Slashdot Mirror
With Euro Zone Problems, Bitcoin Experiencing Boost In Legitimacy
derekmead writes "Despite being used for drugs and beef jerky, Bitcoin is finding legitimate purposes. Bitcoin's decentralized convenience means international efficiency, in areas where local restrictions on money transfers to foreign companies make legal businesses cumbersome. 'I've been able to have cash in my bank account in a matter of hours using Bitcoin, rather than three days with traditional banking,' one British businessman in China told Reuters. In embattled Europe, Bitcoin offers some a viable alternative against central banks, said a Greek owner of an island bar and restaurant who accepts payment in Bitcoin. 'I don't put money in the banks. I trust the euro as a note, but I don't trust banks. I don't want them making money out of my earnings.' Indeed, Europe's financial woes are caused an unprecedented surge of interest in the alternative currency, as the continent loses economic credibility with each new bailout, according to a report by the Financial Post."
Let me be first to say:
HAHAHAHAHAHAHAHAHAHAHA!!
You know what has more legitimacy than bitcoin? Zimbabwe Dollar!
"Despite being used for drugs and beef jerky, Bitcoin is finding legitimate purposes"
Is buying beef jerky NOT a legitimate purpose?
Or is "beef jerky" here a euphemism... and if so, dare I ask what for? ("prostitution" would be the obvious companion to drugs, and I'm familiar with a handful of "beef" related euphemisms, but jerky? Hookers with hard, dry vulvas that will abrade the skin off your dick?)
... the one about a month ago where someone stole lots of bitcoins or spoofed or whatever...
Yeh... sure... mod me vague, or offtopic for bringing it up, but if you know what link I'm too lazy andon-a-phone to dig up, you're probably right with me on the disbelief of bitcoin as a smart idea.
The gist of the article, IIRC, was that an exploit to the system existed that produced undeserved wealth for one guy and everyone else got devalued....
Who has the link???
I trust banks more than bitcoin and mattresses, coming from someone who has little credit, zero debt, and as the bank stated a "substantial" account (not that I am rich by any means I just dont go racking up debt ... mainly since I have never had much of any credit from 18 to 33)
life is not all peaches n cream like that either, its GREAT to be debt free ... when you have the crap you want, but more difficult when you sort of need it. Though times get rough its a comfort to know that there's a stash in the savings that may only be earning fractions of a percent a year for when the car blows up, or I break a leg versus HOPING bitcoin values are not tanked, if even still around.
As I understand it, inflation is when the government prints more money than the value of goods and services produced.
So for example, in a static economy with fixed production, the government prints 5% more currency per year and spends it, so that inflation is 5% and the value of peoples' money gradually diminishes. (The for-real economy grows with increases in efficiency of production etc, and money wears out and needs to be replaced, but the principle is the same.)
This is a hidden tax on money. It devalues savings, and encourages people to spend and invest rather than save.
It occurs to me that bitcoins can't be abused in this way. It's impossible for a government to blithely print money except by mining, for which there are diminishing returns.
Take away the governments ability to raise revenue by inflating the currency, and you take away a large portion of their income and some of their influence over the economy.
Hmmm... I wonder what will happen when governments eventually figure this out?
The one and only "advantage" to the fictional currencies such as the dollar and the Euro is that they can be used to pay for taxes since they are legal tender for those purposes. This is something Bitcoin does not have. Bitcoin is a fiat currency and is intrinsically worthless. While it is convenient for anonymous transactions done online, why not instead go for something with intrinsic value that can easily be bartered such as gold, silver or copper?
Yeah, Bitcoin is neat, yeah, the technology behind it is interesting, but at the end of the day its a made up currency with none of the advantages of the rest of the made up currencies. Why not just stick with gold and silver? Especially since TFA mentions physical transactions.
Taxation is legalized theft, no more, no less.
I hope bitcoin becomes a legitimate currency. My bank doesn't trust me with a credit card, so trying to do anything involving money online is a huge pain. I can't believe how incredibly difficult it is to spend your own money online. Why is the defacto standard to borrow someone elses and spend theirs? It's a crazy system.
I bought one bitcoin a long while back, as an experiment. I think it's worth 20-something percent of what it was then.
If some restaurant owner is worried about putting real money in a real bank, he should REALLY stay away from bitcoin.
Put euros under your mattress first.
There are plenty of problems with banks:
A) Capital controls. If you look at the places that have had currency troubles this is the first thing that happens. It starts innocently enough, first you have to "declare" that you have a "large" amount of cash and fill out a form. Next there are limits to how much cash can be brought in and out of the country. Next there are limits to how much money you can take out of the ATM and spend on your debit card.
B) Government reporting.
C) Possibility of collapse. I'm not just talking about a major economic crisis but minor ones such as 9/11 where many banks were not open and were not functioning fully.
D) Inflation will eat up your savings. How much interest is your savings account earning? My guess is ~.5% depending on your bank. The Federal Reserve's official (manipulated) inflation statistics say inflation is at 2.3%, using the older methods of calculating inflation which are not prone to manipulation, inflation is somewhere around 5%. That means you are taking a guaranteed loss. Of course putting cash in something else such as gold, silver, stocks, land, or heck, bitcoins carries some risk, there is at least a potential for reward, it is not a guaranteed loss.
Taxation is legalized theft, no more, no less.
...is buying beef jerky not a legitimate use of Bitcoin or is 'beef jerky' a euphemism for some nefarious deed in the Bitcoin world?
