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A Bitcoin for Your Thoughts

Tyler Durden's picture




 

The best performing currency year-to-date has no home country, no central banker and no physical scrip; it is the online-only ‘Bitcoin’ and as we noted recently, it is becoming more mainstream.  BTC, as the currency is known, up 130% year to date in dollar terms, thanks to rising demand from a wide variety of adherents, which ConvergEx's Nick Colas notes, includes libertarian activists, small businesses, online drug dealers and gambling sites.  That makes the Bitcoin a controversial subject, to be sure, but Nick notes we can also learn from this unique case study a lesson in global economics.  Bitcoin ‘Money supply’ growth is capped at a slow rate – far below its current levels of demand.  That makes it prone to boom-bust cycles.  It also has no sovereign sponsorship, which means it works outside any nation’s security apparatus.  Lose your bitcoins to hackers?  Tough luck – there is no FDIC in these parts.  Still, Colas concludes, in the creation and growth of the Bitcoin it is not hard to see the online future of currency, especially as real-world alternatives continue to struggle with sluggish economies.

 


Via ConvergEx's Nick Colas,

Every journalist knows that the epithet “Secretive billionaire” catches most readers’ attention like the landing hook on an F-16 making a carrier landing.  If someone is rich and not in the public eye, what are they hiding?  Are they crooks?  Or just so happy with their lives that they don’t want to inspire any more jealousy than necessary?  Inquiring minds (always) want to know...

 

Let me introduce you to Satoshi Nakamoto, secretive central banker.  OK, truth is that he (it is probably a man) only uses that nom du guerre when writing research papers; no one knows his real name.  And he isn’t so much a central banker as a technologist and architect of something called Bitcoin.  Yeah, I hadn’t really heard of it either until I read an article on zerohedge about a “Bitcoin ATM” yesterday.  I spent most of the day reading about Mr. Nakamoto and his virtual monetary construct, and there is much to learn from this first online success story in the world of stateless currencies.

 

Here’s a primer on the “Who-what-wheres” of Bitcoin:

  • The elusive Satoshi Nakamoto published a research paper back in November 2008 outlining the structure for an Internet-only currency he dubbed bitcoin.  Confidence in global currencies and financial system were at low points around the world.  Why not try something new?
  • Rather than have one central database of user balances and transaction history, Nakamoto’s design distributed the database to a network of third parties.  Each one keeps the “Ledger” of owners and also runs hugely complex programs to solve cryptographic puzzles.  Crack the puzzle, and you get fresh bitcoin currency for your trouble.  The puzzles have grown so complex that people interested in working on them now band together online to share their computing power and hopefully earn a few bitcoins for their trouble.
  • The overall supply of bitcoin in the system therefore grows at a slow and pre-ordained rate.  There are currently 10.8 million bitcoins in the system, and this will cap out at 21 million coins in just over 125 years (2140, to be precise).
  • To use bitcoin, you need a “Wallet” which allows you convert your local currency into BTC and back again.  There are many available options online, as well as BTC “Exchanges” to execute the conversions.  The distributed database which manages the system is anonymous, so there’s no central record of what you own or where you spent your money.

 

So what we have is a stateless currency, with essentially no government oversight, run by a bunch of nerds cracking puzzles, with an anonymous architect who (by the by) hasn’t been heard from in over a year.  Yes, in other words a recipe for massive success.  Some recent statistics:

 

  • Those 10.8 million bitcoins in circulation are worth $345.6 million as of today. (See this and other stats here: http://bitcoinwatch.com/).  The velocity of this money is astounding: 1.6 million bitcoins have changed hands in the last 24 hours, or over 10% of the existing money stock.
  • The U.S. dollar value of a Bitcoin is up from just shy of $5.00 a year ago ($4.87, to be precise) to $31.09 today.  It has appreciated by over 100% from the end of 2012 alone, when the quoted price was $13.48.   And back during most of 2010, you could buy all the BTC you wanted for less than a dime.
  • Over the last 24 hours, there have been +61,000 transactions using BTC.  This is almost double the 30,000 transactions in January 2013, and more than 6x that of March 2012.
  • That distributed ledger of BTC owners has one pitfall: it takes about 8 minutes to clear a Bitcoin transaction.  The good news is that this is down from the +10 minutes of just a few months ago.

 

So at this point your BS-meters should be quivering – what’s going on here?  Huge swings in value combined with growing adoption for a system which (aside from anonymity) seems more a step back than a great leap for mankind.  The answers are part pulp fiction, part elegant case study on the real utility of “Money.”  A few points here:

 

  • While Bitcoin may not get much mainstream finance love, the FBI and various U.S. legislators are paying close attention.  Turns out that some bitcoin-accepting online vendors (look up “Silk Road market”) with good anonymity software allow customers to buy illegal drugs using the similarly no-names-please Bitcoin.
  • Online casinos who wish to cater to U.S. customers accept Bitcoins, again for the anonymity of the currency.  The folks that run BTC “ledgers” do release aggregate financial information – where the money is going.  And it is going to online gaming, with an unknown number of U.S. customers in the mix.
  • At the same time, scores of legitimate businesses are also beginning to take BTC, in addition to dollars and euros.  You can buy everything from socks to sneakers to precious metals to baklava online, all with Bitcoins.  See here for a more complete list: https://www.spendbitcoins.com/places.
  • When incremental adoption meets relatively fixed supply, it should be no surprise that prices go up.  And that’s exactly what is happening to BTC prices.  What’s interesting to note is why BTC prices plummet, which they did in the back half of 2011.  The cause was a very short-lived hack attack on one Bitcoin “Wallet” company out of Japan, which caused the price to drop from $27 down to $2 in a few months.  Confidence in money as a store of value is the ultimate driver of its value, both in the cyber and real worlds.

 

I have no idea which way Bitcoins will trade in the next 2 days or 2 years, but the whole process of starting a new Internet currency is a great case study in how real people use real currency.  Limiting supply has clearly been a huge plus for the BTC.  Becoming known as a currency for illegal drugs and gambling is more problematic, of course.  But let’s not forget that the U.S. Treasury printed 3 billion $100 bills in the 2012 Fiscal Year.  Most of those (the Federal Reserve estimates 80%) go overseas and many of them simply facilitate the global drug and arms trade, not to mention tax evasion and human trafficking.  So the BTC’s growing role in the same types of business might qualify it for “Reserve currency” status sooner than anyone thinks.

 

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Thu, 02/28/2013 - 19:10 | 3288039 francis_sawyer
francis_sawyer's picture

Time to make a 'golden' shirt [out of bitcoin "1's" & "0's"], & wear it to the disco to attract & impress all the Indian pootie...

Thu, 02/28/2013 - 19:16 | 3288074 Mark Carney
Mark Carney's picture

Hmmmm, bitcoin, something that is electronic, non tangible and could disapear anytime...... think ill stick to gold and silver buillon.

 

Thanks

Thu, 02/28/2013 - 19:20 | 3288099 Ahmeexnal
Ahmeexnal's picture

Which part of PONZI do these retards fail to comprehend?

Thu, 02/28/2013 - 19:25 | 3288131 johngaltfla
johngaltfla's picture

Bingo AH!!!

 

If, more like when, the governments of the EU and US decide to shut this door, all funds will be seized and redistributed to participants at THE GOVERNMENT/CENTRAL BANKSTER designated exchange rate as determined by THEM!

 

I love the concept but if we had an economic world based on FREEDOM, then and only thne would it work.

Thu, 02/28/2013 - 19:31 | 3288157 Shell Game
Shell Game's picture

"I love the concept but if we had an economic world based on FREEDOM, then and only thne would it work."

