What's the point, tho? First of all, what does the value of a bitcoin actually come from and how does the 'mining' process benefit it in any way? Surely, you could achieve the same effect by changing a bunch of integers in the code? Secondly, what exactly are advantages supposed to be? I mean, currency is meaningless anyway - it's just a token you get for doing providing a service or creating a good, so you can exchange them for other services or goods. What benefit there is if one meaningless currency replaces the other meaningless currency when even costs for creating that currency aren't really cut down?

The value comes from the demand the community has for it. That's it. Literally. The mining process has no benefit.

ive been talking about two different things yes, but am not mixing them, not in my mind atleast.

Also while some may seem to think, ive actually not proposed to change say USD into BTC. I am also not saying BTC is superior to USD or vice versa. Ive tried to say, that despite they seem utterly different things -at the core-(!!!) they are not SO different. Economist may argue naturally. I am however looking at it very layman's level.

I dont not own any BTC, nor ever have.

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The "cheap loan" what i mean is not really tied to BTC in anyway. That was offshoot of the fact that the fractional reserve banking hasnt exactly worked very well, as lending for nations seems good business (nations tend to stick around longer than any company or individual) and many have been/are willing to take all the loan they are offered.

Its shame that there arent too many nations that have the ability to really plan their economics in long way. As parties change, so do the priorities and taking a loan or two may seem like easy way to keep the nation running. After all, the troubles only start when you have to actually payback...

One could ofcourse argue that banks are just doing business and shouldnt be blamed - rather one should blame politicians. Well that view has its merits...but i would also like to see the banks which stretch too far would actually crumble instead of being saved and thus basically rewarded for acting irresponsible.

-> if engineer designs a bridge badly and people get hurt, he may have to prison.
-> if construction worker builds a bridge shabbily and people get hurt, he may have to go prison.
-> if banker messes ups billions+ and crumbles (inter)national economics for decade or two ...he gets still bonuses?

but this is now spiraling more and more OT. Got to go sleep. g'nite :)

It's worse than that, as time progresses it gets harder and harder to complete a block and get a reward, which mean that all the early adopters get tons for practically nothing and the suc^H^H^H^H^Hnewcomers effectively have to buy any bitcoins that they want to have as the amount of time and electricity just don't make it worthwhile.
Planned economies have never worked out well. As long as the government has all the money you can plan, but in cases where the people are allowed to have money it winds up being rather messy rather quickly. I'm not even sure I can come up with a current example of a country with a planned economy other than perhaps Cuba.

Definitely stop thinking of exchange rate as a single point (just on the surface of this, if you look at different exchanges you'll find different exchange rates). It's easiest (relatively speaking) to think of bitcoin exchange rates similarly to how stock sales take place. When stock is being sold, what's going on behind the scenes is that numerous buy and sell offers are being made, and when those offers happen to match up that's where the price gets set at and where transactions take place. When there's lots of buy and sell offers being made you'll usually find the offers to be pretty close (what's known as the bid-offer spread is quite low), and it's pretty easy to quickly buy or sell the stock- in other words the liquidity is high. However, if there's not much trading going on then it can create a situation where in order to find a buyer in a short time-frame you'd have to drop the price you're offering to sell for much lower than you prefer (when there's still enough trading going on this is how stock prices move up and down, but when there just aren't many buyers then the result is that unless you're willing to take a major loss then it can be tough to sell at all).

Now, one way that this can be overcome is if an intermediary is willing to float the transaction- in other words, if they're willing to buy from you before a seller is found, then hold the asset until they can find a seller. For fairly volatile assets like stocks this doesn't happen very often (and when it does there are high fees that reflect the volatility), but it's fairly common for more stable assets like exchanging traditional currencies along with safe government bonds. I think most bitcoin exchanges are willing to float lower-value transactions, but there's usually a fee that reflects the volatility of bitcoin. Where the lack of liquidity is particularly noticeable is when you try to buy or sell larger amounts. For instance, if you wanted to sell $1 M in bitcoins you'd either need to find someone willing to plop down $1 M, or an exchange that was willing to float that amount, and both of those things would be extremely difficult to find in today's environment. In contrast most $1 M stock transactions are pretty trivial these days; there is an upper limit at which liquidity can still become an issue for stocks, but it tends to be at much higher values. With currency and government bond exchanges you can go into the billions without any liquidity issues.

To try to simplify all of this, it's best to think about it this way- if you want to buy bitcoins you need to find someone willing to sell them, and if you want to sell bitcoins you need to find someone willing to buy them. How easy it is to do this for the amount of bitcoins you want to exchange is the liquidity of bitcoin. For 1 bitcoin liquidity isn't a huge issue, for hundreds or thousands of bitcoins, it's a major issue.

