[Chugalug] More on Bitcoin:

Lynn Dixon boodaddy at gmail.com
Thu Aug 22 19:27:58 UTC 2013


Stephen,
I sincerely hope you do not think the CPI backs the US Dollar.  The CPI is
a lagging indicator of the rate of inflation. It is a measure of the change
in price of a set basket of goods. It has nothing to do with the value of
the USD, moreover it simply echoes the current value of the USD in relation
to this set basket of goods.

Here, educate yourself: http://www.bls.gov/cpi/cpifaq.htm

The value of the dollar is quite simply controlled by monetary policy of
the Federal Reserve, which is ran by small group of men.  If I remember my
econmics lessons from college correctly, there are three things that
determinse the value of the dollar.  Our National debt has a huge impact on
the demand for this currency and conversely its value.
1. Treasury Notes -- The tresuray controls the supply of these notes and
investors will auction for them. Sometimes for more than face value (demand
is high) sometimes for lower than face (Demand is low). Those investors
then re-sell those notes in a secondary market

2. Foreign Reserves --  When other countries import and export, they
sometimes end up with an excess or shortage of USD which also affects the
demand for it.  When the value starts to decline, these foreign countries
will dump their reserves (because who wants to hold worthless notes?). ANd
just like any market, this causes people to buy and sell.

3. Exchange rates with other currrencies (since not everyone wants the
USD).  How the USD measures up to the value of other currencies.  Alot of
times, the GDP of the countries are analyzed and sometimes the government
stability is taken into consideration to detemine the actual value of one
currency to another.  The coutnries central bank interest rates, debt
levels (to both domestic and foreign bodies) GDP, and other factors are
what set the value.


A retailer or supplier would set the value of his products based upon the
demand for his products and the costs to make those products (time value of
money also included). I would also quip that I did indeed buy a portion my
servers, rackspace and hardware to mine my BTC with BTC. However, I will
admit, that when I pay my power I have to use my BTC to buy US dollars
since my electic company only accepts USD. I can't even use Chad's paypal
example, since they refuse to accept Paypal or even AMEX.


To Randy's point, and to argue against yours, I have no idea why you had to
assume One would take BTC, convert to USD, and then buy gold.  That is
plain stupid.  1 BTC is worth about .08 ounces of gold, and there are
vendors online that will trade their gold for your BTC. You dont have to go
through the crazy process of converting to USD, unless you simply like
converting currency for the hell of it. I really wish you would realize
there is more to this world than the USD.  Also to Randy's point, the
Dollar hasn't been backed by gold for a long time now.  See my points above
to learn how the value of the dollar is truly set (spoiler alert: It has
absolutely zero to do with gold anymore).





On Thu, Aug 22, 2013 at 2:47 PM, Stephen Kraus <ub3ratl4sf00 at gmail.com>wrote:

> Nothing backs the dollar, except the consumer price index.
>
> But nothing backs bitcoins either.
>
> Guess what Lynn? Ask the retailer you purchase from what the end pont of
> their bitcoins you give them are? Also, ask them how they set their values
> for bitcoin purchases are set?
>
> I'm assuming the company didnt buy their servers, rackspace, in are paying
> their power bill in bitcoins
> On Aug 22, 2013 2:36 PM, "Lynn Dixon" <boodaddy at gmail.com> wrote:
>
>> Stephen,
>> I have already told you what my bitcoins are worth.  I have bought and
>> sold several prodcuts and services using my Bitcoin, and none of them
>> invovled the USD.  Just recently  I bought 100G of Copy.com storage for .15
>> BTC.
>>
>> I am also thinking about buying a BlockEruptor for around 1 BTC, just for
>> poops and snickers.
>>
>> Tell me, what "backs" the US Dollar?   I would imagine the essence of
>> your reply will be the same things that "backs" my BTC....the utility of it.
>>
>>
>> On Thu, Aug 22, 2013 at 2:31 PM, Stephen Kraus <ub3ratl4sf00 at gmail.com>wrote:
>>
>>> No, Lynn I think its safe to say youbare severely overthinking bitcoins.
>>>
>>> Tell me right now: outside of the processing cycles, invested piwer
>>> bill, and an algorithm, what backs your bitcoin?
>>>
>>> What is one bitcoin worth? A gpu cycle? A power bill? Gold?
>>> On Aug 22, 2013 2:28 PM, "Lynn Dixon" <boodaddy at gmail.com> wrote:
>>>
>>>> Stephen,
>>>> again, I think you and Chad fail to understand how Bitcoins actually
>>>> work.  The value (like anything in trade) is set by the parties involved in
>>>> the transactions.  If you ONLY think in USD then you are only thinking very
>>>> simple.  This is a global economy, I do business in more than just the US.
>>>>  The value of ANY currency is set by supply/demand.  With USD the supply is
>>>> artificially manipulated by the Fed, which in my opinion is absolutely
>>>> horrid. The Supply of Bitcoin is controlled by the peer-to-peer network.
>>>>  No one individual or entity can change the supply, therefore the value
>>>> backing the currency is the sheer demand for it.
>>>>
>>>> I honestly have no idea how to continue this debate if we only focus on
>>>> the simple minded-ness of assuming everything is done in US Dollars only.
>>>>  The world doesnt revolve around the dollar.
>>>>
>>>>
>>>> On Thu, Aug 22, 2013 at 2:22 PM, Stephen Kraus <ub3ratl4sf00 at gmail.com>wrote:
>>>>
>>>>> That is without even mentioning the cognitive dissonace of saying this:
>>>>>
>>>>> 'The dollar has no value because there is nothing backing it beyond
>>>>> the word of the government. So trade in bitcoins....which also have nothing
>>>>> backing it beyond our personal guarentees'
>>>>>
>>>>> Its the same thing. Meet the new boss, a clone of theold boss
>>>>> On Aug 22, 2013 2:18 PM, "Stephen Kraus" <ub3ratl4sf00 at gmail.com>
>>>>> wrote:
>>>>>
>>>>>> Good thing everyone has mining equipment. Oh wait, investment costs!
>>>>>>
>>>>>> As for buying them....do I even have to explain the cognitive
>>>>>> dissonance?
>>>>>>
>>>>>> 'The dollar is worthless we should replace it....but you can freely
>>>>>> purchase bitcoins with it, thereby implying that the dollar we say has no
>>>>>> value HAS value, because we are willing to accept it in trade'
>>>>>> On Aug 22, 2013 2:15 PM, "Lynn Dixon" <boodaddy at gmail.com> wrote:
>>>>>>
>>>>>>> Stephen,
>>>>>>> Did you even read the article?  No where did it mention anything
>>>>>>> about USD or exchange rates.
>>>>>>>
>>>>>>> There are only two ways to get BTC.  1. Mine them 2. Buy them.
>>>>>>> Since most folks dont want to mine, they will buy BTC.  The website
>>>>>>> just listed the most recent exchange rate.
>>>>>>>
>>>>>>> Heres another site for exchange rates:
>>>>>>> www.bitcoinwatch.com
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>
>>>>>>>  On Thu, Aug 22, 2013 at 2:09 PM, Stephen Kraus <
>>>>>>> ub3ratl4sf00 at gmail.com> wrote:
>>>>>>>
>>>>>>>> Randy.
>>>>>>>>
>>>>>>>> On the top of the very site you just linked to. Guess what those
>>>>>>>> exchange rates establish? And the only reason payment processors might be
>>>>>>>> interested in bitcoins.
>>>>>>>> On Aug 22, 2013 2:06 PM, "Randy Yates" <lpcustom at gmail.com> wrote:
>>>>>>>>
>>>>>>>>>
>>>>>>>>> http://www.coindesk.com/bitcoin-debit-card-ibtcard-will-offer-lower-processing-fees-for-merchants/
>>>>>>>>>
>>>>>>>>> It's coming :)
>>>>>>>>>
>>>>>>>>>
>>>>>>>>> On Thu, Aug 22, 2013 at 2:03 PM, Chad Smith <chad78 at gmail.com>wrote:
>>>>>>>>>
>>>>>>>>>> *sigh* no one ever pays me in Gum!
>>>>>>>>>>
>>>>>>>>>> *- Chad W. Smith*
>>>>>>>>>>
>>>>>>>>>>
>>>>>>>>>> On Thu, Aug 22, 2013 at 1:01 PM, Chad Smith <chad78 at gmail.com>wrote:
>>>>>>>>>>
>>>>>>>>>>> You could buy lunch with Pesos if you're Pesos were in the bank
>>>>>>>>>>> and you had a debit card that automatically converted for you (like I paid
>>>>>>>>>>> for software in Euros yesterday through PayPal without ever owning a Euro
>>>>>>>>>>> in my life).  The same cannot be said for BitCoins - or POGs - or Beanie
>>>>>>>>>>> Babies - or Baseball cards - or Star Wars action figures - or Yugioh cards
>>>>>>>>>>> - or Pokemon - or Level 80 WoW characters...
>>>>>>>>>>>
>>>>>>>>>>> All of those things have some value to some people - and they
>>>>>>>>>>> will gladly trade with you for them - but they are not actual currency.
>>>>>>>>>>>  You can't take your comic book collection to the bank and ask them to give
>>>>>>>>>>> you the equivalence in Pounds Sterling.
>>>>>>>>>>>
>>>>>>>>>>> *- Chad W. Smith*
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>> On Thu, Aug 22, 2013 at 12:55 PM, Lynn Dixon <boodaddy at gmail.com
>>>>>>>>>>> > wrote:
>>>>>>>>>>>
>>>>>>>>>>>> Chris,
>>>>>>>>>>>> This is an excellent point! Peso are a "world recognized
>>>>>>>>>>>> currency", but yet, I can't buy my lunch with Pesos.  Well I probably could
