Are Bitcoins the New Pogs? (No, really)

http://newhive.com/carriecutforthyoung/are-bitcoins-the-new-pogs

by zachv2222 • 13 years ago

22 66 13 years ago

diminoten3• 13 years ago

Finance fads are called bubbles, as far as I understand, and yes, there is a Bitcoin bubble. I don't think anyone's going to argue that point.

But I think it's a bad idea to dismiss Bitcoin because of the bubble. The specific value of a bitcoin is kind of irrelevant to the things you can do with bitcoin. Obviously you have to care how much a bitcoin is worth, and the fluctuations make it hard to take seriously as a currency, but the utility of bitcoin isn't really tied to its value.

maxerickson3• 13 years ago

A more stable value would increase the utility of bitcoin.

For instance, arbitration transactions would be great, except they carry something like 20% currency risk over periods as short as a day.

interstitial2• 13 years ago

Funny how the volatility of gold prevents it from being a currency (see egold, etc). But the volatility of bitcoin is magic rainbow-spewing miracle of portents.

baddox7• 13 years ago

Finance fads are called bubbles, as far as I understand, and yes, there is a Bitcoin bubble. I don't think anyone's going to argue that point.

You have to be more careful with your wording for these statements to be testable and therefore meaningful. When you say "there is a Bitcoin bubble," what exactly do you mean? Do you mean that the USD price will go down to x in the next y months (and you have to fill in x and y for it to be testable)?

dllthomas3• 13 years ago

How would you have come up with an X and Y at the start of tulip mania?

KrisAndrew2• 13 years ago

I think he means: "there is an intense, relatively widespread, sudden, superficial interest in bitcoin that will eventually be followed by a sudden loss of interest in bitcoin." Bubbles are only identifiable after they have popped.

notahacker4• 13 years ago

One of the defining traits of a bubble is that it continues to exist partly because people convinced there is a bubble are unwilling to bet on when it will burst. "The market can stay irrational longer than you can stay solvent". (BTC and pre-IPO tech companies also have the added advantage of being impossible to short)

But here's a testable hypothesis for you: ten years from now a Bitcoin will not be convertible into more than $10, if it's reliably convertible into currency at all.

richcollins• 13 years ago

I don't think anyone's going to argue that point

Apparently lots of people are willing to argue that point by putting their money where their mouth is.

mullingitover• 13 years ago

If bitcoin ends up as a mainstream payment option alongside Visa and MasterCard, there is no bubble right now. If not...

astrodust• 13 years ago

If Pogs end up a mainstream payment option alongside sandwiches mom makes and candy bars, then there is no bubble right now. If not...

scotty793• 13 years ago

If a cart that can ride only on two metal rods laid on the ground and needs to burn coal to move will become mainstream mode of transportation alongside walking and horse buggy then there's no bubble. If not... you'll have a lots of useless metal rots rusting in the desert.

interstitial2• 13 years ago

Tamagotchi Trading Coins.

gress• 13 years ago

Fie on bitcoin!

post_break• 13 years ago

I'd totally run my 280x at full tilt if I could mine for pogs.

rbosinger• 13 years ago

I have tubes of mint condition pogs back at home. Some of them were ads for movies like Jurassic Park. I wonder if they'll ever be worth anything... I wonder if I could trade them for bitcoin?

scotty793• 13 years ago

http://www.ebay.com/sch/i.html?_trksid=p2050601.m570.l1313&_...

You probably won't be able to convert them to bitcoins directly though.

clavalle• 13 years ago

I don't think Bitcoins are a fad. I think bitcoins are the first of 'designed currencies'.

Bitcoins have certain advantages (and disadvantages) that emerge based on the design characteristics of the Bitcoin system. They are hard to forge, they are hard to steal (at least if you plan on spending them), and they are easy to transfer (among other things).

These are valuable characteristics. These characteristics (among others) differentiate bitcoins from traditional currency and make them very well suited for certain types of transactions. They also have characteristics that make them less than ideal for other types of transactions...transactions that the parties don't want logged, for example.

The currencies we have right now, (more or less accidents of history rather than based on designs with defined goals) government backed notes and precious commodities, have their own advantages and disadvantages, too.

Now that we have a counterpoint, I have a feeling we will see more currencies designed around different principles and goals. MintChip, the Canadian government backed cryptocurrency, will be interesting to watch since it will be a blend of traditional currencies and cryptocurrencies. What niche will it fill in the market? It is all very exciting.

johnwyles5• 13 years ago

Just to echo your point; I saw an article where the author likened Bitcoin to investing in IBM before Microsoft or Apple were ever companies. There will surely come something else which improves upon the currency and its algorithms, security, and ecosystem, but until then we still have a functioning cryptocurrency which is well understood and trusted by a select community.

AaronFriel• 13 years ago

Yes, they are. The fundamental problem of Bitcoin is the massive number that were accumulated when they were cheap. It's a problem more-so than any of the technical problems that have been discovered to date or even a moral preference for derivatives that permit greater anonymity.

