Bitcoin giveaway! :)

[Bean]

Meanwhile the price just hit $675. Holy moses!

Is anyone here considering selling any?

I lost all of my bitcoins in a horrible boating accident this morning, that I bought after Marc sold me on this.  Plus no one will ever find find them in the lake because they are anonymous.

If I still had them, I would get rid of half and play with house money from here on out.

[Gumby]

5. The commodity must have accepted VALUE. It must be usable and accepted for a non-money purpose before it can serve as money. Only then can the reipient be sure he isn't receiving a white elephant. [/b]

I agree with you that Bitcoin is mostly for speculation right now, but I think Browne is simply saying that a commodity needs to be useful in order for it be a good form of money — so that it will always be worth something when people lose faith in that currency, or so that people don't lose faith in that currency.

In other words, sea shells and clay tokens were obviously currency, but Browne would argue they were poor forms of currency because they became white elephants (which is true).

Additionally, Bitcoins will make a poor form of currency if they continue to stay volatile...

Bitcoin is mostly just a speculative vehicle. Yes, there are PR stunts about bars and other shops accepting bitcoins. And there is a Bitcoin ATM for some reason. But mostly Bitcoin is a speculative vehicle. And really, you'd be insane to actually conduct a sizable amount of commerce in bitcoins. That's because the price swings so wildly, that the next day, there's a good chance that one of the parties will have gotten royally screwed. Either the purchaser of the good will have ended up totally blowing a huge opportunity (by not holding longer) or the seller will be totally screwed (if Bitcoin instantly plunges). The very volatility that excited people to want to play the Bitcoin game is death when it comes to real transactions in the real world.

Again, Bitcoin might go up a lot more before it ultimately ends. That's the nature of bubbles.

Source: http://www.businessinsider.com/bitcoin- ... ns-2013-11

[Gumby]

So, there are obviously pros and cons to Bitcoin. But, I suspect Marc and others may be on to something in terms of speculating on an irrational "mania" with a tiny amount of money you can afford to lose.

A fudge, but not a stupid one

Let’s use a broad guesstimate. One Bitcoin should theoretically be worth 700 ounces of gold or pretty close to $1,000,000, if we adjust existing supply of both to equal eachother.

One BTC is currently worth 0.14 ounces of gold.

That gives BTC an upside of 5000 times to equal the current price of gold, supply adjusted. Clearly, I and everyone else believes that Gold may well be much higher than here in the next 5 to 10 years, thus versus the US Dollar the upside for BTC could be multiples of that.

Now, before you shake your head, simply go back to the chart of Gold versus the US Dollar and just recognise that it has risen 8750% since the 1920s. And just remember that Microsoft rose 61,000% from its IPO to it’s peak.

Considering what we know about the world, I personally believe that Bitcoin may well explode in value as more and more people begin to use it.

If you stuck $5,000 into Bitcoins and each Bitcoin did go up to a gold equivalent of let’s say, only 100 ounces of gold (not the potential fair value of 700), then at current prices your Bitcoin stash would be worth $3.3m.

Now that’s what I call a tail-risk option. It’s either worth zero or it’s worth a truly outstanding amount of money.

I bet you never thought you’d see this in a macro publication. But I’m serious. This just might work.

Source: http://www.zerohedge.com/sites/default/ ... itcoin.pdf

I have a hard time believing that people will use Bitcoins (rather than hoard them), but it's not unfathomable.

[HB Reader]

Meanwhile the price just hit $675. Holy moses!

Is anyone here considering selling any?

Sure.  I've been selling a few here and there on the way up (just like I did in April).  I just sold some at $650 this morning.  Profits from btc I bought in 2011 and 2012 have paid for a few of our vacations and other items this year.  It has been the best returning (percentage wise) VP investment I've made in my 40 year investment career.

I'm still holding some to see where it will all shake out down the road.  I may sell a few of them in the near future if it continues to appreciate in this run up.  It could ultimately end up much higher or much lower (or even worthless).  Neither outcome would shock me.

