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Old Dec 6, 2013, 01:47 PM   #1
macmesser
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China, others adverse to Bitcoin, Ron Paul takes it seriously

http://www.moneynews.com/Personal-Fi...o_code=15D54-1

http://www.google.com/url?sa=t&rct=j...57752919,d.cWc

Congressman Ron Paul, the hero of many libertarians and conservatives, thinks that Bitcoin could pose a serious threat to an already weak dollar and that other governments will follow China in acting against it. I think he might have jumped the rails on this call. I don't know much about it, but as digitized as society has become I don't think we are even close to being ready to accept something like Bitcoin for everyday use. I agree with those who say that Bitcoin and anything like it will remain relegated to the esoteric niche it currently occupies. It has specialized uses among the technologically sophisticated so it will be tolerated, but it's an upstart and not a threat to anything. The fact that there are actually Bitcoin speculators amazes me. Still, things could change quickly and we could be near a tipping point. When people are more universally familiar with it there could be a digital revolution in financial matters as profound as the industrial revolution or the digital revolution itself. Although I wouldn't feel secure with Bitcoin speculating it or even using it, I'm watching it as a bellwether.
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Old Dec 9, 2013, 10:03 AM   #2
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I looked into this Bitcoin phenomenon a few weeks ago and was slightly intrigued. I established a Bitcoin wallet, but didn't want to invest any of my real money, so I went to a site that gives out small fractions of Bitcoin for doing online Crowdflower-type tasks.

So now I have a handful of mBTC (milliBitcoins-- a single Bitcoin can be divided to 8 decimal places), just to say later that I did. I don't yet see any everyday use for this. Nevertheless, it's kind of fun to watch the Mt. Gox ticker price go up and down. Last time I looked, the "worth" of my pitiful wallet stood at about 2.5 times its worth in US dollars when I earned the coin.

A big problem I see with the Bitcoin community right now, though, is the relegation of Bitcoin mining (the cryptography-related process by which Bitcoins become available) to a select few who have invested in expensive specialty computing machines, as the difficulty of the computations have now effectively exceeded consumer-level computer hardware. If Bitcoins get hoarded by these few miners, then the perceived worth-- and that's all there is with this currency-- faces eventual collapse.
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Old Dec 9, 2013, 11:31 AM   #3
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Wouldn't be surprised if the IRS already has a team established to solely investigate it's trace and those who are using it large sums.
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Old Dec 9, 2013, 05:14 PM   #4
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Originally Posted by dXTC View Post
I looked into this Bitcoin phenomenon a few weeks ago and was slightly intrigued. I established a Bitcoin wallet, but didn't want to invest any of my real money, so I went to a site that gives out small fractions of Bitcoin for doing online Crowdflower-type tasks.

So now I have a handful of mBTC (milliBitcoins-- a single Bitcoin can be divided to 8 decimal places), just to say later that I did. I don't yet see any everyday use for this. Nevertheless, it's kind of fun to watch the Mt. Gox ticker price go up and down. Last time I looked, the "worth" of my pitiful wallet stood at about 2.5 times its worth in US dollars when I earned the coin.

A big problem I see with the Bitcoin community right now, though, is the relegation of Bitcoin mining (the cryptography-related process by which Bitcoins become available) to a select few who have invested in expensive specialty computing machines, as the difficulty of the computations have now effectively exceeded consumer-level computer hardware. If Bitcoins get hoarded by these few miners, then the perceived worth-- and that's all there is with this currency-- faces eventual collapse.
Perceived worth is all there really is to your dollars (or any other fiat currency). Fiat currencies are not backed by anything and in fact are instruments of debt. Bitcoin miners are doing the same thing a gold miner or prospector does. They "outfit themselves" (buy, run and maintain their equipment) at personal cost. Haven't looked in to it at all but I was thinking of doing a little mining myself until I read your post. : (

The value of gold (at least as money) is in the difficulty of obtaining it, so Bitcoins and gold share that property. The Fed can obtain all the dollars it wants by simply printing them.

I have another problem with Bitcoin. How do we know the system can't be busted? Theoretical barriers have a way of being circumvented by theoretical breakthroughs.

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Wouldn't be surprised if the IRS already has a team established to solely investigate it's trace and those who are using it large sums.
Probably do. And somebody else probably knows how to game the Bitcoin system.
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Old Dec 9, 2013, 05:44 PM   #5
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I looked into this Bitcoin phenomenon a few weeks ago and was slightly intrigued. I established a Bitcoin wallet, but didn't want to invest any of my real money, so I went to a site that gives out small fractions of Bitcoin for doing online Crowdflower-type tasks.

