Bitcoins, Dollars and Renminbi

Marc To Market's picture


Reports indicate strong Bitcoin interest in China.  BTC, the China-based Bitcoin exchange accounts (trading a third of all Bitcoin transactions, while China may account to close to half of the daily turnover,  according to some internet reports) at an estimated 200k Bitcoins a day. 

Registered participants on BTC is reportedly near 10k and rising quickly lately.  China-based Baidu, one on the largest internet companies in the world, has begun integrating Bitcoins into their network. 

On a recent trip to Asia and since, we found the Chinese media, in particular, had strong interest in Bitcoin angles and stories.  That level of interest, however, did not appear reflected among the asset managers to whom we spoke.

There two general explanations offered from the Chinese interest in Bitcoins.  The first is that it is part of China's challenge to the US dollar.   Some who are involved in the digital currency space, think that the Bitcoin could actually chip away at the US dollar's reserve currency status.  This seems quite far fetched and a incredible claim (in the sense of lacking credibility), though it has not stopped reporters from repeating it.  Yet, not to lose point, the idea is that digital currencies, of which the Bitcoin is the biggest and best known, is an alternative to fiat money. 

The other explanation of the popularity of China's interest in Bitcoins is much less philosophical and normative and simply pragmatic and grounded into real needs.  Simply put, in a country that continues to closely regulate capital flows, the Bitcoin gives Chinese savers a way to circumvent the government's strictures. 

China has been in the process of financial liberalization for some time, albeit at varying speeds.   It is expected to become gradually easier to investment overseas.   Often, when legitimate channels are developed, officials crack down harder on the shadier channels.  Back in 2009, Chinese officials did move against another digital currency (QQ).  Some argue that it was the centralized form that Chinese officials thought challenging rather than digital currencies in theory. 

Yet, there are few places in China to really spend Bitcoins and the issue seems to be how much are the Bitcoins, simply another speculative vehicle and how much is it a circumvention vehicle.  Even if it is most a speculative vehicle, regulators may still take an interest.   To be fair, the media coverage outstrips the actual number of people involved with Bitcoin trading in China. 

In the US, Bitcoins have a different function.  An like bluejeans and rock and roll music, the plasticity or flexibility of American culture and political institutions offers a different tact.  In Senate hearings early this week, both the chairman of the Senate Committee on Homeland Security and Governmental Affairs and the Director of the Treasury Department's Financial Crimes Enforcement Network (FINCEN) suggested that digital currencies are comparable to the internet in its earliest days.  

Treasury's Calvery was quoted saying, "So often, when there is a new type of financial service or a new players in the financial industry, the first reaction by those of us who are concerned about money laundering or terrorist finance is to think about the gaps and the vulnerabilities that it creates in the financial system.  But it is also important that we step back and recognize that innovation is a very important part of our economy."  

US officials seem to recognize the digital currencies can provide a legitimate financial service and has the same benefits and risks of online payment systems.  Later today, the Federal Election Commission is to decide today whether digital currencies, such as Bitcoins, can be used as contributions to political campaigns. 

For those devotees who embrace the Bitcoin in the US (of high income countries more generally) as an alternative store of value than fiat (paper) money, there seems to be a fundamental contradiction.  If it is truly desired as an alternative store of value, then the exchange value is less important, but if it cannot be used, then it might not be considered money.   It seems that such a holder of Bitcoins should only use them for transactions if they felt that value of Bitcoins was rich to paper money. 

The critique of fiat money indicates that paper money will continue to fall depreciate against some external metric, like gold or a basket of goods.  This view argues against using Bitcoins as medium for transactions.  Economists often argue there are three functions of money, a medium of exchange,  a store of value and a unit of account.    Digital currencies, including the Bitcoin has not achieve the networking effect that is required for a unit of account.  We argue here that its function as a store of value works against it acting as a medium of exchange.    Perhaps this is the trilemma facing digital alternatives to fiat money. 

