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On The Money-ness Of Bitcoins

Tyler Durden's picture




 

Submitted by Nikolay Gertchev of the Ludwig von Mises Institute,

Bitcoins have been much in the news lately. Against the background of renewed concerns about the integrity of the euro zone and the imposition of capital controls in Cyprus, the price of a bitcoin has tripled over the last month and reached more than $141 for 1 BTC. Are we witnessing the spontaneous emergence of an alternative virtual medium of exchange, as some would put it? This article offers an answer to this question by considering three aspects of the economy of bitcoins: their production process, their demand factors, and their capacity to compete with physical media of exchange.

 

The Production of Bitcoins

A bitcoin is a unit of a nonmaterial virtual currency, also called crypto-currency, by the same name. They are stored in anonymous “electronic wallets,” described by a series of about 33 letters and numbers. Bitcoins can travel from a wallet to a wallet, by means of an online peer-to-peer network transaction. Any inter-wallet transfer is registered in the code of the bitcoin, so that the record of its entire transaction history clearly identifies its owner at any single moment, thereby preventing potential ownership conflicts. Bitcoins can be further divided into increments as small as one 100 millionth of a bitcoin. The current outstanding volume of bitcoins is above 10 million and is projected to reach 21 million in the year 2140.

This brings us to the truly fascinating production process of the bitcoins. They are “mined” based on a pre-defined mathematical algorithm, and come in a bundle, currently of 25 units, as a reward for carrying out a large number of computational operations that aim at discovering the solution to what could be described as a randomized mathematical puzzle. The role of the algorithm is to ensure a declining progression of the overall stock of bitcoins, by halving the reward every four years. Thus, somewhere in the beginning of 2017, the reward bundle will consist of 12.5 units only. Also, the more bitcoins are produced, the harder are the randomized mathematical puzzles to be solved.

Bitcoins come about as the uncertain pay-off for an energy—and hardware—-consuming process that is extended through time. The per-time pay-off varies, based on the efficiency and sophistication of the more-or-less specific hardware used for the mining. Individual miners have started to pool their efforts, and this cooperation has tremendously reduced the uncertainty that each individual miner bears.

Due to this costly production process, bitcoins, although virtual, are constrained by scarcity. While a bitcoin has no material shape or content, the algorithm that generates it has been designed to replicate the competitive production of a scarce good. First, entry in the business of producing bitcoins is open to anybody. Second, the production process is capital and labor intensive, extended through time, and also uncertain. Third, production is subject to decreasing returns, thereby conforming to the generalized scarcity faced by acting individuals in the better-known physical world. Thus, bitcoins turn out to be the exact opposite of the “Linden dollars” of the Second Life “virtual world.” The latter are produced by a monopolist central authority, out of thin air, and without any other limitation but the very discretion of that same monopolist authority.

However, it is not their costs of production that bestow on bitcoins the status of an economic good. After all, scarcity is not rooted in the absolute quantitative limitation of something; it comes from the insufficiency of the stock of that something, perceived as useful in some regard, relative to the individuals’ needs. Hence, we must ask ourselves how bitcoins have come to be valued at all. This leads us to an analysis of their demand.

 

The Demand for Bitcoins

At their inception, bitcoins were created and first held within a “crypto-punk” community. It could then be safely assumed that they served the purpose of conveying a specific antiestablishment worldview. The first demand factor, initially for producing bitcoins, and then unavoidably but only indirectly for holding them, was rooted in their capacity to project a certain point of view. In a sense, bitcoins were comparable to an artistic medium of expression, such as music, literature, and painting.

Thanks to that initial source of value, bitcoins had a reference point that positioned them relative to other goods and services. From there onward, the technological features that characterize them led to an expansion of their demand. Bitcoins are imperishable. Storage and protection against theft or accidental loss come at a very low cost, as these are accessory services rendered by standard antivirus and back-up software. Marginal transaction costs are also practically zero, once the fixed cost of establishing and maintaining a network connection has been accounted for. All these aspects are common to real wealth assets. Thus, the second demand factor for bitcoins is explained by their capacity to store wealth at a low cost. From the status of a good which, as a “worldview-conveyor,” was largely used for personal enjoyment (and hence consumption), bitcoins evolved into an investment good that has become attractive well beyond its original crypto-punk community.