IF btc eventually settles down and survives longer term as a kind of currency, I suspect that it will be at a much higher exchange value.  On balance, I doubt that it will survive given all the possible pitfalls, but I can see a possibility that it might.  I guess that possibility (or potential, or whatever you want to call it) is what gives it value to me.  I take it that you don't see any "value" there, but that's a semantic distinction that I don't think is worth wasting time discussing.

None of this has changed my approach to the PP.   

[Kshartle]

I guess that possibility (or potential, or whatever you want to call it) is what gives it value to me.  I take it that you don't see any "value" there, but that's a semantic distinction that I don't think is worth wasting time discussing.

You don't think it's worth discussing whether something you own (and a lot of people here own) that costs $675 dollars to buy actually has real value driving the price vs. the greater fool theory?

The possibility of higher prices doesn't convey value. It supports the price by encouraging buying and hoarding but that's not value, that's the price. If something is worthless.....then it can only be a matter of time until everyone figures it out, just like the shells and wampum and every other peice of worthless peice of crap that people used as money.

All that being said......congrats on the April selling and the selling today! Vacations paid for by someone else paying up for your bitcoins have got to be sweet.

[jfreib]

As a long time peruser of this site but someone who just found out about bitcoins, I knew I could count on this forum to provide me with a lively discussion of their merits and drawbacks.

I understood one of the merits of bitcoins to be that there are only 21 million of them, however something that Marc said earlier led me to believe that it might be possible to complete transactions using fractions of a bitcoin? If that is the case it seems to me that bitcoins would still have the inflationary risk that fiat money does. I.E. with a gold you can split it into smaller pieces but eventually the physical size limitations get in the way of subdivision. However it would seem to me that a digital currency could be divided without limits, effectively increasing the currency supply.
Is this just a misunderstanding of how it works due to my still limited knowledge of bitcoins?

Either way, I am very curious to see how this bitcoin story plays out, and, Marc, if your generous offer of free bitcoins still stands I would be interested in giving it a try!

[frommi]

• I can hold them and store them myself, I don't need to trust anyone.
• I can own them anonymously, and pay anonymously.
• If necessary I can hide them in my brain and take them across borders.

In times where the NSA/CIA has unlimited access to every byte and bit in the the world, you don`t really think that that is worth something when shit hits the fan do you?

[Gumby]

However it would seem to me that a digit currency could be divided without limits, effectively increasing the currency supply.
Is this just a misunderstanding of how it works due to my still limited knowledge of bitcoins?

There is a limit...

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.
As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller units, such as milli-bitcoins (mBTC) or micro-bitcoins (uBTC).

Source: https://en.bitcoin.it/wiki/Myths#21_mil ... .27t_scale

[edsanville]

However it would seem to me that a digit currency could be divided without limits, effectively increasing the currency supply.
Is this just a misunderstanding of how it works due to my still limited knowledge of bitcoins?

There is a limit...

One Bitcoin is divisible down to eight decimal places. There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible atomic units in the bitcoin design.

The value of "1 BTC" represents 100,000,000 of these. In other words, each is divisible by up to 10^8.
As the value of the unit of 1 BTC grows too large to be useful for day to day transactions, people can start dealing in smaller units, such as milli-bitcoins (mBTC) or micro-bitcoins (uBTC).

Source: https://en.bitcoin.it/wiki/Myths#21_mil ... .27t_scale

The number of subdivisions can also be increased in the future, if the community decides to do so.

[Bean]

The number of subdivisions can also be increased in the future, if the community decides to do so.

True, but with the distributed computing community this might be hard to make happen.

You could probably do it if you get the major pools to agree on adding more decimal points.  But increasing the decimals is not inflationary, it is just increasing the divisibily of the bitcoin population.

1BTC = 1 BTC no matter how many decimal places you add.

[Peace]

Hi Marc,

Thank you for all the advice and tips you've provided here on Gyroscopic Investing and on your blogs (NL and EN), which I've been following for years now.

I hope your offer is still available. I've been wanting to post here for days now but couldn't decide on where to create a wallet (Blockchain.info, Coinbase, Multibit, Electrum etc.).