A hundred and twenty characters ought to be enough for anyone...
really? a electronic only currency? food, gold & ammo are they only safe bets these days.
Bitcoin, bitcoin, rah rah rah!
Never mind that it's lost more of its value more suddenly than the Dollar or the Euro have in any of our lifetimes. Never mind that I can't spend them at the grocery, or Amazon, or Newegg, or any restaurant I eat at, or.... oh, very nearly *anywhere*.
Never mind any of that. Bitcoin, bitcoin, rah rah rah!
I wonder how much the bitcoin people are paying for these slashvertizements.
Tought that they were becoming widely used in Greece instead of euros, at least were a lot of talk about it... bitcoins werent even under the radar.
Money is losing its original meaning, going back to barter could have some sense.
So which powerful entity is backing Bitcoin again?
None of these "problems" that you mention are best solved by using a made-up Internet currency. All of them are either inherent in government controlled money systems, or the fault of clueless individuals who still use commercial, for-profit banks.
I don't respond to AC's.
That 2.4% inflationary loss isn't a good long term investment.
Losing 80%, like many have in bitcoin, is fucking retarded.
So how many bitcoins do I need to plunk into the soda machine to get a coke, and what bank to I go to to have a few of them jingling in my pocket?
Time is what keeps everything from happening all at once.
its not my only investment, and like the ac stated below
That 2.4% inflationary loss isn't a good long term investment.
Losing 80%, like many have in bitcoin, is fucking retarded.
I know more people who have 1000% gains in bitcoin in last 18 month than those who lost 80% by buying during a very short period (a week or two) while it was all raging bubble about a year ago.
I also see many viable business working in Bitcoin economy and growing nicely.
There are new projects are in the works behind the scenes as well.
Of course, slashdot public mostly prefer to ignore the reality and whine about their stupid speculative bets. Carry on.
As I understand it, about half all Bitcoins there will ever be have already been mined, even though presently almost no one knows about it and the Greek from the article is the exception rather than the rule. This means that no government that cares for its people will recognise it until a way is provided to a) turn back the clock to day one and b) to inflate the currency both to keep the economy going and to keep their citizens' debt from spinning out of control. And until that happens you cannot pay your taxes with it; and although in theory the currency is anonymous, you'll still be expected to declare your income and if a discrepancy is found, just like when you deal on the black market today, the tax man will make you pay. In real money.
A) The limits on withdrawals on your debit card are for your own protection. You don't want someone cleaning you out because they stole your card. If bitcoin were to catch on (big if), it would need something equivalent to a debit card, and such cards would have limits. There are likewise good reasons to be suspicious of people carrying hundreds of thousands of dollars in cash across national borders.
B) "Government reporting" is pretty vague. What exactly is the problem?
C) Bitcoin can collapse just like any other currency. I'm not sure what could lead you to think otherwise.
D) Inflation affects bitcoin just like everything else. You're right that the GP is silly for thinking that his "fractions of a percent a year" is at all meaningful, but that 2-3% loss each year is a constant, and it will hit you regardless of whether or not you're investing your money. So it's always a guaranteed loss. It should be treated as a sunk cost, and investing versus not investing should be looked at separately.
And there are people who made 1000% gains investing in real estate in the mid 2000s. That doesn't mean its a good investment, it just means that some people will always be the lucky ones.
It's the height of irony, by the way, that you would tout 1000% gains and end by mocking the "stupid speculative bets" of others.
A government controlled currency is still "made up"...
There are not always alternatives to commercial banks.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
People have lost 80%, or even larger amounts investing in traditional financial systems too... Look at the large "safe" companies/banks that have collapsed in recent years.
A high risk investment is a high risk investment.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
it just means that the rich people will always be the lucky ones.
FTFY
They'll do anything to avoid paying tax. It's the main reason why their economy is so fucked.
Example: A mate of mine is an RYA (Royal Yachting Association) Instructor, and has been asked to run a course down in Greece, so he has to book some accomodation - decides on a nice 4 star hotel. After he booked, he was called up and told that if he paid in cash it would be half price. There they are complaining of austerity measures, whilst not paying tax.
Why aren't people hoarding, if they know BitCoins are supposed to be more valuable tomorrow than they are today? My guess is people still don't trust that their BitCoins will be worth anything at all tomorrow.
From The Economist, "Leaving the euro: My big fat Greek divorce" http://www.economist.com/node/21556583
Some economists think that Greece could nonetheless avoid a sudden departure from the euro. The government could pay some of its bills by issuing its own IOUs direct to its domestic creditors. These notes (“scrip”) would start to circulate at a steep discount to euros. In effect, argues Thomas Mayer, an adviser to Deutsche Bank, Greece could create its own parallel and depreciated currency while still remaining in the monetary union.
Something similar happened in Argentina as it struggled to retain its rigid link between the peso and the dollar before the link eventually snapped in early 2002. Bankrupt regional governments started to pay their workers in scrip, such as the patacones issued by Buenos Aires Province. But these desperate measures were desperately unpopular because the patacones immediately fell in value. Within just a few months, the Argentine government restricted withdrawals of bank deposits, defaulted on its debts and broke the link with the dollar, allowing the peso to devalue.
Mario Blejer, who was Argentina’s central-bank governor in the middle of the crisis, says that resorting to scrip would be even worse than creating a new currency outright (which he thinks would be disastrous). It would create monetary chaos and generate inflationary pressure before the exit that would inevitably ensue.