The growing investment demand also spurred the development of intermediary dealers in bitcoins. There are a number of exchanges where bitcoins can be bought and sold against currencies. Specialized online storage, presumably with increased security, has also been made available. Intermediation, though open to free entry, is likely to remain rather monopolistic, given the very low margins associated with transacting in and with bitcoins.

This latter aspect, namely the intrinsically low transaction fee, contributes to a third demand factor for bitcoins, namely as a means of payment. A number of online vendors, who are mostly specialized in web-related services and online sales of rather exotic items, accept final payment in bitcoins, not the least because of the guarantee for almost absolute anonymity. This last component of the demand for bitcoins is still nascent. After all, a very limited set of items can be purchased with bitcoins, and sellers still price their goods in dollars, euros, etc. The price is then converted into bitcoins, according to the prevailing exchange rate, at the final stage of finalizing the payment method of the transaction. Thus, while bitcoins do appear to serve as a means of payment, they are definitely not used yet for business calculation. This is most certainly attributable to their still very limited demand to hold as a means of exchange. Nevertheless, couldn’t they become full-fledged money in the foreseeable future?

 

Bitcoins as Money

Prima facie, bitcoins possess all the qualities required from a money (a generally-used medium of exchange). They are perfectly homogeneous, easily cognizable, conveniently divisible, storable at practically no cost, and imperishable. Also, they seem to be fully shielded from counterfeiting. In addition, because they exist as a consumption and investment good, they are appraised on their own, thereby satisfying the Misesian regression criterion for the free-market inception of a medium of exchange. However, in order to become a viable alternative to existing monies, bitcoins must generate a sufficiently large demand so that their usage becomes generalized. Without the certainty that they can be transacted for any other good in the economy, a demand to hold them as money could not develop. It is with respect to their capacity to become and remain commonly used that bitcoins suffer from a relative disadvantage.

Indeed, bitcoins are embodied in a specific and highly capital-intensive technology. They can become convenient enough for standard personalized transactions only if both parties of the exchange possess the necessary technology that gives access to bitcoins. Bitcoins can do the job already for internet-based impersonalized purchases, because the marginal cost of the exchange technology they go along with is already almost zero for those who possess it. However, the transposition of that technology in the physical world of common face-to-face shopping (getting a haircut, buying a sandwich, or purchasing vegetables at the local grocery shop) would imply extra costs. True, these costs would decrease progressively as portable smartphones with permanent internet access become more widely used, not only by buyers, but also by sellers. The key point, however, is that bitcoins could become a generalized medium of exchange only through the accessory use of other, specific and physical, goods in an economy that has reached a very high level of technological development. This is a tremendous disadvantage, for at least two reasons.

First, at any given moment, the level of technological development is not uniform for all individuals within the same (national) economy. While some have access to the latest technology in a given field of activity, others prefer to stick to older versions. This is definitely due to the cost of replacing existing capital goods, but also to individual preferences, and sometimes to personal wealth. Consequently, bitcoins could become money only at the point when the technology that embodies them becomes commonly used. We are not there yet.

Second, an economy in which the medium of exchange is dependent so much upon the widespread use of a specific technology would be extremely vulnerable. Technologies are not given; they are the result of individual choices with respect to capital accumulation and allocation that must be made time and again, and are subject to reversal. Then, if the medium-of-exchange-linked technology is abandoned, because for instance no sufficient savings are available any longer, the economy will have to find another medium of exchange. This transition phase might then involve significant disruptions in the structure of production. A technology-linked medium of exchange does not provide enough flexibility to economic relations and might be viewed as complicating, rather than facilitating, some actions, such as shifting from one technology to another. This is a significant drawback of any virtual currency.

In trying to understand whether the increased popularity of bitcoins is reflecting the emergence of a new money, we have actually come to a fundamental distinction between virtual and material media of exchange. The latter are technology-embodied and matter-independent; the former are technology-independent and matter-embodied. This distinction is not trivial as it emphasizes the great advantage that material money offers: it is good enough for anybody and at any time, and is independent from individual choices with respect to investment, allocation and maintenance of capital. Virtual monies could be programmed to reproduce some aspects of material, whether commodity or fiat, monies. However, they will always be dependent on specific capital investment decisions. The latter reduce their degree of commonality as well as of adaptability to changing economic conditions.

