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If no one controls this then how can you be sure it is stable? How is it regulated and most importantly how is it valued? I'm having a hard time grasping the idea of not being centralized and regulated somehow… can someone game the system… blah blah blah etc!?

marked as duplicate by Murch, Salvador Dali, Stéphane Gimenez, John T, dchapes Feb 9 '14 at 1:41

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  • It's not stable. Just like stock prices, its value is controlled entirely by market forces. Neither requires centralized or regulated things. Both can be gamed, with some difficulty. – Tim S. Jan 27 '14 at 21:49
  • How is Argentinian peso valued?, how is dollar valued? how is euro valued?.....Answer those questions and you will answer your own. Dollar value is not given by US, is given by the other countries that put a price for a dollar and the other way arround. – YoMismo Jan 28 '14 at 14:21
  • Currency is typically backed by something a country or a company i.e. A stock value is based on a company and their performance in the market. What causes the value to go up if there is no import/export or performance to base it off? – user12781 Jan 28 '14 at 23:53
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If no one controls this then how can you be sure it is stable?

There is a bigger discussion around this point - it implies a that a currency controlled by a government is stable.

Stability is not determined by a government, no matter what you may believe. The value of the Euro or the Pound or any other currency is determined by the general consensus in the market that the currency has a certain value. When markets turn against a currency it can be a problem. Note for example how the US dollar collapsed to half its value against the Euro couple of years ago.

It is the same for Bitcoin, except that what you need to consider is that Bitcoin is still very new and early valuations of new technologies are naturally unstable because markets do not know them very well and can get spooked easily - hence the volatility. This will become less and less as time goes on.

How is it regulated and most importantly how is it valued?

The system is self regulating, but it depends on what you mean by regulation. Regulation is not always necessary for successful technologies. Is facebook regulated? Is amazon? Both have issued their own form of currency, and nobody talks about regulating them.

What sort of legal framework do you think is suitable to "regulate" bitcoin? Even the regulators in most countries are issuing notices stating that they do not have the authority to regulate Bitcoin. Note they are not banning Bitcoin. This means exactly what it says, and doesn't say.

I'm having a hard time grasping the idea of not being centralized and regulated somehow… can someone game the system… blah blah blah etc!?

I'm not surprised you are having a hard time. You probably do not know enough either about the Bitcoin protocol, the technology behind it, how markets work, how markets can be gamed (or not).

I can't answer a vague question on this but I suggest if you think of a specific situation where something might happen, post your question and someone will answer.

  • Appreciate the comments. I guess its confusing because currency is typically backed by something a country or a company i.e. A stock value is based on a company and their performance in the market. So with the bitcoin value just free floating it doesn't feel logical that businesses would take this in exchange for services. What causes the value to go up if there is no import/export or performance to base it off? It is what it is I'm just having trouble grasping it... – user12781 Jan 28 '14 at 23:49
  • There are really of lot of questions here you must read some more and find out how the world actually works. For example: "being backed by a country" is utterly meaningless, particularly if that country is also carrying large amounts of debt. Think about it in other terms, how could you offer a guarantee for somebody if you do not have the assets to support that guarantee? It is the same with a very large number of countries right now, and is the reason why many people have some very serious concerns about the world economy in the near future. – T9b Jan 29 '14 at 11:24
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  • You can't be sure the value of a bitcoin is stable.
  • The Bitcoin marketplace is not (currently) regulated.
  • Bitcoins are valued only by trading activity on exchanges, based on how much people are willing to buy (or sell) them for.
  • People with a lot of money can "game the system", but that usually takes a lot of money.

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