 

Same is true of a gold standard.  In this Brave New 1984, there would be no monetary freedom no matter the currency or store of value medium.  Honest money = no/minimal government.  Better honest money = gold-backed and minimal government.

Thu, 02/28/2013 - 20:09 | 3288282 Iocosus
Iocosus's picture

What I cannot grasp is who creates the currency and/or takes my dollars in exchange for a bitcoin? Is this essentially not the same principle of creating currency out of thin air?

Thu, 02/28/2013 - 20:14 | 3288298 XenoFrog
XenoFrog's picture

It's the ultimate in fiat currency.

Thu, 02/28/2013 - 20:40 | 3288401 Pseudo Anonym
Pseudo Anonym's picture

not true.  fiat is by decree.  btc is voluntary, nobody mandates its use.

Thu, 02/28/2013 - 20:43 | 3288411 XenoFrog
XenoFrog's picture

Fiat money doesn't have to be by decree. It is also an accepted term to describe a currency that holds no intrinsic value.

Thu, 02/28/2013 - 20:47 | 3288426 Pseudo Anonym
Pseudo Anonym's picture

the term >fiat< is a dictate; by definition.  the fact that it's arbitrary doesnt mean not tangible

Thu, 02/28/2013 - 20:56 | 3288448 XenoFrog
XenoFrog's picture

And bitcoin's structure doesn't reflect a dictate? 

Thu, 02/28/2013 - 21:01 | 3288467 Pseudo Anonym
Pseudo Anonym's picture

fiat is a dictate to >use<, for example, usd.  it's not the inherent structure.  it is the command of the fed: you will use usd to pay taxes; and nothing else, you slave!  that's what fiat is, a command to use, or do something.  btc is a voluntary use

Thu, 02/28/2013 - 21:19 | 3288495 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

 

 

Bitcoin competes with 

* Swiss numbered accounts 

* Deflationary PMs

* Money transfers like Western Union, Paypal, SWIFT

* Markets for arbitrarily imposed goods and services, imposed from the killers of Aaron Swartz

* Cannot be seized (unless you break RIPEMD; then break SHA256; then break a private key--> the amount of paranoid intelligence built into it is unthinkable for the average ZHer who holds the simpleton view of a world with gold, chickens, & middle age scenario next week).

I could go on, but I want ZHers OUT OF BITCOIN.  Don't buy it and raise the price; I want to have 2100 bitcoins, which means that in the entire planet only 10,000 people can have a stash similar to mine.  

Please proceed with random ranblings about ponzi scam CIA-devised and whatever lunacy you come up with. Just be on the sidelines and watch the real show.  

Whenever you desire to move a large amount of PMs, you'll understand bitcoin.  Until then, please GTFO and just ignore us.

Thu, 02/28/2013 - 21:28 | 3288538 Pseudo Anonym
Pseudo Anonym's picture

that's your problem right here:

I want to have 2100 bitcoins, which means that in the entire planet only 10,000 people can have a stash similar to mine

you will be poor just as you are poor now.  the value of something goes up if everybody has a little bit and competes with everybody else for more. it's the circulation that makes it valuable as money for trading.  it has to flow everywhere.

Thu, 02/28/2013 - 21:30 | 3288544 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

tell that to the 0.001%

Thu, 02/28/2013 - 21:33 | 3288554 Pseudo Anonym
Pseudo Anonym's picture

on the std. distr. curve, which 0.001% do you refer to?

Thu, 02/28/2013 - 21:44 | 3288572 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

The ones that hold all the land, patents, debtslaves et al.  

And btw, what the fuck are you taking about gaussian curves?  Wealth follows power-law distributions, not gaussian distributions.  

Seriously, if you don't grasp this, how can you ever grasp the magnitude achieved in bitcoin?

This year there will be less BTC created than people living in San Diego.  Think about that for a minute.

Meanwhile, http://www.quickmeme.com/Bitcoin-owners-safe/?upcoming

 

Thu, 02/28/2013 - 21:53 | 3288618 Pseudo Anonym
Pseudo Anonym's picture

review your previous comments before you post meaningless %. we were talking btc.  what is the stat. probability that you will have 21K coins and only 9999 individuals in the world will be able to mine the rest?  as far as "your" 0.001%, where do they come into the btc debate?  do "they" have any?  i dont know.  do you know?

Thu, 02/28/2013 - 22:04 | 3288641 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

There will only be 21M bitcoins ever made.  They are 238 times scarcer than an ounce of gold--when all are mined.  

Now if you please, study first, ask basic questions later.

Fri, 03/01/2013 - 00:13 | 3288964 Pseudo Anonym
Pseudo Anonym's picture

pfft.  what are you talking about? btc are scarce my ass. pico transactions, i.e. (10-12) of one btc are possible.  21M btc x (10-12) fractions is a lot of money.  in 125 years, a national treasure could be 100 btc

Fri, 03/01/2013 - 04:23 | 3289320 gold-is-not-dead
gold-is-not-dead's picture

I'm so glad ZHs still can't coprehand what BTC is. I thought people around here are with a vision and knowledge. Well, this makes me even more confident that the majority will join this party fashinably late.

 

http://www.youtube.com/watch?feature=player_embedded&v=mjmuPqkVwWc

Fri, 03/01/2013 - 05:52 | 3289375 Prisoners_dilemna
Prisoners_dilemna's picture

My thoughts exactly. I told myself, if anyone is intelligent enough to comprehend bitcoin it will be the ZH crowd. And they all have more dry powder than I do. Im sunk. The ship has sailed.

Now after reading the comments, and ignoring the trolls Im thinking I may be part of the vanguard yet.

Fri, 03/01/2013 - 07:00 | 3289418 gold-is-not-dead
gold-is-not-dead's picture

true.... lets just sit tight and wait for the endgame, and that is $1 = 1 satoshi... :)

Thu, 02/28/2013 - 23:21 | 3288910 Pseudo Anonym
Pseudo Anonym's picture

so what? what is your point? 

This year there will be less BTC created than people living in San Diego.

small btc transactions b/w sellers and purchasers can be executed in pico-btc (10-12).  there's enough btc for everybody in this world to use and trade

Thu, 02/28/2013 - 21:13 | 3288497 smlbizman
smlbizman's picture

i will admit that i am completly ignorant of how bit coins work....but my bat senses tell me something just is not right.....i dont understand how these 1010101010, are different from bennys 1010101010....i am a simple man and holding a 1oz coin feels real, were bitcoins feel  like the dollar, like religion, like george michael...where you have to have faith.....and anything that runs on faith tends to be an illusion....

Thu, 02/28/2013 - 22:47 | 3288515 Pseudo Anonym
Pseudo Anonym's picture

the diff is that benny can create, in less than a nano-second, infinite number of his judefetzen; btc not so many, just 21 million coins in over 125 years can be mined.

Thu, 02/28/2013 - 22:23 | 3288652 jayman21
jayman21's picture

Bitcoin is designed to be deflationary.  You will continue to see prices go down and number of transactions go up if you hold bitcoins.  The other fiats are based on growth and inflation.  If you are a saver, you will welcome bitcoins.  If you are a debtor, then you are going to hate bitcoins.

 

Right now, you can get bitcoins by buying them or setting up a mining machine to help with the bittorent network.  Keep an eye on the story.  This one will be very interesting if the dollar ever goes.  The one thing I hear is every currency had the dollar to soften the blow up.  If the dollar ever goes, I think everyone will wish they have bitcoins.  Some on thier phone and most of the rest of the bitcoins in a safe place.

 

 

Fri, 03/01/2013 - 07:13 | 3289326 gold-is-not-dead
gold-is-not-dead's picture

BTC will be the reserve currency of the world. Everyone who thinks different will just loose money. No violence is strong enough to solve the math problem.