If you still have some BTC to share, feel free to send some to my newly created empty wallet.

1JTU8r86xFqRHwGcvoAKtPiGRaRHGmUiRM

Peace

[HB Reader]

I guess that possibility (or potential, or whatever you want to call it) is what gives it value to me.  I take it that you don't see any "value" there, but that's a semantic distinction that I don't think is worth wasting time discussing.

You don't think it's worth discussing whether something you own (and a lot of people here own) that costs $675 dollars to buy actually has real value driving the price vs. the greater fool theory?

The possibility of higher prices doesn't convey value. It supports the price by encouraging buying and hoarding but that's not value, that's the price. If something is worthless.....then it can only be a matter of time until everyone figures it out, just like the shells and wampum and every other peice of worthless peice of crap that people used as money.

All that being said......congrats on the April selling and the selling today! Vacations paid for by someone else paying up for your bitcoins have got to be sweet.

Thanks for the congrats.

The reason I don't think its particularly worth discussing is that I don't think I can add anything to a discussion that doesn't make any sense to me as a investor.  It isn't an either/or question to me.  My btc investment decisions have elements of both value to me and possible price appreciation.  I bought the btc originally because I thought it had reasonable potential to become a much more widely used currency or monetary-type transfer arrangement than it already was as more people learned about it and the software and internet support structure improved.  I thought as more people came to similar conclusions, they might well drive up the price.  I may end up using some to make direct purchases.  Or I may just sell what I have left.  Or I may end up trading in them.  I don't know.   

I'm not arguing that the possibility of a higher price by itself conveys necessarily conveys any value.  The value in btc lies is in how it will or won't be viewed and used by people in the future.  I, nor anyone else, knows the answer to that question.  My assessment of whether it has any value at all, either now or in the future, may well be flawed.  I also don't have any opinion as to whether the person who bought it at a price of $650 from me this morning is a greater or lesser fool than me or someone else in the future.  I just know that the $650 per coin I received for the btc was worth more to me this morning than that fraction of my btc holdings.  Like everyone else, I'm making a bargain with an unknowable future. 

       
       

[Rien]

Value can only exist in the mind.
It is not a physical property.

I think that value is derived from utility. Not as an absolute number, but as a way to compare the utility that can be experienced from different things. Value allows us to express our preference in a fine grained way. Rather than being forced to say I like A over B, but not over C, we can say I value A at 50, B at 24 and C at 66.

We use external symbols to represent value, for example (fiat) currency. But it is not the symbol that has value. The value itself is in our heads.

In general we disagree on value. If we would all agree on value there would be no commerce. Though we might agree on price, we do not agree on value. A baker rather sells its bread, while I would rather buy it. The price is the same to both of us, but the values we place on the utility of the bread is different.

Value and its cousin price are different things. The first glass of water after a hot day has a higher value than the second one, and the tenth glass of water may hold no value at all. But the price you need to pay is likely to be the same for all of them. Hence we stop buying once the price exceeds the perceived value. This example illustrates why I think that value is not a property of the water, but of our use of that water.

Why do bitcoins have value? because possessing bitcoins fulfills a need in the mind of the bitcoin holder. It does not matter if the bitcoin is virtual or not, that need is present and real. Knowing that other people place a value on bitcoins is for many other people sufficient to place a value on bitcoins as well.
But like water, bitcoins do not have a "value" property that can be measured. Value is all in the mind.

So what is the value of a bitcoin?
For you that is the price you are willing to pay for it or sell it for.

PS: Sorry that I cannot join the discussion in a more timely manner. The time zones be blamed 

[Kshartle]

Value can only exist in the mind.
It is not a physical property.

I think that value is derived from utility.

We use external symbols to represent value, for example (fiat) currency. But it is not the symbol that has value. The value itself is in our heads.

In general we disagree on value. If we would all agree on value there would be no commerce. Though we might agree on price, we do not agree on value. A baker rather sells its bread, while I would rather buy it. The price is the same to both of us, but the values we place on the utility of the bread is different.

