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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 - 19:24 | 3288115 McMolotov
McMolotov's picture

Or the CIA.

Thu, 02/28/2013 - 19:40 | 3288185 francis_sawyer
francis_sawyer's picture

 Covert Israel Attache?

Thu, 02/28/2013 - 19:16 | 3288080 PUD
PUD's picture

I am on the phone at this minute talking to my son...he brings up that he put $50 in bitcoin a while back....He just checked his account and it's worth $294.

How bizarre is that that at the second this post went he was calculating his gain?

So now he's deciding whether to buy a jap passport, ecstacy from holland, an uzi or an amazon gift card...lol

Too fucking weird!

Thu, 02/28/2013 - 19:17 | 3288083 Spastica Rex
Spastica Rex's picture

I vote for the X.

Thu, 02/28/2013 - 19:42 | 3288193 francis_sawyer
francis_sawyer's picture

Back in the 90's... I bought $50 bucks of JDS Uniphase stock... Sure wish I'd bought a couple of pieces of eight instead...

Thu, 02/28/2013 - 19:35 | 3288171 Charles Nelson ...
Charles Nelson Reilly's picture

Great story.....

Thu, 02/28/2013 - 20:02 | 3288263 Scro
Scro's picture

Get a Jap hooker in Holland and pay her with an Amazon gift card.

Thu, 02/28/2013 - 19:19 | 3288086 TruthInSunshine
TruthInSunshine's picture

Any alternate currency that is NOT officially state (aka nation) sanctioned, that enjoys near-monopoly if not absolute monopoly status as payment of public and private debt, that can be literally created at zero cost basis by fractional reserve banking interests (as The Bernank himself proudly and freely admits that it is) constitutes a direct and significant threat to the exisiting MMT system that is intentionally utilized to produce boom and bust economic and financial cycles.

Without being able to induce such boom and bust economic & financial cycles, harvest can't occur, and without harvest, the further concentration of real wealth (e.g. taking fee simple interest in assets that possess inherent value that were pledged as securitized collateral for fiat paper loans) can't continute to accrue to the ruling elite (aka Crony Capitalists in today's vernacular).

Hence, any alternate currency that grows in popularity and frequency of use as a medium of exchange of commerce will be severely frowned upon and the state will devise increasingly harsh methods to wipe it out of existence, as it threatens and runs contrary to the interests of the very top rung of the fiat oligarchy that owns allegedly sovereign governments (whether proclaimed as democratic or not) & that currently wield absolute control over the levers of the monetary system.

Thu, 02/28/2013 - 19:46 | 3288203 francis_sawyer
francis_sawyer's picture

So you're saying that BITCOINERS have more to fear from 'drones', than comedic comments from ZHers... Damn ~ & I thought I was getting somwhere...

Thu, 02/28/2013 - 19:49 | 3288216 Temporalist
Temporalist's picture

Thanks for the links.  This is maybe the most important information regarding the actual status of bitcoins.

I am curious to see, if there suddenly is an explosion in their popularity (more than at present), let's say an exponential awareness to them, how will they be distributed, how will the rise in price, how will the "mining" be altered, if at all, to suit growing use.

 

If nothing else this is a big middle finger to the BIS, IMF, ECB, FED, et al 

Thu, 02/28/2013 - 20:01 | 3288258 cynicalskeptic
cynicalskeptic's picture

Ponzi schemes only work if they're officially sanctioned and part of the system - then they are defended to the death (hence the upcoming forced feeding of 401K's into the US debt system).