In conclusion, virtual monies, of which bitcoins seem to be the most perfected specimen up to date, do not allow acting individuals to manage the uncertainty of the future as well as material monies do. They could serve to intermediate exchanges among those who invest in the technology that creates them, stores them, and transfers them. Nevertheless, they could never achieve that degree of universality and flexibility that material monies carry with them by nature. Thus, on the free market, commodity monies, and presumably gold and silver, still have a great comparative advantage.

 

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Thu, 04/04/2013 - 21:41 | 3410667 1100-TACTICAL-12
1100-TACTICAL-12's picture

I'll keep my silver & lead..

Thu, 04/04/2013 - 21:57 | 3410701 CH1
CH1's picture

But why the urge to say so at the first possible opportunity?

Thu, 04/04/2013 - 22:01 | 3410715 1100-TACTICAL-12
1100-TACTICAL-12's picture

Did'nt even read read it CH1 Bitcoin is a hologram it's there till it ain't..

Thu, 04/04/2013 - 22:02 | 3410721 DoChenRollingBearing
DoChenRollingBearing's picture

Holy Smokes!  Bitcoin has taken over Zero Hedge!

And I thought the arguments about the Middle East and gold were bad...

Thu, 04/04/2013 - 22:05 | 3410736 zorba THE GREEK
zorba THE GREEK's picture

DoChen... I agree, it seems ZH is getting somewhat sidetracked from the real issues at hand.

Thu, 04/04/2013 - 22:12 | 3410757 jcaz
jcaz's picture

Eh, I can't blame Tyler-  he gets paid by the click traffic...  I'll gladly wade thru this drival if it keeps the site up.

If I can't dip my Caddy in it, or pay my ho's wit it, it's ain't no money to me.....

Thu, 04/04/2013 - 22:16 | 3410765 Pinto Currency
Pinto Currency's picture

Bit coin may be a currency some day but it is not money.

As it becomes worth more and more, great resources will be applied to cracking its encryption and this will be successful at some point.

Further, we are heading into an age of real assets after our financial system has been collapsed by those who control the banks and the central bankers (and the BIS, IMF, World Bank, etc.).

Bit coin is an abstract currency not real money with 5,000 years of market choice backing it.

Thu, 04/04/2013 - 23:02 | 3410947 Bunga Bunga
Bunga Bunga's picture

Quantum computers will crack almost everything, but then you can say good bye to all electronic finance as well.

Thu, 04/04/2013 - 23:24 | 3410993 Ahmeexnal
Ahmeexnal's picture

Seems like the power elite want the sheeple to pile onto bitcoin so the real barometers of SHTF (gold and silver) remain off the radar.

Fri, 04/05/2013 - 00:20 | 3411091 surfsup
surfsup's picture

Insta Death via EMP

Fri, 04/05/2013 - 07:46 | 3411239 Pinto Currency
Pinto Currency's picture

It has potential as currency and should not be dismissed.

Moores law however seems to dictate that great computing power can increasingly be expended on cracking this medium and I think it will be achieved.

We are entering into a period of peak economic turbulence and potentially communication disruption - I would not want to be relying on Bitcoin in these times.

It will be interesting to watch.

Fri, 04/05/2013 - 10:08 | 3412476 Drachma
Drachma's picture

Question: Who wrote the code for bitcoin transactions?

Question: Is the code open-source? Can I start my own free-market 'bitcoin' by modifying the code?

Question: Who decided which 'mining' algorithm to use? Panel of 'experts'?

Question: Who decided the mining bundle size, reward discount and it's half-life? Who controls this?

Question: Randomized mathematical puzzle? (Got to love that word 'randomized') If they are truly random, how are you to know if the mathematical problem even has a solution? Is it tractable, solvable? Who coded this randomization algorithm?

Question: Who regulates the monopolization of computing power dedicated to bitcoin mining?

Question: Who decided on the algorithm that is "designed to replicate the competitive production of a scarce good."? Is it based on the current consensus economic theory? What basis does it have in reality?

Question: How have all these algorithms been vetted?

Question: "...the production process is capital and labor intensive, extended through time, and also uncertain." Labor intensive? In the real world of mining, the skills and knowledge of the miners influence the amount of uncertaintly, no? So who controls this intrinsic uncertainty with bitcoin?