Sovereigns traditionally have two monopolies:  the power of coinage and the legitimate use of violence.  There are numerous examples of the sovereign sharing its monopoly with others, but only in limited ways.  Those who embrace digital currencies as an alternative to fiat money may always exist, but in relatively small numbers.  Surely, the income and wealth divergence that transcends economic models, suggest that far too many people do not have sufficient fiat money to make ends meet and digital currencies are a luxury they cannot afford. 

On the other hand, digital currencies to facilitate transactions may have a greater future, but then, predicated on fiat currencies.

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Thu, 11/21/2013 - 21:12 | 4179594 carlin401
carlin401's picture

The Bitcoin cryptocurrency records its transactions in a pub-
lic log called the blockchain. Its security rests critically on the distributed
protocol that maintains the blockchain, run by participants called miners.
Conventional wisdom asserts that the protocol is incentive-compatible
and secure against colluding minority groups, i.e., it incentivizes miners
to follow the protocol as prescribed.
We show that the Bitcoin protocol is not incentive-compatible. We
present an attack with which colluding miners obtain a revenue larger
than their fair share. This attack can have signi cant consequences for
Bitcoin: Rational miners will prefer to join the sel sh miners, and the
colluding group will increase in size until it becomes a majority. At this
point, the Bitcoin system ceases to be a decentralized currency.
Sel sh mining is feasible for any group size of colluding miners. We pro-
pose a practical modi cation to the Bitcoin protocol that protects against
sel sh mining pools that command less than 1
4 of the resources. This
threshold is lower than the wrongly assumed 1
2 bound, but better than
the current reality where a group of any size can compromise the system


What is ignored now about BTC is that the HONEST MINER has been put out of biz, now only 'bad miners' remain, and they're running server farms of USB-ASIC's and FPGA's in CHINA, and running secret private mining pools'. It's only a matter of time before they decide to quit playing the game honest.

Now that 'honesty' no longer pay's, and it doesn't honest people have been selling their mining HW since april 2013.

So, now critical MASS has happened, and CHINA has the advantage with mining control, so they'll run the bitch up, and then those holding majority shares will become active and sell, and its game-over.


Personally I see MANY crypto-currency's, and it easy to move between them, and there is no toll gates, no exchanges, and no fucking mining-pools. It will come, but it will come from FSF folks that aren't greedy assholes.

Thu, 11/21/2013 - 20:43 | 4179504 carlin401
carlin401's picture

How about an honest change in subject about BTC, nobody ever answers my question here.

We can all agree that the power behind that worthless fiat toilet paper virtual currency the USD is fully backed by its proven history of murdering 100's of millions of people in the last 80 years.

But what the fuck is BTC will to do? Once the 'BTC JOKER' either pulls the 'kill switch' or holds BTC ransom, then what is the BTC community going to do? Well in the old days if you were a US citizen you could call the US marines to back up your investment in Honduras or Lybia. But now there is nobody to call. Period, ... for every BTC theft everybody just sits on his ass.

So, first of all I expect black-stone, or ex-cia to very soon offer a Mercenary army for those holding BTC, and they send their kill-teams out, ... why the fuck not? This is how the real world operates.

Certainly 'satoshi' was probably JAP, and probably the Yakuza is involved, ... This thing is 100% supported by the MSM worldwide, so you know TPTB is involved.

We already have hit's online in BTC to kill politicians, certainly there are or will be hit's to kill or 'investigate' the 'theft' of BTC.

Another item I don't see discussed, and I have spent a lot of time studying BTC, there are millions of lost BTC's to date, ... what about recovery? Somebody is going to go after those 'lost', but are they really lost? and if some 'agency' or SOF group grab's your lost BTC's how are you going to show original ownership?

Don't fucking laugh at my questions, wallets are now routinely broken for those who have lost the passwords, and mining can be turned around to re-mine the old hash-blocks, on the basis that there has been no transaction in history, why not somebody mine for that 'key' on those 'lost' blocks, and nab that key and spend the money? It will come. Say you are saving your COIN, how do you protect it? So then there has to be a registry of all coin, otherwise they'll say a few years and non transacted BTC's get re-cycled,... its coming.

