[Forbes] My Answer To A VC's Bitcoin Question

[Indy Vidual]

Did anyone participating actually read the interesting article?

[Elwar]

Did anyone participating actually read the interesting article?

I did. You came at it from an interesting angle pointing out the Bitcoin startups as opposed to investing in Bitcoins.

This may be a better way to make money, sort of like how people will invest in mining stocks instead of just in gold.

There have been a lot of high return Bitcoin investments and they tend to pay out big returns compared to the regular market. But that is likely because of the greater risk in something that is so new. The market is wide open for many VC investments and it would be wise to consider some investments into competent projects that have the potential to have a huge impact.

I think the companies that are working toward point of sale technology have the potential for the highest returns. There are several competing toward that end.

Then again, there are a few companies that are the sole companies offering a service such as bitinstant. They dominate the market when it comes to converting cash to BTC. And they continue to grow their services.

[Indy Vidual]

^^^
Thanks, I'm not the author ("Contributor"), but I did like the article.

[Danan]

They have intrinsic value in terms of CPU cycles. BitCoins are "mined" using CPU cycles. Lately people have been using graphic cards to mine bitcoins.

Those are costs, not value. The whole market value of BitCoins comes from the fact that its purchasers believe they will be able to buy the same amount of goods and services with them as they could with the money required to buy them in the first place.

What you described are the reasons I'm not a goldbug. Its circulation value is far and above what its fabrication value is...which from my perspective means it is quite overpriced...

Then your perspective would be wrong. "Value" is not equal to a good's production cost. There is no such thing as "fabrication value" independend from how consumers value a good.

Many neo-classical economists would argue that champagne is so expensive, because land in the Champagne is so expensive. But of course they have it backwards. If consumers wouldn't value sparkling wine from that region as much as they do, the land would worth as much as any other generic piece of land anywhere else. Value is imputed to consumer goods by costumers and from there iterative to all former stages of production by the profit-expectations of their respective sellers.

and there is no guarantee that the price could suddenly and without warning nor logical reasoning, come crashing down to industrial fabrication value (not counting jewelry). So if the real price of gold is 100 dollars an ounce and the market price is 1000 dollars...sure gold could say hover and bounce around in that high range...but it could only do so with ponzi justification.

You are right about the fact that gold could at every time drop in value/market price. But there is no "real" price of gold (as in: quantifiable/objective, based on anything else but on supply and demand). It just doesn't exist. It is correct that the gold price has to do with many factors. Some of them have to do with its use in electronical or medical products. Another factor (and I really don't understand why you won't count that) is its utilization as jewelry. And also the fact that people know that gold is valued for all the former reasons and more and that it's a nonperishable material adds to its aggregate value, because they see it as a store of value and even a possible means of exchange. Every single one of these factors adds to golds value. There is neither a ceiling nor a floor for the gold price. It could drop to zero tomorrow. As could every other existing product, if people stop to value its usages. The only question is: Is that very likely? Given that gold is mainly valued because of its physicle properties (and of derived usability and its valuation), I'd say it's better suited for money purposes than anything else I could come up with. But I prefer the position: Anything the market choses. I, as part of the market, would go for gold based currencies.

[Elwar]

Bitcoin's value as far as holding bitcoins is just a small subset of what Bitcoin is all about.

It is a useful tool for the exchange of goods. The value of the BTC itself makes little difference in that regard.

PayPal has no intrinsic value either. But it has brought in a lot of money and aided in e-commerce.

[Indy Vidual]

+1

Bitcoin's value as far as holding bitcoins is just a small subset of what Bitcoin is all about.

It is a useful tool for the exchange of goods. The value of the BTC itself makes little difference in that regard.

PayPal has no intrinsic value either. But it has brought in a lot of money and aided in e-commerce.

Also, Bitcoin has proven to be an interesting story:
How fast will it develop?
What will Gov's do?
Look! It went way up, then lost half it's value in ~2 days; Buy Now?
What will happen next?



<back on topic>
Should people create BTC based businesses?
Will you get rich, or hassled by the Gov?

[brandon]

It always bums me out when libertarians subscribe to Marx's labor theory of value. Nothing has intrinsic value.

Edit: Danan nailed it. Nicely said.

[amy31416]

Whether or not you think they have value, we just bought all new appliances and a new bed using bitcoin. No tax and we got them about half the price this way.

What's not to like about a currency that the Federal Reserve doesn't control?

[Indy Vidual]

Great deal.

Whether or not you think they have value, we just bought all new appliances and a new bed using bitcoin. No tax and we got them about half the price this way.

What's not to like about a currency that the Federal Reserve doesn't control?

+1776

[Seraphim]

+ rep

Some Libertarian types have yet to clue in that whether they like Bitcoin or not, is irrelevant (to the extent that 1 person can influence a market). The FACT that people DO place value in Bitcoin is EXACTLY what gives it tangibility as currency.

Currency can be anything, including digital manifestations.

As far as I'm concerned, anything should be allowed as currency. The only strict enforcements on money should be ON THE GOVERNMENT.

Something about NO BILLS OF CREDIT...As far as I'm concerned, if the government cash is honest in nature (gold...)...what everyday folk use to transact is 1) none of my business and 2) my ideals are not THE answer - merely a part.

Power to Bitcoin - more appropriately, power to those who seek to free themselves peacefully. Bitcoin is part of that solution - so long as enough people hold such a view.

Whether or not you think they have value, we just bought all new appliances and a new bed using bitcoin. No tax and we got them about half the price this way.

What's not to like about a currency that the Federal Reserve doesn't control?