sometimes those reasons are that speculators think that a future speculator will be willing to pay more for them. That only ends one way.
You just rephrased what I said, except that you replaced "person" with the scarier sounding "speculator."
They actually have to at least in some countries, you can't just only accept a made up currency and not legal tender.
Re:For Sale: 29,656.51306529 Bitcoins
by 13throwaway on Thursday June 12, 2014 @07:46PM
(#7886691)
People's need for a decentralized, pseudononymous currency gives Bitcoin value.
This is the fundamental answer to "why is any representative money valuable?" If people don't have confidence that they can offer the money in the future, they won't accept the money today.
> To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that.
As far as I know, that can't happen, at least not in a proof of work system. The work in a proof of work system can't be severable from the specific information it is designed to secure (in Bitcoin, that would be transactions on the block chain). This isn't exactly a scholarly source, but it's from the "Chief Cryptographer for the Ripple protocol": http://bitcoin.stackexchange.com/questions/11649/intrinsical...
I'm not very familiar with other cryptocurrency systems, like proof of stake, but I know there are some attempts at cryptocurrencies that use computation with unrelated useful side effects.