The problem with Bitcoin being a major currency is that the early miners have accumulated large portions of the total share of Bitcoin wealth. That's a fundamental problem that does not exist with fiat currency like money, and while many consider it an asset that Bitcoin's inflation is highly regulated, very few individuals would be comfortable with the idea that certain individuals would own billions or trillions of USD worth of them in the future. And that is what will happen if Bitcoin maintains its upward trajectory in value and more and more people use Bitcoins as a form of wealth.

What banks would feel vastly more comfortable with would be certain technological abuses of the Bitcoin protocol to make it a substitute for real money. For example, using the transactions to create cryptographic, trusted proofs of USD transfers with negligible amounts of BTC actually involved.

Yes, Bitcoins are the New Pogs, and some folks early on bought out the first few production runs of them hoping that people would eventually replace currency with their New Pogs. That notion should be deeply disconcerting to anyone who invests in BTC (either in mining or with money) because at some point those people that have a large portion of the total amount of BTC that can ever exist might decide to cash out or abuse the market.

Detrus• 13 years ago

Weren't there some attempts to regulate?

possibilistic• 13 years ago

The fundamental problem of Bitcoin is the massive number that were accumulated when they were cheap. [...] The problem with Bitcoin being a major currency is that the early miners have accumulated large portions of the total share of Bitcoin wealth.

Should (yet another) digital currency be created to address this issue? Imagine if every person on earth was assigned an equal amount of such a digital currency (ignore the infeasibility). Would that be a healthier market?

vectorpush• 13 years ago

I'm not an economist, I don't see why this is a deal breaking issue. Could you please elaborate?

If they spend or trade the coins, then they are distributed, if they do not, then its just cash under a mattress.

Additionally, it seems to me that a trillion USD "worth" of bitcoin is only a theoretical trillion seeing as there aren't any institutions capable of (or willing to) cash such a sum.

tedunangst• 13 years ago

People who are wealthy today but don't own bitcoins have little incentive to welcome the bitcoin nouveau riche to their ranks. Typically when you swap out old pesos for new pesos, you have a fixed exchange rate such that the rich stay rich and the poor stay poor.

tolmasky• 13 years ago

Because it's not like a small percentage of the population owns a disproportionate amount of the capital already right?

DustinCalim• 13 years ago

If it weren't for the early miners, who believed in the currency enough to invest time and money in machines to mine them, I don't think there would be Bitcoin wealth to distribute...

If this is your belief, there are plenty of Altcoins trading for < $0.25 that you can buy up now and have this theory work to your advantage.

The problem is nobody wants to be the first to leap(it's very human to avoid risk); they wait first for social confirmation but in doing so, lose their advantage.

I suggest you read about coin coloring and take a closer look at the altcoins.

WizzleKake2• 13 years ago

The problem with Bitcoin being a major currency is that the early miners have accumulated large portions [...] That's a fundamental problem that does not exist with fiat currency like money

You have identified this as a problem without explaining why it is a problem. Can you elaborate?

glomph• 13 years ago

If it is true that a large proportion of bitcoins belong to s a small number of people it has some pretty extreme consequences. It puts the effective monetary policy of bitcoin in the hands of random individuals. If they want the value to go down they can sell more, if they want it to go up they can sell less. Controlling that amount of the market makes them a defacto mint. That is a worrying scenario. It also is a complete opposite of the decentralization that bitcoin is supposed to represent.

iamjustin• 13 years ago

Could I transfer my Pogs anywhere in the world, in a matter of minutes, for an incredibly small fee? Were Pogs also a distributed public ledger? Was there any reason to use Pogs over the dollar?

If the answer is 'No', maybe you should re-think your position.

The amazing thing about Bitcoin is the network. Saying it's "the new pogs" shows a huge lack of understanding of what Bitcoin is.

greyman• 13 years ago

I think the real question now is, whether Bitcoin can be stopped.

For example, banks are "not feeling comfortable", since more fiat money are being extracted from their money network and put into BTC network. For example, I took about half of my savings and bought bitcoins - all my bank can see is, that the money "vanished", and they can't collect any more fees from services they could offer me handling those money. Actually, no bank knows where the value now is, since I made a lot of BTC transactions since then.

It's same with the wealthy people - yes, they will not feel comfortable about the idea that other individuals will own most wealth in the future. But what can they do about it? It's like today: most people are not comfortable with the fact that just a few individuals or their families control 90% of the total wealth, but that is about all they can do, feel uncomfortable about it.

With bitcoin it's similar, it's not that bitcoin will succeed only by making banks and rich people comfortable, bitcoin might succeed despite that.

Also, I realized an interesting property about the BTC network, which is not talked about much. Namely, people who invested into BTC, do not have much incentive to do damage to the network, since that would only cause the BTC value to go down, and they would incur loses to themselves - they will realize, that by behaving "properly" they can gain more.

It's more possible that some hostile government or other entity will try to sink bitcoin, but it might be hard to achieve. And if their attack will not be very quick, the BTC owners can detect that something is wrong, and could quickly transfer the money to alternative cryptocurrency.

diminoten3• 13 years ago

That money didn't "vanish". You paid someone for those coins, and that person put their money into a bank.

dragonwriter2• 13 years ago

For example, I took about half of my savings and bought bitcoins - all my bank can see is, that the money "vanished"

Nope. Your bank can see that that money was transferred out of your bank account and where it went -- quite likely, to another bank account (possibly, even, at the same bank -- so many of them being global institutions).