Thu, 02/28/2013 - 20:17 | 3288311 francis_sawyer
francis_sawyer's picture

Both of you are correct... Here's the math...

~~~

I posted [about a month ago]... the 'notional' value of all BITCOINS in existence VERSUS the notional value of all the various FIAT in the world [& loosely ~ how that attaches to perceived values of prized physical assets]...

To make a long story short ~ It's a ridiculous ratio... Which DOESN'T ~ in my mind ~ make the probable case for BITCOINS RISING [in value] to meet the par valuations... BUT RATHER ~ the easy to comprehend likelihood that even a modestly placed WHALE... ON A WHIM... could purchase up all the bitcoins on the planet [like a real estate, or oil speculator, buying up land from unsuspecting farmers]... 

I'm guessing that that WHIM would be based upon putting an end to all the nonsense [like Mosanto buying up a mom & pop seed company]...   

Thu, 02/28/2013 - 21:51 | 3288614 JimRogers
JimRogers's picture

huh?

Thu, 02/28/2013 - 21:59 | 3288633 francis_sawyer
francis_sawyer's picture

you wouldn't understand... just stick to your naked farming activities in Canada...

Thu, 02/28/2013 - 22:25 | 3288686 TruthInSunshine
TruthInSunshine's picture

Greenspan in his younger and more lucid days acknowledged the absolute & inherent governmental hostility towards any competing or alternative currency to  state issued monopoly fiat exactly as has been mentioned:

Gold and Economic Freedom (1966)

by Alan Greenspan

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving.

The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible.

...

Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange. If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks). But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one — so long as there are no restraints on trade or on the movement of capital. Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

Thu, 02/28/2013 - 22:23 | 3288687 cxl9
cxl9's picture

.

 

Thu, 02/28/2013 - 22:23 | 3288708 cxl9
cxl9's picture

I think your logic is flawed, sir. Suppose a whale attempted to corner the bitcoin market. He would begin buying up bitcoins on the open market, exchanging (let's say) US dollars for them. As the supply of available bitcoins dwindled, their price would rise. Some people would refuse to sell entirely, perhaps out of principle. In the end the price of a bitcoin would rise exponentially out of the whale's purchasing reach. So in the end he's left with, say 90 or 95 or 99 percent of them before running out of dollars. Ho hum. Now what? He's got a bunch of bitcoins that he can spend down by purchasing goods and services from people or companies that will accept them. Or he can dissolve his bitcoin stock (destroy his private key), accept the capital loss, and declare the bitcoin project deceased. But what about the people who sold their bitcoins to the whale at inflated prices during the run up? Now they have a bunch of dollars to spend. Bitcoin is dead? Bring on bitcoin II. Those old bitcoin dollars will find their way back into the new bitcoin system. And bitcoin II will probably suck in many more speculators who look with envy at how much money the original bitcoin participants made. The whale will not have accomplished anything, except a huge money loss.

This will never happen. Bitcoin will not be killed by a whale spraying dollars at it with a fire hose.

Disclaimer: I am not a bitcoin participant. I hold no bitcoins. I am, however, broadly supportive of it.

Thu, 02/28/2013 - 20:08 | 3288279 Z'
Z''s picture

Glad you found them useful.  I have been reading up on Bitcoin, not being one to just jump in without research.

Thu, 02/28/2013 - 20:33 | 3288376 Tinky
Tinky's picture

As usual, the "journalists" who cover this story couldn't identify irony if it hit them in the face. Take this headline, for example...

"bitcoin-the-european-central-bank-sees-you-as-a-threat-to-financial-stability"

Thu, 02/28/2013 - 22:24 | 3288560 TraderTimm
TraderTimm's picture

@TruthInSunshine

Edit: You replaced your earlier post with a long excerpt about Greenspan for some reason - just putting in a note here for clarity, in case someone is confused by my reply.

You've ably described the obstacles facing bitcoin from governments and other power structures. I disagree that they'll be able to stop it, for a variety of reasons - one notably being that the system is decentralized. Governments have had trouble exerting their influence on such architectures.

Essentially, like other peer-to-peer technologies, I believe bitcoin will be able to survive in a similar manner.

Thu, 02/28/2013 - 22:57 | 3288816 TruthInSunshine
TruthInSunshine's picture

I never said that they will or won't be able to stop bitcoin or any other nascent alternative medium of exchange from supplanting existing monopoly fiat in the future.

I merely said that the state (controlled by the monopoly fiat oligarchy) will deploy all of its tools and known methods to try and stop such alternative mediums of exchange from being popularized and utilized.

Fri, 03/01/2013 - 00:51 | 3289129 TraderTimm
TraderTimm's picture

@TruthInSunshine

Yes, I was just stating my opinion on the subject, sorry if I didn't express that clearly - you did state what you've summarized in your latest reply.

Also, I was confused by the greenspan quote - but I see your other post was there after all. Just my luck, I guess :)

Fri, 03/01/2013 - 01:23 | 3289174 TruthInSunshine
TruthInSunshine's picture

Not a prob.

Thu, 02/28/2013 - 19:18 | 3288090 Water Is Wet
Water Is Wet's picture

The biggest drawback to bitcoin that I've come across is that your wallet is a usb stick.  I don't trust usb sticks, and I don't know of a way to back up the wallet.  If my wallet is on my (hard/usb/sd) drive and it crashes/gets lost, I lost all my bitcoins.

Thu, 02/28/2013 - 19:28 | 3288143 CH1
CH1's picture

There are many options. Look into it.

Thu, 02/28/2013 - 20:18 | 3288313 All Out Of Bubblegum
All Out Of Bubblegum's picture

> your wallet is a usb stick.

Your wallet can be your brain or a piece of paper:

http://brainwallet.org

https://www.bitaddress.org

Thu, 02/28/2013 - 21:00 | 3288469 aphlaque_duck
aphlaque_duck's picture

You can store bitcoin in your BRAIN.

Thu, 02/28/2013 - 22:25 | 3288717 JimRogers
JimRogers's picture

brainwallets

or store in the cloud

or get a QR code tatted on your ass

Thu, 02/28/2013 - 22:45 | 3288782 samwell
samwell's picture

You can also print out or buy actual physical bitcoin coins with a private key which is blocked to preserve the "value" of bitcoin.

 

http://print.printcoins.com/

 

these bitcoin (wallet) addresses are impossible to run out of as their are trillions of  combinations.  these bills need to be funded of course with already established BTC.  Once funded it is imposible for someone to steal the underlying bitcoins unless they gain access to your private key located on the bill.  same is true with the actual physical casascius bitcoins

Thu, 02/28/2013 - 19:22 | 3288106 MoneyThangs
MoneyThangs's picture

Bitcoins are as safe as an asset as the US dollar. Gold bugs who think this is a new miracle currency that will cure the fiat system will be soarely disapointed not to mention the pathetic liquidity

Thu, 02/28/2013 - 19:24 | 3288125 Temporalist
Temporalist's picture

Not as disappointed as I am in your spelling.

Thu, 02/28/2013 - 19:25 | 3288127 Quinvarius
Quinvarius's picture

No.  Actually that just shows what gold and silver are trying to do, and where they would already be if left alone.  The bankers got flanked.  Now they look like friggin retards because bitcoin humilated them.  That is like your money actually being worth less than monopoly money.  Find a way to buy gold with your bitcoin.

Thu, 02/28/2013 - 19:26 | 3288135 MoneyThangs
MoneyThangs's picture

BTC is rigged just as much as any fiat bullshit, anyday one person could kill it or replace it in a heartbeat. People using as a an inflation hedge will be bums in the long term

Thu, 02/28/2013 - 19:29 | 3288148 CH1
CH1's picture

And you know this how?

Thu, 02/28/2013 - 20:25 | 3288337 XenoFrog
XenoFrog's picture

Probably historical precident where a single hacked website or a dumping of bitcoins on the open market crashes the price to near zero in a single day.

Thu, 02/28/2013 - 20:42 | 3288407 All Out Of Bubblegum
All Out Of Bubblegum's picture

You're so 2011.

Thu, 02/28/2013 - 20:45 | 3288417 XenoFrog
XenoFrog's picture

And you should be ashamed of yourself for perpetuating this nonsense.

Thu, 02/28/2013 - 21:00 | 3288465 Shell Game
Shell Game's picture

Ashamed of competition?  You a free market hater?  If BC is as dangerous as you claim, it will go NOWHERE.  I say, let it live, or die, by it's own virtue or lackthereof, allow competition.

Thu, 02/28/2013 - 21:02 | 3288473 All Out Of Bubblegum
All Out Of Bubblegum's picture

I'm ashamed of myself for not putting another $10k into bitcoins when they were at $5.

Thu, 02/28/2013 - 21:38 | 3288571 TraderTimm
TraderTimm's picture

@MoneyThangs

I disagree.

I'd be interested how one person could kill or replace a decentralized system of many nodes. If you could reply, we could talk about those ideas.

Thu, 02/28/2013 - 22:50 | 3288800 samwell
samwell's picture

Keep buying your gold and silver fool.  they have already made their moves and will actually collapse when the morons on wall st. realize that bernanke has painted himself into a corner.  Then we will see the true rigor of a deflationary collapse.  everyone will sell their gold to pay margin calls and the price of the FRN will skyrocket.

 

“There is no means of avoiding the final collapse of a boom brought about

by credit (debt) expansion. The alternative is only whether the crisis should

come sooner as the result of a voluntary abandonment of further credit

(debt) expansion, or later as a final and total catastrophe of the currency

system involved.” – Ludwig von Mises

 

bernanke, and the market, will choose voluntary abandonment, because to choose otherwise would destroy the federal reserve system.  I don't think bernanke is that suicidal.  he may be stupid, arrogant, detached, but he is not suicidal.  he will seek to preserve his job/life/ and the federal reserve system. we are very close to the tipping point on the cost/benefit of creating more debt

Thu, 02/28/2013 - 19:55 | 3288237 harlanaladd
harlanaladd's picture

There's already at least one site selling physical gold coins for bitcoin.  Google is your friend.

I'm haven't jumped on board (yet), but what I read is pretty convincing that it's not a classic ponzi.  For one thing, therer's no central entity resonsible for issuing (i.e., diluting) the currency.  Also, though there's no cop to turn to in case you're defrauded, there is a network of public reviews of transactions-- an online reputation for the merchant.

The anonumity I love.  The state will despises it, though, so I think one should be very careful where one conducts significant bitcoin transactions. 

I think it's perhaps worth investing a few bucks to explore.  Just my own opinon.

Thu, 02/28/2013 - 20:28 | 3288352 XenoFrog
XenoFrog's picture

It's not a single entity running the ponzi. It's essentially an environment of corruption with dozens of confidence scams and ponzis running at any one time. For simplicity's sake rational people just say bitcoin is a ponzi but it is merely a general description of what is a culture of thievery and graft. Look up incidences of bitcoin scams and you will find literally hundreds of cases where people have lost huge amounts of bitcoin "wealth" due to the actions of people considered leaders of the bitcoin community. These guys have no shame and the fleeced will often become just as zealous in their attempt to regain their lost investment.

Thu, 02/28/2013 - 20:37 | 3288383 fuu
fuu's picture

Hey look, a free market!

Thu, 02/28/2013 - 20:40 | 3288402 XenoFrog
XenoFrog's picture

A wise man once said that you never know how expensive something can be until someone says it's free.

Thu, 02/28/2013 - 20:45 | 3288414 fuu
fuu's picture

And a wise woman once said freedom's just another word for nothing left to lose.

Thu, 02/28/2013 - 20:46 | 3288422 XenoFrog
XenoFrog's picture

Well, you convinced me. It's time for me to get in early on bitcoin so that I can get rich quick*

 

*Not a get rich quick scam, promise.

Thu, 02/28/2013 - 20:50 | 3288434 fuu
fuu's picture

Your fear is palpable.

Thu, 02/28/2013 - 22:02 | 3288639 francis_sawyer
francis_sawyer's picture

 "a wise woman once said freedom's just another word for nothing left to lose"

