How To Use Bitcoin – The Most Important Creation In The History Of Man

[pantsorama]

The same can be said of the dollar on the same basis.

Ummm. No. The dollar literally represents a portion of the US GNP. Which is guaranteed by law. Is that abstract? Yes, but not so abstract that I can't say that, for example, my one dollar represents 1 / the total amount of dollars in circulation as a fraction of US GNP.

BTC has no such backing.

 

[ThunderChunky]

Is there evidence that anyone was able to convert Bitcoins to large amounts of another currency (U. S. dollars, for example) and have the converted sum successfully deposited to an external bank account when the price was skyrocketing last year? Any examples of deposits over $10,000? Any examples of deposits over $100,000? Deposits over $1 million?

There are a few people living large, bought cars, bought real estate, one prominent figure I think ran off to aruba and denounced his US citizenship. The mining companies also convert a lot of their mines coins to currencies just to cover expenses.

 

[Scopedog]

There are a few people living large, bought cars, bought real estate, one prominent figure I think ran off to aruba and denounced his US citizenship.

Are these people that bought expensive things from companies that accept payment in Bitcoin or people who converted Bitcoins to a fortune in another currency? My understanding is that a lot of people were only able to 'convert' or 'cash out' Bitcoins by trading them well below market value for cash from individuals outside an exchange or by buying highly-valued items using Bitcoins.

The mining companies also convert a lot of their mines coins to currencies just to cover expenses.

I'm not saying that large withdrawals and deposits can't or haven't happened but has any one posted evidence of large deposits in their bank accounts? I've mainly read stories of people requesting large withdrawals/conversions and getting repeated transfer delays and promises of an eventual deposit.

 

[ThunderChunky]

Are these people that bought expensive things from companies that accept payment in Bitcoin or people who converted Bitcoins to a fortune in another currency? My understanding is that a lot of people were only able to 'convert' or 'cash out' Bitcoins by trading them well below market value for cash from individuals outside an exchange or by buying highly-valued items using Bitcoins.



I'm not saying that large withdrawals and deposits can't or haven't happened but has any one posted evidence of large deposits in their bank accounts? I've mainly read stories of people requesting large withdrawals/conversions and getting repeated transfer delays and promises of an eventual deposit.

Well I heard of someone buying a tesla, and tesla did not accept any bitcoins, so presumably someone cashed out the BTC (or they found an intermediary). My understanding was similar types of deals happened for real estate too. I think exchanges have limits on how much you can withdraw at a time. As, I understand it big deals often happen off the exchanges. The CEO of BTC china said he thinks off-exchange transactions may account for an equal trading volume as the exchanges. This is how second market seems to operate as they state they can deal with large volumes without impacting the price. Typically small scale off the exchange transactions charge a huge premium rather than discount, but I would guess the pattern reverses for big transactions. These are obviously not advertised or made in public.

 

[wrs]

Ummm. No. The dollar literally represents a portion of the US GNP. Which is guaranteed by law.

Where in the world did you get such an idea?

Is that abstract? Yes, but not so abstract that I can't say that, for example, my one dollar represents 1 / the total amount of dollars in circulation as a fraction of US GNP.

Please provide a link in support of this interesting claim. However, even if this were true, it would be meaningless because GNP isn't even measurable, it's an estimate and as far as I know, GDP is what everything refers to these days.

BTC has no such backing.

Yeah and until you demonstrate otherwise, neither does the dollar as far as I know.

 

[ThunderChunky]

Yeah and until you demonstrate otherwise, neither does the dollar as far as I know.

You can pay your debts to the US government in USD. You can write to the public bitcoin ledger with a unit of bitcoin.

 

[catsmate]

Interesting article on bc mining.

 

[Brian-M]

It has a value based on the amount of investment made on behalf of the concept due to infrastructure and applications as well as acceptance.

You could apply the same logic to motor vehicles, but the vast amount of money spent on infrastructure (such as roads and gas stations) doesn't mean that the rusty old clunker in your backyard is worth anything more than scrap value (ie, intrinsic value, not utility value).