Not even money has intrinsic value. The only universally accepted currency that has intrinsic value is gold. Money is a fiduciary currency by definition.

There's a clear contradiction there. If the US government has to "say" that US dollar has intrinsic value, then it's because it doesn't have intrisic value. Governments create this notion of "value" to currency by law. A dollar is just a thin piece of paper, it doesn't have any value by itself, the value it has is imposed by law.

Currency in the past did have intrinsic value (like salt in the Roman Empire, gold, silver and even cows). But things evolved and using scarce goods such as gold as currency proved to be a barrier to the development of the global economy.

I think Monkeydelarge said it all (I believe he quoted the US House meeting on the matter). I guess bitcoin will stay around a little longer with ATMs for it being installed here and there (in the US there are two: Austin, TX and Seattle, WA). I expect it to go out quietly. Or maybe it will stay around in secret without having any cultural or socioeconomic impact (I'm looking at you, Esperanto).

There is a huge difference there. The banker that manages to mess everything up should be punished for sure, and there should be mechanisms to allow to seek and punish irresponsible managers, especially after the recent "subprime" crisis. The problem with the more "liberal" approach to economical regulation taken by the US (especially Fed and OCC) is that it allows distortions to happen. What happened back in the subprime crisis is that bankers were actually rewarded for doing EXTREMELY risky investments. They didn't have to think about the long term implications, when the bank broke they could just run away with the money they made. The more risky it was, the more money these bankers would get. And that's a huge problem, risky and irresponsible management is being stimulated by this model. There had to be more limits to how much banks could leverage and how much money managers got for risky investments.

However, letting the bank go bakrupt is a completely different issue. Some banks and financial institutions are just "too big to fail". The international financial system is heavily interconnected, if one big bank goes bankrupt it could take down the whole international economy with it through a series of chain reactions (one bank breaks, then another bank that was extremely connected to the first breaks, and then another one breaks, and so on). That's why the most important banks have to be saved I (and some were saved by the Fed).

Not to mention that it's people's money we are talking about. By letting a bank go bankrupt it's not the the CEO who will suffer, it's those who put money there. I know there is a fund to secure deposits in cases such as this one, but it's not unlimited, people would still lose a lot of money.

That's not quite so: the dollar does not have a value "imposed by law", it has a value that is determined by the buyers and sellers of dollars (and of goods, services, obligations, and securities denominated in dollars). One of those uses is the payment of debts and taxes in the United States.

The difference between a bitcoin and a currency is that a currency has a government and a banking system behind it: institutions that stand ready and make effort to maintain its value stable relative to other currencies and its supply sufficient to deal in the goods and services that make up the national (or, especially for dollars and euros, international) economy.

Bitcoin is not a currency because no institution even makes a pretense of maintaining a stable value, a liquid market, and a ready exchange for goods and services.

And gold gained ascendancy as a metal of coinage not because it was scarce, but because it was sufficiently plentiful and durable. It has no intrinsic value, apart from its uses in arts and industry.

I'm not sure what you mean by liberal there seeing as it was mostly the conservatives pushing that approach.

Anyways, you make is sound like that distortion is somehow accidental. It's intentional in that it prevents people at the lower end from ever digging themselves out of debt. The typical bank account in the US pays less than 1% interest and interest rates of .71% per annum are common place, the typical inflation rate that the Federal Reserve targets is 2-3%, as in they make sure to print enough money every year that the savings rates are below the inflation rate.

I don't really want to bore anybody, but the interbanking lending rate has been at roughly 1%. Meaning that the rate at which they're lending money to banks is below inflation, meaning that anybody who can't afford to invest large sums of money is faced with the choice of losing it slowly to inflation or spending it and at least preserving the buying power.

Meanwhile, you've got greedy corporations whining about the insufficient number of H-1B visas that they can use to further undermine the buying power of individuals working in the sciences and technology. But, that's a bit of a tangent.

This is by and large good news for people in the 2nd and 3rd world because it means that y'all benefit greatly from this incompetent economic mismanagement as an increasing number of Americans can't afford to buy higher quality goods produced in places that compensate the workers well.

Yeah, grimwerk already pointed that out. The author of that piece of text misused the words "intrinsic value".
But with paper money, you can at least burn for warmth or use as toilet paper if there is a zombie apocalypse or something similar. :)

FEATHERCOIN OR DIE!!

I have no experience actually with Bitcoin or other crypto currencies other than what i've learned from Rhett and Link when they talked about it one day. It makes sense why people would use it buuuut... not for me lol.

MONKEYCOIN! One crypto currency to rule them all. One crypto currency to find them,
one crypto currency to bring them all and in the jungle bind them.