Bitcoin - Scam or Legitimate Currency

[Geoff_M]

And how is Bitcoin much different than money digitally direct-deposited into your bank account and then spent on-line with a debit card?

 

[schrammalot]

I've been asked if I accept it with my business.

Yeah, no thanks. It just screams laundering to me.

 

[Albort]

https://en.bitcoin.it/wiki/FAQ

 

[PrincessKsMom]

Come on, seriously. Has anyone checked with Bernie Madoff to see what he's been spending his time doing in prison and if he has access to a computer?

 

[TinkerBelled]

The thing is, dollars are backed up by the full faith and credit of the US. The US is a stable economy and has never defaulted on its debts.*

Bitcoins are mysterious and are backed by no traceable entity. There is no one to trust or to hold responsible.

Tulips it is.

*More or less. There's the war of 1812 and a paperwork error in the 70s, but not a true default.

 

[JanaDee]

Sounds just like play money to me.

 

[Disneychick75]

When we invest, it's in gold or silver that we can keep in a safe. The price goes up and down but at least the metal is real.

 

[Jennasis]

Why is gold or silver so special? It is of no value to ME (can't eat it, build with it, heat my home with it etc). It's only got a monetary value because someone decided it did. Like wampum or beads, perhaps gold or silver one day will no longer be the expensive shiny object.

Things only have value if/when enough people decide it does.

 

[Arsenal1982]

Why is gold or silver so special? It is of no value to ME (can't eat it, build with it, heat my home with it etc). It's only got a monetary value because someone decided it did. Like wampum or beads, perhaps gold or silver one day will no longer be the expensive shiny object.

Things only have value if/when enough people decide it does.

Correct.

 

[Disneychick75]

Why is gold or silver so special? It is of no value to ME (can't eat it, build with it, heat my home with it etc). It's only got a monetary value because someone decided it did. Like wampum or beads, perhaps gold or silver one day will no longer be the expensive shiny object.

Things only have value if/when enough people decide it does.

I never said it was special. It's the same as buying paper gold or silver- we wouldn't do that either because we like to have our investments in hand. It's the reason we won't invest in the stock market either.
One day it might not be the expensive shiny object but when we see it begin to head that way, we'll sell.

 

[Arsenal1982]

One day it might not be the expensive shiny object but when we see it begin to head that way, we'll sell.

Assuming you have time.

 

[Jennasis]

I never said it was special. It's the same as buying paper gold or silver- we wouldn't do that either because we like to have our investments in hand. It's the reason we won't invest in the stock market either.
One day it might not be the expensive shiny object but when we see it begin to head that way, we'll sell.

Oh shoot! I didn't even see your comment above...took me a minute to figure out. I wasn't responding to you in my post, just commenting on what "money" is in general. So sorry! It sure looks like I was talking back at you.

 

[DeaverTex]

I think that tulips is a good comparison, but it sounds more like a shell game to me. I wouldn't want to be holding a few grand or more in bitcoins when they nosedive, and I think that will happen because there are too many folks who are dealing in bitcoins like they were Nutrilife or something.

By the way, dollars are accepted not only because they're backed by "full faith and credit", but because they're legal tender and you're required to take them. There is no such requirement for bitcoins.

I wonder what happens when somebody steals your bitcoins? What value is established for them? Is it even a crime? It's certainly not a crime to "steal" a few bazillion gold coins from your characters in some MMO, even though it's possible to buy those gold coins for real money. (Just like bitcoins.)

It's late, and I'm certain somebody will explain why I'm being dense, but I remember the Segue.

 

[Geoff_M]

By the way, dollars are accepted not only because they're backed by "full faith and credit",

Actually that phrase doesn't apply to the US Dollar, but instead applies to debt obligations sold by the US Treasury. In the Constitution, it's a term that refers to government contracts. All that phrase means is that the US government promises it will repay its debt obligations in a timely manner per the legal terms spelled out in the bonds sold... with dollars. It's not a promise of their future worth.

but because they're legal tender and you're required to take them. There is no such requirement for bitcoins.