So if you are in Greece, you seem to have a bad option for storing your cash, and an even worse one.
Take your pick.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
The bank angle here is an irrelevant distraction to be used as a handy bit of misdirection. It really doesn't matter how good or bad the banks are, the question is whether it makes any sense at all to get involved in the old fashioned ponzi scheme in new clothes that is bitcoin or not.
The way bitcoin is set up the you can't have everyone as a winner - if someone makes a killing it is at the expense of a later participant in the pyramid scheme. It's a cynical ploy that relies on the expectation that currency is fiat and not a measure of useful production (sorry kids, the window dressing calculation in bitcoin is not useful production), so the scam relies on supposed invention of another fiat currency.
To sum up, this forced comparison is just designed to make people think that their little non-bank scheme is not bad simply by pointing at a bad bank and pretending to look more respectable than a badly run bank.
As for C), possibility of collapse, with a ponzi scheme that can be replaced by certainty of collapse. I'm sure many of the early adopters of bitcoin that get out in time will do well financially, but I don't think they necessarily deserve even the respect that a convicted embezzling banker or other financial criminal gets. That may sound harsh but wake up - it's an incredibly fucking obvious scam kids and a million miles away from the cool stuff you read about in "Cryptonomicon" that it pretends to be.
Any currency that can take a massive dive on the foreign exchange market due to Internet trolls posting on one single message board is a currency that will never have a single shred of credibility. Just because legitimate businesses accept it doesnt suddenly eliminate the huge amount of risk associated with trading in that currency. There are also plenty of other ways of transferring cash within a day.
You can see at Bitcoin Watch various running totals for Bitcoin. In the last 24 hours about 2.5 million bitcoins were sent. If you watch this site daily you will see a wide variance, up to 6 million bitcoins per day. The total number of bitcoins ever made is now just over 9.2 million, so you can see that every few days an amount of bitcoins is been sent that is greater than the total amount of bitcoins created.
Individuals can exchange bitcoins directly, without the use of any intermediary. This is a big advantage to bitcoin; no ridiculous transaction fees. So now you can see that MTGox is nowhere even close being "the main financial activity in bitcoin." In fact, the exchanges make only a small percentage of the total number of transactions, and has been growing non-stop.
The number of bitcoins increases by 30-50 thousand every day, so guess what that means? If your peanut-sized brain was able to deduce that adding bitcoins every day means inflation, you guessed right! Bitcoin is an inflationary currency (until 2021).
The way people like you pop on here and start spewing bullshit about bitcoin makes me wonder if you aren't anything more than a fucking sock-puppet for the banksters.
That the first thing that is brought up with bitcoint is it's usage in illigitimate dealings... This is the number one usage of "original coins" so the mere fact that bitcoins can stand in that place shows its usability!
If drugdealers, child pronographers and terrorists trust this currency, and they are aware of protecting themselves (to some degree at least) then it is quite safe. Considerably safer than the alternatives (paypal or google pouch or facebook coins etc.)
D) Inflation affects bitcoin just like everything else. You're right that the GP is silly for thinking that his "fractions of a percent a year" is at all meaningful, but that 2-3% loss each year is a constant, and it will hit you regardless of whether or not you're investing your money. So it's always a guaranteed loss. It should be treated as a sunk cost, and investing versus not investing should be looked at separately.
Bitcoin is designed to be deflationary. That might not be a good thing, but inflation should not affect it, in other ways than it getting worth more in relation to inflationary currencies.
Could be an obscure Chrono Trigger reference. In the game, beef jerky is very hard to come by, and worth a fortune if you sell it (10,000 gold in a game where you typically accumulate just over 100,000 gold by the end).
It's a sad day in the world when real currencies are in such sorry shape that a fake, made-up toy currency based on, well... nothing, is starting to appear legitimate by comparison. What people don't realize is that ALL currencies, even currencies "backed" by gold, or platinum, or whatever, are fiat currencies. The idea that a currency should have to be exchangeable for some rare commodity is absurd, since besides all the problems that causes, it is also the case that if someone suddenly finds a way to make more, or finds a huge amount of it that no one has yet claimed, it could drive the value of the currency down, possibly of all currencies, just because the rare commodity is no longer as rare. It also allows those who own a lot of it to manipulate the entire economy for their own narrow purposes, not because they're smarter, or somehow better, or because they should be in control, but just because they have it, and have the power to create artificial scarcity or excess at a whim.
I look at money, "fiat" money, as being essentially negotiable shares in the economy of the nation or state issuing the currency. I defy anyone to show how what is ACTUALLY the case, in for example, the United States, is manifestly different from that. A dollar is a token that represents value, and is generally exchanged (or gifted, occasionally) for a commodity, a good, or a service. Its value is derived from the fact that people are willing to work, providing materials, goods, or services, etc., in exchange for them. Also, being the official coin of the realm in the US, the dollar can also be used as a medium of exchange of value with the government itself.
So what the hell are Bitcoins worth? Can you pay your taxes with them? Can you buy fruit at a roadside vedor's stand? Can you walk into a supermarket and buy a case of beer with Bitcoins? Can you purchase a glass of lemonade from the neighbor's kids with them? Can you pay a hooker with them? Good luck with that. Also, what the fuck is this farming of Bitcoins shit? Can you farm gold? I mean in real life... I suppose gambling and stock exchanges could be seen as a form of dollar farming, but in reality, gambing is generally a losing proposition, all games of chance offered for "fun and entertainment purposes only" are rigged to pay-out somewhere between 45% and 49.9% of the time, with the average weighted by how much is being bet. In other words, the house always wins, in the end.