So now I have a handful of mBTC (milliBitcoins-- a single Bitcoin can be divided to 8 decimal places), just to say later that I did. I don't yet see any everyday use for this. Nevertheless, it's kind of fun to watch the Mt. Gox ticker price go up and down. Last time I looked, the "worth" of my pitiful wallet stood at about 2.5 times its worth in US dollars when I earned the coin.

A big problem I see with the Bitcoin community right now, though, is the relegation of Bitcoin mining (the cryptography-related process by which Bitcoins become available) to a select few who have invested in expensive specialty computing machines, as the difficulty of the computations have now effectively exceeded consumer-level computer hardware. If Bitcoins get hoarded by these few miners, then the perceived worth-- and that's all there is with this currency-- faces eventual collapse.
Hoarding couldn't help them directly. Since Bitcoins would be competing with other currencies they need to have a competitive level of utility. If nobody's using them, they lack utility.


ps- Google "Edison dollars." I don't like the man too much, but he had some good ideas.

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Old Dec 9, 2013, 10:35 PM   #6
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Perceived worth is all there really is to your dollars (or any other fiat currency). Fiat currencies are not backed by anything and in fact are instruments of debt. Bitcoin miners are doing the same thing a gold miner or prospector does. They "outfit themselves" (buy, run and maintain their equipment) at personal cost. Haven't looked in to it at all but I was thinking of doing a little mining myself until I read your post. : (

The value of gold (at least as money) is in the difficulty of obtaining it, so Bitcoins and gold share that property. The Fed can obtain all the dollars it wants by simply printing them.

I have another problem with Bitcoin. How do we know the system can't be busted? Theoretical barriers have a way of being circumvented by theoretical breakthroughs.

----------



Probably do. And somebody else probably knows how to game the Bitcoin system.
I agree with you on your "perceived worth" statement. As for the ease of mining: Solving the cryptographic hashes was easy enough to mine Bitcoins sensibly using a decent-spec consumer-level computer very early on. Later, as the network upped the difficulty, miners started using their computer's GPU. (Many a video card was melted.) Then someone discovered that FPGA/ASIC specialty boxes made mincemeat of hashes, and the hash difficulty has gone up considerably.

I'm still not 100% sure of how the crypto scales its hash difficulty, but suffice to say that consumer-level machines now have laughably low chances of earning a person any Bitcoin unless the person joins a mining group, where the rewards of any solution get shared by all. Even with that, the rewards themselves have shrunk from 50 BTC per found "block" to 12.5 by now, and will just get smaller from here on out, making the ratio of bitcoins earned to cost of electricity used increasingly worse and just not worth it for all but the most dedicated of miners. Eventually, the payout per block will be so low that miners will get bigger rewards from the small transaction fees that Bitcoin exchanges "charge" their users.

There are a couple of anti-bust features. Transactions have to be verified by multiple independent peers before they are available by the recipient to spend; this prevents double spending of Bitcoin. Also, the entire blockchain is public. The creation and transfer of every Bitcoin is 100% traceable by Bitcoin address. However, it is by Bitcoin address alone. Unless and until the FBI seizes an exchange or large-scale site that uses Bitcoin, they'll have a very hard time linking offline identities to Bitcoin wallets.

Then again, there's the recent Silk Road site seizure, meaning that theoretically the FBI is now in effective control of over 1% of available Bitcoins. That saves the Fed from having to mine any for future operations. It'll take a little time, but I'm sure they've already got leads to some of the shadier elements of the Deep Web just from the Silk Road bust, and wallet anonymity is a two-way street.

The "Bitcoin thefts" that have been making the news have all been based on BTC exchange site hacks, and not from any inherent flaws in the protocol. That's why my wallet (ridiculously small as it is) will remain physically with me. If I lose it or forget my encryption password, the only thing I've lost is some time classifying tweets for their emotion and a handful of CAPTCHA tests. No biggie.

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Hoarding couldn't help them directly. Since Bitcoins would be competing with other currencies they need to have a competitive level of utility. If nobody's using them, they lack utility.
Exactly. If the Bitcoin experiment is to have any appreciable amount of success, it has to reach beyond the Deep Web and go mainstream. I've seen a couple of articles where WordPress and the odd real-life coffee shop now take Bitcoin as payment, but beyond that, it's still rather underground and not too far from the "5% tinfoil hats, 95% criminals" demographic stereotype.
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Old Dec 10, 2013, 06:48 AM   #7
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I agree with you on your "perceived worth" statement. As for the ease of mining: Solving the cryptographic hashes was easy enough to mine Bitcoins sensibly using a decent-spec consumer-level computer very early on. Later, as the network upped the difficulty, miners started using their computer's GPU. (Many a video card was melted.) Then someone discovered that FPGA/ASIC specialty boxes made mincemeat of hashes, and the hash difficulty has gone up considerably.