Thu, 11/21/2013 - 20:46 | 4179512 hmmtellmemore
hmmtellmemore's picture


"Certainly 'satoshi' was probably JAP, and probably the Yakuza is involved, ... This thing is 100% supported by the MSM worldwide, so you know TPTB is involved."


You sound like a true idiot, I hope you really aren't in real life.  

Thu, 11/21/2013 - 21:16 | 4179607 carlin401
carlin401's picture

Yesterday here on the other ZH post that got hidden and quick, the author pivotfarm asserted that satoshi was 'gain', and nobody contested I don't waste my time, cuz honestly I don't care about 'who the man is behind the mask', I only care about ideas.

But the fact is GAVIN ( is the fucking talking head for the WASH-DC BTC lobbying on the behalf of the NSA, ... so I can only suspect that given that is the talking point of ZH, then WOW,

Most people think that SATOSHI is Asian, and I agree.

Like malcolm-x said long ago "never give whitey credit for conspiracy, he ain't smart enough"

But GAVIN, my god he's a sellout and all that is wrong with BTC, its his that has taken satoshi's orginal paper and work and turned it into a fucking 'get rich quick pyramid chain-letter'.

Thu, 11/21/2013 - 20:58 | 4179541 carlin401
carlin401's picture

Everybody in MSM is a cheerleader for BTC, ...

We already know that the MSM is 100% evil, and they
don't even let you near the camera unless your on 'team'.

When you see or hear on orchestra look for a conductor, only
one 'power' in the world has the power to enable all the MSM worldwide to jump on a story continuously. Look at ZH, it too has bit the 24/7 BTC cheerleading.

How about a non-bot man stepping forward and addressing the issues?

Thu, 11/21/2013 - 20:33 | 4179454 carlin401
carlin401's picture

Liars and bigger lies, ... btc is safe, btc is private,... yak-yak

There are many lies, but most important is SHAMIR's work where he found that 90% of BTC's are dormant ( when these mofu's go active watch fucking out ).

Then there is the new Cornell paper (, which tell's exactly how to control BTC, including pseudo code.

The chinese don't give a fuck, they're not looking long term, they're willing to gamble today, cuz in china nobody gives a fuck about anybody outside of the 'family' the last sucker holding the bag is his fucking problem.

In the west its a little different, people get hurt, then the US gubmint step's in and cripples a technology. In China they simply ban it as opposed to 'regulate'.

Here is some more fucking reality ...

The assumption that X% of the hashpower cannot earn more than X% of the revenue is almost certainly not true, once X% exceeds 33.3%.

Network vulnerabilities could potentially make this threshold much smaller. We don’t know for sure yet.

Even with an optimal network, and for mining coalitions between 0 and 1/3 of hashpower, we have no proof that honest mining is the most profitable strategy. Even if the paper’s “selfish mining” strategy turns out not to work in this case, it is possible that another strategy exists.

Given an adversarial mining strategy, can a coalition form around it? This is an orthogonal question that awaits a definitive answer.

Regardless of its other merits, it is likely that this paper will necessitate stronger sybil defenses, and this will further underscore the degree to which Bitcoin’s security currently depends on the actions of its volunteer custodians.

[1] There is another assumption necessary for the standard Bitcoin security argument: no investment of X% of the money spent on mining can achieve more than X% of the hashpower. The paper does not challenge this assumption, however.

[2] Members of the Bitcoin community have already created simulations that seem to confirm this aspect of the paper’s claims


What the above means is that the assholes running BTC ( a wash-dc lobbyist firm now has a justification to re-write btc to 2.0, that means that all the dormant and lost btc's will be salvaged, which of course means that hoarders have to come forward and identify them, or lose them.

IMHO there is a critical mass, that's why I like lite-coin or something smaller you can still play the game, but the GAME is small enough to not be under the 'systems' gaydar.