Question: Are you my father?

Fri, 04/05/2013 - 14:43 | 3413675 mccoyspace
mccoyspace's picture

Why don't you start at the beginning?

The original paper: "Bitcoin: a Peer-to-peer Electronic Cash System" by Satoshi Nakamoto

http://bitcoin.org/bitcoin.pdf

 

You can begin your code audit here:

https://github.com/bitcoin/bitcoin

 

If you are disatisfied with particular aspects of bitcoin, you can choose other crypto-currencies that have different attributes.

https://bitcointalk.org/index.php?topic=134179.0

you can even trade between them:

btc-e.com

vircurex.com

 

enjoy.

Fri, 04/05/2013 - 02:31 | 3411353 Gief Gold Plox
Gief Gold Plox's picture

Hang on. If I undrstand correctly Bitcoin transactions are distributed openly via a P2P network. Wouldn't that require a powerfull planet-wide EMP event to have any significant effect? An EMP that size and magnitude would probably wipe everything out, including power lines, low-orbit telecommunication satelites and who knows what.

Fri, 04/05/2013 - 04:47 | 3411470 Urban Redneck
Urban Redneck's picture

Or an internet kill switch (or great Chinese firewall) in whatever country you happen to be in... because if you can't  physically get to a place where you can access your virtual wallet, it is just as worthless as if no one is willing to accept the currency in the first place (or if you accidentally run over over your wallet with an mkfs).

 

Fri, 04/05/2013 - 07:49 | 3411639 Pinto Currency
Pinto Currency's picture

How would you like to lose access to your money in your area for a few weeks?

It's a problem with electronic banking as well.

Fri, 04/05/2013 - 09:16 | 3412126 fonestar
fonestar's picture

Far less of a problem with Bitcoin than online banking.  I am the bank and the administrator with bitcoin.

Fri, 04/05/2013 - 12:00 | 3413038 Urban Redneck
Urban Redneck's picture

True, but my bank won't let me telnet into their server and rm -rf / my account, only Uncle Ben (or the NSA) is allowed to do that...

Even with cotton-linen blend I can leave my wallet at a table in restaurant- there is no fool-proof strategy.  

I could even confuse the spot on the lake where I had all those accidents, especially since rainfall can change the relative distance to the shore line.

It's when the Bit Coin Bitchez start pushing their magically invincible deus ex machina snake oil that I get concerned that some gullible idiot will start falling for their BS just as easily as they fall for the nonsensical FED fiat fibs of reassurance.

Fri, 04/05/2013 - 08:54 | 3411939 fonestar
fonestar's picture

"Or an internet kill switch"

Maybe you should read up on what an internet is if you think they can just kill it when they feel like it.  Some people are accessing the regular unfiltered web just fine in China and yes, they know the risks.

Fri, 04/05/2013 - 11:38 | 3412970 Urban Redneck
Urban Redneck's picture

The internet is a "network" of "tubes", if you want to use it "your" data goes through "their" tubes.  They can switch them off whenever they choose and have for years - try standing around a presidential motorcade sometime and even getting a cell signal, much less finding an open internet tube...  Even the goat-fucking Pakis have mastered the basics of the Off-On switch.  "They" don't even need to waste the bandwidth on DDoS when they can relatively easily filter the packets at the switch level. 

In regards to BitCoin, it isn't Any Port, Any Protocol, Any Message Structure, it is clearly defined and can thus be blocked from successful transmission by those who control the tubes...

https://en.bitcoin.it/wiki/Protocol_specification 

Fri, 04/05/2013 - 16:44 | 3414208 aminorex
aminorex's picture

The network protocol is independent of the key exchange protocol.  The network protocol can be changed at any time.  It is defined only as a convenience for compatibility of software.  The key exchange protocol is a mathematical object, subject only to mathematical attacks, not to physical controls.

Fri, 04/05/2013 - 18:45 | 3414582 Urban Redneck
Urban Redneck's picture

But the key exchange protocol is useless if the network protocol is blocked.  If authorities were to clamp down and the communication model devolves into into a game of cat and mouse then the desirability of the currency is effectively eliminated.    