Actually, there is no such power in the term "legal tender". From the U.S. Treasury itself:

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.

If I decide to sell my car and state the asking price is 5 Troy Ounces of 99.999% gold, and someone offers me the current equivalent in US Dollars, I'm free to tell them to get lost and come back with some gold.

I wonder what happens when somebody steals your bitcoins? What value is established for them? Is it even a crime? It's certainly not a crime to "steal" a few bazillion gold coins from your characters in some MMO, even though it's possible to buy those gold coins for real money. (Just like bitcoins.)

As I understand it, the Bitcoin system tracks the ownership history of each "coin". So think of a world where a system automatically knows the serial numbers of each bill in everyone's pockets and tracks the transfers of each note from person to person (and I've met some people that think the government can do that with spy satellites now!). In this world, if someone steals your wallet and tries to use one of the bills contained in it, the system would catch the fact that the note doesn't belong to that person and instead know who is the rightful owner. That's an oversimplification, but it's my understanding that this is at the core of the Bitcoin system.

Am I saying that people should dump dollars for Bitcoin? No. Is there risk in using Bitcoin? Sure. But in the final analysis, the Econ 101 rules still apply: A currency is only worth what people are willing to accept for it on any given day. It doesn't matter if it's US Dollars, gold, Bitcoins, wampum belts, or shark teeth necklaces. People might be right that the value of Bitcoin now is overblown and a "correction" might occur. But people have also been saying that about a lot of things over the years (the Dollar included).

 

[Schmeck]

What happens when someone actually does figure out how to crash the system, or hack into it, or has access already and is scamming the system as we speak?

Or what happens when there's a power outage in a large area - oops, sorry, you have no access to payment, no food/supplies for you! (Thinking of superstorms Sandy and Katrina)

Let's see, what else could go wrong?

 

[Uncleromulus]

It seems to me like a "sounds great" thing until you REALLY check into it.

 

[Schmeck]

The bitcoin.org website is pretty bad. This part cracked me up:

"With Bitcoin, there is no credit card number that some malicious actor can collect in order to impersonate you".

Sounds like one of those scam emails that try to get you to send money, LOL! Got to watch out for those malicious actors! I'm more worried about scam artists myself.

 

[jenm2878]

Overstock.com and Amazon accepts bitcoins. There are also websites that you can exchange bitcoins for gift certificates. So it's not entirely like having poker chips you can't cash in, but the places you can use it are limited right now.

ETA: There are also banks that will exchange bitcoins for cash.

 

[Schmeck]

But how do you get bitcoins to start out with? Aren't they worth a certain amount of US $? Exactly how does one start out?

I'm asking because based on how much $$$ you have to pay to get the bitcoins it's just another currency with an exchange rate/etc. If you don't use $$$ to get bitcoins, then how do you get them?

 

[DeaverTex]

But how do you get bitcoins to start out with? Aren't they worth a certain amount of US $? Exactly how does one start out?

I'm asking because based on how much $$$ you have to pay to get the bitcoins it's just another currency with an exchange rate/etc. If you don't use $$$ to get bitcoins, then how do you get them?

You can buy them with another currency, you can sell things and ask for bitcoins in payment, or you can mine for them. It's an involved number crunching situation, involving buckets of processing power, that seems to involve looking at Bitcoin transaction data and "discovering" stuff, but it's about as clear as mud to me. Every time you do it right, you get a certain number of bitcoins. It's how they release new ones into the system, and if I'm reading correctly, the sole purpose of mining is to release new Bitcoins at a very slow, controlled rate.

I still don't trust it. I mean, from reading the (a?) Bitcoin site, the originator or originators is still this shadowy existence who hasn't been seen. That's just not something that I'm comfortable with, nor that gives me confidence. And I still think that, if it hasn't been hacked, it will be, and that's not like having money in a bank covered by the FDIC or insurance. You're on your own -- tough luck, cookie.