~~~

that's funny... I just thought she was stoned to the verge of overdose... But maybe the point is the same.

Thu, 02/28/2013 - 22:12 | 3288662 fuu
fuu's picture

If I was concerned about the vices of poets, artists, and philosophers it would really limit the selection.

Fri, 03/01/2013 - 01:16 | 3289165 francis_sawyer
francis_sawyer's picture

If I was concerned about the ADvices of poets, artists, and philosophers it would really limit the selection...

Thu, 02/28/2013 - 22:02 | 3288640 samwell
samwell's picture

which gov. lab do you work in tadpole?  you are such an obvious sock puppet shill for the continuation of the dynastic banking central bank model.  bitcoin is not about getting rich quick, although accumulating something with true value is a nice fringe benefit.  bitcoin is about bringing down a despotic monetary system that does much more harm than good to the average person.  ie upwards of  40% of money is used to pay interest on other money ie bonds, taxes, etc.  pretty inefficient with a lot of friction; or it now takes ~six dollars of debt to create $1 of GDP.  sounds like a good deal eh?  bitcoin is a frictionless currency where it is impossilbe to counterfeit a bitcoin.  

no need for someone like you to get rich quick when you are just a gov. paid scientist sucking at the public teet, eh?  you have your little scam now don't you?

Thu, 02/28/2013 - 22:51 | 3288802 samwell
samwell's picture

so what does that make you?  a fucking moron tadpole with a very small brain.

Thu, 02/28/2013 - 20:41 | 3288405 All Out Of Bubblegum
All Out Of Bubblegum's picture

"Freedom is a scam. Stay on the plantation."

-The Bernank

Thu, 02/28/2013 - 20:47 | 3288425 XenoFrog
XenoFrog's picture

Because in the mind of a bitcoiner, you are either for bitcoin or you are for the US Dollar fiat.   

Thu, 02/28/2013 - 21:51 | 3288611 samwell
samwell's picture

Hey frog lady.  anybody home.  ya, we bitcoiners are all 0's and 1's in your microscopic view of things.  "you're either with the terrorists or with us"--W  such a moronic, simpleton analysis it doesn't even deserve comment.  You are probably some government sock puppet "scientist" who works in a lab and studies tadpoles and think you have all the answers to everything in life.  

Bitcoiners, or more properly miners, believe in an honest currency system which is not able to be manipulated by political or power elite at a whim.  do you even know how a bitcoin comes into existance you fucking idiot?  do ou think that BTC can be created out of thin air "by decree" like dollars can be by our "benevolent Ben" bernanke?  It will be wonderful to see all of you government shills that parasitically live off the tax payer doing their "research" eat their own shit when bitcoin goes to $500/BTC.  I was buying bitcoin back in 2011 at$0.10.  Do the math Bitch.  you are day late and a dollar short.  the american people are going to wake up to the annonymity of bitcoin big time this summer.  imagine the government not being able to track your every financial move.  no need to imagine.  it exists now and it is called Bitcoin!

