Bitcoin: more than just the currency of digital vice

The Guardian ^ | March 14, 2013 | Arwa Mahdawi

[yoe]

Dale doesn't exactly look like an international crypto-criminal. He's soft-spoken, baby-faced, and a senior at an Ivy League college. But every couple of weeks the political science major logs onto the Silk Road, an online black market that has been described as an "amazon.com of drugs" to buy wholesale quantities of "molly" (also known as MDMA, a particularly "pure" form of ecstasy), LSD and magic mushrooms. Some of these will be for his personal use, and the rest he'll flog to less tech-savvy classmates at a mark-up of up to 300%. On a good weekend, he can net a profit of around $2,500. It's a more lucrative sideline than waiting tables.

[Greysard]

If you want to buy Bitcoins you simply go to an online exchange service such as Bitinstant and convert your local currency into the virtual money.

There is no shortage of offers to convert real money into something else; primarily it's because that "something else" is worthless.

As I don't buy drugs (and don't even use them, imagine that!) I have no convincing reason to need Bitcoins.

Bitcoin has become the world's best performing currency, with its value spiking 130% just this year.

OK, I see that the author of this article is already on some heavy drugs. Currencies are not supposed to "perform" - they exist for the sole purpose of maintaining their value compared to, say, commodities. If a currency inflates or deflates so fast, it makes it useless for trade.

But if he wants to speculate with Bitcoins, he should be aware that Bitcoin just suffered a major bust after a major boom - just as expected. That's how money of greedy fools is harvested. This will happen again and again because people rarely learn their lessons.

[Catphish]

“Currencies are not supposed to “perform” - they exist for the sole purpose of maintaining their value compared to, say, commodities.”

Really? In case you didn’t hear speculating on the foreign currency market is kind of a big deal . . .

[TexasGator]

You missed his point.

[Catphish]

His point was that Bitcoin shouldn’t be an investment if it is to be used as a medium of exchange wasn’t it? As long as there has been money people have been trading and speculating on it in order to make more.

Also it certainly isn’t a problem if the price of Bitcoin steadily “inflates” in relation to the dollar as long as its value is truly reflected in that price.

[CharlesWayneCT]

Currency traders of course gamble on the fluctuation between the values of different currencies based on the emotional evaluation of how each country is handling their affairs, the relative trade balances, and a lot of pushing around by wealthy traders.

But when a currency changes value within it’s own country by large amounts, it is generally because it is becoming worthless as a currency, and people are bailing.

Because for most people, it really doesn’t matter much whether a dollar can buy 80 yen, or 120 yen. But if they walk into the grocery store and the milk that was $3 yesterday is $5 today, and then it’s $4 tomorrow, that is a real problem.

Because the point of “currency” is to allow someone to exchange a unit of work now, for a unit of consumption LATER. If currency can’t do that, because the units keep changing, you will end up with a barter economy.