The utility of bitcoin as a means of transferring wealth is completely redundant, it provides little or no utility value beyond what already established methods of wealth transfer provide (such as cash, eftpos, credit cards, cheque, money order, paypal, ect).

Given the instability of bitcoin prices, it currently has little or no value as a means of storing wealth either.

So if it has little or no value as a means of transferring wealth, and little or no utility value as a means of wealth storage, what exactly it the utility value of bitcoin?

The same can be said of the dollar on the same basis.

Yes, and the many real-world instances of hyperinflation show clearly how quickly the unit value of a fiat currency can drop to almost nothing, even though the utility value and supporting infrastructure remain unchanged.

 

[wrs]

You could apply the same logic to motor vehicles,

Sure except that cars are not a form of currency nor does anyone believe them to be so it's not even apples and oranges.

The utility of bitcoin as a means of transferring wealth is completely redundant, it provides little or no utility value beyond what already established methods of wealth transfer provide (such as cash, eftpos, credit cards, cheque, money order, paypal, ect).

Same argument can be made for pesos, pounds, yen and yuan. Your point?

 

[superfreddy]

The dollar has the backing of the "full faith if the US government"

 

[jhunter1163]

The dollar has the backing of the "full faith if the US government"

And, as someone said upthread, BTC has the backing of the full faith and credit of the international drug trade.

 

[psionl0]

It has a value based on the amount of investment made on behalf of the concept due to infrastructure and applications as well as acceptance.

Not true. The amount of money spent on infrastructure has no effect on the price of bitcoin (although the reverse is true) because its mining rate is constant. If the "acceptance" went down to zero the so would the bitcoin price - regardless of the bitcoin infrastructure.

This is true of ATM cards and credit cards for the dollar.

ATM and credit cards are not money (anymore than a bitcoin wallet is money). Like cheques, they are just a means of transferring fiat currency from one person to another.

 

[wrs]

ATM and credit cards are not money (anymore than a bitcoin wallet is money). Like cheques, they are just a means of transferring fiat currency from one person to another.

I didn't mean to imply that they were. My statement was rather poorly worded. What I meant to convey is that ATMs and credit cards are representative of the infrastructure and applications supporting the dollar. The fact that those things make dollar transactions nearly ubiquitous and easy gives the dollar some value based on it's ease of use as an medium of exchange.

 

[pantsorama]

Where in the world did you get such an idea?



Please provide a link in support of this interesting claim. However, even if this were true, it would be meaningless because GNP isn't even measurable, it's an estimate and as far as I know, GDP is what everything refers to these days.



Yeah and until you demonstrate otherwise, neither does the dollar as far as I know.

Money supply (ie total $ in the system) times velocity of money equals GNP. Basic macroeconomics. Look up Money supply on Wikipedia. It how the Fed works. It how the US prints money and controls inflation. It works I theory and in decades of practice.

Call it crude and imprecise, and I will agree. But call it nonexistent (which you did) and I'll call you wrong.

 

[psionl0]

The fact that those things make dollar transactions nearly ubiquitous and easy gives the dollar some value based on it's ease of use as an medium of exchange.

Again, not true. Assuming that as a result of ATM and credit cards, people spend more money than they would otherwise do then the effect would be inflationary if anything. ie "those things" devalue the dollar.

 

[ponderingturtle]

Again, not true. Assuming that as a result of ATM and credit cards, people spend more money than they would otherwise do then the effect would be inflationary if anything. ie "those things" devalue the dollar.

No. Credit in general does as this is how the Fed manages inflation. But credit cards don't. Why are you so against lending?

 

[psionl0]

No. Credit in general does as this is how the Fed manages inflation. But credit cards don't. Why are you so against lending?

Is that supposed to be a response to what you quoted?

 

[wrs]

Money supply (ie total $ in the system) times velocity of money equals GNP. Basic macroeconomics.
Look up Money supply on Wikipedia. It how the Fed works. It how the US prints money and controls inflation. It works I theory and in decades of practice.