 

Thu, 02/28/2013 - 22:10 | 3288643 francis_sawyer
francis_sawyer's picture

I bought JDS Uniphase stock in the 90's when it was 10 cents a share... But I'm sure you're smarter than me with that Star of David avatar...

~~~

I'm just a FICTION writer... But... as a FICTION writer... I can imagine a FICTIONAL COMEDY whereby, at the end of the day, its discovered that the writers of the original BITCOIN CODE, were in the employ of the Rothschilds/JPM's/Lazards/ or whomever you wish to nominate...

Not that I'll be worried about any of that... 

Thu, 02/28/2013 - 22:28 | 3288726 JimRogers
JimRogers's picture

You're a knave.

Fictional writer =/= hysterical paranoid schizohrentic message board poster

Thu, 02/28/2013 - 22:56 | 3288819 samwell
samwell's picture

Bully for you and your JDSU.  

its a star of david innertwined with a nazi swastika dipshit!!  Israel is a fascist dictatorship  wrapped up with an apartheid racist theocracy.  no democracy there, and they are no friend to america in the middle east.  in reality, they are our enemy.  search engine Israel attacks USS liberty.

Fri, 03/01/2013 - 01:22 | 3289172 francis_sawyer
francis_sawyer's picture

Congrats...

~~~

Your SMALLTYPE [irony] face avoids the 'joojunkers'...

I hope [FOR YOU] that it makes you the next 'Sheldon Adelson' of BITCOINS... Maybe LasVegasDave will be your poolboy...

Fri, 03/01/2013 - 03:30 | 3289297 Prisoners_dilemna
Prisoners_dilemna's picture

I use my ebt to buy bitcoin. So I support both.

Thu, 02/28/2013 - 21:33 | 3288549 Haole
Haole's picture

You must just be wet to the knees having the opportunity to ignorantly shill your BS all over Bitcoin twice in one week XenoWTFrog...

Fri, 03/01/2013 - 07:09 | 3289423 awakening
awakening's picture

Failed the litmus test also (2 planes, 3 buildings ...and, unlike Bitcoin, defies the laws of Mathematics).
Prob's to ZH for letting it soil the comments on these articles as it demonstrates more openness than just about any Government currently in existance. =/

Thu, 02/28/2013 - 21:43 | 3288586 TraderTimm
TraderTimm's picture

@XenoFrog

So what you're saying is anything that is valuable is set upon by scammers and con artists? Yes, you're quite right, just like gold has scammers putting tungsten inside, bitcoin has people trying to trick others to obtain more bitcoins. I think you'll find the same situation occuring with US Dollars, Yen, and many other currencies.

As for your suggestion that people who have lost bitcoins will immediately turn around to scam other people, I have no basis to believe this. If you have some proof, that would be useful to the discussion.

Does this mean when a trader has a bad day in the E-Mini he goes and robs someone? I certainly hope not.

Fri, 03/01/2013 - 00:11 | 3289050 samwell
samwell's picture

rational people like you that don't even understand the underlying basis of anonymity and liberty and that they go hand in hand with a crytographic currency like bitcoin.  You're "rational" mind will only realize it when it is too late and the gov. has cut you off from the teet!

you should go to the fox news boards tadpole where you will find like rational minds that just love the hive borg mentality.  just admit it, you hate bitcoin because you don't understand it.  when you don't understand something you have to attack it

Fri, 03/01/2013 - 03:21 | 3289289 Prisoners_dilemna
Prisoners_dilemna's picture

Frog is onto something here. For the last 100 years the federal reserve bank, that private cartel with the bank monopoly which our wisest forefathers warned us about, has been devaluing the federal reserve note like frog values brain cells. And because of this, now that we have an honest, sound currency, no one remembers how to use it. Excellent observation frog. We've been in the monetary wilderness so long the sound monies are foreign and unfamiliar. Frog. How will we kill Iraqi babies without a fiat currency? How will the individual amd corporate welfare queens survive such a sudden and brutal adoption of sound money? Will the children of the dc mob have to pay back their student loans under a honest money bitcoin system? Oh the horror.

Thu, 02/28/2013 - 21:38 | 3288277 Shell Game
Shell Game's picture

Quinvarius said, "Find a way to buy gold with your bitcoin."


http://www.goldsilverbitcoin.com/

Never used them, caveat emptor..

Thu, 02/28/2013 - 19:22 | 3288114 Z'
Z''s picture

This article has some interesting points, but the last bullet item glosses over the "hack attack," which if I recall correctly was outright theft of people's account balances.  Not saying Bitcoin isn't worth the enthusiasm, but that factoid should be out there in the context of "hacking."

This is an interesting blog on Bitcoin privacy:

http://anonymity-in-bitcoin.blogspot.com/2011/07/bitcoin-is-not-anonymous.html

Thu, 02/28/2013 - 21:46 | 3288602 TraderTimm
TraderTimm's picture

@Z`

You're technically correct that bitcoin isn't fully anonymous out of the 'box'. There are steps to take to make it more so. Just like safe sex, you have to practice safe bitcoining :)

The system as it exists right now does provide much more privacy protection than any other financial network.

Thu, 02/28/2013 - 21:50 | 3288609 Z'
Z''s picture

Thanks for the reply TT,  I appreciate it.  I didn't write that blog... just found it in my search for more info on Bitcoin, and thought it pertinent info for the Bitcoin discussion.

Thu, 02/28/2013 - 19:26 | 3288134 Id fight Gandhi
Id fight Gandhi's picture

The story on the ATM earlier this week...

I got the impression you BUY with cash these bitcoins but can you exchange bitcoins FOR cash or bullion anywhere?

Thu, 02/28/2013 - 19:40 | 3288187 Z'
Z''s picture

With a hat-tip to ZH commenter "Half_a_Billion..", gold bullion can be purchased at http://coinabul.com/

 Places that accept Bitcoins:  https://www.spendbitcoins.com/places

Thu, 02/28/2013 - 20:32 | 3288366 XenoFrog
XenoFrog's picture

In order to convert them back into real money, you have to use one of the online exchanges and trust them to not steal it. These are places that have been "hacked" in the past and lots of people were fleeced.