Bitcoins... more like Shitcoins. If they were made of shit, actually, they'd be worth more... you can grow things in shit. Bitcoins are just jumbles of codes, that some people want others to think are valuable, despite that the codes don't resolve into a song, a film, or an image of a woman with big tits, or anything else even remotely useful.
It's no wonder the "currency" is continuously in a state of crisis.
funny that... they're actually planning reducing the daily amount of cash you can withdraw as a means of preventing a run on the banks in Greece RIGHT NOW...
Donald 'Duck' Dunn: We had a band powerful enough to turn goat piss into gasoline.
There are plenty of problems with banks: A) Capital controls. If you look at the places that have had currency troubles this is the first thing that happens. It starts innocently enough, first you have to "declare" that you have a "large" amount of cash and fill out a form. Next there are limits to how much cash can be brought in and out of the country. Next there are limits to how much money you can take out of the ATM and spend on your debit card.
Funny. That was exactly the situation when I was a kid (gee, I'm getting old). No big deal. In fact, those measures kept the largest part of the money where it should be (in the real economy) while still permitting that it was taken abroad. Nowadays, most of the money is "invested" in "derivatives" (basically nothing more than an idea) on the other side of the world, so there is nothing left for you to take abroad.
B) Government reporting. C) Possibility of collapse. I'm not just talking about a major economic crisis but minor ones such as 9/11 where many banks were not open and were not functioning fully.
Yep, this is an interesting one. Banks are on the verge of collapse every day. That is how banks work these days. But for some reason the people are not allowed to see it. A bank is one of the least safe places to put your money. Your money is spent on loans as soon as possible, only at that time the bank calls your money its own. Banks count on the fact that you will not be asking your money back. And if you and your fellow customers do want your money back, you are accused of a "bank run".
D) Inflation will eat up your savings. How much interest is your savings account earning? My guess is ~.5% depending on your bank. The Federal Reserve's official (manipulated) inflation statistics say inflation is at 2.3%, using the older methods of calculating inflation which are not prone to manipulation, inflation is somewhere around 5%. That means you are taking a guaranteed loss. Of course putting cash in something else such as gold, silver, stocks, land, or heck, bitcoins carries some risk, there is at least a potential for reward, it is not a guaranteed loss.
Which is a good thing off course. One of the bad things of money is that it can be kept forever and there is no limit to collecting it. If you were paid in food, you would only want as much food as you could eat (with your family and friends perhaps). But anything more would be senseless. But with money, you can "earn" the living of a complete village for yourself, and still want more.
Nae king! Nae laird! Nae yurrupiean pressedent! We willna be fooled again!
Thank you.
I have some very well meaning right wing friends who swear by gold and have obviously never looked at it's historic value. Sure it's up overall, but there are plenty of points where if you have had to cash out for a sudden emergency you would have lost your shirt to the tune of double digit percentiles in a matter of months.
Bitcoin will establish itself as a world's reserve and exchange currency.
End consumers in their day to day lives don't even have to touch it or know anything about it.
Or 3) Greece could comply with the bailout conditions.
Greece has a way out, the Euro zone is PROFITABLE, they could slash spending and raise taxes so they reduce their borrowing, and the rest of the Euro zone, (the profitable part), will lend them that little bit of money, on their little 2.5% of the European economy.
Bitcoin is useless, its like buying paypal credit.
A government controlled currency is still "made up"
As has been stated before, it's a question of backing. Government-issued currencies are backed up by a promise from the government that they will accept them in payment for taxes and, often, by a legal requirement for merchants to accept them within the relevant country's borders. This guarantees that you will be able to exchange them for goods or services in the future, for as long as the government survives, although it does not guarantee that they will retain the same value. BitCoin is backed by nothing. It depends entirely on the willingness of other users to accept it.
The simplest form of money is an IOU: you do something for me, and I give you a promise to do something of equal value in return. This is then backed by me, my promise, and the fact (or, at least, belief) that I am capable of doing something of value in the future. A typical currency is a form of group IOU, which says that you have done some work for someone in a group and that someone in the same group will do some work for you in the future. As long as there are people in the group willing and able to redeem the IOU, then it holds some value, and if an entire country requires these IOUs for taxes and is legally required to accept them in payment for goods or services then there is a very high chance that you will be able to redeem your IOU. With BitCoin, anyone can create new IOUs without doing any useful work, but no one is required to accept them.
I am TheRaven on Soylent News
Gold is going to keep going up in value for as long as the supply of people with a poor grasp of economics keeps increasing and until cheap elemental transmutation becomes possible. This makes it seem like a pretty good long-term investment...
I am TheRaven on Soylent News
That word does not mean what you think it does.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
... or until someone finds a load of it under the ground somewhere.
Actually what will cause it to drop will be the economy picking up; higher returns in property, shares etc will make gold relatively less attractive. The drop might be sharp & sudden if panic selling drives even more panic selling.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
C) is also Bank Holiday when the bank or banks limit all accounts' withdrawal amounts due to bank runs.
D)Negative interest rates. Effectively, account holders are paying the bank so that their money can be parked in a bank. What used to be free, such as checking accounts, are being charged a fee. With higher and more fees and charges, we're getting nickeled and dimed to death.