Call it crude and imprecise, and I will agree. But call it nonexistent (which you did) and I'll call you wrong.

How about I call you wrong instead.


Here is what you said

The dollar literally represents a portion of the US GNP. Which is guaranteed by law. Is that abstract? Yes, but not so abstract that I can't say that, for example, my one dollar represents 1 / the total amount of dollars in circulation as a fraction of US GNP.

The dollar representing a portion of GNP is meaningless. The claim that it's guaranteed by law is what I was saying is nonexistent. The dollar is not guaranteed by law to be the value of a portion of GNP, it just is based on some silly estimate but that isn't a valuation of the dollar itself because GNP just represents some total volume of economic activity.

If you can find such a law, let me know. I suspect you might be referring to the law that requires the Fed to have as it's objectives in managing the banking system, full employment and low inflation. Those are simply objectives and they rarely meet the objectives (the mid-late 90s were the closest they got in my lifetime).

I think that law is based on the quantity theory of money which goes (in it's simplified form) something like

MV=PQ

where in simplified terms P is some price level and Q might be GDP (not GNP) and M is some measure of money in the economy while V is the velocity of money. However, this isn't what the Fed targets, they quit using money supply as their target a long time ago and started focusing on interest rates. Lately, they switched to the unemployment rate.

So I am afraid you aren't up to date on this stuff but suffice it to say, a dollar is not guaranteed to have some portion of the value of GDP by law.

What M amounts to is anyone's guess. It's not currency in circulation. In case you didn't know it, the Fed used to have three measures of M called M1, M2 and M3. Now it has M1, M2 and they track something else they call MZM which is closer to the M in the equation.

So while you have some notion of how you think things are, they are not that way. The shadow banking has totally screwed the Fed along with other financial "innovations". The idea that some single entity can control the economy by controlling the money supply is an academic fantasy. It's not reality and the quantity of money theory hasn't been proven to have any validity in the short term which is why the Fed hasn't been effective using it in it's management of the banking system.

 

[wrs]

Again, not true. Assuming that as a result of ATM and credit cards, people spend more money than they would otherwise do then the effect would be inflationary if anything. ie "those things" devalue the dollar.

Whether purchasing power of the dollar is decreasing due to inflation has nothing to do with the utility value of the dollar. That should be the same as some percentage of it's purchasing power no matter what. That is all I am suggesting. That utility value is there no matter what the purchasing power is.

 

[lupus_in_fabula]

Money supply (ie total $ in the system) times velocity of money equals GNP. Basic macroeconomics. Look up Money supply on Wikipedia. It how the Fed works. It how the US prints money and controls inflation. It works I theory and in decades of practice.

Call it crude and imprecise, and I will agree. But call it nonexistent (which you did) and I'll call you wrong.

I think you give the wrong impression. We must infer velocity by dividing the nominal value of GDP with our preferred money supply measure (e.g., M2).

Money supply… it's not how the Fed works and it's not how the US prints or controls inflation.

San Francisco Fed:

Q: How does the Fed determine interest rates to control the money supply?

A: Your question highlights a common misconception about how the Fed conducts monetary policy. For a period of time, the Fed did in fact implement monetary policy by controlling the monetary aggregates (the quantity of money). However, developments in the financial services industry, changes in the relationship between the money supply and the economy, as well as changes in views on monetary policy, eventually led to the Fed reverting back to implementing monetary policy through changes in interest rates (the price of money).

Alan Greenspan in a testimony to Congress already in 1993:

The historical relationships between money and income, and between money and the price level have largely broken down, depriving the aggregates of much of their usefulness as guides to policy. At least for the time being, M2 has been downgraded as a reliable indicator of financial conditions in the economy, and no single variable has yet been identified to take its place.

***
QTM, as in the quantity "theory" of money, is junk.


Edit. >>> I see wrs already had a post about this in. Oh well.