Thu, 02/28/2013 - 22:08 | 3288650 samwell
samwell's picture

First they ignore you, then they laugh at you, then they fight you, then you win.

Mahatma Gandhi

I guess you are at the attack stage eh gov. troll?

you just can't stand the fact that there are people out there who have broken free of the federal reserve system to live in true anonymity.  no slimeballs like you watching their every financial transaction.  can't have fianncial anonymity or freedom can we?  then the terrorists would win wouldn't they.  you probably think that our governement was brought to its knees by a bunch of bearded Muslims living in caves don't you.  

Thu, 02/28/2013 - 23:29 | 3288900 Haole
Haole's picture

"...you probably think that our governement was brought to its knees by a bunch of bearded Muslims living in caves don't you."

As a matter of fact, she does as is evidenced by past psycho-shill-dom in 9/11 discussions. Hence the reason anything this avatar of idiocy posts is completely and utterly worthless at best. Never mind the blunt instruments that up vote this nonsense...

Fri, 03/01/2013 - 14:06 | 3290947 Long_Xau
Long_Xau's picture

Suppose tomorrow you find out that 10 of the most trusted people you know offer to sell and buy bitcoins. Would that make you rethink Bitcoin?

Do you know of any inherent aspect of Bitcoin that shows any sign of maliciousness or immorality or dishonesty or secrecy? If so, please specify. Or is there any essential information about Bitcoin that you can't easily get from a public source? Or is there anything essential to Bitcoin that for whatever other reason you can't judge whether there might be something wrong with it? Please do ask yourself these questions!

Fri, 03/01/2013 - 01:17 | 3289166 e_goldstein
e_goldstein's picture

not my bullion.

Thu, 02/28/2013 - 19:27 | 3288138 magpie
Thu, 02/28/2013 - 19:31 | 3288145 fuu
fuu's picture

Alternative currencies are part of the answer. The amount of vitriol is surprising.

Thu, 02/28/2013 - 19:32 | 3288158 CH1
CH1's picture

The amount of virtiol is surprising.

If they were informed questions, that would be one thing. If they were simply ignorant and scared, that would be another....

But these comments are both ignorant and arrogant, a very ugly combination.

Thu, 02/28/2013 - 19:37 | 3288166 fuu
fuu's picture

"But these comments are both ignorant and arrogant"

They are neither. They are branding. It is even uglier than you suggest.

Thu, 02/28/2013 - 19:39 | 3288183 CH1
CH1's picture

Yeah, you may be right.

Thu, 02/28/2013 - 19:51 | 3288224 francis_sawyer
francis_sawyer's picture

fuu ~ you don't totally get it here...

~~~

There IS NO COMPREHENSIVE SOLUTION [based on history ~ & operational mechanics of humankind]... Therefore ~ it's NOT vitriol [against the sworn enlistees]... Intead ~ it's more like... SHOW ME how dedicated you are...

Thu, 02/28/2013 - 20:12 | 3288292 fuu
fuu's picture

Dude I specified a part of the answer. There is no silver bullet slam dunk touch down solution. Nitpick my thong.

There is obvious overlap to the reasoning behind owning metals as an alternate currency and bitcoins.

 

Thu, 02/28/2013 - 20:21 | 3288323 francis_sawyer
francis_sawyer's picture

Agreed... But this argument SHOULD NOT devolve into 'camps' [read comment above]

~~~

http://www.zerohedge.com/news/2013-02-28/bitcoin-your-thoughts#comment-3288311 

Thu, 02/28/2013 - 20:59 | 3288464 fuu
fuu's picture

Admiral that ship has sailed.

Thu, 02/28/2013 - 22:20 | 3288690 francis_sawyer
francis_sawyer's picture

It's late & you don't have to answer me now, but, HOW HAS THAT SHIP SAILED?

~~~

There are people that say all the mined gold on earth couldn't support the notional value of asset prices... Bitcoins are a mere fraction of that...

Assuming the UNDENIABLE vigor with which the 'ELITE' expend energy to maintain asset bubbles... How can yo entertain this as a reality?... &... assuming the possible DESTRUCTION o the elite class [& all the ramifications which would naturally ensue ~ OSTENSIBLY, a plunge back into the DARK AGES]... How does 'ELECTRONICALLY STORED' wealth survive?

Entertain me Einstein...

 

 

Thu, 02/28/2013 - 23:25 | 3288825 fuu
fuu's picture

It devolved into camps months ago.

There aren't enough dollars to support the notional value of asset prices, what's your point?

Fri, 03/01/2013 - 01:26 | 3289180 francis_sawyer
francis_sawyer's picture

There's not enough ANYTHING to support the notional value of asset prices...

~~~

That's my point...

[yeah ~ so lets get me some bitcoins which are lowest on the totem pole] ~ that oughtaa work...