I'm still not 100% sure of how the crypto scales its hash difficulty, but suffice to say that consumer-level machines now have laughably low chances of earning a person any Bitcoin unless the person joins a mining group, where the rewards of any solution get shared by all. Even with that, the rewards themselves have shrunk from 50 BTC per found "block" to 12.5 by now, and will just get smaller from here on out, making the ratio of bitcoins earned to cost of electricity used increasingly worse and just not worth it for all but the most dedicated of miners. Eventually, the payout per block will be so low that miners will get bigger rewards from the small transaction fees that Bitcoin exchanges "charge" their users.
Another problem with Bitcoin is that the getting of Bitcoins will not be conducted on a level playing field, and the degree to which this is true is really unknown. By this I don't mean that, in mining Bitcoins, someone with a cluster of eight Mac Pros has an unfair advantage over someone with a cluster of four Mac Pros. The owner of the superior equipment is indeed entitled to his advantage as he invested in the hardware. What I do mean is that it seems to me that the best energy and computer science can not be owned by just anybody. So the Bitcoin's scarcity is not pegged to a set of primitive operations that everyone understands but rather esoteric knowledge. With this choke point, ultimately Bitcoin can degenerate into just a higher-tech fiat currency. Something like Edison dollars would be a much, much better idea for reforming money but, alas, they are not digitally based. Now, if they were digitally based, they'd be a lot like . . .Bitcoins. (I know this because I just received a promotion selling Bitcoin as the reincarnation of Edison dollars.)

IMO any currency reform that is not backed by something of real value is no reform at all but rather a feint. Even the gold standard, where gold is a scarce symbol for truly valuable commodities, is corruptible. The production of gold is subject to technological improvement and if the improvement is vast the technology used will certainly be esoteric knowledge. My point is that Bitcoin may overcome it's superficial problems and be useful but it's not going to change business as usual.

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Old Dec 11, 2013, 06:53 PM   #8
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Hoarding couldn't help them directly. Since Bitcoins would be competing with other currencies they need to have a competitive level of utility. If nobody's using them, they lack utility.


ps- Google "Edison dollars." I don't like the man too much, but he had some good ideas.

You are right that you need utility, though forgive my adding that without utility you lack liquidity. Dutch tulips and 1990s comic books had a similar craze. People rushed to buy as an investment only to find the only reason for prices rising was a desire to sell at even higher prices, not an increase in utility (rough definition of asset inflation).

A warning that recently a lot of sites are posting and reposting some hogwash article suggesting that bitcoin = Edison dollars. Forgive this external link but this article does a great job of explaining the difference:
Will Digital Currency Replace the US Dollar?

Bitcoin currency has an exact limit for how many bitcoins will be available at the end, BUT here's the rub. Anybody at any time could make their own identical bitcoin system. So while it is perfect in its own environment, anybody can theoretically invest their own future bitcoins thus causing inflation within the bitcoin system. I guess you'd call that digital alchemy.

Gold for all its faults is used in electronic devices and in jewelry. It looks shiny and does not rust. When women get it they often give the men who give it to them something those men want. Bitcoin can never do that.
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Old Dec 11, 2013, 07:31 PM   #9
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Forgive this external link but this article does a great job of explaining the difference:
Will Digital Currency Replace the US Dollar?
I read the article at that site and linked to it without first checking out the site. It is rather political and pessimistic in nature and I do not endorse it.
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Old Dec 12, 2013, 08:04 AM   #10
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You are right that you need utility, though forgive my adding that without utility you lack liquidity. Dutch tulips and 1990s comic books had a similar craze. People rushed to buy as an investment only to find the only reason for prices rising was a desire to sell at even higher prices, not an increase in utility (rough definition of asset inflation).

A warning that recently a lot of sites are posting and reposting some hogwash article suggesting that bitcoin = Edison dollars. Forgive this external link but this article does a great job of explaining the difference:
Will Digital Currency Replace the US Dollar?

Bitcoin currency has an exact limit for how many bitcoins will be available at the end, BUT here's the rub. Anybody at any time could make their own identical bitcoin system. So while it is perfect in its own environment, anybody can theoretically invest their own future bitcoins thus causing inflation within the bitcoin system. I guess you'd call that digital alchemy.

