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Originally Posted by GregWeld
Well === it didn't take long for the bubble to burst did it....
I'm always happy for anyone that scores - regardless of how they did it... My problem is with folks not having a clue about values of "things"... We all know housing can't double and triple every other year... we all know a 1969 Camaro CLONE (now called a tribute car) has no value at $200K.... yet somehow people get sucked in and sucked up.
Tony - I agree there is some value in the Bitcoin system... but the value has to be in trading the "coins" for goods and services... Not just trading the coins themselves. So I agree with you... it's too bad that there was a pile on affect that made this go crazy and if it falls back to "norm" ($30ish) then it will hurt the legitimacy of the entire system.
It's funny - people LOVE stuff when it's going up -- and when it comes back to "normal" they don't want to have anything to do with it (whatever it is).
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I still love the principle of bitcoin. Yes, it has some serious weakness, one being that the main exchange was under constant dos hack attacks and at the same time flooded with new accounts. They were shut down all day yesterday. So its clear they need to shore that exchange, and more people need to use the dozens of other exchanges out there too. But CNBC has just officially added bitcoin to their ticker.. so that is pretty cool I think. We are seeing steady pricing today around $75 after all the weaklings sold out.
I will remain in the system.. I see it only getting stronger and growing. And you can exchange for goods and services. There are websites where you can buy precious metals, electronics etc using it.
Quote:
Originally Posted by sik68
These recent posts on bitcoin have really guided me to learn more about currencies and so here's a summary based on how I understand it.
A currency falls into 2 categories: an instrument of equity, or an instrument of debt.
A currency that is backed by a tangible asset (like gold) is an instrument of equity. At any time, your notes can be traded in for a ratio quantity of the asset. Of course, it can be argued that the value of gold is arbitrary, but there are a lot of valid reasons why it works. Not rocket science, but I'm stating the obvious to draw the distinction with non-backed currencies.
A currency that is not backed by a tangible asset is only an instrument of debt; an IOU traded among people who agree on its value. It is only backed on faith by those using it.
Again, not rocket science...the concepts are basic but thinking about the difference between an asset based monetary system vs a debt based monetary system and you start to see the world through a different lens.
I know this is not directly Investing 102 material, but I think it applies, because it is important for us as investors to recognize the distinctions between not only speculation vs investing, but also the distinction between real assets and IOUs, aka liabilities.
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That's great. I think currency is interesting too. It important to remember that our dollar is not back by gold/silver anymore, it's an instrument of debt as is the euro and most other currencies from central banks. I don't want to derail the investing thread here, but it's good information to know. I still like the traditional topics here, but I also like precious metals and other investments for diversity.