Fri, 03/01/2013 - 01:31 | 3289181 francis_sawyer
francis_sawyer's picture

Bitcoin = JDS Uniphase [& company]

~~~

You can't prove me wrong until it's all over... Which will easily be accounted for when the "ON A LONG ENOUGH TIMELINE..." concept kicks in...

Fri, 03/01/2013 - 16:27 | 3291447 TraderTimm
TraderTimm's picture

@francis_sawyer

That is a wonderful bit of circular logic, truly. Do you always employ hindsight when judging new innovations? It must be a very difficult road you're on.

Thu, 02/28/2013 - 23:00 | 3288827 samwell
samwell's picture

above all a decentralized monetary system like bitcoin is essential.  the people have had enough of these criminal clowns monkeying around with our lives.  a central bank is part of the bolshevik (jew) communist manifesto along with a "progressive" income tax.  go figure.  they are both the bane of the common man today.

Thu, 02/28/2013 - 19:36 | 3288177 Sudden Debt
Sudden Debt's picture

I don't see why you would buy that...
it's expensive for... well you don't even get a paper for it.

Stick to gold and silver because if you need to trade, not everybody you'll meet will be a internet nerd who has those.

Thu, 02/28/2013 - 19:52 | 3288222 unununium
unununium's picture

The adoption curve of bitcoin has been like nothing so much as that of the Internet itself.

Your response is circa 1994-1995 ... most reasonable people were saying stick to AOL for email, and of course, never buy anything on the Internet.

Thu, 02/28/2013 - 20:20 | 3288321 XenoFrog
XenoFrog's picture

This is a rhetorical trick. Lacking legitimacy, the bitcoiner will hold up examples of positive change "proving" that bitcoin will be positive too even though there is no relation between them.  Pets.com was the next best thing at one point too. Not all change is inherantly good, or profitable.

Thu, 02/28/2013 - 20:28 | 3288354 All Out Of Bubblegum
All Out Of Bubblegum's picture

> Lacking legitimacy

$33 a bitcoin is pretty legit.

Thu, 02/28/2013 - 20:33 | 3288377 XenoFrog
XenoFrog's picture

Really? because it was $5 a little while ago. Before that, it was $28... sure sounds like a great currency. Nothing like huge swings in "value" to create confidence in those who are expected to use it.

Thu, 02/28/2013 - 20:43 | 3288394 All Out Of Bubblegum
All Out Of Bubblegum's picture

> Nothing like huge swings in "value" to create confidence in those who are expected to use it.

I've been using it for two years. I'm richer now than I was two years ago in physical metals, cash and btc value, even with the massive btc crash of 2011. My new wealth is due to Bitcoin and its all out of the purview of any government or regulatory agency. I suspect I'm not the only early adopter than can make that claim.

Let it keep swinging.

Thu, 02/28/2013 - 20:47 | 3288419 akak
akak's picture

I may not support or even understand Bitcoin as a transactional currency, but I would defend to the death your right to voluntarily use it with others so inclined.

Compare that to the US feral government's attitude towards those desiring to use gold and/or silver as a medium of exchange in competition with their dollar.  Monopolies hate competition, and those enforced at the point of a gun hate (and fear) competition the most.

Thu, 02/28/2013 - 20:57 | 3288455 All Out Of Bubblegum
All Out Of Bubblegum's picture

> I would defend to the death your right to voluntarily use it with others so inclined.

As I'd do for you in whatever method of voluntary trade you choose to conduct.

Thu, 02/28/2013 - 20:49 | 3288432 XenoFrog
XenoFrog's picture

sure you are.

Fri, 03/01/2013 - 02:57 | 3289275 unununium
unununium's picture

Keep it up, troll.  bitcoin deserves the publicity.

Thu, 02/28/2013 - 22:17 | 3288681 samwell
samwell's picture

nothing like huge swings in value with the usd eh?  for instance it has lost 99% of its value since the inception of the federal reserve system.  The only thing that has managed to give the FRN value is periodic deflationary collapses like we saw in 1929-1943  sounds like a real store of value doesn't it gov. shithead?  how bout the fact that the federal reserve note has lost 62.5% of its value against BTC just this year.  people know a good thing when they see it.  and for your info BTC  hit $34.51/BTC today.  A new all time high eclipsing the previous wave 1 high of $31.90/BTC.  FRN have no value other than having the slave labor of the american middle class.  anonymity is truly priceless when dealing with a tyranical gov.....that wants to track your every move and yet keep all of its dealings opaque.  quite the doublestandard.  but, gov.(federal reserve) sock puppets are used to double standards aren't they?  do as I say, not as I do.  You probably voted for obama and drive a prius and think you are saving the world

Thu, 02/28/2013 - 21:50 | 3288610 TraderTimm
TraderTimm's picture

@XenoFrog

Not all change is good, but bitcoin has a decent chance for being a force of good. If you use bitcoin, I can't tell you not to spend it. I can't prevent you from using it by shutting down your bitcoin client. I can't gang up on you and tell everyone else to not allow your bitcoin transaction to be put through the network. That is true monetary freedom.

And I think it is overdue.

Thu, 02/28/2013 - 23:35 | 3288941 Haole
Haole's picture

That from a student of rhetoric, with failing grades worn as a badge of honor.

Fri, 03/01/2013 - 00:55 | 3289139 TraderTimm
TraderTimm's picture

@Haole

Due to the trend of people replying to posts automatically, I'm not sure if you mean that for me. If you did, I'd appreciate elaboration.

Thanks.

Fri, 03/01/2013 - 21:20 | 3292269 Haole
Haole's picture

Certainly not TT, sorry for any confusion. It was directed at this stunned cunt that calls itself XenoFrog.

One thing I dislike about the comment section at ZH is the way it is visually structured on the pages, almost impossible to keep comments and replies to them straight sometimes.

Fri, 03/01/2013 - 03:09 | 3289283 Prisoners_dilemna
Prisoners_dilemna's picture

Blockchain.info/charts

The charts scream legitimate. Or is that a rhetorical trick as well?

Thu, 02/28/2013 - 19:59 | 3288251 fonzannoon
fonzannoon's picture

i have no problem with bitcoin. i wish you luck. I am too far down the rabbit hole to trust anything that I don't have access too. But it seems to me that all forms of alternative currencies are people using a similar mindset.

Thu, 02/28/2013 - 21:54 | 3288619 TraderTimm
TraderTimm's picture

@fonzannoon

I respect that. If you're uncomfortable then it isn't for you. My attraction to it is not just the freedom of it, the barriers of entry are extremely low as well.

I think both alternative currencies, precious metals and bitcoin, are great weapons against tyranny.