Today we have a situation where every asshole on the planet wants his piece of BTC, which means that nobody is going to get anything, because it just takes one 'JOKER' like in batman to use the work from the paper ( ) to destroy the entire chain, and ergo the entire system, so called the 'kill switch' and known all along, as all this is in the original Satoshi paper if any body cared to actually read the fucking thing.

Thu, 11/21/2013 - 20:51 | 4179523 hmmtellmemore
hmmtellmemore's picture

It sounds like you would love to see btc have trouble.  I think you'll be dissapointed as new versions of bitcoin address issues and build on the base.  For instance, including Zerocoin.  Litecoin is a waste of time, not much imagination there.  Namecoin on the otherhand is truly more than just a btc clone.  Check it out.

Thu, 11/21/2013 - 21:06 | 4179566 carlin401
carlin401's picture

I don't love to see anything.

I want an honest debate with real CS folk about the real issues.

I want an honest discussion about the 'goals', given the
24/7 mandate of ZH "How high will SP go, or gold, or BTC"

It's clear that 99% of the folk6s here are 'get rich quick morons', said

On a higher level I would like to see

1.) private transactional currency
2.) safe
3.) no prying eyes (nsa)
4.) egalitarian, no pools, no exchanges
5.) no 'first on' hoarding of +80% of the base
6.) rock solid, ...

Lastly, don't bitch about lite-coin it runs the same fucking software as BTC, except the HASH algo is not NSA, the BTC uses the NSA-SHA algo, the reason lite-coin went with a non-NSA algo was to put the 'mining pool asics' out of biz and bring back 'egalitarianism', one cpu, one miner,
Now in china there are houses with 1000's of ASIC's mining
BTC's and so now SOLO mining in BTC's is fucking dead, all POOLS are THEFT as the pools only pass back trump change to the miners. Orginal mining was meant to be SOLO.

Those that support BTC are either assholes or greedy mofu's.

Thu, 11/21/2013 - 22:33 | 4179776 hmmtellmemore
hmmtellmemore's picture

I don't see the logic of calling btc supporters assholes/greedy mofos.  I actually agree that cpu mining is a massive energy waste.  I like when variant coins actually are innovative, as competing currencies should be.  For instance Peercoin has a very interesting mining system:

It seeks to reduce the energy cost of coin creation to a minimum.  That is innovation.

Litecoin is not really much different than bitcoin, just a few minor tweaks in my opinion:

Feathercoin seems like another yawn to me, just a couple small tweaks.  In a free-market of currencies, many currencies will eventual fail if they are not creative and don't bring much difference to what is already on the table.  I don't see Litecoin and feathercoin going very far because in terms of technology they aren't a big improvement.

A very creative system that goes way beyond simply a currency is namecoin.  Namecoin forms the backbone of a new Internet, basically, which isn't controleld by the US government.  This is what I like to see, not just someone cloning the bitcoin sourcecode and making a couple tweaks, but true innovation that can shake the world.  Namecoin are fairly cheap too, as they've had high profile issues in the past which they seem to have fixed for the most part.

Fri, 11/22/2013 - 01:00 | 4180244 carlin401
carlin401's picture

My logic is that those who pimp and pump 24/7 the bitcoin pyramid scam are assholes.

Ok, is that enough clarification?

Fri, 11/22/2013 - 01:21 | 4180284 hmmtellmemore
hmmtellmemore's picture

The price is going up because it is being used heavily in China.  That aint no scam, sir.

Thu, 11/21/2013 - 20:18 | 4179417 carlin401
carlin401's picture

chinese like to gamble biggest gamblers on earth, if everybody was buying dog-shit and it went up, every chinese would join the speculation cuz its in their genes

bad news is it only takes one to bail and the rest follow

Thu, 11/21/2013 - 16:02 | 4178639 Godisanhftbot
Godisanhftbot's picture

 Don't forget , buy LintCoin(c) based on the lint found in my pocket.

 Limited supply.

Thu, 11/21/2013 - 16:01 | 4178635 Godisanhftbot
Godisanhftbot's picture

 If its Chinese, its crooked.