Fri, 03/01/2013 - 01:24 | 3289178 AndrewJackson
AndrewJackson's picture

Wow, you hit the nail on the head. Exactly what I was thinking. These are no different than benny bucks when everything is boiled down. All of the bitcoin enthusiast will tell you that they are different because of anonimity, limited supply, decentralized, etc BUT they are still a bunch of 1's and 0's conjured up by man at the end of the day. 

Fri, 03/01/2013 - 05:40 | 3289368 Prisoners_dilemna
Prisoners_dilemna's picture

Man didnt create math or the phenomenon of electricity any more than man created gold. But we dont trade gold dust, we formed gold into coins. We dont create 1 & 0s, we form them into a beautiful arrangement whereby they become usable in the same way as gold. Some argue gold has no intrinsic value. Yet its still the preferred money when legal tender laws dont interfere. Bitcoin might also not have any intrinsic value unless you like to collect small memory cards with unique electron patterns on them. Yet they perform as money in a way far superior to fiat curencies and on par with gold. Dont get hung up on the electronic voodoo aspect. The problem with bennie bucks, and milton friedman would agree, is that electronic or not, the currency can be inflated. Bitcoin can not be inflated. Gold can not be inflated. So how is bitcoin like FRNS?
Read into bitcoin more and you will come to understand and hopefully appreciate its nature. I suggest starting here and clicking the introduction tab on the right side of the page. https://en.bitcoin.it/wiki/Main_Page

Thu, 02/28/2013 - 21:14 | 3288496 Pseudo Anonym
Pseudo Anonym's picture

btw, gold coin could be fiat money too.  for example, the fed could stamp out a gold coin with a circumcised dick on it and issue a command: from here on, in usa, you will pay your taxes with a gold coin with a circumcised dick on it and nothing else!  by fiat.

Thu, 02/28/2013 - 21:34 | 3288559 CH1
CH1's picture

Wow, as soon as you mention Bitcoin, the enitre paid troll contingent shows up!

Fri, 03/01/2013 - 04:45 | 3289337 gold-is-not-dead
gold-is-not-dead's picture

paid by who? I made my own wealth on btcs... no one helped me...

Thu, 02/28/2013 - 21:18 | 3288508 TraderTimm
TraderTimm's picture

Its actually the ultimate in hybrid payment system/currency.

Thu, 02/28/2013 - 22:04 | 3288642 espirit
espirit's picture

So... the more players, the higher the value? Do tell.

Fri, 03/01/2013 - 00:42 | 3289119 TraderTimm
TraderTimm's picture

I see what you're trying to imply - but no, it isn't about the valuation of bitcoin in < insert badly managed sovereign currency >.

But again, what was the point of your post?

Thu, 02/28/2013 - 20:45 | 3288415 A Nanny Moose
A Nanny Moose's picture

Every day, except for today, I see ads for the bitcoin generator. I fail to see what value is added in to create such currency units, unless the heat from all those microprocessors is harnessed to produce energy.

I would rather invest in IPv6 addresses

Thu, 02/28/2013 - 21:20 | 3288513 TraderTimm
TraderTimm's picture

This statement is like saying "Why doesn't my car fix potholes in the road when I'm idling, its just sitting there doing nothing."

The work that the mining nodes are doing is something, it secures the network among other things.

Thu, 02/28/2013 - 23:31 | 3288932 A Nanny Moose
A Nanny Moose's picture

Not at all, since it is generally accepted that the productive value of an automobile lies solely in its ability to get me to work more efficiently over long distances, than say, a bicycle.

The work that the mining nodes are doing is something, it secures the network among other things.

Define please. I fail to see the how Bitcoin can produce additional security for a network. I suppose this lies in your definition of "secure," and of "network." Explain please? What network? Whose dime is paying for it?

Fri, 03/01/2013 - 05:07 | 3289350 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

>>>I fail to see the how Bitcoin can produce additional security for a network. I suppose this lies in your definition of "secure," and of "network." Explain please?

The only way to attempt dishonest trasactions in bitcoin, or to momentarily stop the network, is to achieve 51% of the network.  You have to pick up a very open fight with the internet; a fight that will generate headlines and draw more people into bitcoin.

http://www.weusecoins.com/globe-bitcoin/

 

>>>What network?

Bitcoin is open-source software with no hidden secrets.  You can download it now and become part of the network. This leads to your next question...

 

>>>Whose dime is paying for it?

 

Anybody that participates in securing the honesty of the network gets statistically their fair share of the new bitcoin created.  2013--2016 are the last years of "bitcoin high inflation", when the networks monetary base increase by >8%/annum.  

The problem with mining bitcoin today, is that it has become so professional and specialized that it takes more capital than energy; you have to get your hands on an ASIC machine--a processor that can NOT sum 1+3 (non-programmable), but that computes the Bitcoin security codes in hardware.

Fri, 03/01/2013 - 05:13 | 3289353 Prisoners_dilemna
Prisoners_dilemna's picture

https://en.bitcoin.it/wiki/Main_Page on the right side you'll see introduction and other links. start there.

The question you asked is beyond my patience to attempt a succinct answer in a comments box using a touch pad tablet.
If ones even possibly.

I dont think you know it but the question you asked has a pretty technical answer, it appears you have minimal knowledge of bitcoin systems, and dont know even the basic jargon.

Id have more luck explaining the evils of fiat currency to a statist. Please follow that link I provided.

Fri, 03/01/2013 - 04:54 | 3289343 Prisoners_dilemna
Prisoners_dilemna's picture

The idea for a cryptocurrency was conceived long ago.

Satoshi wrote the bitcoin code. There is an 11 page pdf he authored explaining the system. The bitcoin algorithm was designed by satoshi to mimic gold mining. At first people doing the mining, which requires energy inputs and a mining machine, were striking rich veins of btc. But after mining so many bitcoin, the algorithm halves the reward. Now when miners use electricity to solve complex hashing operations they are only finding nuggets. Evemtually bitcoin mining will resemble huge pit mines, monster computer working to extract 1.5 btc.
I am not sure how to say it but mining bitcoin is hardly equivalent to cntrl+p. Mining is resource intensive. Just like mining gold there are capital expenditures and energy costs to mine the btc. Maintenance must be performed on the mining computer.
https://en.bitcoin.it/wiki/Mining
As to the second half of your question I suggest you visit mtgox.com or any other bitcoin exchange. Buying and selling bitcoin is no different then buying and selling canadian loonies or yen. Except you can do it in your living room, you can transact pretty much instantaneously with anyone anywhere in the world. The transaction will be mostly.annonymous with varying degrees based upon your own knowledge of encrytpion tools and other internet privacy practices.
Google buy local bitcoins. There are websites now hooking people up for face to face transactions so they can be bought with cash rather than buying using a CC or checking account.
Mtgox.com
Localbitcoins.com

Hopefully my answer helps your understanding. 1 hr of reading bitcoin forums and wikis should help you understand that bitcoin miners are no more creating something out of thin air than goldminers.

Bitcoin is not inflatable or counterfeitable but neither is it a perfect substitution for gold. It does require network access. On the flip side you will have trouble carrying 50oz AU out of USA and to your central american villa. Bitcoin, you could carry billions worth and no one would know.
The real issue with bitcoin are found here.
https://en.bitcoin.it/wiki/Weaknesses
Anything else is an ussue of misunderstanding and misinformation.

Thu, 02/28/2013 - 19:32 | 3288159 lemonobrien
lemonobrien's picture

you could even apply laws of treason.

Fri, 03/01/2013 - 05:10 | 3289352 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

"The actions of that DELL SD203 were unspeakably treasonous, your honor!"