Blocking Skype or VOIP services would be an antique low-tech analogy- who uses Skype in a country where you can't use the client? (a cheap shot and a trick question - I know)

Without even resorting to packet inspection (or a more insidious packet manipulation strategy) or heaven-forbid a trip to a judge, Eric the Bagholder could get half a dozen CEOs on the line and have them append a rule to drop all TCP traffic on port 8333 almost instantly.  Certain users in the Bitcoin community can overcome this almost immediately on an individual level, but the damage is the to the entire community and the usability and desirability of the product.    

The alternative transport layer APIs range from the interesting (torrents) to the pie-in-sky BS of an kid on his parents computer (SW radio), but the fact remains above a more impervious and flexible alternative is needed - supposedly serious people claim this is fool-proof, but yet even a fool could explain to a monkey like Holder how to shut it down in less time than it takes to take a piss.    

 

Fri, 04/05/2013 - 09:05 | 3412032 fonestar
fonestar's picture

Yes exactly, an EMP is not something Bitcoin users fear.  Or those legacy institutions called "governments", not too worried about them either.

Fri, 04/05/2013 - 09:04 | 3411999 fonestar
fonestar's picture

Right I am sure people are piling into Bitcoin at the behest of TPTB.  Or could it just be that Bitcoins are way simpler to buy, sell and trade from your home online?  Or when you go to a coin dealer he is asking 15% markup on some of his ASE because "supply is tight" but when you go to sell he is offering less than spot because "I have to make a profit too"?

Fri, 04/05/2013 - 09:58 | 3412418 jjsilver
jjsilver's picture

Correct me if I'm wrong, but Bitcoin is a creation of MIT a known NSA, DARPA, CIA hangout. They probably  already cracked the code before it was introduced.

You have to ask the question, why all of sudden is bitcoin going through the roof and gold and silver are thrown to curb like a drunken politician.

Fri, 04/05/2013 - 08:52 | 3411927 fonestar
fonestar's picture

So why haven't your quantum computers cracked online banking?  What would be a more lucrative target for these quantum computers to go after?  C'mon... it's pretty easy to do after all.

Fri, 04/05/2013 - 01:07 | 3411203 Harrison
Harrison's picture

My understanding, perhaps incorrect, is that "cracking its encryption" would take more computing time and power than it is physically possible to perform before the heat death of the universe occurs.

You do realize that you can actually calculate how many decisions would have to be made in order to break an encryption scheme, right? (Unless one merely gets lucky, and the encryption key is "1".)

Fri, 04/05/2013 - 06:43 | 3411543 thisandthat
thisandthat's picture

You're not counting with flaws in the code, which is how pretty much all cracking actually happens.

Fri, 04/05/2013 - 06:53 | 3411547 espirit
espirit's picture

Back door by the guy who wrote the bitcoin encryption?

Fri, 04/05/2013 - 09:14 | 3412103 fonestar
fonestar's picture

We are heading into the same period after the US Dollar that we have always been heading into... more processing power, more technology and faster payments.

Amazing the amount of people who think clocks are going to start ticking backwards after the US Dollar collapse.

Fri, 04/05/2013 - 10:11 | 3412495 thisandthat
thisandthat's picture

Faster payments, at 10 min/transaction? Only if by faster you mean slower...

Fri, 04/05/2013 - 11:05 | 3412793 fonestar
fonestar's picture

WTF are you talking about?  I just transfered, took less than three minutes to be verified by the block-chain. 

Can your communist internet banking do that?

Fri, 04/05/2013 - 20:14 | 3414883 Bunga Bunga
Bunga Bunga's picture

It takes about one hour to have enough confirmations, but then it's astronomically secure and irreversable. And that's a real chash transaction, directly between two peers between any places in the world. In contrast, banking transactions have a lot of middlemen involved and a transaction takes days before it really cleares for cash.

Fri, 04/05/2013 - 22:08 | 3415231 thisandthat
thisandthat's picture

Yuss, comrade, and it could get me a disposable credit card, shop with it and have it all confirmed within seconds - everytime - obviously, proof enough of yet another red commie's evil cunning plan to take over the world, enslave the whole of mankind and submit it to the cult of Cthulhu, aka Satan; after all, it's bankers we're talking about here, not freedom loving, god fearing, red (oops...) blooded, 'mercan capitalists!

