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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."
... 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???
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.
Ha!
The currency generation function in bitcoin is a shift operator. Bitcoins are limited to a precise discrete value. A move to wider registers could allow that number to be higher by a tiny, tiny, tiny amount. There is no "indefinitely" about it.
The rest of your post is just Keynesian nonsense. We get the message. You love debt. You want to reward debtors, which is the same thing as punishing savers.
Deflation is the natural state of an advancing world. Computers have deflated massively against other technologies, and we are all cheering about it. The only people that think that inflation is better are statists and bankers (when they own the statists). Banks create money out of thin air, and they get to sell it (to you!) right away, before it starts chasing assets and driving their prices up. If inflation came from a different mechanism, bankers would hate it too, since it would devalue their holdings then, just like it devalues yours and mine.
It doesn't matter why governments devalue currency, what matters is that they do. Always and without fail. In practical terms, Congress really likes having a bottomless checkbook. That it destroys the value of our currency is a problem for someone else to solve, like our kids.
See that "Preview" button?
I've never understood this argument, so perhaps you can explain it to me. Let's say I want worms for fishing. I have a buddy with a farm that is just crawling with worms. He really likes gumdrops. Everytime I ask him for worms, he says I can have them in exchange for gumdrops. This goes on for quite some time and I start to trust that I can get worms from the guy if I give him gum drops. So I stock some gum drops all the time, just in case I suddenly want to go fishing. Maybe you don't want to say that gum drops are a currency, but surely in this scenario gum drops have value (they are worth X worms).
In the same vein, if I want to buy drugs from the Silk Road or whatever, they want Bitcoins. It doesn't matter how many gold dubbloons I have in my house; I can't email them to the guys who are going to ship me drugs. The gold is worthless in this siuation and the Bitcoins have real value (X bitcoins are worth Y drugs).
In both scenarios, the value is risky. My buddy may suddenly stop liking gumdrops. The Silk Road may get taken down by the FBI. Then my stock of gum drops and Bitcoins is worthless. But they still have value until that point.
The argument that it doesn't have value unless you can pay your taxes wih it baffles me. I don't see how it is connected at all. I can't pay my taxes in saffron, but saffron is incredibly valuable to some people.
Bitcoin has value to some people. This is obvious because people are paying money for them. Actually quite a lot of money is exchanged for Bitcoin every day. They don't hold much value for me since I don't want the things you can buy with them, but that doesn't make them valueless. I tend to agree that Bitcoins will not become popular enough to be as widely accepted as other forms of currency, but that doesn't make them valueless.
Finally, while I touched on it briefly before, the reason why you don't want to use silver or gold is because you can't do electronic transfers of silver or gold with very low fees and without the intervention of banks.