One early investor's story about Bitcoin and criticism of Brendan's absolutist position

[Firefly]

Duke you know well I'm not sorry to have missed any boat. As regards Tuilips. I've a nearer comparison. When the Celtic tiger was rising I used to come back to Ireland in wonder at how Ireland was and how I'd lost out. How everybody was suddenly rich. I posted on here about various instances of it. Some of you might remember my post about wandering into a furniture store to be hit by sign for credit. Thus bit on reminds me of that madness.

Another, my sibling told me I'd missed the boat and they would be millionaires in a couple of years. 10 hard years later I see the pain that madness brought.

Elac will be fine if has banked. He seems to be in it for pure speculation. He will make money on the later idiots. As long as he doesn't go back in with his winnings. I await his figures on life changing banking.

A friend of mine told me he was going to retire in a year's time. That was about 6 months before everything went wallop. Mortgaged up to his neck and a difficult decade has ensued.

I don't know anyone who has borrowed to invest in bitcoin however so the collateral damage if there is a bubble shouldn't be too bad.

 

[Bronte]

Indeed Firefly. And I just noticed something. Bitcoin. Big con.

You could borrow to invest in Eircom. I did. Easiest money I ever made and first and last time I bought shares.

 

[fpalb]

My understanding of this is that as economies developed or "emerged", barter as a means of exchange became too cumbersome and so commodity money developed. That is a standardised unit of something that had value of itself. Salt as an example.

There is a theory that barter was never that common, which makes sense as it's quite impractical. Small communities would simply remember the debt as you or I might do with friends. When trading with other more distant communities they may have bartered. Correct noting that it's cumbersome, and commodity money as well as other types of money emerged. Salt is an example of a commodity one, people also used things like sea shells and Rai Stones are one of the weirder ones: https://en.wikipedia.org/wiki/Rai_stones

So some had intrinsic value like salt, and some didn't like sea shells or rai stones. Why did some prosper more than others? and why did gold emerge as unanimous winner above all the others? Think about it.

Indeed. And my understanding of that development is that as trade developed further commodity money also became cumbersome and so fiat currency was developed.

This is a really interesting point, because people (with a little coercion) were willing to no longer use gold (which has intrinsic value) and instead use something more practical (which did not have intrinsic value).

This is money which while worthless of itself, just a bit of paper, has value because the law supports it. The law, a government or its central bank, says that it must be accepted in payment of debt and taxes. Without that legal support a €50 note is just a piece of paper. This legal support is all that gives fiat money its value. Bitcoin has no such support.

Another interesting point. Is it due to the legal support? or is it forced demand via forbidding competing monetary systems? or is it forced demand due to only accepting taxes in it? or is it that fiat has no in-built scarcity so a government is required to ensure that scarcity?
Maybe a combination.

The central bank control of fiat money does of course mean that the central bank can manipulate the value of its currency, by printing more, by raising interest rates. This control by the central bank is limited by the need to maintain confidence. Print too much money and your tax receipts will be devalued. Some people think this CB control is a bad thing. (I do not agree but that is another argument. Actually the Duke develops this point above, our posts crossed).

Sometimes it just goes down anyway right? Sterling took a big dive after the Brexit vote, is there anything their central bank could have done to prevent it?

Bitcoin has no such CB control, I have yet to see any explanation why this is a good thing, beyond a general dislike of government interference.

You say that as if general dislike of government interference is not enough?