Why do bitcoins have value? because possessing bitcoins fulfills a need in the mind of the bitcoin holder. It does not matter if the bitcoin is virtual or not, that need is present and real. Knowing that other people place a value on bitcoins is for many other people sufficient to place a value on bitcoins as well.
But like water, bitcoins do not have a "value" property that can be measured. Value is all in the mind.

So what is the value of a bitcoin?
For you that is the price you are willing to pay for it or sell it for.

This is a crazy topic.....and I've learned a lot, I hope other people have gotten a lot out of it also.

There was a popular show in America decades ago called "Let's make a deal". It might still be on TV...I don't know.

People would do things to win prizes. Sometimes they would be given a choice, keep their valuable prize, or get to open a mystery box or a door and see what's behind. They could also trade the mystery box or door with other audience members.

Sometimes the mystery box or door had something good behind it, sometimes it was a worthless gag. The point is, whatever they traded for the box/door (the price) had NOTHING to do with what was behind it. The fact that they traded for it, hoped, believed, whatever that they had something more valuable.....this had nothing to do with the value. The value was either there or it wasn't, and it didn't matter how many people traded for it or believed in it. They could not create value with their mind. 99.999% of people watching knew when something was worthless. That's because it was worthless, it was not a matter of opinion. If 0.001% of people preferred the worthless prize...it could only be because that person was completely insane.

Believing a bitcoin has value doesn't give it value. It gives it a price. I can pay 1 million for a t-shirt, but that doesn't make it more valuable.

You said quite correctly above that the price is not the value, then you said the price you're willing to pay is the value. If I'm willing to pay 1 million for a T-shirt, is it worth 1 million? Can I get a million for it, or was I completely stupid and wrong about it's value?

I get that everyone likes to think value is just an opinion and therefore can't be wrong, but then what would you say about me buying the T-shirt for 1 million? Wouldn't you and every other person on Earth know I was wrong to pay that much? If every single person on Earth knows I'm wrong and see that I've traded massive wealth for nothing....am I not wrong? Did I not perceive value where it didn't exist?

If a secluded African village trades the entire village for sea shells, and then scouts out the nearby shore for a new place to live and finds millions of shells.......did they not perceive value where it didn't exist?

[Kshartle]

1. I think that value is derived from utility.


2. This example illustrates why I think that value is not a property of the water, but of our use of that water.


3. But like water, bitcoins do not have a "value" property that can be measured. Value is all in the mind.

1. What utility does a bitcoin have? Transfer of ownership is not utility. Ownership of everything can be transferred, this is not a use. You don't use a car when you sell it, only when you drive it. You don't use a house when you sell it, only when you live in it. You don't use a piece of food when you sell it, only when eat it. You don't use a gold coin when you trade it, only when you put it in electronics, or a filling, or make a piece of jewelry and wear it.

Bitcoins have no use, no utility whatsoever as far as I can tell. All you can do is transfer ownership. You can do this with anything you own though. Sure, it's easy to transfer ownership....but I can transfer ownership of that famous jar of poop and it doesn't make it valuable or useful.


2. Yes, water is useful therefore it's valuable. Even if you don't need it, someone else does and always will, therefore it's valuable. Why does anyone ever need a bitcoin....ever? They aren't useful for anything. All you can do is pass them around. Believing it's useful when it isn't doesn't make it useful, it makes the person incorrect in their belief.


3. Water quenches thirst. We need it to live. It's value has nothing to do with anything in the mind. You can think it's worthless and act accordingly and you'll die of dehydration. Water is valuable and it always will be. It's completely objective that it's valuable. At any given time the price someone is willing to pay might be different, but water is valuable. Take it all away and it will be demonstrated very quickly just how valuable it is.

[Rien]

Value can only exist in the mind.
It is not a physical property.

I think that value is derived from utility.

We use external symbols to represent value, for example (fiat) currency. But it is not the symbol that has value. The value itself is in our heads.