Thu, 02/28/2013 - 19:42 | 3288191 CH1
CH1's picture

all funds will be seized

And where do you suppose these funds can be found?

Thu, 02/28/2013 - 20:14 | 3288301 CCanuck
CCanuck's picture

Does Bitcoin offer a list of companies, or people that accept bitcoin.

The govvie will start there, not hard to find.

Thu, 02/28/2013 - 21:24 | 3288526 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

then they migrate to TOR and that's it, nothing to find, nothing to do.  Inverted totalitarians will be forced to be honest dua to cryptocurrencies.

Thu, 02/28/2013 - 21:30 | 3288537 francis_sawyer
francis_sawyer's picture

I'm not certain, but I'm pretty sure all the companies who traffic CHILD PORN, HASHISH, & MILITARY GRADE WEAPONRY  have to register themselves with the government before doing business in bitcoins... 

Thu, 02/28/2013 - 22:10 | 3288655 Bunga Bunga
Bunga Bunga's picture

Surprise, the company counterparties who do CORRUPTION are sometimes within the government by nature.

Thu, 02/28/2013 - 22:15 | 3288674 EscapeKey
EscapeKey's picture

You mean like drug barons do when they trade in US Dollars?

Thu, 02/28/2013 - 22:27 | 3288724 Cursive
Cursive's picture

@CH1

I was an early "miner" but my POS Dell Latitude died.  My wallet is on that hard drive, so I can't "find" my wallet without buying a reader or paying someone to pull it and read it.  If this is the future of money, we're collectively fucked.

Fri, 03/01/2013 - 00:58 | 3289144 francis_sawyer
francis_sawyer's picture

Shit Cursive... & I had to go on a boating trip to lose all my gold... Just think... NO BOAT REQUIRED!

Fri, 03/01/2013 - 04:30 | 3289328 Prisoners_dilemna
Prisoners_dilemna's picture

@cursive
I left my leather wallet on top of my car and drove down the highway. $300 were lost never to be found by me again.

Then I got a bitcoin wallet. I informed myself on how it works. Then I printed my private key and put it in a safe. Then I backed up my wallet .dat file onto a thumb drive. My computer died. But not being retarded I simply grabbed my thumb drive and my wallet was there. Functional and full of btc.

Sounds to me like you fucked yourself.
The rest of us will learn from your unfortunate mistake.

Fri, 03/01/2013 - 09:01 | 3289558 Cursive
Cursive's picture

@Prisoners_dilemna

Since I can't think of anything I want to buy with bitcoin, I'm not really missing my wallet.  The main thing I was an early adopter of bitcoin before it was widely known (I was one of the first to mention it on zerohedge, long before you were a member here) and what my example demonstrates is that I've tried bitcoin, I think it's a highly unreliable medium of exchange and anyone who believes that this is will ever become the predominant medium for monetary transactions is fucked in the head.  If I were ever to buy a drink with BTC from a conveinence store, I'd have to have an ExxonMobil payment fob or use NFC with a Google-wallet type device.  I don't care if the wallet and the mining are encrypted, the risk is fooling different layers of the network, in this case payment apps, to accept fraudulent bitcoin or reject true bitcoin.  And there is the statist angle.  With the notable exception of peer-to-peer encrypted anonymous transactions over the internet, any electronic payments can be easily tracked.  As we all know, cash transactions are much harder to tract.  Oh, BTW, I've never been so fucking retarded that I've left my wallet on top of my car, but at least those $300 bills were freed from a fucking dumbass who fucked himself by loosing a lot more money than I ever have. 

Fri, 03/01/2013 - 11:44 | 3290156 Prisoners_dilemna
Prisoners_dilemna's picture

Such strong language. The truth hurts I know. It must be painful to realize you messed up so bad, threw your comp in the river, swore off bitcoin, then watch it ramp steadily since. Ouch!
I feel your pain.

You make one salient point, cash is anonymous. But its much easier to transfer large sums across borders with bitcoin.
Im talking about using a tool for its proper purpose. Your saying it fails when another tool is appropriate. Well shit. Your obviously college educated. Princeton?

Lol give me your bitcoin address. I'll transfer 10 btc to ya. Just make sure you destroy that comp too. Then you can say you're a big boy and lost money. Never, I'll sink it into btc and give ya double that in a few months.

Fri, 03/01/2013 - 06:12 | 3289391 TraitorsHang
TraitorsHang's picture

If you ship me your fried drive, I'll charge you 10BTC to pull your data off.

Thu, 02/28/2013 - 20:23 | 3288333 Long_Xau
Long_Xau's picture

What Bitcoin offers you is precisely a piece of economic freedom. The freedom to transact without any restrictions whatsoever. It is crucial to understand Bitcoin is actually two things in one: a tool to transact (like a payment processor) and a currency. You don't need to actually hold the currency - you can buy it just before you want to send it and sell it immediately upon receiving it to minimize any exchange rate risk.

No matter what governments decide to do, bitcoin or other similar alternatives will always remain operational and alive and even better suited to underground use than cash or precious metals for example.

Thu, 02/28/2013 - 21:58 | 3288631 tarsubil
tarsubil's picture

Why not just have the amount of bitcoins be dependent on transactions and needs like tally sticks? Create bitcoins for every transaction which can be saved or traded. The idea that the number of bitcoins slowly increases just means that there is a built in inflation as creating them costs nothing. Who gets the new bitcoins? Sounds too much like the Fed. Meh, what do I know. I'll go with tradition. If this takes down the system, good for you guys.

Thu, 02/28/2013 - 22:19 | 3288684 jayman21
jayman21's picture

You can read up on the bitcoins.  As the usage grows so does the number but at a very slow rate due to the mining nodes guessing the right keys to ensure the transactions is not a fake bitcoin.  Once the guess is correct, then the mining node is rewarded with bitcoins that are issued into the system.

 

This is very much a deflationary design, not inflationary.  If Ben B only issued another million dollars next year, but our population grew by 5 million, would you call the monetary policy deflationary or inflationary assuming the same velocity of course.

Thu, 02/28/2013 - 22:18 | 3288685 TraderTimm
TraderTimm's picture

@tarsubil

I think you've got it backwards - the total amount of bitcoins that will ever exist is capped at 21 million. It is deflationary, not inflationary. To combat any severe effects of deflation, each bitcoin is divisible to a rather small unit if necessary.

Bitcoin is also decentralized, and isn't under the control of any one government or monetary policy wonk, which puts it in an entire class by itself.

Thu, 02/28/2013 - 23:11 | 3288867 Long_Xau
Long_Xau's picture

By inflation he means simply the increase of the money supply. He has a legitimate concern about it. It's definitely important who gets the new currency units and whether they actually deserve it.

Fri, 03/01/2013 - 02:36 | 3289253 Silver Bully
Silver Bully's picture

'By inflation he means simply the increase of the money supply.'

Gold is constantly mined every year. There will be more gold next year than this year. And on and on. But it isn't inflationary because the RATE of increase remains constant, and the substance remains rare. Fiat money is inflationary because it can be produced in vast amounts, quickly, which will rapidly degrade the public's confidence in it.

Bitcoin works like gold - only so much can be 'mined' at one time. The hashing or mining process prevents any entity from suddenly creating untold amounts of BTC out of thin air. The rate it can be mined also gradually decreases over time as well. It is deflationary by design, not inflationary.

Fri, 03/01/2013 - 13:56 | 3290909 tarsubil
tarsubil's picture

It costs real wealth in the form of work to mine gold. Is the same true for BitCoins?

Thu, 02/28/2013 - 22:52 | 3288807 Long_Xau
Long_Xau's picture

I like the entrepreneurial spirit! Bitcoin is just the pioneer in a new kind of cryptocurrencies. Others are being contemplated and implemented that have different characteristics. Basically you can propose/design/create a cryptocurrency with any inflationary/deflationary behavior (or none at all) you can imagine.