E)Commingled accounts. MF Global customers had a total of 1.6 Billions dollars stolen from them when MF Global declared bankruptcy last October. Of course, nobody went to prison over the "vaporized" US$ dollars.
F)You don't have a choice if the bank lends out your money, or gambles with it in investments. Malinvestments by the bank could make the bank lose money. You don't have control over what the bank does when you deposit your money with them, they can play with it to make the bank more money. We need an option where we can tell the bank not to invest or lend our money, but to just keep our money safe(100% reserve, no-interest bearing account that would be off the bank's balance sheet).
G)The "To Big To Fail" banks have become so large that they have too much influence on our political process. That there's even TBTF is proof of that.
H)The repeal of the Glass-Steagall Act in 1999 allowed the banks to make speculative activities. Instead, banking reforms are needed so the banks are limited in these speculative gamblings with depositor's money.
ad nauseum, etc., etc.
Anytime anyone tells you they are forcing something upon you "for your own protection" they are obviously doing it for their own benefit. ATM withdrawal limits are there to reduce the bank's fraud liability; similarly the border blockade, police confiscations, the massive FBI spy network embedded in the banking system are not "keeping you safe", they are putting the government's interests above yours.
I can't make my mind up:
run SETI@Home
run Bitcoins
TOO MUCH PRESSURE.
Perhaps I should run Bitcoins, I might get something good out of it.
I'm pretty sure we won't find delicious alien goddesses with magical powers to solve all of humanities problems and make us immortal. Sorry SETI.
So they will replace the euro, a currency that locks multiple countries into a essentially a fixed exchange rate mechanism, which a central bank that refuses to issue sufficient liquidity to meet market requirements for transactional currency.... with.... Bitcoin, a currency that would also be essentially a fixed exchange rate mechanism (no different than euro spanning multiple countries), but even worse - not a chance of the central bank expanding money supply to meet requirements for a transational currency. Bitcoin is worse than the gold standard, because at least gold has a few industrial uses.
Uh, no. It can collapse even more dramatically than most other currencies. In fact, it will, simply because it works like a bad case of the gold standard.
The gold standard never collapsed so this analogy is fundamentally broken.
Perhaps its collapses will so drill into people some basic knowledge of modern economics. If, in the process, bitcoin also brings ruin and suffering to libertarians and gangsters, then so much for the better.
Such as people are ignorant of economics, if they don't adhere to my biases?
inflation is when the government prints more money than the value of goods and services produced
Inflation is when government prints money out of "thin air", i.e. with nothing of actual value to back it up, and then injects it into the economy, typically as a means to "pay off" their debt without actually paying it off. The business of government wins, and everybody else loses. Not only did government weasel out of paying off some debt (by using "phony money", but the remaining debt is now worth even less in terms of dollars (since there are more dollars in circulation with nothing to back them up). The "net worth" of the economy remains constant, yet there are more dollars. The result is that each dollar is now worth less in terms of buying power.
The best way to visualize what's happening is to simply imagine a private firm doing the same thing. Imagine that a private firm, in the business of currency, tried to pay off their debt by simply printing more currency -- with nothing to back it up, not even more debt. If anyone but government tried to do it, it would be counterfeiting. What makes government different? Coercion, of course.
It is merely a clever form of default on debt owed. A back-handed, under-the-table form of default. Of course they don't call it "default" -- in true government form, they give it an official, important-sounding title like "economic stimulus" or "quantitative easing".
The fact of the matter is, it continues to exist and continues to be used DESPITE people saying that it's useless and will collapse and never be used again.
Despite all the naysayers (and I DON'T own any bitcoins) the supply continues to expand. One has to acknowledge the reality of what is actually happening with the currency vs what one thinks or would like to happen. (well, you don't have to but that's another argument)
No? I know some people bunker gold and feel smart about it, but that's it. Perhaps its more helpful to tell people like you that the economies built around the gold standard were not as successful as one might want, so it suffered from some lack of appreciation at some point. Since gold has some additional uses (which a bitcoin has not), such lack of appreciation will mean collapse. Until the next round of idiot libertarians find the idea appealing, and discover some absurd argument to justify to themselves trying the whole thing again.
Could you please make sure your sentences make at least a little bit of sense? Thank you.
Non-Nation-State controlled electronic money transfer will Greece the rails of the track to destruction.
B) "Government reporting" is pretty vague. What exactly is the problem?
It is not a problem, if you blindly trust your Government. But you should never do this. In theory the government always wants to control you more than they already do. Also in theory we, the people limit this effect with our political influence. In the long run it is far from unlikely we get more and more controlled. This has been the trend for a long time in most countries actually. The natural idea if you do not trust your government completely is, they have no business knowing how much money I have.
C) Bitcoin can collapse just like any other currency. I'm not sure what could lead you to think otherwise.
I think Bitcoin being international and not controlled by a government makes it a bit less suceptible to a crash. Sure, people can lose faith in it, but the bigger number of people could make it more stable, and the fact that a broke government or banks on which it relies cannot just devalue it in simple ways.
Expanding the money supply just takes planning. It's not impossible, as it is with gold, (which I agree, is limited in its use.) Bitcoin isn't limited in this manner.
Here's the real issue:
Any system of currency, even one based purely on paper, or in this case, digital numbers, is fine. It can work. -So long as usury isn't allowed to enter the system. Interest cannot be supported by any system which hopes to remain viable.
Why?