Fri, 03/01/2013 - 12:16 | 3290334 Prisoners_dilemna
Prisoners_dilemna's picture

I agree many people wont be able to transact in btc. the typical walmartian watching honey booboo probably dont have btc.
But they probably dont possess PMs either.

PMs may be better for trade. Btc are better for evading capital controls.
PMs may be more tangible, Btc don't increase the weight of my thumbdrive no matter how many I load on it. Carried any PMs out of country recently?

Thu, 02/28/2013 - 19:49 | 3288218 Uinta
Uinta's picture

Incidently, no F-16 ever made a carrier landing.

Thu, 02/28/2013 - 19:49 | 3288219 HeavydutyMexica...
HeavydutyMexicanOfTheNorthernKingdom's picture

Au & Ag aren't susceptible to the ubiquitous network outage.  You can't bank on perpetual network connectivity.

Sun, 03/10/2013 - 00:52 | 3289145 Prisoners_dilemna
Prisoners_dilemna's picture

Ag & Au are susceptible to capital gains tax, customs reporting, export limits, and until 1971 US citizens couldnt even own gold. On the other hand I can carry an encrypted thumb drive anywhere I please. You cant bank on big brother not coming for your PMs or claiming a share.

Edit: you're correct... however I am banking on networks outlasting big bro.

Thu, 02/28/2013 - 19:52 | 3288226 besnook
besnook's picture

how would i solve the problem of unifying all currencies into one unit. i would create bitcoin. at first i would let the system run free as a platform for anonymous worldwide trade for any commodity wanting to be traded(except maybe sex, at least, real sex. virtual sex would be no problem). that would attract a critical mass of users that would serve as bait for other, more mainstream users. the first users would be rewarded with real asset gains to keep them from quitting as more and more people join. eventually the new currency will reach a critical mass that has become the "necessary" medium of exchange for enough people that the most reluctant will be drawn in because of the revenue gains in business and the expression of choice it provides from around the world. at this point .gov begins to stealthily impose their interests on behalf of the banks and megacorps and their own security  interests to track all the financial transactions going on in bitcoins and by whom. the game is complete. the facebook of worldwide finance has been created and the world uses one currency.

so, yes, invest now. you will be rewarded. i just talked myself into it. just beware of the end game.

Thu, 02/28/2013 - 20:02 | 3288259 Temporalist
Temporalist's picture

Yes the sex trade with BTC.  I can see it now:

Put your dongle in my port...nobody makes me feel zeros and ones like you do.  If this external drive housing is a rockin, don't come a knockin.

Thu, 02/28/2013 - 20:13 | 3288296 SMG
SMG's picture

I really wish you weren't right.

Thu, 02/28/2013 - 20:27 | 3288349 All Out Of Bubblegum
All Out Of Bubblegum's picture

I'd agree with you but for one point: those prone to the disease of centralization would never think to create Bitcoin. It was created as an experimental defense against centralizing influences. It can't be centralized without destroying it.

Thu, 02/28/2013 - 20:42 | 3288406 besnook
besnook's picture

rrrrriiiiiiggggghhhhhttttt

Thu, 02/28/2013 - 19:59 | 3288243 Pseudo Anonym
Pseudo Anonym's picture

where's XenoFrog today?

Thu, 02/28/2013 - 20:20 | 3288324 XenoFrog
XenoFrog's picture

Missed you too, babydoll.

Thu, 02/28/2013 - 20:22 | 3288330 All Out Of Bubblegum
All Out Of Bubblegum's picture

I hope you bought some bitcoins at $5 or even $10.

Thu, 02/28/2013 - 20:37 | 3288390 XenoFrog
XenoFrog's picture

No because I have a functioning human brain. I bet you bought your bitcoins the last time they were in the 20s and are just now regaining what you think is your investment. Prepare for the next crash it'll be a doosy.

Thu, 02/28/2013 - 20:48 | 3288427 All Out Of Bubblegum
All Out Of Bubblegum's picture

> I have a functioning human brain

 

Citation needed.

Thu, 02/28/2013 - 20:51 | 3288436 XenoFrog
XenoFrog's picture

I've had no problem facing down the mob of bitcoiners sent over here to try and find new investors for their scams.

Thu, 02/28/2013 - 20:59 | 3288462 All Out Of Bubblegum
All Out Of Bubblegum's picture

Your batting average of 0.000% with regard to Bitcoin is impressive, I have to agree.

Thu, 02/28/2013 - 21:57 | 3288629 TraderTimm
TraderTimm's picture

@XenoFrog

I find it interesting that your tactics center around this belief that we need people to 'invest'. I've personally handed out bitcoins to other people when they've asked, not demanded that they log on to an exchange and buy some. Its pretty much the definition of anti-ponzi.

Bitcoin users want people to understand the system before they get involved, and have no problem answering questions from new users.

Thu, 02/28/2013 - 22:11 | 3288658 JimRogers
JimRogers's picture

1Cg7nVC5BnhwJv5SZq4m1RqSysUDG7C9LU

Thu, 02/28/2013 - 22:32 | 3288742 TraderTimm
TraderTimm's picture

Sent 0.01337 to you, should confirm soon :)

Thu, 02/28/2013 - 23:25 | 3288922 JimRogers
JimRogers's picture

w00t

^This guy is a straight up gentlemen of these interwebz.

Let's pay it forward...

ZH comment thread pyramid scheme. Next ZH nerd to post a public addy gets .01337*2... any takers for the free moneyz???

All you gotta do is give out .01337 to someone else, they confirm, and I'll send you double your investment. I'll even kick some in for the guy who confirms recieving. 

 

Fri, 03/01/2013 - 07:17 | 3289431 awakening
awakening's picture

No thanks, I'm trying to raise enough to buy an ounce of silver (thereby demonstrating both value in Bitcoin for transactions and Ag for a store of wealth over "fiat" ). :)

Fri, 03/01/2013 - 07:15 | 3289430 awakening
awakening's picture

Stil open for business? 1F2vaLqrgCjxjhK4bYBdFnzAmuaSigsemp

Fri, 03/01/2013 - 16:32 | 3291465 TraderTimm
TraderTimm's picture

No problem.

Sent, should get the first confirm soon.

Fri, 03/01/2013 - 22:14 | 3292377 awakening
awakening's picture

0.01337 BTC received, nice donation with a l33t number thanks :D

Thu, 02/28/2013 - 22:22 | 3288702 samwell
samwell's picture

you are raising on a busted flush bitch.  Go troll somewhere else on the taxpayers dime!  I wonder if you have a two functioning brain cells, let alone an integrated brain you make such fallacious arguments.  everything that goes up in value is a scam and a ponzi scheme, so BTC must be a scam.  what a simpleton.  you should ask for a refund at your gov. indoctrination center.  you look like a grad student in a gov. lab.  getting your gov. welfare check to suck up to your "advisor".  indentured servant

Thu, 02/28/2013 - 23:12 | 3288872 samwell