As for Bitcoin, you can think of the miners (the people who use processing power and receive the new Bitcoins and transaction fees (if any) in return) as supporters of the health of the system and guardians against any potential attacker trying to cheat the protocol and defraud by reversing one of their recent spending transactions. I think that currently they have more than enough processing power to defend against any such attacks, even from an organized criminal organization with supercomputers (a few come to mind).

Thu, 02/28/2013 - 20:12 | 3288290 XenoFrog
XenoFrog's picture

People in the middle of being fleeced are the last ones to know.

Thu, 02/28/2013 - 21:22 | 3288518 TraderTimm
TraderTimm's picture

I agree that confidence scams do this, but I disagree with your application of it to bitcoin in general. As we've explained in the thread prior to this, there is no requirement for you to participate if you don't want to. Its pretty much the antithesis of a scam.

If you don't like the idea, please don't participate.

Thu, 02/28/2013 - 22:00 | 3288636 tarsubil
tarsubil's picture

Wait, if a scam has a requirement to take part,it is called extortion. Every scam gives people the option of not taking part. The scam is convincing them to take part.

Thu, 02/28/2013 - 22:23 | 3288705 TraderTimm
TraderTimm's picture

@tarsubil

I disagree that bitcoin is a scam. I find it hard to imagine that a decentralized network based on open-source code could be twisted in that way. There are too many people who can completely examine every aspect of the system. Scams require obfuscation and trickery to do their dirty work.

Bitcoin is open and well documented.

Fri, 03/01/2013 - 00:33 | 3289099 willwork4food
willwork4food's picture

I agree, but I have reservations on what others have stated here: Failed hard drive, solar flare, EMP or even the .gov coming to save the children (again).

That being said its a great system & a finite amount created and well secured.

Fri, 03/01/2013 - 13:54 | 3290905 tarsubil
tarsubil's picture

Good point. I was just nitpicking the definition of scam. From above, I am not trying to argue against BitCoins since I clearly do not understand them very well. I'm just trying to learn about them. Thanks for the info.

Thu, 02/28/2013 - 22:21 | 3288694 Long_Xau
Long_Xau's picture

If you only use Bitcoin as a payment processor, and not as a store of value (which it NEVER was contemplated, intended or advertized to be. Whether it will ever deserve to be considered a good store of value is another matter.) the risk of losing money is pretty low (mostly exchange rate risk during the few minutes between receiving the bitcoins and sending them).

No third parties = no possibility of fraud except from the one party you are dealing with at the time.

See my other posts for more info. There I mentioned that Bitcoin is actually a pioneer in a new, substantial market. That market has a lot of potential, but whether Bitcoin in particular has what it takes to do well against the other competing cryptocurrencies - now THAT is a good topic for discussion.

Thu, 02/28/2013 - 21:53 | 3288579 Long_Xau
Long_Xau's picture

Let's suppose you are right and it is a Ponzi scheme. People speculate on its price and eventually the price falls dramatically.

I claim, and I'd like to hear what you think about it too, that there is a certain demand in the world for a solution for making transactions globally with relatively low transaction costs and no third parties. Third parties in transactions add risks of up to a full loss, e.g. through confiscation, theft, default, transportation failure (boating accidents, there were loads of those in the old times too, but mostly during trade). As far as I know, only some cryptocurrencies (and no other types of currencies) with their transaction mechanisms (see my previous comment: http://www.zerohedge.com/news/2013-02-28/bitcoin-your-thoughts#comment-3288333), among which first and most notable being Bitcoin, fit well into the aforementioned criteria.

When a dramatic price fall occurs, the current holders of the currency suffer a loss due to exchange rate risk (which can be mitigated, see my previous post). However, since there is still demand for a solution for making transactions as described above, the collective market for all the currencies used for such transactions will remain bid and at least some of the currencies will retain some value.

Now it is debatable what exactly are the most important characteristics of a successful currency in that particular market - whether it is the network effect, inflation behavior, volatility, transaction time, etc. So I do not exclude the possibility that Bitcoin could end in a Ponzi-like collapse, but I am pretty sure the upside potential in cryptocurrencies is tremendous, at least until other competitive solutions emerge (for example I envision drones carrying precious metals - again it could be made relatively cheap and without third parties, but still there are some risks to be accounted for). And, once again, it all depends on there being a significant demand for a solution for this kind of transactions.

Also of note is that Bitcoin, like the other cryptocurrencies can be made anonymous (although Bitcoin is NOT truly anonymous out of the box, but it can EASILY be made to be with the use of such tools as the TOR anonymizing network). This characteristic is a consequence of there being no third parties.

Fri, 03/01/2013 - 00:29 | 3289088 El Crusty
El Crusty's picture

what makes you think that Bitcoin is a ponzi scheme? you do realise that bitcoins are mined using processing power of computers to solve mathematical equations, as in anybody can download the software and "mine" Bitcoins for free.

its the only un-manipulated currency out there, and that includes gold and silver.

Fri, 03/01/2013 - 03:38 | 3289304 Bangers
Bangers's picture

What part of the definition of the word "Ponzi" do you fail to comprehend?

Fri, 03/01/2013 - 06:06 | 3289384 StychoKiller
StychoKiller's picture

Pyramid schemes, by design, rely on infinite growth to survive and expand.  Bitcoins have a finite limit;

therefore, Bitcoin != Ponzi, since infinity != finite.  Q.E.D.

Fri, 03/01/2013 - 06:21 | 3289397 TraitorsHang
TraitorsHang's picture

It's no more a ponzi than Au is.
A BTC may not be tangible, but it required energy to discover. And if you and I agree to treat it as if it were money, than it is money.
An ounce of Au may not be intrinsicly useful, but it required energy to discover. And if you and I agree to treat it as if it were money, than it is money.

The beauty of BTC is precisely the fact that it cannot be regulated. It cannot be stolen (except by careless use of your private key). It is what the gold bugs have dreampt of for centuries: the separation of money and state. Mathematics will not yield to bribes, threats, or pity. It is Law. The court is Nature herself.

Thu, 02/28/2013 - 19:30 | 3288150 unununium
unununium's picture

The value of gold and silver, those metals having been created by a type II supernova and nothing else, is based on proof-of-work.

Just like bitcoin.

 

Thu, 02/28/2013 - 20:23 | 3288334 XenoFrog
XenoFrog's picture

Gold and silver are widely accepted stores of value created through the machinery of the universe. Bitcoin was created by some nerd and used by criminals to purchase drugs and child porn from silkroad.  Clearly this means they're the same thing.

Thu, 02/28/2013 - 21:23 | 3288521 EscapeKey
EscapeKey's picture

I own something along the lines of 3 bitcoins, which I made from mining on my trusty 6950. I don't really give a rats ass if you or anyone else buys them, but I can see their merit, and understand their technical background (working in a related industry helps in that aspect). I can also see why I wouldn't want all my wealth stored in that one place (I own the usual; gold, silver, retirement plan, fully paid off house, some savings in bank, cars paid off etc), but each to their own. If people want to put all their money in bitcoins - good for them, as said, I don't give a shit. I don't try to regulate the behaviour of others, ie the libertarian attitude.

However, you do. You seem to fight tooth and nail in every post - belittling people, name-calling in first instance, and generally talking shit (typically accusing others of what you are guilty of yourself, aka first-class hypocrisy - like accusing others of being "bitcoin pushers" and equivalents when they disagree with you). And being my age, I always think about people's motives, it comes down to one thing - what's in it for you?

