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Author Topic: The new oil  (Read 1348 times)

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Offline Texan77

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The new oil
« on: October 01, 2021, 11:16:20 PM »
El Salvador state plans to mine bit coin using cheap power it gets from geothermal power. El Salvador has gone to using bit coin as legal tender. Now it hope to mine its ways into being a rich nation using its geo thermal power from its volcano. It has made all debts payable in bit coin and so far nearly 70 per cent of the population has a crypto wallet. Citizens were given thirty dollar worth of bit coin for opening up the wallet and the money could be spent anywhere. It will be interesting to see how this experiment works out and if other small states follow this model.   

https://finance.yahoo.com/news/el-salvador-mines-300-bitcoin-162456640.html?fr=yhssrp_catchall
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Offline Texan77

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Re: The new oil
« Reply #1 on: October 03, 2021, 12:44:14 AM »


If it is done by enough countries it will just depress the price of crypto currencies. Only countries with cheap electricity will be able to use this new oil. This will have more to do with the collapse of countries like the UK and western Europe who have a high price of electricity than the USA. But really I do not think that will happen either but rather the question is what will it do for the price of crypto. That is because this country wants to make a lot of crypto and not make any goods or services to sell on the world market. They are using the buyers of crypto in other countries to support their mining efforts and make the currency have value. On the other hand because bit coin is so volatile I am not sure how they are going to be able to conduct trade.  They will have to buy dollars then trade but the cost of everything will vary so much everyday no one will know what anything will cost in the future.
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Offline andrewfi

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Re: The new oil
« Reply #2 on: October 16, 2021, 04:23:23 AM »
Texan77, you are wrong to think that increased adoption of crypto currencies, in particular Bitcoin will tend to cause their prices denominated in dollars to go down.

The opposite is the case. Most crypto currencies have a limit of supply. In the case of Bitcoin that's 21 million coins. The more people or organisations hold and use Bitcoin the greater the demand for the limited supply and thus the price will increase in dollar terms.

As currencies move away from proof of work, which requires 'mining' the less power will be consumed in the creation of the tokens.

Right now, even proof of work coins such as Bitcoin are seeing changes as miners introduce new ways of managing power consumption. So, in the USA we are starting to see miners associating their output with flared gas - hitherto waste energy. Yes, El Salvador is using geothermal power as are miners in other parts of the world. The cost of energy is becoming less important.

In addition, I think you do not understand volatility or how it doesn't affect purchases made in crypto currencies and absolutely not the use case for countries that currently use the dollar in trade such as El Salvador.

I am sure that you have questions that can clarify your understanding. Please feel free to ask. I and others will try to help you.
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Offline Texan77

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Re: The new oil
« Reply #3 on: October 17, 2021, 10:58:27 AM »
Andrew if they are able to make Crypto currency for free what gives the currency value?
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Offline Manny

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Re: The new oil
« Reply #4 on: October 17, 2021, 12:17:56 PM »
Andrew if they are able to make Crypto currency for free what gives the currency value?

What gives dollars, euros or pounds value if they can just print or electronically create more?

I agree it's a very interesting experiment.
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Offline Texan77

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Re: The new oil
« Reply #5 on: October 17, 2021, 12:25:27 PM »
Andrew if they are able to make Crypto currency for free what gives the currency value?

What gives dollars, euros or pounds value if they can just print or electronically create more?

I agree it's a very interesting experiment.

When one increases dollars and other currencies to a point it cause the production of more goods. WE have reached a problem recently. Because of supply chain problems and resources shortages now increasing dollars no longer creates more goods and will cause a huge problem going forward.

The dollars created beyond the increase of goods and services has gone into driving up the price of the stock market and real estate. We are likely to see and end to these bubbles next year or soon after.  Now this year we are having 5 per cent inflation as the money did not go into the creation of anything but rather paying people to stay home. If the central Banks raise interest rates the world as we know will change for the worse. If they do not then it will get bad as inflation will continue to get worse until something breaks.
3) There has been no "threat" to invade Ukraine. The US invented that and fed it to a complicit media.

Offline andrewfi

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Re: The new oil
« Reply #6 on: January 20, 2022, 12:02:52 PM »
Actually, creating at least some crypto currencies does have a cost. Bitcoin costs money to mine, largely from electricity costs. So there's a value below which production makes no sense.

But value comes not just from cost of production, aesthetics, or a figure plucked from one's arse. Value is often derived from utility. That's often given, erroneously, as being behind the value of gold.
In the case of crypto currencies many of them do have utility. However many people, including more than a few who own crypto have little idea about that aspect.

Texan77 your statement about production is kinda correct however you seem to not have much idea of the relationship or what has been happening in the USA over the past few years.

When you discover what has actually been happening with money creation you'll be a tad concerned - if you understand the words you wrote.
...everything ends always well; if it’s still bad, then it’s not the end!


 

 

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