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Thread: Bitcoin?

  1. #76
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    Quote Originally Posted by Wade Lippman View Post
    You would have lost 10% already.
    Is this the bubble bursting? No way to tell, but you can be sure it will burst eventually.
    https://www.investopedia.com/article...r-currency.asp

    Ever since world currencies abandoned the gold standard and allowed their exchange rates to float freely against each other, there have been many currency devaluation events that have hurt not only the citizens of the country involved, but have also rippled across the globe. If the fallout can be so widespread, why do countries devalue their currency?

    To Boost Exports

    On a world market, goods from one country must compete with those from all other countries. Car makers in America must compete with car makers in Europe and Japan. If the value of the euro decreases against the dollar, the price of the cars sold by European manufacturers in America, in dollars, will be effectively less expensive than they were before. On the other hand, a more valuable currency make exports relatively more expensive for purchase in foreign markets. (See also: Interesting Facts About Imports and Exports.)
    In other words, exporters become more competitive in a global market. Exports are encouraged while imports are discouraged. There should be some caution, however, for two reasons. First, as the demand for a country's exported goods increases worldwide, the price will begin to rise, normalizing the initial effect of the devaluation. The second is that as other countries see this effect at work, they will be incentivized to devalue their own currencies in kind in a so-called "race to the bottom." This can lead to tit for tat currency wars and lead to unchecked inflation.
    To Shrink Trade Deficits

    Exports will increase and imports will decrease due to exports becoming cheaper and imports more expensive. This favors an improved balance of payments as exports increase and imports decrease, shrinking trade deficits. Persistent deficits are not uncommon today, with the United States and many other nations running persistent imbalances year after year. Economic theory, however, states that ongoing deficits are unsustainable in the long run and can lead to dangerous levels of debt which can cripple an economy. Devaluing the home currency can help correct balance of payments and reduce these deficits. (See also: Current Account Deficits: Government Investment Or Irresponsibility?)
    There is a potential downside to this rationale, however. Devaluation also increases the debt burden of foreign-denominated loans when priced in the home currency. This is a big problem for a developing country like India or Argentina which hold lots of dollar- and euro-denominated debt. These foreign debts become more difficult to service, reducing confidence among the people in their domestic currency.
    To Reduce Sovereign Debt Burdens

    A government may be incentivized to encourage a weak currency policy if it has a lot of government issued sovereign debt to service on a regular basis. If debt payments are fixed, a weaker currency makes these payments effectively less expensive over time.
    Take for example a government who has to pay $1 million each month in interest payments on its outstanding debts. But if that same $1 million of notional payments becomes less valuable, it will be easier to cover that interest. In our example, if the domestic currency is devalued to half of its initial value, the $1 million debt payment will only be worth $500,000 now.
    Again, this tactic should be used with caution. As most countries around the globe have some debt outstanding in one form or another, a race to the bottom currency war could be initiated. This tactic will also fail if the country in question holds a large amount of foreign bonds since it will make those interest payments relatively more costly. (See also: Why Your Pension Plan Has Sovereign Debt in it.)
    The Bottom Line

    Currency devaluations can be used by countries to achieve economic policy. Having a weaker currency relative to the rest of the world can help boost exports, shrink trade deficits and reduce the cost of interest payments on its outstanding government debts. There are, however, some negative effects of devaluations. They create uncertainty in global markets that can cause asset markets to fall or spur recessions. Countries might be tempted to enter a tit for tat currency war, devaluing their own currency back and forth in a race to the bottom. This can be a very dangerous and vicious cycle leading to much more harm than good.

  2. #77
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    I am seeing a lot of people with strong opinions, but no desire to learn about digital currency. A quick youtube search will give you 5 to 10 minute videos explaining the technology.

    It's actually very brilliant. Bitcoin is only one example. It won't end up being THE digital currency for various reasons, but it was still a home run. Here are a few things I want to clear up:

    - Digital currency isn't totally anonymous, in fact in most cases the total opposite
    - You pay income taxes on any digital coin that you transfer to USD
    - Inflation / deflation (Amt of digital currency created) is set by a computer program

    Digital currency is really really exciting and has the potential to solve many issues. Just from a currency stand point: there are people who are NOT starving in Venezuela right now because of Bitcoin. Think about that. Regardless of how irresponsible your government is, you can still feed and shelter yourself because you have a currency that is NOT tied to where you are geopolitically located. Why does currency have to be tied to where you are anyway?

    Secondly, and this takes some understanding of how digital currency works, this space is extremely good at keeping records. Even in America, we have to pay a company to find out if the person selling the house really owns the house. Imagine a world where you create a part with serial number XYZ and every buyer of that serial number is known from cradle to grave. How powerful would that be? No receipts necessary. It's too complicated to describe in a forum, but if you are interested check out filecoin or ethereum to get an idea of what can go on in the background. In other words, I could pay in USD to Germany. They would get paid in Euro. But if we both were using a digital currency in the background, then the purchase would be recorded on 1000's of computers.

    A lot of ignorant anger comes from people in wealthy countries who already have a stable currency. These digital currencies have the potential to help millions of people that aren't as fortunate as those living in first world countries. Property ownership records being a huge example.

    Obviously the currencies aren't ready yet, but they will be. They are the future. The technology makes sense. Inflation by mathematical equation or inflation by an old gov't employee that bends to the will of big banks and presidents? You can have your government BS, I'll take the decentralized currency.


    Also, if you want anonymous, use cash. Hell, I wanted to take back a tool I bought with a debit card and the store wouldn't let me because I didn't have a receipt. Not sure why people get bent out of shape about that aspect anyway. Everyone buys and sells cars in their lifetime and doesn't tell the gov't.

  3. #78
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    Quote Originally Posted by andrew whicker View Post

    - Digital currency isn't totally anonymous, in fact in most cases the total opposite
    How so?
    The whole point of it is that it is untraceable; so how isn't it anonymous?

  4. #79
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    Everyone buys and sells cars in their lifetime and doesn't tell the gov't.
    All it takes is getting a bunch of parking tickets for a car sold 6 months earlier to cure a person of not making sure the government knows when a particular car has changed owners.

    Besides, to legally drive it on the streets it needs proper tags & plates.

    jtk
    "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."
    - Sir Winston Churchill (1874-1965)

  5. #80
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    If anyone is interested, it is now 6,900. It was 15,000 when this thread started.

    Ignoring bitcoins promise as a wildly speculative investment, fluctuations like this are not what you look for in a currency.

  6. #81
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    Aug 2010
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    Quote Originally Posted by Wade Lippman View Post
    If anyone is interested, it is now 6,900. It was 15,000 when this thread started.

    Ignoring bitcoins promise as a wildly speculative investment, fluctuations like this are not what you look for in a currency.
    Thanks for the update. Maybe post again when it drops another 50%

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