Looking through your posting history, you seem to exclusively appear when bitcoins are referred. 5 pages of replies - basically all of them bitcoin related. How amusing. I've seen retards flaming others in stupid arguments about football or ice hockey, or even religious debates. But in all of these cases, it's because they're passionate about their team/religion/whatever - something with which they personally identify.

What I don't understand is why anyone would be so passionate about others not investing in something you choose not to yourself. It's a set of bits in a digital wallet on someone's PC. It makes fuck all difference to you who owns these in theory. So why so passionate?

 

Oh, while at it - I must also add I really enjoy those post from people who in previous threads have ADMITTED not to know anything about bitcoins accusing them of being a scam.

Thu, 02/28/2013 - 21:33 | 3288552 francis_sawyer
francis_sawyer's picture

I'd suggest that you 'monetize' them in Turkey & buy a few grams of hash...

Thu, 02/28/2013 - 21:34 | 3288557 EscapeKey
EscapeKey's picture

Nah I don't smoke that shit anymore. Prefer a good bottle of wine instead these days.

Thu, 02/28/2013 - 21:39 | 3288573 francis_sawyer
francis_sawyer's picture

On that we can agree... But I feel I'm getting a better DEAL on the exchange if I'm giving them paper joobux for the vino... SUCKAS!

Fri, 03/01/2013 - 06:10 | 3289388 StychoKiller
StychoKiller's picture

And so you are, since paper munny only decreases in value as the amount of it goes up.  If or when I procure some Bitcoins, they will be safely stowed away, appreciating in value, much like that bottle of vino.

Thu, 02/28/2013 - 23:41 | 3288972 samwell
samwell's picture

already monetize.  bitcoin is monetized electricity.  again the specious argument that bitcoins are only used for buying drugs and porn.  less than 5% of bitcoin transactions were on silk road last year.  I thought this was a libertarian community on ZH where you can do what you want with your own body and life as long as you do not harm others.  what i do in the sanctity of my own home is none of anyone's business esp. gov goons and nanny state proponents!

Fri, 03/01/2013 - 00:33 | 3289100 samwell
samwell's picture

she's an obvious gov. sock puppet.  perhaps Israli megaphonie!!  exactly, what did bitcoin ever do to her.  

Fri, 03/01/2013 - 12:00 | 3290219 Long_Xau
Long_Xau's picture

Created a new need for her to learn, think and adapt. That does entail efforts and time.

Thu, 02/28/2013 - 21:24 | 3288522 TraderTimm
TraderTimm's picture

@XenoFrog

Funny how you don't mention US Dollars buying contraband and porn. Or any other currency for that matter.

Thu, 02/28/2013 - 23:28 | 3288929 samwell
samwell's picture

wrong again gov. shill.  you should go to bed, its past your bedtime.  frog lady uses the typical ad hominem attack to slander bitcoin.  "only nerds, pervs, and criminals use bitcoin.  actually, tadpole, the vast majority of transactions are legitimate business transactions and only a small fraction are on silkroad.  for example 2.1 million dollars (62,924 BTC) were transacted in the last 24hrs on the bitcoin network.  silk road that verminous sanctuary of freedom lovers the world over who think they should be able to decide what they put into their own body only did $21 million dollars in business all of last year.  get your facts straight.  your arguments are very childish.  the vast majority of transactions are actually people tipping each other on the internet for help they receive or intangible services they provide.  

 

go to bed child

Thu, 02/28/2013 - 23:33 | 3288942 samwell
samwell's picture

and "she"/"it" won't mention the exploitation that goes into the mining of gold in african countries like S. Africa or what is currently happening in Mali. They've got gold, invade!!!  w

 

What about the criminal banksters that launder money (FRN) for mexican drug cartels.  Had tohoist you on your own petard, tadpole.  you are an easy target.  go back to your mutant tadpole farm.  that is the only place you can have all the control you desire.

 

"machinary of the universe"  give me a break.  by that logic bitcoin is also a store of value created through the machinary of the universe also and it is called the human brain!

