Forum: Author Hangout

With his science fiction knowledge he sells high and buys low. And ends up each (sell, buy) step with more BTC than when the step started.

Not a novel strategy.
https://public.com/learn/what-to-know-about-short-selling-stocks?yay=vjm95k2&gclid=EAIaIQobChMI773lmJ7T9QIVJsmUCR1YRQDkEAAYASAAEgLqJfD_BwE

Shorting is a quick path to the soup line.

Shorting is a quick path to the soup line.

I didn't say it was a good strategy, just that it wasn't a novel idea.

I noted that the daily volume of BTC in Oct/Nov 2011 was mostly over a billion BTC. That sounds strange. BTC trading hands multiple times each day?

Look at the trade volume for other cryptocurrencies from the same time. As I recall, the others were first converted into BTC, then traded for cash or other cryptocurrencies. That would artificially bump up the trade volume.

Note that Bitcoin has no intrinsic value

How does that differ from, say, the U.S. dollar or the currencies of many other countries?

How does that differ from, say, the U.S. dollar or the currencies of many other countries?

The difference is that I can buy anything anywhere with the regular currencies and can't do the same with bitcoin. In the described situation bitcoin might be a good way to increase value fast but it's useless in enabling to spend large amounts of money. In other words, it's more a speculative currency and less of a real-life usable currency.

Note that Bitcoin has no intrinsic value

How does that differ from, say, the U.S. dollar or the currencies of many other countries?

It's a trust issue.
While theoretically nearly anything can be used as money – something most people agree to accept instead of the goods offered in barter – it must be something scarce which can't be easily increased by anybody. So seashells work as long as finding them – unbroken by surf - is so time consuming you are better off doing other work like fishing, building boats etc.
While governments can print more money, devaluing the money, the people can't usually switch to another currency because in most countries other currencies are no legal tender, you may even get fined for not accepting the local currency.
This is the difference to Bitcoin (and all other alike).

To get enough people to accept something as currency for daily use they must trust in its value and its stability – that's where Bitcoin e.a. fail.

HM.

When you're in Egypt, what law is there to say they have to accept US dollars?

None. And he didn't say anything about merchants in Egypt accepting US Dollars. He mentioned going to an exchange bank and exchanging his US Dollars for local currency.

If China nukes the US back to the stone age, what good is a law making US dollars legal tender for payment of debts when tendered to a creditor?

At that point we are down to barter, or maybe gold and silver if you have any.

My point is that unregulated currencies like Bitcoin are more global than those owned by a single country.

Bitcoin is not a global currency if you can't spend it for purchases everywhere under all cirmustances.

The fact that bitcoin and other cryptocurrencies can't be spent on anything anywhere off-line is fatal on this point.

Therefore there are no global currencies.

Correct, but irrelevant, Starfleet Carl didn't in any way suggest that there were.

He talked about going to Egypt, but he didn't talk about spending US Dollars there, he talked about going to an exchange bank and exchanging US Dollars for Egyptian currency.

That is what exchange banks are for, exchanging one nation's currency for another's.

But there's no law to force them to exchange another country's currency.

There are exchange banks in every country and I wouldn't bet against most countries having laws requiring that they handle transactions to/from the local currency.

When you're in Egypt, what law is there to say they have to accept US dollars?

None. And he didn't say anything about merchants in Egypt accepting US Dollars. He mentioned going to an exchange bank and exchanging his US Dollars for local currency.

If China nukes the US back to the stone age, what good is a law making US dollars legal tender for payment of debts when tendered to a creditor?

At that point we are down to barter, or maybe gold and silver if you have any.

While the US is no longer on the gold standard, it specifically states 'This note is legal tender for all debts, public and private' on each bill printed today.

Now, a private store could REFUSE to take your cash, but that's on them - there's no law that requires them to do so.

The definition of "legal tender" says the store has to accept your US-Dollars. Depending on the amount probably not as cash and quite certain not in small bills or coins. Imagine a customer wants to pay $200 in small coins (dime or smaller) he has brought in a burlap sack. Or if he tries to pay his new $50,000 car with one-dollar-bills.

They can't insist on payment in British £, Swedish Crowns or Australian $ or any other foreign currency.
OTAH, governments can refuse to name any currency as legal tender, or – as happend in Monte Negro after the break-up of Yugoslavia – name a foreign currency as legal tender ( this case it was the DM).

HM.

The definition of "legal tender" says the store has to accept your US-Dollars. Depending on the amount probably not as cash and quite certain not in small bills or coins.

Nope. The US law on "legal tender" says that US currency is legal tender for the payment of all debts.

point of sale retail transactions are not debts.

https://www.treasury.gov/resource-center/faqs/currency/pages/legal-tender.aspx

I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

While theoretically nearly anything can be used as money

Immediately thought of the Douglas Adams HHGTTG item from the Christmas link episode of the original radio series (now 'fit the seventh'):

"How can you have money," demanded Ford, "if none of you actually produces anything? It doesn't grow on trees you know."
"If you would allow me to continue.. ."
Ford nodded dejectedly.

"Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich."

Ford stared in disbelief at the crowd who were murmuring appreciatively at this and greedily fingering the wads of leaves with which their track suits were stuffed.

"But we have also," continued the management consultant, "run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship's peanut."

Murmurs of alarm came from the crowd. The management consultant waved them down.

"So in order to obviate this problem," he continued, "and effectively revalue the leaf, we are about to embark on a massive defoliation campaign, and. . .er, burn down all the forests. I think you'll all agree that's a sensible move under the circumstances."

-- this quote was also highlighted by the Financial Times

Read the rest of the sentence.

There's a huge amount of, for example, USD in circulation as actual currency — used to pay people's wages, buy their groceries, fill their gas tanks, pay their taxes and their mortgages and their rent, and so on. All of those transactions are based on the idea that a dollar has a certain value, and that's what gives it that value. While that drifts some, gradually dropping over time, there's a major government with significant economic power that has a vested interest (no pun intended) in ensuring that it doesn't drift too much too fast. There is speculative investment in USD, but that's a fairly small influence on its price compared to the vast amount of it involved in fueling the global economy.

For Bitcoin, on the other hand, as I already said, while there is some used as actual currency, that's a small amount compared to the volume that's traded as a pure speculative investment, so its price is not dependent on the accepted value people actually buying and selling things using Bitcoin believe it has, but on the opinions of a bunch of speculative investors. Basically, the price of Bitcoin goes up because people buying Bitcoin think it's going to go up more, and it goes down because people selling Bitcoin think it's going to go down more. And this has nothing to do with the value that the people using it to launder their drug and slave money think it has.

And this is why people are freaking out because USD has had 7% inflation in the last year, but BTC can have 700% inflation in a day and no one bats an eye. Except for the cryptobros who were betting it was going to go up instead.