Currency isn't consumed when its used to buy things, whether its a car or a bitcoin.

notahacker4• 13 years ago

I don't think banks are at all uncomfortable about the decision of a few people to buy Bitcoins.

You could have bought the entire stock of BTC ever produced at the highest rate ever paid for a Bitcoin on an exchange, for less than 0.5% of the excess reserves held by banks in the US alone. That's the reserves the banks don't need to be legally compliant and solvent, and those reserves are themselves a tiny fraction of the banks' outstanding loans which is where they actually earn their money. So the banks don't exactly see BTC as a threat, especially since retail banking operations aren't exactly a major profit centre for them.

And, as someone has correctly pointed out, your hard-earned savings that you're risking went into the bank account of the person you bought Bitcoins from, therefore staying in the banking system anyway.

Bitcoin, on the other hand, lacks the solvency guarantees the banking system does: if people decide they want to leave en masse, the price crashes. Even if BTC owners will be able to "quickly transfer the money to alternative cryptocurrency", if their government (or the US government) decides to effectively ban Bitcoin transfers, it's certain they will end up able to purchase less than they were prior to the attack.

May I politely suggest you reconsider your decision to put half your savings into BTC before it's too late.

johnwyles5• 13 years ago

You whole argument is based on the premise that these early miners have not already sold Bitcoin and still hold it. Besides, even if they were holding it, the market could not absorb them selling it all at once so those miners would be very wise to sell slowly over time and at the demand.

In my opinion I think most of the early miners have already cashed out and what we are seeing now is the exchange of already "used" bitcoins.

maxerickson3• 13 years ago

There are millions of bitcoin that have never changed hands.

letstryagain• 13 years ago

Luckily Bitcoin's success does not depend on the banks 'feeling comfortable' with it.

maurycy• 13 years ago

It could be argued that in the long term it simply does not matter:

http://en.wikipedia.org/wiki/Coase_theorem

altoz3• 13 years ago

Understanding the trend towards Bitcoin usage is less in understanding the caveats developer Amir Takki employs: i.e. “a pure form of money with a mathematical basis,” and more about the social behaviours of those playing the system, those employing the mechanics of scarcity for leverage.

Ugh, I hate these sort of comments. It's as if bitcoin is only an exercise in speculate supply and demand. People, there is a huge network and protocol that's behind this thing! It's not just about the currency everyone's trading, it's about the underlying network! There's a distributed registry that anyone can look up. There's a source of truth for every single bitcoin (and future uses thereof) in existence. There's a reason network difficulty trends with price.

No, bitcoin is NOT just a bunch of traders trading and no, that's not what's going to give you an understanding bitcoin. That's like saying that understanding how a computer works is just by watching the monitor. There's an underlying fundamental, dare I say, intrinsic value to bitcoin that gets ignored by almost everyone fixated on bitcoin the currency's price when the real interesting thing is in bitcoin the protocol.

scotty793• 13 years ago

Bitocoin protocol is just a tool for guaranteeing scarcity and transferability. Better tool than ever existed. Better tool than government assurances that are basis of the value of fiat currencies.

altoz3• 13 years ago

I wouldn't say "just a tool". It's an enormously powerful tool that has backups everywhere, is not corruptible without at least 50% of the hashing power on the network, and has a consistent, decodable, verifiable format.

No registry of deeds by the government, no bank vault and certainly no website has this level of security around transactions.

chc2• 13 years ago

Your comment seems to be saying, essentially, "You are talking about X, but I would prefer it if you talked about Y, because I think that is more interesting."

Another example would be, "You are talking about how to seamlessly add someone to a photo in Photoshop, but I would rather hear about how to optimize image algorithms for efficient cache usage, because I think that is more interesting."

This article is talking about Bitcoin as a commodity and a currency, which are actual use cases for it. I agree that the Bitcoin protocol is interesting, but to demand that people only talk about the protocol and not Bitcoins themselves seems a bit restrictive to me.

altoz3• 13 years ago

The author specifically claims that to understand bitcoin usage, you only need to look at the trading activity. That is what I'm disputing. No, you can't understand bitcoin usage without actually understanding the protocol.

In your analogy, it would be someone saying that you can understand Photoshop by looking at how people use the resulting pictures. It's nonsense and that's what I'm disputing.

johnwyles5• 13 years ago

I actually think what he meant is that Bitcoin is valuable from the network that stands behind it and all the tools, websites, and services that have sprung up around it. In addition to all of that you also have the actual rules of the bitcoin system ("protocol"), which of course is interesting from a technical / mathematical standpoint, but also setup a structure and ecosystem that may (or may not) have long term staying power until the next and more sophisticated cryptocurrency comes along.

WizzleKake2• 13 years ago

No.

mdotk• 13 years ago

This title made me laugh

Are Bitcoins the New Pogs? (No, really)

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