Fri, 03/01/2013 - 01:02 | 3289150 francis_sawyer
francis_sawyer's picture

OK folks... by account... we now have "Star of David" avatars shilling positively towards bitcoin

~~~

BULLISH!

Fri, 03/01/2013 - 06:12 | 3289390 StychoKiller
StychoKiller's picture

Sure that isn't a Freemason's Trysquare and compass (in blue)?

Fri, 03/01/2013 - 16:18 | 3291411 TraderTimm
TraderTimm's picture

@francis_sawyer

I really have to wonder about your motivations when you feel the need to single out a specific attribute - in this case "Star of David" instead of the actual avatar name "samwell".

Is there something you'd like to get off of your chest?

Fri, 03/01/2013 - 06:25 | 3289400 TraitorsHang
TraitorsHang's picture

The mathematical irreversibility of the hash algorithm (SHA256) and the signing algorithm (ECDSA) are no less the machinery of the Universe than any element. Mathematics is truth divorced from the physical world. Truth is truth, and no decree can make it otherwise.

Thu, 02/28/2013 - 19:53 | 3288232 Kriya144
Kriya144's picture

Yeah too fucking right!

Outrageous! I don't even get paper anymore? just some computer code. At least with fiat when it all goes wrong I have toilet paper and kindling!

Thu, 02/28/2013 - 20:04 | 3288268 jackinrichmond
jackinrichmond's picture

bitcoins are not looking to replace gold and silver.. or national currencies for that matter.

i started using bitcoins because i felt uncomfortable giving unknown online vendors my credit card number.

bitcoins offer a level of security that i feel more comfortable using for purchasing things online.

 

use currency for daily transactions, use bitcions for online commerce and save with precious metals.

 

Thu, 02/28/2013 - 21:32 | 3288550 Groundhog Day
Groundhog Day's picture

bitcoin, is that like second life.  What will they think of next

Fri, 03/01/2013 - 01:24 | 3289179 The Dumb Money
The Dumb Money's picture

Although your bullion will be confiscated by TPTB.

Thu, 02/28/2013 - 19:19 | 3288097 McMolotov
McMolotov's picture

Be sure to grow a magnificent mustache, too. You will earn not only pootie, but also respect and admiration, and will be known as a man of distinction.

Thu, 02/28/2013 - 19:21 | 3288107 Temporalist
Temporalist's picture

Moustache rides 1 Bitcoin!

Thu, 02/28/2013 - 19:26 | 3288123 francis_sawyer
Thu, 02/28/2013 - 19:56 | 3288241 Scro
Scro's picture

Tongue punch my fart box for a bitcoin.

Thu, 02/28/2013 - 21:40 | 3288580 francis_sawyer
francis_sawyer's picture

COMMENT OF THE WEEK! ~ LMAO [Thanks]

Thu, 02/28/2013 - 22:09 | 3288653 moonstears
moonstears's picture

I canno' quit laughing, Scro!

Fri, 03/01/2013 - 01:05 | 3289152 francis_sawyer
francis_sawyer's picture

fuck no man ~ I came back 4 hrs later & this STILL put me in stitches...

Thu, 02/28/2013 - 20:07 | 3288278 clara-to-market
clara-to-market's picture

Can you use Bit-coin to buy a high-class hooker?

I didn't think so.

Motherfuckers.

http://www.angrysinner.blogspot.kr/2013/02/thursday_28.html

Thu, 02/28/2013 - 23:03 | 3288843 meltdown
meltdown's picture

the tor directory might be a place to look

Fri, 03/01/2013 - 14:47 | 3291102 Prisoners_dilemna
Prisoners_dilemna's picture

I would love to hit the pootie of a woman who is intelligent enough to comprehend and appreciate BTC.
What an excellent way to screen women. Gold sorts out the boobs. btc sorts out the brains.
Great idea sawyer.

Thu, 02/28/2013 - 19:12 | 3288060 kaiserhoff
kaiserhoff's picture

NO INDEPENDENT VERIFICATION OF THE BALANCES ---

Why does that not fill my heart with joy?

Thu, 02/28/2013 - 19:14 | 3288069 CH1
CH1's picture

NO INDEPENDENT VERIFICATION OF THE BALANCES ---

And you read the piece just hoping to find something to use against BTC.

Ah well, I'll do my best to gather your share.

Thu, 02/28/2013 - 19:26 | 3288130 jomama
jomama's picture

gonna go out on a limb here and guess that you've got a position in these arcade tokens?

Thu, 02/28/2013 - 19:36 | 3288172 CH1
CH1's picture

gonna go out on a limb here and guess that you've got a position in these arcade tokens?

A very small one that I obtained by accident. But after learning a bit, I came to like the stuff.

I don't mind people who are unsure, but to spout mindless, arrogant bullshit... that I find objectionable.

Thu, 02/28/2013 - 19:48 | 3288212 Gazooks
Gazooks's picture

gather as with your cold, dead, virtual hands?

 

may get a bit tricky in power disruptions amid feds cyber war froliks

 

digital wealth of freakish cyborg police state economy 

 

hmm 

Thu, 02/28/2013 - 23:43 | 3288982 samwell
samwell's picture

the whole bitcoin Qt network is an independent verification of the balances.  every node verifies the block chain.  take your childish attacks elsewhere fool!  ignorance on display writ large.

Fri, 03/01/2013 - 00:37 | 3289109 El Crusty
El Crusty's picture

actually there are independant verifications of balances, it jut doesnt work the way you are used to. when a Bitcoin transaction is made the transaction event is made avaliable to the ENTIRE system- you buy an item or send someone 10.5 bitcoins. everyone knows that 10.5 Bitcoins were transfered. no one will know where the Bitcoins came from or where they went to other than the sender and reciever but the transaction event is automaticaly made aware to the entire system. transparent but yet anonymous at the same time, bankers piss themselves when they hear about this- no way to manipulate it unless you buy ALL of them.

Fri, 03/01/2013 - 06:30 | 3289402 TraitorsHang
TraitorsHang's picture

Below, please find a list of all the balances within every wallet on the BTC network, as well as the transaction history of each and every bitcoin that has ever existed.
http://blockexplorer.com/

The anonymity comes from the difficulty of connecting "1Eo3Rbr4ZABBimCrVsT4xwCxByfA8pfmYF" to a human being.

Thu, 02/28/2013 - 19:13 | 3288066 Spastica Rex
Spastica Rex's picture

How many bitcoins per gallon of gas? How many tomorrow?

HOW MANY IN 1956?!

Thu, 02/28/2013 - 19:53 | 3288231 Gazooks
Gazooks's picture

watcha smokin, Rex?

Thu, 02/28/2013 - 20:29 | 3288356 Spastica Rex
Spastica Rex's picture

I wish I was smoking legal Washington State marijuana, but it's illegal to buy it.

Thu, 02/28/2013 - 19:14 | 3288067 AndrewJackson
AndrewJackson's picture

Bitcoin is a ponzi, similar to most of the major fiat currencies of the day. There are some differences and some good characteristics of bitcoin. The main problem, though, is that it was just created out of thin air. You can not say the same thing about gold/silver/physical commodities.

Thu, 02/28/2013 - 19:17 | 3288082 CH1
CH1's picture

Bitcoin is a ponzi

You know, being polite to people who don't even try to understand gets old.

You're not a natural idiot, but you are one by training. You have NO FUCKING CLUE what you are talking about.

Thu, 02/28/2013 - 19:29 | 3288149 CunnyFunt
CunnyFunt's picture

Just like you will have no fucking clue what happened when the state criminalizes btc due to its links with "terrorists and drug dealers." Go on, trust your fucking 1s and 0s.

Thu, 02/28/2013 - 19:34 | 3288169 Shell Game
Shell Game's picture

I share your concern, in a big way.  But I love the black market competition and civil disobedience of Bitcoin.  May it have legs and offer a way around the Fuggin-Evil-PetroDollar.

Thu, 02/28/2013 - 20:05 | 3288184 CunnyFunt
CunnyFunt's picture

I like the subversive angle too, but will stick with HERF- and EMP-proof tangibles instead.

I don't like the idea of relying on an electronic infrastructure (internet) to retrieve my valuables. A digging
tool or bare hands will do fine

Fri, 03/01/2013 - 14:05 | 3290944 Prisoners_dilemna
Prisoners_dilemna's picture

What tool will you use to transfer your wealth to another country without having to report or declare it?

Do you use a credit card, which relies on electronic infrastructure to access your valuables.

Seems to me you are arguing that gold is the prefered store of wealth over btc. Your entitled to your opinion and in many ways you are correct.

But thats not to say btc are useless. Dont focus on their weakness.
Focus on their strengths, if you bother to learn and understand them. What can bitcoin do for you? Maybe nothing. Maybe you don't engage in online commerce. Maybe you dont worry about transaction fees going to banks. Maybe you dont believe people have the right to voluntarily associate, trade, and then consume whatever they like. I dont know. But for the reasons above among many other, it has uses.

I may not like fake tits. But a lot of people do. Should I shun a potential lucrative investment in silicon because silicon tits arent for me? (male)

Thu, 02/28/2013 - 23:55 | 3289014 samwell
samwell's picture

a gold bug with a bit of envy I see. only a bit longer before BTC reaches parity with gold.  has already surpassed silver.

Hey genius how do you propose the state criminalizes bitcoin when bitcoin is by design anonymous?  you got short changed when they were handing out intelligence.  Let's see, are they going to round us all up and put us into work camps and confiscate our bitcoins.  The federal reserve and ECB are very worried about alternative currencies like bitcoin because they know the threat that they pose to their little status quo criminal enterprise.  once the people realize that they don't have to pay the money changers interest (usury) and that they can possess a part of an anonymous digital currency which only charges small transaction fees, then it is off to the races.  bitcoin is a pschological phenomenon, not a ponzi.  There is actually a hunger to have the gov. and banksters off the backs of the people micromanaging every aspect of our lives.  

oh, and terrorists and "drug dealers" don't transact in FRN;s or other useless/harmful currency systems.  simple supply and demand.  bitcoin will constantly go up in value over time due to the fact that block chain rewards get cut in half every few years(log).  so it is naturally a deflationary currency vs. good ol FRN's which are naturally prone to inflation due to the fact that you have two groups of psychopaths getting together and conspiring namely politicians and banksters!

 

Go on trust your heavy metal!

Fri, 03/01/2013 - 00:14 | 3289058 CunnyFunt
CunnyFunt's picture

No need for the lecture, bitch. Any fool who has faith in electronic binaries deserves what he will get. Don't underestimate the power of the petrodollar; it hates competition. All ISPs will comply with the wishes of the state and will block your transactions. You dumb fucks who assume that they will have the same freedoms tomorrow as today will be sorely disappointed. Mark my motherfucking words.

Fri, 03/01/2013 - 06:45 | 3289411 TraitorsHang
TraitorsHang's picture

I didn't junk you, but ISPs "enforce" torrent-mediated piracy too. And if the protocol itself (somehow) becomes illegal, it will move into encrypted VPNs, and plausible deniability will rule.

The internet is much deeper than I think you think. And the constant flow of data is many orders of magnitude too large to be effectively monitored when even simple encryption (as simple as XOR) is employed. Did you know Verizon tries to block VoIP traffic on their network? They want people buying minutes rather than using data.

I defeated Verizon's multi-million dollar traffic analysis strategies with 6 lines of carefully-placed code to XOR every packet with 0x55. Building mathematical locks is easy compared to breaking them.

Fri, 03/01/2013 - 11:16 | 3290042 CunnyFunt
CunnyFunt's picture

That's great, you defeated Verizon. However, in order to retrieve my valuables I'd rather just take them by hand than via someone else's wiring and circuitry. That's my point, that this infrastructure is a component of counterparty risk.

Fri, 03/01/2013 - 06:56 | 3289415 awakening
awakening's picture

'Mark my motherfucking words.' - Marked and valued at 0

Proof? --> thepiratebay.se/

Fri, 03/01/2013 - 11:27 | 3290089 CunnyFunt
CunnyFunt's picture

Good luck maintaining the status quo of your counter parties.

Fri, 03/01/2013 - 01:30 | 3289185 The Dumb Money
The Dumb Money's picture

That's the real threat to BTC.  Of course, criminals use it for precisely the reason that it is hard to trace.  For that reason alone, I don't think BTC is going anywhere. 

Fri, 03/01/2013 - 14:33 | 3291056 Prisoners_dilemna
Prisoners_dilemna's picture

That's the real threat to the dollar. Of course, criminals use it for precisely the reason that cash is hard to trace. For that reason alone, I don't think the dollar will go anywhere.

BTCs strength is that in its 4 years of adoption it has yet to be co-opted. The PTB fear it. They could care less what "victimless crime perpetrators" do with it.

Its not for the kids they complain about BTC. It is because it is being voluntarily adopted and as of yet, The PTB have no way to stop it.

Fri, 03/01/2013 - 06:36 | 3289404 TraitorsHang
TraitorsHang's picture

Let them criminalize it. It won't do anything to stop it. The only way this can be stopped is via the complete destruction of the internet.

I'm not sure you realize just how much you implicitly trust 1's and 0's every day of your life. Your car's computer? Your mode of communication? Face it, man. the computer makes a mistake once every 200 trillion calculations. And even then, it almost always recovers without you ever noticing.

Data loss is *always* the user's fault. Always.

Fri, 03/01/2013 - 12:08 | 3290269 CunnyFunt
CunnyFunt's picture

Data loss is not always the user's fault.
I have 2 ecm-free vehicles, but even if I did have ecm mobiles, I still have the option to walk. With e-money, all the infrastructure MUST be in place. Humans have become too comfortable in assuming continuity of networks.

Fri, 03/01/2013 - 13:09 | 3290700 Long_Xau
Long_Xau's picture

It is precisely because people know that states like to criminalize all sorts of things that many of them make an effort early on to familiarize themselves with things that offer extreme resilience against any state interference. The only thing you need to trust with Bitcoin is the protocol and algorithms behind it. Familiarize yourself with how it works.

Thu, 02/28/2013 - 19:17 | 3288085 kaiserhoff
kaiserhoff's picture

Why reinvent silver, without the metal content?

If it ain't broke, don't fix it.

Thu, 02/28/2013 - 19:24 | 3288124 CH1
CH1's picture

Why reinvent silver, without the metal content?

Because it's hard, expensive and slow to send silver to Holland or South Africa or Indonesia.

Thu, 02/28/2013 - 19:29 | 3288140 francis_sawyer
francis_sawyer's picture

I've got an even better idea...