 Bitcoin fits the bill

Thu, 11/21/2013 - 13:11 | 4177768 Conax
Conax's picture

US officials seem to recognize the digital currencies can provide a legitimate financial service and has the same benefits and risks of online payment systems.  Later today, the Federal Election Commission is to decide today whether digital currencies, such as Bitcoins, can be used as contributions to political campaigns. 

Bitcoin has a bright future- untraceable, unbridled, out of control bribery and graft!  Unlike cash, no bagman has to fly it to the islands, so it's really convenient.

Yaaay, we like it now.

Thu, 11/21/2013 - 13:15 | 4177789 foodisgood
foodisgood's picture

Those mfers - I watched almost all 6ix hours and everyone in that senate hearing room was just masturbating at the Price as they make sure to see Value in all things in control of one exchange/reciept.

Thu, 11/21/2013 - 13:09 | 4177755 squid427
squid427's picture

hey bubblegum, any suggestion where else I should take my business? 

Thu, 11/21/2013 - 13:00 | 4177715 All Out Of Bubblegum
All Out Of Bubblegum's picture

The Renminbi is based on a basket of currencies. China just has to add Bitcoin to its basket after nurturing it to stable levels and the Fed is TOAST.

The Chinese invented paper money. We're playing with their toys and will scald ourselves to death while they eat our lunch.

Thu, 11/21/2013 - 13:11 | 4177756 foodisgood
foodisgood's picture

You are a moron to believe this has anything to do with nations.

This is about control.

The reciept is the transaction that ALL RULERS (of any rule of measurement) BOW DOWN TO.

Crypto currency is central planning on roids with a cock as long as the world is round.

Thu, 11/21/2013 - 12:47 | 4177631 squid427
squid427's picture

Mt Gox is terrible. Coinbase is soooo much easier to use

Thu, 11/21/2013 - 20:52 | 4179526 hmmtellmemore
hmmtellmemore's picture

it took over a week for coinbase to deliver my btc, what a joke.


I'm trying to get into Kraken now.

Thu, 11/21/2013 - 12:58 | 4177701 All Out Of Bubblegum
All Out Of Bubblegum's picture

Coinbase is a Goldmans Sachs operation run by Goldman Sachs trader Fred Ehrsam. Coinbase gives GS a position in Bitcoin and in exchange for running this very singular US-based Bitcoin biz, GS is happy to give your bank and personal info tied to Bitcoin addresses to its pals in the NSA/DEA/FBI/CIA/etc.

Stay away from Coinbase.

Thu, 11/21/2013 - 16:24 | 4177842 Metal Minded
Metal Minded's picture

Buy BTC on Coinbase only because it is an easy entry point for USA buyers. After purchase, move it to a secure wallet, cold storage, or trading exchange. Use 2FA(two factor authentication) in all cryptocurrency transactions. Set 2FA up at each transaction point before you move any money or Crypto to that point. I don't currently see how BTC or Coinbase will give any advantage to GS. Big Vacuum Cleaner already has all our information.

Thu, 11/21/2013 - 13:03 | 4177727 foodisgood
foodisgood's picture

With Price and Value increases at no Cost every wasp & joo with a control button is watching their cock grow by not mere inches but yards.

It is beyond the definition of ugly.

Thu, 11/21/2013 - 12:44 | 4177610 observer007
observer007's picture

Don't worry

its going up

target 10000

now: 752$

Realtime quotes and news:

Thu, 11/21/2013 - 13:31 | 4177596 Metal Minded
Metal Minded's picture

As the week and a half long roller coaster ride(starting with a parabolic rise) of the BTC/USD and BTC/CNY currency pairs slows to take a breather, LTC(Litecoin) is starting to catch a bid at exchanges such as BTC-e, Vircurex, Bter, and Cryptsy(to name just a few of the available exchanges), in major pairs LTC/USD, LTC/CNY, and LTC/BTC. Max Keiser initiated coverage of LTC two days ago, calling for an interim of $50(currently ~$8.50). Arbitrage opportunities abound. 24/7 Trading. When was the last time you traded on an exchange and didn't feel like you were up against Front Running, HFT, co-located brokerage computers, and POMO?