Gold for all its faults is used in electronic devices and in jewelry. It looks shiny and does not rust. When women get it they often give the men who give it to them something those men want. Bitcoin can never do that.
I think we are talking about different ideas of utility; I meant suitability for use as currency while I think you mean intrinsic value or usefulness of a thing for its own properties. Bitcoin's only possible utility could be as medium of exchange. I think the properties that a medium of exchange needs are ease of authentication (is it genuine?), a high degree of existential persistence (will it go bad or evaporate in your purse?), stability (will it fluctuate wildly in value?), scarcity or difficulty in obtaining the thing. The last two are interrelated. IMO, no potential medium of exchange has all of these properties to anything but an acceptable degree of certainty, i.e. a degree which affords a practical time horizon for the holder in addressing changes in its "monetary properties" (there's probably a technical term). Bitcoin seems to have good marks as far as these properties go. Even if something has these properties it is only potentially useful as currency, because if it isn't accepted as such it lacks utility in my sense. (Acceptance would have been on my list of properties, except that it's not intrinsic to a thing.) You mention liquidity, which roughly corresponds to acceptance, so I think we are on the same wavelength. I would disagree that something needs to have intrinsic value to serve as a medium of exchange, although that always is a plus (I also like gold). Of what intrinsic value is fiat currency other than its rag content? Yet it is universally used, albeit with hidden cost to its users. I agree with your point that Bitcoin is not a new version of Edison dollars, but that doesn't mean it's a stillborn idea. Whether or not it could or will reduce the overhead of using money to "ye person on ye street" is a question I wouldn't bet the ranch on.

If others made their own Bitcoin systems would that be like having silver coins and gold coins? I guess if enough people did start mining bit money, there might be a glut of it and that would be inflationary as far as bit money goes. What would that do to regular money? It gets crazy complicated pretty quickly and maybe that's a warning sign that the tail is starting to wag the dog. I disagree that Bitcoin is perfect within its own system as there might be advantages or disruptions that could affect miners and users of Bitcoins but this is based on my sketchy understanding so I have no strong position. Your example of investing future Bitcoins is interesting and a more conventional objection to my feeling that there might well already be a tilted field. That would indeed be digital alchemy.

As I mentioned, I also like gold and it has a high degree of excellent properties which explains its historical position as the premier "real money." Interestingly, Bitcoin boosters include in their pitch reports that the Chinese have quietly begun to dump their vast hoard of gold. Ye person on ye street has no way of knowing for sure what's going on except to make this stuff a profession. Even gold can be manipulated, unfortunately, but the problems inherent in a gold standard might be equally well or even better managed than those inherent in fiat money. Anything is manageable in a fair way if there is a will to do so.

IMO, although gold has various technical uses in the physical world, not enough of it is used to be a significant component of the end products value. For instance, what fraction of your dentist bill is due to the cost of the gold in your filling? How much of the cost of your iPhone is due to gold used in the electronics? These uses probably consume a only a very small fraction of the gold supply and the goods in question would probably not change much in price if the price of gold doubled or halved. Probably gold is valued mainly because it possesses ideal qualities as a repository of value itself and secondarily because over the millennia its aesthetic qualities and physicality have made it an ideal medium to craft symbols and works or art which are intended to convey great value. Which, I think, is what you said more succinctly. To be sure, one cannot bestow a Bitcoin necklace on the woman of one's desires and even if one could, it could never mean the same thing.

Will look at your link as I like to get opinions from all quarters. Gives one a slightly better chance of figuring out what's going down.

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Old Jan 20, 2014, 07:41 PM   #11
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has anyone used the open source to code to create their own currency? if so any pointers?
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Old Jan 21, 2014, 01:36 PM   #12
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has anyone used the open source to code to create their own currency? if so any pointers?
Unless you have several thousand people who are willing to invest their time in the concept, I wouldn't bother. The digital currency market is seeing a flood of candidates: Litecoin, Peercoin, Namecoin, Anoncoin, and the infamous Coinye West (now defunct, as was expected), and several more. Any new ones are likely to get lost in the crowd. I've only seen Bitcoin and Litecoin talked about in mainstream media as serious contenders; the others seem to be mentioned only on Bitcoin-related sites (especially gaming/gambling sites).