~~~

Just become a STAR & go supernova on us... Shower the universe with all your bitcoin glory...

Thu, 02/28/2013 - 20:16 | 3288307 XenoFrog
XenoFrog's picture

If the US Dollar collapses and we need an alternative currency, you won't be doing any business with Holland, South Africa, or Indonesia

Thu, 02/28/2013 - 21:28 | 3288536 TraderTimm
TraderTimm's picture

Wait, you mean all boats in the sea will sink?

Thu, 02/28/2013 - 21:33 | 3288547 akak
akak's picture

Well, of COURSE TraderTimm --- don't you know that every waterborne vessel containing precious metals has an irresistable and inevitably disastrous attraction to the bottom of any body of water over which it travels?

Fri, 03/01/2013 - 01:12 | 3288625 francis_sawyer
francis_sawyer's picture

@akak ~ see... that's what I'm counting on...

~~~

I'm convinced that the Jew story about Adam & Eve & Noah is all a fairy tale... That the world, IS ACTUALLY more than 6,000 years old... Sooner or later, we might return to Paleozoic or early Mesozoic eras... Whereby all the gold lost during boating accidents might be rediscovered...

I'm making a pirate treasure map as we speak... [to be found by ~ MYSELF]...

~~~

Edit: No ~ according to 2 persons... The earth is only 6,000 years old, & Adam & Eve were its first inhabitants...

IT ALL MAKES SENSE NOW... Sorry for the error...

Thu, 02/28/2013 - 21:23 | 3288523 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Because the banksters HAVE reinvented silver. They financialized it, so they now can do whatever they want with the price. Issuance and options games with SLV. And unlimited naked shorting allowed by the sleeping/complicit "regulator". So those of you hoping shiny metal will somehow escape the clutches of bank crime, you may be disappointed.

And anyone who thinks Bitcoin is a Ponzi doesn't know anything about either the term "Ponzi" or Bitcoin itself.

Bitcoin tried to duplicate the "work" of mining gold as a relatively stable limiter on the amount of currency that was being issued. So they came up with a different form of work: solving math problems. By using their computer power to solve these problems the Bitcoin "miners" can "earn" new Bitcoins. Agreed the endeavor to mine Bitcoins is now beyond the reach of regular people and anyone telling you you should try it is probably a scammer. Yes there are real miners still but they are using huge computer processing power and the remaining factor is probably their access to relatively cheap electricity.

But you don't have to be a miner to use Bitcoin. You can purchase Bitcoins with fiat at several exchanges or wallets. The reason Bitcoin value dropped so much last year was that one of the wallets was hacked. Now that fear has subsided.

Thu, 02/28/2013 - 22:38 | 3288761 Bunga Bunga
Bunga Bunga's picture

Bitcoin is the oposite, it exposes the Fiat as a Ponzi.

Fri, 03/01/2013 - 04:07 | 3289315 Prisoners_dilemna
Prisoners_dilemna's picture

Actually you are dead wrong. Mining bitcoin is resource intensive requiring capital and energy to mine. We dont use shovels. We use electricity to solve a complex algorithm. Only in this way can a bitcoin be mined.
There is no cntrl +p for bitcoin.
https://en.bitcoin.it/wiki/Mining

Btw whats your definition of a ponzi? I'm not aware of any bitMadoffs taking in new money to give to other clients.

Perhaps you'd care to explain how bitcoin is a ponzi so we dont just write you off as a fool.

Thu, 02/28/2013 - 19:15 | 3288073 AUD
AUD's picture

The stock of the South Sea Company was up about 10 million per cent against the Pound Sterling in 1720.

Thu, 02/28/2013 - 19:59 | 3288248 cynicalskeptic
cynicalskeptic's picture

You've got to invest in something TANGIBLE with REAL VALUE, something in real demand.

The tulip bulbs I've got stored away are gonna' make me a billionaire. 

Thu, 02/28/2013 - 21:32 | 3288546 TraderTimm
TraderTimm's picture

Yes, bubbles do exist.

Do I think bitcoin is a bubble? No, I don't. I also think bitcoin is more valuable than just what it fetches in other sovereign currencies. The underlying principle is monetary freedom. I think that is important.

Thu, 02/28/2013 - 19:17 | 3288078 CH1
CH1's picture

Dupe.

Thu, 02/28/2013 - 19:19 | 3288092 dick cheneys ghost
dick cheneys ghost's picture

gambling and illegal drugs???..................sounds like the jews are involved

 

 

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