In general we disagree on value. If we would all agree on value there would be no commerce. Though we might agree on price, we do not agree on value. A baker rather sells its bread, while I would rather buy it. The price is the same to both of us, but the values we place on the utility of the bread is different.

Why do bitcoins have value? because possessing bitcoins fulfills a need in the mind of the bitcoin holder. It does not matter if the bitcoin is virtual or not, that need is present and real. Knowing that other people place a value on bitcoins is for many other people sufficient to place a value on bitcoins as well.
But like water, bitcoins do not have a "value" property that can be measured. Value is all in the mind.

So what is the value of a bitcoin?
For you that is the price you are willing to pay for it or sell it for.

You said quite correctly above that the price is not the value, then you said the price you're willing to pay is the value. If I'm willing to pay 1 million for a T-shirt, is it worth 1 million? Can I get a million for it, or was I completely stupid and wrong about it's value?

I get that everyone likes to think value is just an opinion and therefore can't be wrong, but then what would you say about me buying the T-shirt for 1 million? Wouldn't you and every other person on Earth know I was wrong to pay that much? If every single person on Earth knows I'm wrong and see that I've traded massive wealth for nothing....am I not wrong? Did I not perceive value where it didn't exist?

The only way to express the value you feel is by paying a price. If you feel the T-shirt is worth a million bucks to you, then who am I to say that you are wrong?

[Kshartle]

Value can only exist in the mind.
It is not a physical property.

I think that value is derived from utility.

We use external symbols to represent value, for example (fiat) currency. But it is not the symbol that has value. The value itself is in our heads.

In general we disagree on value. If we would all agree on value there would be no commerce. Though we might agree on price, we do not agree on value. A baker rather sells its bread, while I would rather buy it. The price is the same to both of us, but the values we place on the utility of the bread is different.

Why do bitcoins have value? because possessing bitcoins fulfills a need in the mind of the bitcoin holder. It does not matter if the bitcoin is virtual or not, that need is present and real. Knowing that other people place a value on bitcoins is for many other people sufficient to place a value on bitcoins as well.
But like water, bitcoins do not have a "value" property that can be measured. Value is all in the mind.

So what is the value of a bitcoin?
For you that is the price you are willing to pay for it or sell it for.

You said quite correctly above that the price is not the value, then you said the price you're willing to pay is the value. If I'm willing to pay 1 million for a T-shirt, is it worth 1 million? Can I get a million for it, or was I completely stupid and wrong about it's value?

I get that everyone likes to think value is just an opinion and therefore can't be wrong, but then what would you say about me buying the T-shirt for 1 million? Wouldn't you and every other person on Earth know I was wrong to pay that much? If every single person on Earth knows I'm wrong and see that I've traded massive wealth for nothing....am I not wrong? Did I not perceive value where it didn't exist?

The only way to express the value you feel is by paying a price. If you feel the T-shirt is worth a million bucks to you, then who am I to say that you are wrong?

You say I'm wrong when you won't trade me a million bucks for it, just like everyone else on Earth. I can sit around and believe it's worth a million, but everyone else knows I'm wrong and they prove it by only offering me ten bucks for it!

That's the real-world expression of my wrongness.

My point with those lengthy posts was:

1. Bitcoin, or anything, doesn't have value just becuase you believe it does.

2. Water doesn't have value because you believe it does. Water isn't valueless even if you believe it is. It's valuable becase we can use it for something. The price you're willing to pay might be subjective, but the fact that it has value....that's completely objective.

That being said.....there's no objective value in a bitcoin because it has no useful properties or qualities and no intrinsic value either. All you can do is transfer ownership and that's not an actual use. Therefore the price is exclusively being driven by belief in future value. Ahhhh, I feel I'm on repeat and this disscussion is getting long in the tooth. Actually, I don't repeat, I three-peat!