samwell's picture

a bit paranoid are we tadpole?  You kind of have an inflated sense of self don't you think?  you are a legend in your own mind arent you tadpole.  The mob of bitcoiners are actually sentient, thoughtful human beings who have had enough of people like you defending the status quo which has screwed us all over for far too long.  get a life frog lady!

Thu, 02/28/2013 - 22:25 | 3288718 samwell
samwell's picture

I don't think you are the best judge of that.  kind of presumptuos don't you think.  when you can tell me how bitcoin actually works then I might tend to agree.  you're level of ignorance is simply astounding and actually bodes quite well for BTC if you are the typical "investor" out there.  the crowd only realizes the trend when it is too late and has run its course

Thu, 02/28/2013 - 22:30 | 3288733 samwell
samwell's picture

are you sure that you aren't a mutant cross with a xenopus brain.  that's why you aren't making any sense isn't it.  you are a test tube human/frog aren't you tadpole?  you should go to the tadpole boards on the internet as you obviously aren't suited to the big wide ocean of ideas of zerohedge and a complex monetary system like bitcoin now are you?  poor thing

Thu, 02/28/2013 - 19:59 | 3288249 proLiberty
proLiberty's picture

I like the idea of an idenpendent currency, but in fleeing the fiat money system, people are jumping into a pool of money that is purely supply/demand with no asset value whatsoever.   Moreover, it is vulnerable to some new discovery about how to create Bitcoins and if that happens instantly the currency will be inflated and its value erorded or destroyed.

 

Thu, 02/28/2013 - 22:01 | 3288637 TraderTimm
TraderTimm's picture

@proLiberty

Your concern about counterfeiting is valid, as it plagues currencies and precious metals alike. I won't get into the technical description of how bitcoin does it, but I will state that the bitcoin protocol has never been compromised to allow that scenario.

Usually when you see people stating claims of fake bitcoins, it is because some web site operator stored balance numbers in a database, and that is what got hacked, not the bitcoin system itself.

 

Thu, 02/28/2013 - 23:18 | 3288898 samwell
samwell's picture

impossible to counterfeit bitcoins as it is a decentralized currency where everyone is a node on the network with a complete ledger of all transactions/wallets that have ever taken place.  If someone tried to introduce a counterfeit bitcoin into the network it would immediately be detected.  essentially bitcoin mining is a self referential operation where the miners are rewarded for electronic work that they perform with bitcoin and part of the work they perform is verification/confirmation of bitcoin transactions going back to the birth of the peer to peer bitcoin network. with a crytographic algorithm overlay, it becomes pretty impervious to hacking or counterfeiting unless someone were to corner 50% of the mining capacity

Fri, 03/01/2013 - 00:40 | 3289113 Prisoners_dilemna
Prisoners_dilemna's picture

" unless someone were to corner 50% of the mining capacity"

To add some perspective to this; If all of googles servers, all~40 petaflops worth, were redirected to the bitcoin network, google would have less than a third of the current network hashing power.

Thu, 02/28/2013 - 20:00 | 3288254 SilverMaples
SilverMaples's picture

Bitcoins will go up until COMEX implement a future market contract for it ... 

Thu, 02/28/2013 - 20:14 | 3288299 All Out Of Bubblegum
All Out Of Bubblegum's picture

Tyler, when are you and Mr. Banzai going to post Bitcoin addresses?

Thu, 02/28/2013 - 20:52 | 3288438 XenoFrog
XenoFrog's picture

The term, "Jump the shark" springs to mind.

Thu, 02/28/2013 - 22:16 | 3288676 Orly
Orly's picture

No doubt.

Between this and the girl trader, it leaves me scratching my head.

Thu, 02/28/2013 - 20:35 | 3288359 PieEconomics
PieEconomics's picture

Here are the only reasons for not basing national currencies upon Bitcoin: (1)Coups/ wars, and (2)theft/ data loss.

Other than that, national currency based on Bitcoin would be superior in every way. Consider:

"Money is about numbers, and trust. If there wasn’t an issue of trust, a very simple decentralized system based on numbers alone could be devised.

As an example, assume someone goes into a store to buy a can of soda. At the front counter, the customer pulls out his ledger book, crosses out his old cash balance, and writes in a number $1.25 lower. The clerk at the counter takes the store’s ledger book, crosses out the store’s old cash balance, and writes in a number $1.25 higher.

Remarkably, no physical or electronic money changes hands.

In this system a decision had been made that the government would no longer be involved with creating or managing the country’s money, and that the banks would be closed. Individuals added their final bank statement balances to their cash on hand, and this was their starting cash going forward. Now that they had recorded their balances, they threw out their old physical cash and bank statements.

The traditional vessels for money are of no use and have fallen away: paper money, coins, bank accounts, and even gold. All that remains are numbers, which when added together for the system as a whole remains unchanging, allowing them to retain their value. How much of this simple decentralized system can we retain, and still satisfy the real world’s need for trust?..."

[My blog then shows how Bitcoin can be modified into a national Bitcoin model to become the ideal national currency.]

http://pieeconomics.blogspot.com/p/title.html

Note: There will always still be a need for gold; the risk of coups/ wars can never be eliminated.

Thu, 02/28/2013 - 20:32 | 3288370 Charles Wilson
Charles Wilson's picture

"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."

 

No, it doesn't.  This is Digital Monetarism.  The "Boom" and the "Bust" would be in refective value of OTHER currencies in relation to a fixed change in quantitiy over time of the Bitcoin.

AS time moves on, it will be most interesting to see if the Rate of Expansion of Production of "Real World Goods and Services" would produce Bitcoin Inflation or Bitcoin Deflation - not "Boom and Bust or Bubbles" but reflections of Production and restrictive laws (See Wanniski, "Crash of 1929" f'rinstance).

IF IF IF the Bitcoin PTB do not decide to inflate away their creation, we will have a very beautiful experiment to determine if Friedmanite Monetarism (Slow Linear Growth over long periods of time) actually provides the Basis for understanding the Fiscal Phenomenon of matching Say's Law with a Quantity of Money over time.

Beautiful!

CW

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