Consider a $50,000 loan at 10% interest. If that's you, then you need to pay $417 per month in interest fees just to hold the principle debt steady at $50,000.
Okay. Fine. Everybody understands this, but what people don't seem to understand is that every $417 monthly owed is exactly $417 more than the total amount of money in existence. That $417 didn't exist before, but now it is demanded by the crediting party. Which means you have to take it from somebody else, leaving somebody else out of pocket. And every month which goes by where interest debt is created increasingly strains the money supply.
This means that unless the central bank expands the amount of cash available, interest cannot be paid back and people are forced to default. This is exactly the force which crashes economies. It is what we are experiencing right now.
Not to mention hoarders. Anybody holding a billion dollars rather than putting it back into circulation is helping to choke the economy. There ought to be a law which prohibits the holding of more than some set amount for a year or two before it is seized and redistributed.
Bitcoin, or any other currency is fine, but interest has to be made illegal, and hoarding needs to be regulated.
Socialist? Maybe, but at least it doesn't crash by logical default. Math doesn't lie.
A. If you're carrying over ten thousand dollars in cash around, you're either nuts or doing it for sinister purposes.
B. I wish I read your signature before writing this post.
C. Most developed (and some developing) countries have depositor's insurance on accounts, so unless you have more than a million USD sitting in a checking account, you should be fine. Unless, of course, it's the apocalypse, which means cash has no value and you should have invested heavily into bullets (or slingshots, depending on if it was a short term or long term plan).
D. If you are worried about inflation, you don't put your money in a savings account. You either buy Inflation protected securities or invest it in something that appreciates with inflation (gold).
http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm
Bitcoin Experiencing Boost In Legitimacy
No it is not.
If you're saving anything substantial in any way, you're ultimately hoping that whatever it is will keep its value. Be it cash in a bank or bitcoins... there's really no difference in the fact that you're relying on something to keep its value.
That said, being Canadian (for better or worse), I also trust banks more than bitcoin (likewise for better or worse).
But I am also aware that according to statistics, given a fixed pile of wealth, spreading your wealth around is safer than "putting all your eggs in one basket".
People have been looking for gold for all of mankind's history, the chances of a true substantial deposit being found are slim, especially with all the regulations when it comes to mining in some of the richer deposit sites (California, South Africa)
Gold is not an investment. Gold is money. It has the same properties as money. Silver is both money and a investment (it has lots of industrial uses).
Taxation is legalized theft, no more, no less.
Lets see here, the industrial revolution and the Victorian era, two of the most productive and revolutionary eras in mankind's history was defined by the use of hard currencies (gold and silver) and while it didn't have a "technical" gold standard in most countries (bimetallism was much more common) we had none of this paper money crap.
If you look at the decline of civilizations the first thing to tell of their impending collapse is the decline of their currency. When Rome was prosperous, their main silver coin, the denarius was nearly pure silver. When a string of bad emperors, a welfare state and expensive wars happened, Rome reduced the denarius slowly until it was just a copper coin with a thin silver plating.
Look at the Athenian city state, its principle coin, the tetradrachm, was nearly pure silver during prosperity and became a copper coin with silver plating when Athens was troubled by wars and conflicts.
The US was in an unusual situation. When it abandoned the true gold standard in 1933, it managed to still dominate the financial world via the pseudo-gold Bretton Woods system, of course that collapsed in the early 1970s. So here is the financial situation of the US:
A) Abandoned the true gold standard in 1933, abandoned a pseudo-gold standard essentially in 1971, removed good silver from all coins in 1965 and abandoned all silver in circulating coins in 1971 (1965-1970 half dollars are 40% silver)
B) Currently have a number of expensive wars to pay for, a worldwide military presence, and other expenses related to being the "world's policeman"
C) The US has a huge debt problem
D) The US is increasingly becoming a welfare state
E) The only logical way out of this is by (hyper) inflating its currency.
Taxation is legalized theft, no more, no less.
With BitCoin, anyone can create new IOUs without doing any useful work
In fact, it's just the opposite. They waste electricity and computer cycles. That's my biggest problem with it. Surely we can do better than that if we're going to design an electronic currency from scratch.
Would you all shut up and buy more coins? I'm up almost 20% in the last 30 days and I want to see bitcoin hit 6 USD!
I agree with most of your post, but:
The simplest form of money is an IOU: you do something for me, and I give you a promise to do something of equal value in return. This is then backed by me, my promise, and the fact (or, at least, belief) that I am capable of doing something of value in the future. A typical currency is a form of group IOU, which says that you have done some work for someone in a group and that someone in the same group will do some work for you in the future. As long as there are people in the group willing and able to redeem the IOU, then it holds some value, and if an entire country requires these IOUs for taxes and is legally required to accept them in payment for goods or services then there is a very high chance that you will be able to redeem your IOU. With BitCoin, anyone can create new IOUs without doing any useful work, but no one is required to accept them.
is simply not true. I assume you're referring to bitcoin farming: this will only work for a short time, as there are still bitcoins that have not been discovered yet. The amount of existing bitcoins is fundamentally bounded, because they are issued based on a mathematical problem that has a finite amount of solutions (if I recall correctly, its slightly more complicated than that, but that's the gist of it). Each solution gives you one coin, so the amount of coins is fixed.
That said, the reasons outlined in your comment are exactly the reasons that me (and many others with me) don't use bitcoins.
