Bitcoin and Digital Currencies

While I’m sure Tesla probably can technically afford to spend a billion dollar on a meme I expect most of the shareholders would rather the money go on something else, either development, a safer investment or strait up dividends.

"And the Bunny nails it!" ~ Gabrael "If the UN can get through a day without everyone strangling everyone else so can we." ~ Cyran

It is being discussed on CNBC whether Tesla's purchase of bitcoin may lead other companies to follow suit. This would absolutely give it a stabilizing force and, most importantly, make bitcoin useful for more than buying drugs and telling everyone how Internet rich you are.

Edited by Fighteer on Feb 8th 2021 at 4:28:51 AM

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

It would only stabilise it until Tesla had a need for the cash, and which point the bottom would fall out of the Bitcoin market. Currency’s aren’t stable because one user has a big stash of it, they’re stable because there’s continuous use of them.

If Tesla wants to stabilise it the move wouldn't be to buy lots of Bitcoin, it would be to allow you to purchase a Tesla with Bitcoin.

There are only a handful of businesses that let you buy actual good with Bitcoin, illegal goods make up a big chunk of that purchasing market, leaving a very small legal market. I wonder how the legal goods purchasing market compares to other commodity purchasing markets? How many places will let you pay for goods with precious metals or other commodities?

"And the Bunny nails it!" ~ Gabrael "If the UN can get through a day without everyone strangling everyone else so can we." ~ Cyran

That move is reportedly coming (Tesla purchase with bitcoin). I would imagine it would be cash; nobody in their right minds would finance such a purchase.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Back when dogecoin was a hot new meme, I remember it being a big deal when a couple people managed to actually use the joke cryptocurrency to buy pizzas. But that was the better part of a decade ago.

Isn't bitcoin designed so that it's going to get deliberately more difficult to obtain? How's that going to affect it's stability?

We've been over this quite a few times, but I'll bring you up to speed. Bitcoin is intended to deflate: to become more valuable per unit over time as it becomes harder to mine new ones. For any asset or commodity with a fixed supply, its price is entirely a matter of demand and is subject to no external stabilizing forces.

If there is high demand for a fiat currency, the government can issue more of it. If there is runaway inflation, the government can raise interest rates. There is always a baseline demand for the currency because the government demands it in payment of taxes and other obligations. The government has police and an army to defend its economy against cheaters and invaders.

Inflation rewards spending money because you get more value out of any given amount of it now than you would in the future. Deflation rewards hoarding money because you get more value out of it in the future than you do now. Since bitcoin is deflationary by design, an economy based entirely around it would grind to a halt... ironically destroying the value of the currency in the process.

Bitcoin is digital gold that techbros and libertarians believe will liberate them from the evils of governments trying to devalue their precious money.

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As a separate matter, bitcoin "mining" is done by expensive and power-hungry computer hardware that solves cryptography puzzles to compute the blockchain and verify any given transaction. The miners are rewarded with bitcoins. I'm not clear how that's supposed to work once all possible bitcoins are mined, but the major problem is that the power drawn by the mining computers is a significant drain on the grid and results in a lot of pollution due to all the extra fossil fuel consumption.

It also creates insane artificial demand for high-end GPUs that crowds everyone else out of buying them.

Edited by Fighteer on Feb 9th 2021 at 8:18:13 AM

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

At least gold has some intrinsic value outside of jewelry.

Also, another problem with Bitcoin is that its lack of any central bank that could oversee its flow makes it ideal to use for money laundering and to buy illegal goods in the net.

Edited by raziel365 on Feb 9th 2021 at 5:32:02 AM

Instead of focusing on relatives that divide us, maybe we should try to find the absolutes that tie us.

That's not a bug, that's an intended feature.