Thu, 11/21/2013 - 12:31 | 4177552 squid427
squid427's picture

@ ThisIsBob

Thae amount of illegal activity done using bitcoin PALES IN COMPARISON to the amount of crime, terrorist activity, and money laundering done in USDs. And the larget platform for illegal activity using bitcoin was taken down months ago and bitcoin price has doubled.

Thu, 11/21/2013 - 12:28 | 4177535 orangegeek
orangegeek's picture

these bitcoiners are a pretty passionate bunch


converting a military backed currency - like the USD for some 1's and 0's on some server in Asia is a sucker's bet


created by the people, schmeeple - it's software


caveat emptor

Thu, 11/21/2013 - 12:27 | 4177531 rwe2late
rwe2late's picture

The advantage of Bitcoins for widespread use in internet transactions seems questionable:

Bitcoin users can be identified

Bitcoin "wallets" etc. can be hacked, and are subject to malware and fraud


The desire to have long-range transactions without government intrusion is understandable. But attempting such by use of the internet ultimately depends on governments allowing/tolerating such use. The likelihood that governments will curb Bitcoin use for taxation and other reasons seems high.

The desire to avoid the current transaction fees charged by credit cards, banks is also understandable. The likelihood that the banks will exert influence to have governments curb Bitcoins seems rather high.

Thu, 11/21/2013 - 22:31 | 4179798 hmmtellmemore
hmmtellmemore's picture

Bitcoin users can be identified

Look up Zerocoin.

Bitcoin "wallets" etc. can be hacked, and are subject to malware and fraud

So can anything else.
The likelihood that governments will curb Bitcoin use for taxation and other reasons seems high.

Good luck to them.  They could even try to reshape TCPIP traffic to remove bitcoin transactions, and that would just limit the flow for a short time as work arounds get set up.  Once again, look up Zerocoin.  With vigilance to your account, such as not writing your bitcoin address online with your social network account, you can stay anonymous.  They best the State can do is regulate the brick and mortar shops in their own country, such as a Wall Street fund which invests in btc, but they cannot control the network.  So get to know Tor, and eventually get used to using sites in countries like Singapore and Switzerland.  You might even want to look into a brain wallet, it is stored in your own memory.

Thu, 11/21/2013 - 12:58 | 4177702 foodisgood
foodisgood's picture

Price and Value increases at no Cost. Every wasp & joo with a control button is watching their cock grow by not mere inches but yards.

It is beyond the definition of ugly.

Who has the resources to care at this point?

Thu, 11/21/2013 - 11:57 | 4177406 michaelsuede
michaelsuede's picture

This makes absolutely no sense to me:


" We argue here that its function as a store of value works against it acting as a medium of exchange.    Perhaps this is the trilemma facing digital alternatives to fiat money. "


What the hell kind of logic is that?  The real world operates exactly the opposite from this statement.

The more people want to hold it as a store of value, the more accepted it will become as a means of payment.  

Thu, 11/21/2013 - 13:17 | 4177809 Jay
Jay's picture

"Digital currencies, including the Bitcoin has not achieve the networking effect that is required for a unit of account."


I don't understand this either. How is Bitcoin not a unit of account?

Thu, 11/21/2013 - 13:46 | 4177952 daemon
daemon's picture


" I don't understand this either. How is Bitcoin not a unit of account? "

I'm not sure but reading the following sentence " We argue here that its function as a store of value works against it acting as a medium of exchange. " , I would say this is the contradiction he sees between the fact that the value of bitcoin lies in it's wide adoption/use, circulation, and the fact that people try to hoard it .

To make it clear you have to imagine the extreme case where only 10 people (for example), have succeded in hoarding all the bitcoins . There would probably be such a feeble amount of transactions that this currency would finally be abandoned .

To sum up , the more it is hoarded -> the fewer people will have some of it -> the more it will be abandoned by businesses -> and the less a bitcoin account will have value .