...As has been stated before, it's a question of backing. Government-issued currencies are backed up by a promise from the government that they will accept them in payment for taxes and, often, by a legal requirement for merchants to accept them within the relevant country's borders. This guarantees that you will be able to exchange them for goods or services in the future, for as long as the government survives, although it does not guarantee that they will retain the same value.
(emphasis mine)
I wanted to make the very important point that promises can be and are broken.
I would highly recommend the short book Fiat Money Inflation in France by Andrew D. White, the founder and first president of Cornell University. It can be read online for free at: https://mises.org/store/Fiat-Money-Inflation-in-France-P435C1.aspx but I would encourage you to purchase a print copy (for cheap) here: https://mises.org/store/Fiat-Money-Inflation-in-France-P435C1.aspx.
Regarding the assertion that governments and merchants will accept a currency as long as the government survives, I am glad you added the caveat about no guarantee of value, for that is important, but more importantly governments have and most probably will in the future completely change currencies. You may or may not have an opportunity to exchange.
Firstly, the period of 1800 to 1913 coincided with the industrial revolution and massive territorial expansion in the US. So, the massive increases in productivity and efficiency certainly cannot be attributed solely to deflation over a century. I'd say that the utterly massive technological improvements over that span, the opening up of vast untapped natural resources, plentiful immigration, and the shift from a nearly 100% agrarian economy (with only some manufacturing) to one with substantial industry probably also had something to do with it.
Also, the period of time you cite was hardly a period of uninterrupted economic stability. The repeated, severe, panics of that time span make the current recession look like the most minor blip on the proverbial economic radar.
I've pointed this out to you before, but you choose to utterly ignore it.
Okian decides how much value things have, and we don't want to think about it?
This sounds wrong. We (not Okian) actually do want to think about this stuff, and ultimately we make the value decisions every day. It's called by many names: "setting a price" or "negotiating a deal" or "shopping around" or "accepting an offer" or ...
No, that's exactly what I said: they don't do any useful work. They increase the entropy of the universe, but there is no calculation performed that has a result that anyone cares about outside of the closed system of BitCoin. If it were a promise of future computational work, then that would be different.
I am TheRaven on Soylent News
Who lost 80%? Yeah, you'd have to be retarded or downright incompetent to do that. Gavin Andresen said he only lost 5 BTC because he's brilliant and spreads his assets around different resources. He also encrypts his wallets, as everyone using bitcoin should be doing. I haven't lost any bitcoins, partly because I don't have enough to steal and partly because I follow Gavin's example. I have multiple wallets, all encrypted, all backed up and all hosted on different servers, both local and in the cloud. I don't trust any bank to manage my money as carefully as I do myself.
This is getting rather pedantic, and I understand you are correct strictly speaking as to physics, but the connotation of what you originally said isn't the same as the point I made. One of the major points of Bitcoin is just how hard it is to "mine" them, as opposed to just conjuring them up like a public/private key pair.
I've reviewed all the responses to my post, and it's been quite illuminating. As a scientist, I'm used to examining my assumptions and checking for rationalizations and such, and it was quite interesting to sort out the chaff from the wheat.
In the manner of crowd-sourcing the answer to a problem, I've discovered the following are true:
1) No one knows the truth about anything in economics.
There is no general consensus as to whether inflation is good or bad, although standard economic theory states that it is good.
The simple fact that there is dissent, some of which is studied and eloquent (per references people have made to other schools of thought) indicates that the matter isn't settled. If it were, there would be a compelling logical argument which would not require rationalization. And there would be general consensus, as there is on, for example, plate tectonics.
2) Actual economists make predictions based on assumptions which never change.
A good example is the "get a house loan for $300,000 and if the dollar deflates you may never be able to pay back the loan".
This assumes that debt is based on currency instead of wealth. I could instead get a house loan for the purchase price of 1,000 refrigerators (chosen at the time of purchase), and then when the dollar deflates the price of refrigerators goes down. Once I've repaid enough money to purchase the refrigerators, at whatever their current price is, the loan is repaid.
If you separate debt from currency, you can use wealth as a measure of value and then currency is used for exchange, which is how it should be. Refrigerators are an inconvenient measure, of course, but I can imagine a "global average purchasing value of the dollar" which is calculated by taking everything into account and which adjusts the loan amount accordingly.
3) The results just don't make sense
Why is "a little" inflation good when "a lot" of inflation is bad? How is the cutoff point calculated? Is the formula flat (any inflation in this range is OK) or peaked (inflation has to be finely tuned to this specific value)?
There is no functional definition for "good" inflation versus "bad" inflation. Economists only make soft, hand-waving appeals to rationalizations: "if inflation were high, people would do *this*, and it would cause *that*, and the results would be bad".
Let's see, what's the term I'm looking for... oh yeah. It's sophistry.
3) From my own studies, economics has some major flaws in logic
One such flaw is the application of "small signal analysis" to non-linear functions. Double your sales outlets and you double your sales: simple and accurate at the small scale, and it assumes a potential ocean of market. Sell through Wal-Mart, however, and you're done. Wal-Mart is the entire ocean, and a lot of companies were caught unawares by this - Levi and Vlasic to take two examples.
Another one: outsourcing is good because it lowers costs overall. It assumes an ocean of employment opportunities.
The only point remaining that no one effectively disputes is the corruption in the system. The financial system (including governments) is screwing people over, essentially robbing wealth from the masses and concentrating it in the elite few.
So I guess that makes my decision for me.
