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kaz
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Bit Coins - Part III
Nov 1st, 2019 at 2:33pm
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OK, were we are:

Part I - talked about public/private keys
Part II - talked about conducting transactions with bit coins

Part III - account balances (this one)

Part IV - some uses, pros and cons of bit coins (future)

Bit coin chains keep a record of every transaction ever done.  So to know your balance, all you have to do is to read every transaction ever performed, net the ones you were involved in, and that is your balance.

Of course on a daily basis, that isn't practical.  So there are services that do it.  Some are paid fees to do it, but anyone can do it by simply downloading every transaction ever performed and adding it up. The services that keep track of transactions though will always tell you (and everyone else who wants to know) your balance.  Obviously important to know if someone wants to trade with you.

Now, you should ask how you can trust the ones keeping balances.  This is a decentralized currency.  What if they lie?  The answer is that since anyone can download every transaction and add them up, if you are a balance service and are wrong, lots of people will start telling you that.  There would be lots of noise and messages alerting people to your mistake.  You'd lose credibility.  As a decentralized environment, you are always being checked.

Also, there may be some who are paid fees to check.  Depends on the currency and the size and use and so forth.  But for this to work, it's dependent on that services will keep your balance, and they will check each other.

Now let's say there are two services who keeps balances and one decides to misbehave and accuse the other of being wrong.  Well, again, others can check.  The bad actor will be inundated with accusals, the truth will come out.

This is great because we want a decentralized structure (no Fed), but we want accuracy.  A free market provides that
  

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yamcha
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Re: Bit Coins - Part III
Reply #1 - Nov 1st, 2019 at 8:08pm
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I kind of get it and I like the decentralized structure.  I will wait till the last workshop and see.  One thing you said last time is that it doesn't matter what bitcoin is based on or against.  So if gold and fiat currency were to be devalued or even disappear, would bitcoin still retain value?
  
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Jeff
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Re: Bit Coins - Part III
Reply #2 - Nov 2nd, 2019 at 9:30am
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yamcha wrote on Nov 1st, 2019 at 8:08pm:
I kind of get it and I like the decentralized structure.  I will wait till the last workshop and see.  One thing you said last time is that it doesn't matter what bitcoin is based on or against.  So if gold and fiat currency were to be devalued or even disappear, would bitcoin still retain value?
Fiat currency only has "value" because of legal tender laws. Monopoly money would have "value" if legal tender laws applied to it, but not much, because it's to easy to counterfeit. Smiley

It seems to me that bitcoin only has value (if it does) because it is useful, if it is...

BTW, you can't "devalue" gold unless you increase the supply of gold.
  

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yamcha
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Re: Bit Coins - Part III
Reply #3 - Nov 2nd, 2019 at 9:57am
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Jeff wrote on Nov 2nd, 2019 at 9:30am:
BTW, you can't "devalue" gold unless you increase the supply of gold.


FDR did.
  
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kaz
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Re: Bit Coins - Part III
Reply #4 - Nov 2nd, 2019 at 10:16am
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yamcha wrote on Nov 1st, 2019 at 8:08pm:
I kind of get it and I like the decentralized structure.  I will wait till the last workshop and see.  One thing you said last time is that it doesn't matter what bitcoin is based on or against.  So if gold and fiat currency were to be devalued or even disappear, would bitcoin still retain value?


I didn't say it "didn't matter."  I said cryptocurrency can either be asset backed or not.  Whether it is asset backed or not makes a great difference, like any other currency.  But it can be a cryptocurrency and asset backed or not.  I'll try to explain that in part 4.  Probably next weekend
  

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Jeff
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Re: Bit Coins - Part III
Reply #5 - Nov 2nd, 2019 at 10:42am
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yamcha wrote on Nov 2nd, 2019 at 9:57am:
FDR did.
FDR changed the official price of gold in dollars, which changed the value of the dollars, but not of the gold.
  

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kaz
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Re: Bit Coins - Part III
Reply #6 - Nov 2nd, 2019 at 10:51am
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Jeff wrote on Nov 2nd, 2019 at 10:42am:
FDR changed the official price of gold in dollars, which changed the value of the dollars, but not of the gold.


Yowza, Jeff got one right.  Stunning
  

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Jeff
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Re: Bit Coins - Part III
Reply #7 - Nov 2nd, 2019 at 10:54am
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kaz wrote on Nov 2nd, 2019 at 10:51am:
Yowza, Jeff got one right.  Stunning
Law of averages. Smiley
  

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BobK71
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Re: Bit Coins - Part III
Reply #8 - Nov 7th, 2019 at 4:29pm
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I haven't logged in for a while, so I apologize if this is slightly tangential.

Does Bitcoin have 'real value?'  Does gold?  Does fiat?

The truth is, all monies are religious faiths.  Period.  No exceptions.  (That is, assuming the money in question passes basic tests like permanence, fungibility, etc.)  So the answer to all these questions is, it depends on your faith.

That said, top politicians and bankers interfere heavily in the market for money since the start of the modern age.  The twin towers of political and religious power have proved a winning combination when when working in concert.   (As during the Middle Ages.) This is primarily why fiat currency has value today.

It's hard to fight a state church, especially when most people aren't even aware of its existence.

That said, a state church of money concentrates power to such an extent that human nature means this power will be abused, so much so that the system becomes inherently unstable over the long term.

In the modern Western context, this effectively means there will always be a market for non-state monies like gold, Bitcoin, etc.
  
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kaz
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Re: Bit Coins - Part III
Reply #9 - Nov 7th, 2019 at 8:07pm
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BobK71 wrote on Nov 7th, 2019 at 4:29pm:
I haven't logged in for a while, so I apologize if this is slightly tangential.

Does Bitcoin have 'real value?'  Does gold?  Does fiat?


So in this question, I'm not quite clear what you're arguing.  Are you saying that asset backed currencies don't have 'real value' or are you asking if bit coin is an asset backed currency?

To the first question, if you're arguing that gold doesn't have 'real value,' then sure, any asset is based on perceived value.  It could be one day say that gold is so plentiful that it's not valued.  Then other assets could also be the assets backing currency if they are valued, like platinum.

The short answer to the second answer is it can be or not.  I talk about that in Part II if you're interested.  I believe it came up in the first couple replies of the discussion.  I can go into that more, but you leave your meaning here too vague, please clarify which way you're intending to go, either that currency needs to be asset backed, or that doesn't matter to you either
  

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