[ExI] Bitcoin

[Mirco Romanato]

Il 04/04/2013 12:53, Eugen Leitl ha scritto:

>> As I wrote to another fellow here on ExI, my concern for the long
>> term is that even while Bitcoin is structured such that there is a
>> maximum number of coins which can be mined, ensuring scarcity and
>> thus in this respect making it similar to a precious metal, there
>> is no limit to the number of digital currencies which might compete
>> with it. I know of at least six, including Litecoin which is said
>> to be silver to Bitcoin's gold. But are digital currencies really
>> analogous to precious metals? I rather doubt it. I can make a new
>> digital currency but I cannot make a new precious metal.

> There's a network effect working against nonestablished currencies.

This is true

> The value of Bitcoin is dependent on the ecosystem of a network of
> existing nodes maintaining the transaction logs, minting new coins,
> and an according economics where you can spend them (quite lagging
> there, obviously).

The speculation, like all speculation, try to bring the future nearer
the present.
In this case, the speculation increase the price of Bitcoin faster than
the natural increase of price due to increased use. But this
speculation, driving up the price, cause an increase of the ability of
Bitcoin to allow larger transactions to happen without shocking the markets.

At 50$/BTC a transaction of 36K BTC would shake the market with 1.5
millions $ transaction being liquidated in few hours.
Today, the same transaction would require just 12K BTC or the same
shaking would be caused by a 4 millions $ transaction.
At 200 $ (in my opinion we will be there before the end of June for
sure) this type of transaction will be of 6 M $.

Mt.Gox have a queue of 20.000 account to be verified, just today.
They moved from 4 to 24 people just to verify the accounts.
100$ per account in the Bitcoin ecosystem is around 2M $, moving up the
market cap much much more (probably around 100-200 M more).

> Precious metals like gold and platinum have industrial uses, and --
> barring quantitative transmutation -- are going to remain scarce.

Gold industrial applications are so scarce that at current prices many
mines can not continue to stay open. In fact, around half of the gold
mined is used for industrial purposes and the rest go slowly increasing
the available stock.

It is not industrial use that make gold a monetary metal, nor it is its
scarcity alone.

And the same feature making gold a good monetary metal make bitcoin a
better currency system.

Mirco