Hoarding bitcoins make each bitcoin less valuable

But of course I'm not sure that's what he meant . 

Thu, 11/21/2013 - 12:23 | 4177512 dasein211
dasein211's picture

All currency are just public agreements to use that item as a medium of exchange. It's usually criminal/licentious elements that decide which way we go with what technology. VHS vs beta- porn industry decided. Ak-47- war criminals decided. Art, music, food, politics- these things were all at societies fringes at one time and as they became more mainstream they gained value. No difference here.

Thu, 11/21/2013 - 12:23 | 4177466 daemon
daemon's picture

" The more people want to hold it as a store of value, the more accepted it will become as a means of payment. "

Yes, but imagine an extreme situation where only a relatively small bunch of people hoard it . What happens in this case ?

Don't forget that the store of value of bitcoin lies precisely  in the fact that it's widely used, by a lot of different actors, and circulates .

That 's probably why the author of the article sees a contradiction .


Thu, 11/21/2013 - 12:18 | 4177377 RaceToTheBottom
RaceToTheBottom's picture

This author uses lots of large words, but really does not say much of value.

If you print something with abandon, it become less valuable.  This is the action of a FED controlled dollar.

The Bitcoin has outlined EXACTLY how it will be printed/created/mined.

People, the marketplace, is saying that they see more discipline in the method of creation of Bitcoin VS the discipline in the method of creation of dollars

Thu, 11/21/2013 - 21:40 | 4179669 carlin401
carlin401's picture

These are talking points of and,

If you read the Shamir paper or cornell paper's you can see that 90% of all BTC is dormant and never traded.

Total transaction's day-to-day of BTC only account for less than 5% of the BTC's that have been 'mined' to date.

The reason that BTC goes up, is that its thin, and easy to buy, and very hard to sell.

The fact that BTC is now a CULT, is proof that it is a fraud.

Thu, 11/21/2013 - 11:47 | 4177359 y3maxx
y3maxx's picture

Gonna stock up on "Tungsten" filled Bitcoins.

Thu, 11/21/2013 - 11:43 | 4177340 Xandrino
Xandrino's picture

Bitcoin itself is fiat, just digital.


Thu, 11/21/2013 - 13:12 | 4177771 Jay
Jay's picture

Gold is also a fiat metal.

Thu, 11/21/2013 - 12:19 | 4177495 SWCroaker
SWCroaker's picture

Time for a little language police.  The word "fiat" means "by declaration". as in "by order" or "by proclamation".     "Fiat accompli" means   "we declare such and such (usually some deed) to be an accomplished fact".    And "fiat money" means "it is money because we the government say it is so".


Bitcoin, for all of its flaws and faults, is not something that the government is insisting you use.  It is a medium of exchange that has arisen from the people, and as such you would expect it to be fulfilling some perceived need by the people.  I'm a fan of *all* spontaneous currencies; let them compete to see which does the best job of being liquid, indestructible, and preserving wealth.  Since bitcoin isn't being foisted on the masses by government decree, it can hardly be called "fiat".

Thu, 11/21/2013 - 13:01 | 4177708 Nostradumbass
Nostradumbass's picture

It is not "fiat accompli"

It is fait accompli. Nothing to do with currency necessarily.

Thu, 11/21/2013 - 12:38 | 4177545 daemon
daemon's picture

" Time for a little language police.  The word "fiat" means "by declaration". as in "by order" or "by proclamation".     "Fiat accompli" means   "we declare such and such (usually some deed) to be an accomplished fact".    And "fiat money" means "it is money because we the government say it is so". "

I read that fiat means "be done", "be made" . In such a case, fiat money doesn't necessarily imply an authority/government forcing people to adopt said currency . People can very well agree to call some "concept" (I don't know what word to use here) money .

"Hey people, look at bitcoin, it's an interessant idea, it has many advantages over gov. fiat money .  Let's use it, let's make it our money ".