>>>>>>>>>>>> here in Dalton (local yocals will get that joke), but in Benton, probably
>>>>>>>>>>>> not.
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> On Thu, Aug 22, 2013 at 1:37 PM, Chris Mowery <
>>>>>>>>>>>> cmowery at gmail.com> wrote:
>>>>>>>>>>>>
>>>>>>>>>>>>> If you take pesos to a gas station, do they take those?
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> On Thursday, August 22, 2013, Stephen Kraus wrote:
>>>>>>>>>>>>>
>>>>>>>>>>>>>> Lynn.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Doesn't matter. Its still a fiat currency and non-negotiable
>>>>>>>>>>>>>> at any major retailer that cannot convert it to cash.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Its like you went to the arcade and cashed in for some tokens
>>>>>>>>>>>>>> and expect everyone to accept them because of the value the arcade places
>>>>>>>>>>>>>> on the token
>>>>>>>>>>>>>> On Aug 22, 2013 1:32 PM, "Stephen Kraus" <
>>>>>>>>>>>>>> ub3ratl4sf00 at gmail.com> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Go to a gas station. Right now. Pay for gas and a soda with
>>>>>>>>>>>>>> bitcoins.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Don't take out your credit card. Don't use cash. Use bitcoins.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Why can't you? Because they don't understand its value?
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> I could say I have sea shells. I believe they have some value
>>>>>>>>>>>>>> to me, but people don't understand their value, so I can't use them to pay
>>>>>>>>>>>>>> for products immediately. But maybe I can trade someone else who values sea
>>>>>>>>>>>>>> shells in trade for cash. Suddenly my sea shells have worth, despite the
>>>>>>>>>>>>>> apparent lack of actual value as a wide currency.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> But that does not mean I can magically declare the major
>>>>>>>>>>>>>> currency accepted globally as dead becauwe my sea shells hava negotiable
>>>>>>>>>>>>>> value among a select group
>>>>>>>>>>>>>> On Aug 22, 2013 1:26 PM, "Tyler Mittan" <
>>>>>>>>>>>>>> flashbatmanquestion at gmail.com> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Randy and Lynn are right on.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> The more important part of this is that we ought to have
>>>>>>>>>>>>>> competing currencies to keep whomever the issuers are honest. No one wants
>>>>>>>>>>>>>> bad money. This criticism of no one taking Bitcoins is totally off base.
>>>>>>>>>>>>>> First, not everyone knows about bitcoins or how it works. Secondly, the
>>>>>>>>>>>>>> dollar is propped up for two reasons.. People have to use dollars because
>>>>>>>>>>>>>> that's what the government forces banks to accept and because people think
>>>>>>>>>>>>>> the government's handling of the money supply us trustworthy because most
>>>>>>>>>>>>>> people don't understand the political motive to devalue currency
>>>>>>>>>>>>>> On Aug 22, 2013 1:19 PM, "Stephen Kraus" <
>>>>>>>>>>>>>> ub3ratl4sf00 at gmail.com> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Lynn, while you may MAKE money off bitcoins, the value of the
>>>>>>>>>>>>>> traded bitcoins and the inherint value you get from them is.....in dollars.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> While some (very few) retailers may accept bitcoin, even
>>>>>>>>>>>>>> their expectation is to either gain more bitcoins which they can then
>>>>>>>>>>>>>> launder into dollars or exchange them as well for another service, but even
>>>>>>>>>>>>>> THAT service expects the value of the bitcoins they pay to transfer to
>>>>>>>>>>>>>> dollars somehow.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Until you can go to a local grocer or gas station and
>>>>>>>>>>>>>> directly pay with bitcoins, its going to remain a neat, yet niche idea.
>>>>>>>>>>>>>> On Aug 22, 2013 1:15 PM, "Lynn Dixon" <boodaddy at gmail.com>
>>>>>>>>>>>>>> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Chad,
>>>>>>>>>>>>>> I disagree.  Bitcoins are just like anything, the value of it
>>>>>>>>>>>>>> is determined by the demand/supply for it.  The supply is very fixed by the
>>>>>>>>>>>>>> network, and cannot be manipulated.  Therefore the value is directly linked
>>>>>>>>>>>>>> to the demand of the currency.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> The exception with Bitcoin is that people are actually using
>>>>>>>>>>>>>> as a medium of exchange for goods, services, and even currency exchange.  I
>>>>>>>>>>>>>> use it for all 3 of these.  I don't think people used POGs as a medium of
>>>>>>>>>>>>>> exchange.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> On Thu, Aug 22, 2013 at 12:52 PM, Chad Smith <
>>>>>>>>>>>>>> chad78 at gmail.com> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> It's like POGs.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Remember POGs?
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> BitCoins are like POGs.  Really, in and of themselves, that
>>>>>>>>>>>>>> have absolutely no value.  But, for a while in the 90s, some people got
>>>>>>>>>>>>>> RICH off of POGs.  Why?  Because they were able to convince people they
>>>>>>>>>>>>>> needed to have them.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> People bought into it - and some of *those *people also got
>>>>>>>>>>>>>> rich - because they collected and traded and sold them.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Eventually, it all came crashing down, because it is very
>>>>>>>>>>>>>> hard to keep convincing people they need to spend actually real-world money
>>>>>>>>>>>>>> on little cardboard discs.
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> BitCoin is POGs for the Twenty-Teens Tech Geek.  It won't
>>>>>>>>>>>>>> last.  But there will be people who make
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
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