[Rien]

1. I think that value is derived from utility.


2. This example illustrates why I think that value is not a property of the water, but of our use of that water.


3. But like water, bitcoins do not have a "value" property that can be measured. Value is all in the mind.

1. What utility does a bitcoin have? Transfer of ownership is not utility. Ownership of everything can be transferred, this is not a use. You don't use a car when you sell it, only when you drive it. You don't use a house when you sell it, only when you live in it. You don't use a piece of food when you sell it, only when eat it. You don't use a gold coin when you trade it, only when you put it in electronics, or a filling, or make a piece of jewelry and wear it.

Bitcoins have no use, no utility whatsoever as far as I can tell. All you can do is transfer ownership. You can do this with anything you own though. Sure, it's easy to transfer ownership....but I can transfer ownership of that famous jar of poop and it doesn't make it valuable or useful.


2. Yes, water is useful therefore it's valuable. Even if you don't need it, someone else does and always will, therefore it's valuable. Why does anyone ever need a bitcoin....ever? They aren't useful for anything. All you can do is pass them around. Believing it's useful when it isn't doesn't make it useful, it makes the person incorrect in their belief.


3. Water quenches thirst. We need it to live. It's value has nothing to do with anything in the mind. You can think it's worthless and act accordingly and you'll die of dehydration. Water is valuable and it always will be. It's completely objective that it's valuable. At any given time the price someone is willing to pay might be different, but water is valuable. Take it all away and it will be demonstrated very quickly just how valuable it is.

1) I do not know and do not need to know how other people arrive at their value. I only concern myself with the values I hold.
Claiming that bitcoins have no utility is futile. You cannot change how I feel towards bitcoins (or anything else). Utility can be as simple as "I feel good when I have some". (Note: obviously through lengthy conversation you may eventually be able to convince me from your point of view, but that does not change the argument. My feelings are as valid as your feelings. And ultimately value is derived from feelings. I.e. I feel good about being alive, I like to stay that way, hence I will drink and eat. Besides eating feels good all in itself.

2&3) Then the value of water should be infinite? Why is water trading at only a few cents to the gallon? ("special" water excluded)
The water example illustrates that value is never constant. It changes all the time. When we have had or fill of water, you probably could not even pay me to drink more water. Its value goes negative.


Btw: Just read your "repeat reply", and I think you are right. We simply disagree on the concept of value. I'll still post this reply but it is probably another repeat.

[Kshartle]

The water example illustrates that value is never constant. It changes all the time. When we have had or fill of water, you probably could not even pay me to drink more water. Its value goes negative.

The Apple factory has thousands of iPads.....they would never buy more for themselves.....do the iPads in their inventory have negative value?

[Kshartle]

So lemme get this straight.....the price went from $600 to $900 in about 6 hours....then down to $575 in 30 minutes......then back up to $825 in 3 hours....then back down to $525 in 9 hours......then back up $750 in 3 hours.

Anyone with a large percentage of their money in this..........balls...of....steel.

[Supercephalicus]

nice, is the giveaway still going?

adress: 1EahSY5dzy5p9a5rc1tVkg7mzxtjGemTMH  , in case it is!:)

[whatchamacallit]

is it possible the powers that be prefer people buy bitcoins instead of the traditional fiat alternative?

[Tortoise]

is it possible the powers that be prefer people buy bitcoins instead of the traditional fiat alternative?

I'll believe that when I start seeing Bitcoin-related commercials everywhere paid for by big, multinational corporations and governments

[Rien]

The water example illustrates that value is never constant. It changes all the time. When we have had or fill of water, you probably could not even pay me to drink more water. Its value goes negative.

The Apple factory has thousands of iPads.....they would never buy more for themselves.....do the iPads in their inventory have negative value?

You seem to keep insisting that value must be the same for everybody all the time.
But that is where we differ in opinion.
Everybody experiences value differently. Value is subjective, not objective.

[Rien]

is it possible the powers that be prefer people buy bitcoins instead of the traditional fiat alternative?

I'll believe that when I start seeing Bitcoin-related commercials everywhere paid for by big, multinational corporations and governments

That might be closer than you think.
There was some hot shot lately who claimed that all money should be digital so they could force negative interest rates.
What better way to do that than to push bitcoins, and at some time in the future replace these with a govt mandated digital currency (bitdollars).