Thu, 11/21/2013 - 13:08 | 4177637 SWCroaker
SWCroaker's picture

daemon, I'm, uh, old.   So I remember what words meant before our ministry of truth started newspeak.   The definitions of fiat that I learned as a child came into my awareness from discussions of the 30s, and 70s.    I *do* see that from around 2008/09, there is a movement to have fiat mean "money without intrinsic value".   If one were to treat that definition as valid, then Xandrino would be justified in considering bitcoin as fiat.  (So a minor half-apology to Xandrino; he is perhaps just a product of his times).

"Fiat" as a word gained popularity with the French, who used it almost exclusively in a "we the government do declare that thus and such is so"  fashion.     Fiat the automobile is an unrelated cross language coincidence, as the Fabbrica Italiana Automobili Torino just happened to acronym into a recognizable word elsewhere.   If you really chase the meaning of the term back to its etymology, it first shows up in the 1630s, and was derived from the Latin fiat, or "let it be done".       No connotation of intrinsic value was implicit there at all.

Keeping the import of "no intrinsic value" separate from "forced into use by government decree" allows you to consider the case that there are two distinct and differing concerns.   Money lacking intrinsic value *almost* always needs the force of government decree behind it; people are not *that* stupid.   The lack of intrinsic value almost always leads directly to the risk of uncontrolled/nefarious money creation; historically, if there wasn't a cost constraint to making more, what kepts the creators of it from just going to town?  In contrast, I think it can be argued that while bitcoin has no intrinsic value, it *does* possess a mechanism to restrain uncontrolled creation; something that as far as I know cannot be said at for all government mandated fiat currencies of the world.

Thu, 11/21/2013 - 13:17 | 4177780 daemon
daemon's picture

I understand your point of view, and in fact the definition you give of fiat money is the most used one . Personnaly, I think it's too specialized, restrictive .


" I'm a fan of *all* spontaneous currencies "

Again, it depends on how you define spontaneous . I would say that gold, silver, other metals, ... , salt (when and where it was used ) were spontaneous, because they were goods. They could be used by people for things totally unrelated to commercial transactions. According to some people ( like you), they have an intrinsic value. They were bartered goods turning "spontaneously" (meaning "without the people even having to decide to agree ") into money . Because they naturally had some use to the people even when not being used as money



Thu, 11/21/2013 - 13:47 | 4177999 SWCroaker
SWCroaker's picture

daemon, if you have the time, I'd recommend, by Timothy Green.   (I point it out merely as a shared enjoyable book; your thinking is not far from my own and the book doesn't have any stunning revelations that would shock you into radical change).  Having read it recently, it probably colors my mindset a bit; beyond being a historical account of gold, it clearly shows that populations time and time again *invent* their currency, without government assistance.   Once it's chugging along, governments step in and claim exclusive right to the system. This was true in ancient Mesopotamia, and true in early colonial America.  I respect (delight in?)  when a group of individuals invents their own little advance in civilization.  It is their choice if that involves placing import on an alternative use of their currency (butter, salt, tobacco leaves) or not (metal coinage, stone money, bitcoins).  In either case, and as a separate matter, it seems that smart people naturally gravitate towards money that has a trustworthy mechanism for restraining supply.   Whether bitcoin actually possesses that mechanism might be in question, but a number of people seem to be voting that it does.

My main concern with bitcoin is its potential susceptibility for future government control.  History seems to emphatically insist that attempts will happen.  Imho, the net access that bitcoin relies upon represents multiple avenues for just such a future usurpation, in an age where the NSA already sees all electronic transactions, and the tax/tariff/capital laws are not at all a function of the will of the people.

Thu, 11/21/2013 - 13:53 | 4178027 daemon
daemon's picture

" daemon, if you have the time, I'd recommend, by Timothy Green."

Thanks for the info .

" My main concern with bitcoin is its potential susceptibility for future government control. "

It's very understandable. I also believe they will try something, apparently bitcoin could become too much of a problem for the "system", and they won't stand there without attempting something.

Thu, 11/21/2013 - 11:42 | 4177327 ThisIsBob
ThisIsBob's picture

You strip Bitcoin of its use in illegal transactions and it disappears.

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