Bitcoin will be better, because it eliminates a large slice of corruption present in the system. It may not be perfect, but it will be a major improvement over the system we currently have.
I'm not talking about physics at all. I get money by doing useful work for someone (or selling an asset, which was created by someone doing some useful work in the past). New money is introduced into the economy in a similar way, as loans that are contingent on future repayment (i.e. are the promise that the person getting the loan will do some work in the future that will allow them to repay the loan). Bitcoins are created by doing some useless computational work. The fact that it is harder to create them than a key pair affects their scarcity, not their value. It's hard to bottle pony farts, so they're quite scarce too, but basing a currency on them would be equally silly.
I am TheRaven on Soylent News
by a legal requirement for merchants to accept them within the relevant country's borders
No such requirement exists in the US.
"I assumed blithely that there were no elves out there in the darkness"
I'm not talking about physics at all.
Then don't use phrases like "They increase the entropy of the universe". And my entire point, which you did not make, is that beyond not doing anything useful, they are actively wasting valuable resources.
The very same internet you're using to post that comment is being used by peodophiles RIGHT NOW.
I can't comment on the others but here's an example of how 'Government Reporting' can be negative...I had to file 2 separate forms this year with the US government (1 for the IRS, 1 for the Treasury) to report my 'financial holdings outside the US in excess of x amount' (don't recall 'x')...now, at least for me this was money that I earned in Canada (I'm a Canadian citizen) YEARS ago and is in Retirement accounts that I can't touch (like a 401k)...now it's not that I'm going to be taxed on those holdings...but for what POSSIBLE reason could the US government need to know about accounts that are YEARS old and have locked in funds that I can't touch until I retire?...As far as my situation is concerned it's garbage data to the US and an entire waste of time & even the stamp it cost me to mail the form....assuming there is even some legitimate reason (e.g. trying to find tax dodgers, criminals etc.), there is still a cost to me for having to mail the form & time invested in filling it out...plus the cost to the government for tracking this information...and it was GARBAGE data, it provides not 1 scrap of useful information to the US...so GIGO...I'm betting this is a large cost across the populace with government bureaucracies being what they are.
I'm more worried of banks not ever crashing than them crashing, seeing as they own pretty much everything. By controlling all currency transactions, they can basically collect a tax on everything traded. This is the real problem with banks.
I'm still missing why you believe that 'wasting electricity and computer cycles' is the opposite of 'not doing any useful work'.
I am TheRaven on Soylent News
Perhaps its more helpful to tell people like you that the economies built around the gold standard were not as successful as one might want,
I will grant that. In a growing economy where a relatively fixed amount of money is spread over more transactions and actors, you should see some deflation and that deflation probably would adversely affect marginal, remote areas (like rural areas). Similarly, late users will have less effective spending power than early users. That's pretty much the problem that is being complained about in this thread.
The work they do is cryptographically securing the transaction history and account ledger for Bitcoins (who owns how many coins). If that is not useful, then you must also believe that the internal work that banks do tracking transactions and account balances is useless.
First let me say that it's remarkable that too people in general agreement about the uselessness of Bitcoins are at such odds with each other.
I'm still missing why you believe that 'wasting electricity and computer cycles' is the opposite of 'not doing any useful work'.
You're interpreting that wrong. Let me rephrase: Not only do they not do any useful work, they do the opposite of useful work: they waste resources.
I most certainly do understand. Consider the built in major advantage to early adopters of bitcoin (for one of many factors) and then look at the wikipedia entry for "ponzi scheme" and you'll see why I've put that label on it.
I did, and I expect the mods did not. It is a completely incorrect label to apply to bit-coin. Ponzi scheme's involve one individual or organization fraudulently reporting non-existent profits to participators. Also, I really hate that particular argument that appears here so often: "I'm right and I leave it to you to work out why." (Is there a fallacy of logic about that?) The mods however really seem to like it.
Bit coin is not a Ponzi scheme.
swapped computer parts are not a currency
From wikipedia, our mutual friend:
In economics, currency refers to a generally accepted medium of exchange.
As I would totally barter computer parts and many are using bitcoin for transactions, I would say that both are currencies under this definition.
If bit coin is a "scam" please explain why. Trying ill-fitted labels like Ponzi scheme on it does not make it a scam anymore than calling it a scam does.
Corrected link, sorry: http://mises.org/books/inflationinfrance.pdf
Ah, I see. Apparently my reading comprehension requires more coffee.
I am TheRaven on Soylent News
I do wonder how the amount of goods and services purchased with Bitconis compares to the amount of goods and services purchased with something that has a more intrinsic value like Tide liquid laundry detergent. Every time I see these various bitcoin articles I start to wonder if I should start hording laundry detergent, soap, rice, etc when it goes on sale.
Time to offend someone
https://en.wikipedia.org/wiki/Chiemgauer economy is creating jobs
Casteism
Principal=Collateral,
Collateral=Debt,
Debt=Principal + Interest!
http://bibocurrency.org/English/The%20Scam%20short%20form.htm
Casteism
Every nation need dollars to buy OPEC oil.
https://secure.wikimedia.org/wikipedia/en/wiki/Nixon_Shock
What happens if US doesn't need anything from rest of the world?
Casteism
There is no work for the early adopters involved such as in gold panning, and no risk such as in investment. Look at the bitcoin scam itself instead of the flawed analogies.
Gold has industrial uses too, so either they're both money or neither is.
In reality, they're both commodities like any other mineral.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."