Seriously, Dogecoin and Kittehcoin? F'real?
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Old Mar 21, 2014, 03:45 AM   #13
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“...as digitized as society has become I don't think we are even close to being ready to accept something like Bitcoin for everyday use.” - I have to agree with you on that. I think this cryptocurrency is what our modern generation needs.
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Old Mar 21, 2014, 11:38 AM   #14
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has anyone used the open source to code to create their own currency? if so any pointers?
Anyone can create their own currency. But it is only useful if others are willing to accept it for payment. All money is now a fiction, in the sense that it isn't really backed by anything tangible. I live on an island with it's own currency.... accepted at most stores, even the credit union has an ATM to dispense it. But.... totally useless off-ilsand. Except as a collector's item. Which is partly how the currency funds it's administrative costs... they count on a certain percentage being 'bought' with Canadian legal tender, and then disappearing.
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Old Mar 21, 2014, 03:52 PM   #15
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...I live on an island with it's own currency.... accepted at most stores, even the credit union has an ATM to dispense it. But.... totally useless off-ilsand. Except as a collector's item. Which is partly how the currency funds it's administrative costs... they count on a certain percentage being 'bought' with Canadian legal tender, and then disappearing.
So... something like Disney Dollars, good for purchasing items on Disney resort properties but worthless otherwise except as a souvenir or collector's item. Interesting.

/I must admit I had to look up "Salish Sea" to get a better background of your story. The more you know...
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Old Mar 21, 2014, 06:00 PM   #16
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So... something like Disney Dollars, good for purchasing items on Disney resort properties but worthless otherwise except as a souvenir or collector's item. Interesting.

/I must admit I had to look up "Salish Sea" to get a better background of your story. The more you know...
A little more than Disney Dollars…. It's backed by a non-profit society and it needs to keep an equivalent amount of Canadian currency on deposit - to gain the confidence of the local retailers.

Yes, Salish Sea is now an official name….
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Old Mar 21, 2014, 08:24 PM   #17
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Anyone can create their own currency. But it is only useful if others are willing to accept it for payment. All money is now a fiction, in the sense that it isn't really backed by anything tangible. I live on an island with it's own currency.... accepted at most stores, even the credit union has an ATM to dispense it. But.... totally useless off-ilsand. Except as a collector's item. Which is partly how the currency funds it's administrative costs... they count on a certain percentage being 'bought' with Canadian legal tender, and then disappearing.
im pretty sure money has only ever been what value we allow it to have. thats the funny thing.
but i was thinking more just for fun. to learn and make it for fun in my free time. i like to learn how things work. was just looking into where might be a good place to start checking it out or if there were any tips. so i could make a currency for my friends. i read it is written in c language so i was just curious about other knowledge. thanks for ur input!
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Old Mar 22, 2014, 10:35 AM   #18
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im pretty sure money has only ever been what value we allow it to have. thats the funny thing.
but i was thinking more just for fun. to learn and make it for fun in my free time. i like to learn how things work. was just looking into where might be a good place to start checking it out or if there were any tips. so i could make a currency for my friends. i read it is written in c language so i was just curious about other knowledge. thanks for ur input!
Not that long ago money was backed by something tangible. You could go into a bank and (at least in theory) get silver or gold in exchange. And before that money often was made of silver or gold equivalent to the face value. An early way for nefarious folks to create illegal wealth was to trim a tiny amount of silver or gold from the edge of a coin. Not enough to make the coin obviously defaced... but if you trimmed enough coins you got enough material to create new 'currency'.

However, if you and and friends just want to create a way of exchanging value through something created through software... then I'd say you were creating a currency.... as long as you and your friends agree to what that value is and agree to actually accept the currency. I suspect you will get two lessons here... the SW side, plus learning the complexities of maintaining a sane and coherent monetary policy....
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Old Mar 24, 2014, 03:00 PM   #19
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Not that long ago money was backed by something tangible. You could go into a bank and (at least in theory) get silver or gold in exchange. And before that money often was made of silver or gold equivalent to the face value. An early way for nefarious folks to create illegal wealth was to trim a tiny amount of silver or gold from the edge of a coin. Not enough to make the coin obviously defaced... but if you trimmed enough coins you got enough material to create new 'currency'.

However, if you and and friends just want to create a way of exchanging value through something created through software... then I'd say you were creating a currency.... as long as you and your friends agree to what that value is and agree to actually accept the currency. I suspect you will get two lessons here... the SW side, plus learning the complexities of maintaining a sane and coherent monetary policy....
True but then again gold and silver is only worth the value we put on it as well. Since it is bought up and hoarded to make a false value similar to diamonds.
it is interesting tho.
someone make macrumors coin that we can trade on here
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