That's correct, although the FBI and other governmental agencies have gotten fairly good at tracing bitcoin transactions.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

That kind of thing is done with Monero these days

By the way, people keep failing to learn the lesson that if they keep their bitcoin accounts in a "bank", that "bank" can simply make off with them and there's no recourse. Wishing for some regulation now, aren't ya?

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Shit like this is why I think lolbertarians are stupidly, dangerously naive.

Disgusted, but not surprised

More like stupidly greedy, part of the appeal of Bitcoin is that you can get rich without the government taxing anything after all.

Instead of focusing on relatives that divide us, maybe we should try to find the absolutes that tie us.

It's also naive in the sense that they really think that they can't possibly be screwed over by this. They really think regulations are nothing but barriers holding them back when in reality regulations are what are protecting them.

Disgusted, but not surprised

The "there's no more bitcoins to mine" problem's solution is that whoever mines a block earns not just any new BTC generated in the block but also any transaction fees that are part of the block. As the supply of new BTC dries up, the transaction fees increase and eventually become the entire revenue stream of mining.

TIL: Bitcoin mining has overtaken Argentina in annual energy use.

Echoing hymn of my fellow passerine | Art blog (under construction)

Edit: Ok, I said something stupid, sorry about that.

Edited by raziel365 on Feb 10th 2021 at 7:31:47 AM

Instead of focusing on relatives that divide us, maybe we should try to find the absolutes that tie us.

The article uses Argentina only as a comparison, actually.

"For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled." - Richard Feynman

Elon Musk wants dogecoin "whales" to sell. In a series of tweets, Musk says that the primary issue preventing dogecoin from being viable is that too much of the currency is held by a very small number of individual accounts ("whales") who have the ability to alter the price more or less at will. (Although there are some heavy concentrations of bitcoin, it's nowhere near the same level as doge.)

When trading in this sort of funny money, it's important to consider who ultimately benefits. Sure, some individuals may see some digital profit, but that's drops of piss in a river compared to the wealth they are funneling to the big holders, and thus the system still wins. Thought you were getting away from that, did you?

Edited by Fighteer on Feb 15th 2021 at 10:00:09 AM

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

This feels like he just wants to buy it up for himself on the cheep rather than make it a viable currency, because he doesn’t have the ability to make it a viable currency.

"And the Bunny nails it!" ~ Gabrael "If the UN can get through a day without everyone strangling everyone else so can we." ~ Cyran

Perhaps, but the economic argument is sound. Both reasons may be true.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

He's expecting people who wanted to make easy money to sell their goods at cost for the benefit of society?

Guys, I think Elon might be secretly a socialist.

Edited by Kayeka on Feb 15th 2021 at 4:26:56 PM

The argument isn’t solid though, he’s arguing that people other than him having large stashes of it are preventing it being a viable currency, that’s not what’s preventing it being a viable currency.

There are hoarders for all currencies, what makes them viable is the fact that they are accepted as a mean of purchasing goods and paying taxes.

It’s an unpredictable investment asset because of the multiple hoarders, more reliable investment assets have large well known hoarders (that’s the thing with diamonds and oil) who are committed to keeping prices high), but Musk isn’t arguing for making it a viable investment asset, he’s arguing for it being a currency, which it can’t be until you can buy stuff with it.

He wants them to sell their goods so that he can buy them up, that would allow Dodgecoin to operate the way diamonds do, with massive stocks being held by a monopolistic entity that artificially restricts supply to keep the price high.

Edited by Silasw on Feb 15th 2021 at 3:30:16 PM

"And the Bunny nails it!" ~ Gabrael "If the UN can get through a day without everyone strangling everyone else so can we." ~ Cyran

Elon doesn't want to buy them himself, or at least that's not his stated reason. Dilution of holdings would allow more individuals to buy in and establish a foundation for using doge as an actual currency.

I'm not suddenly a cryptohead; don't @ me. This is more along the lines of establishing an economic scenario under which any crypto could be useful as a currency. You can't have global trade in gold if half of all the gold is in somebody's vault.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"