Fri, 04/05/2013 - 09:20 | 3412159 fonestar
fonestar's picture

The only people trying to say that Bitcoin is money are people who are recommending you put 100% of your assets in physical silver and gold.  They are putting words in the bitcoin communities mouth and then saying it is a pump and dump.  Bitcoin is not money and nobody in the bitcoin camp is recommending you put all of your fiat money or faith in it.

Thu, 04/04/2013 - 22:35 | 3410855 Kirk2NCC1701
Kirk2NCC1701's picture

ZH'ers, I'm rather disappointed at the linear thinkers and the in-the-box thinkers I see in the ZH blogs.

Has is even occurred to these skeptics, that you may have an opportunity to save you ass(ets) with PM + Bitcoin?  And have an opportunity to bring he Fight Club movie to its crescendo finale, by opting out  of fiat (with PM+Bitcoin)?  Does everything have to be fucking spelled out for some people?

/God, I swear that some people must still be shagging donkeys, judging by the intellect of some people. /s

Either that, or we got tons of Gov/Fed trolls, who have an eager audience to get distracted by cutesie one-liners.

Thu, 04/04/2013 - 22:42 | 3410890 BLOTTO
BLOTTO's picture

33 letters and numbers

.

'33' is an occult number as some of you may or may not know...i.e, 32nd d and 33rd d...FM

Thu, 04/04/2013 - 23:21 | 3410985 DoChenRollingBearing
DoChenRollingBearing's picture

Cap'n Kirk wrote: "...linear thinkers..."

Obviously he was not referring to you BLOTTO, + 1!

Fri, 04/05/2013 - 06:19 | 3411527 Peace is the x-axis
Peace is the x-axis's picture

Correct. Immediately calls into question the provenance of this "system".

Thu, 04/04/2013 - 23:04 | 3410950 ebworthen
ebworthen's picture

I'm all for an alternative to fiat.

I'm behind the Bitcoin idea, but I just can't bring mystelf to put my own money into it.

Millions of people holding precious metals or even cash in their posession cannot be robbed overnight or even decades.

FDR tried it and estimates are he got less than 15% of physically held Gold, and could not shut down the black market.

My fear with Bitcoin is that if it becomes an alternative to fiat it relies on the networks ultimately controlled by TPTB.

If TPTB can hunt down the people that run Bit Torrent sites like Pirate Bay anywhere in the world, I do not see how Bitcoin survives a crackdown like that over time; 

Even a six month to one year campaign by governments and central banks could devalue Bitcoin massively if not end it altogether.

Thu, 04/04/2013 - 23:55 | 3411050 in4mayshun
in4mayshun's picture

Although, if somehow BC was able to be linked to physical silver...

Fri, 04/05/2013 - 16:47 | 3414215 aminorex
aminorex's picture

You could embed a tamper-proof private key to a 1 btc wallet inside a physical ounce of gold.   Owning the gold would give you an option on 1 btc.

What is the value of an option on something the value of which goes to infinity in the long run, but which no-one believes in at present?

 

Fri, 04/05/2013 - 00:04 | 3411065 Bunga Bunga
Bunga Bunga's picture

Fiat means currency by order of an authority, but bitcoin is a voluntary currency in a peer-to-peer network.

Fri, 04/05/2013 - 00:41 | 3411135 Deo vindice
Deo vindice's picture

While fiat currency does have that meaning, it also includes the idea of currency that has no intrinsic value. Its value is deemed to be that which it is declared to be. Bitcoin has at least that aspect of fiat inherent in its makeup.

Fri, 04/05/2013 - 00:56 | 3411155 Bunga Bunga
Bunga Bunga's picture

Pls, get a class in Latin. It's also a misconception, that fiat must not have intrinsic value. In history there were a lot of fiat currencies around which had intrinsic value.

Fri, 04/05/2013 - 07:19 | 3411593 thisandthat
thisandthat's picture

Not paper money, nor bitcoins - they're both backed by nothing more than the hope they'll still be worth anything when it comes to redeem them, because that's all they got going for them (and the fear they won't, which also keeps people pushing them onto others).

Fri, 04/05/2013 - 09:10 | 3412063 fonestar
fonestar's picture

Bitcoin is backed by privacy and security which is a commodity more scarce than gold & silver.

Fri, 04/05/2013 - 10:02 | 3412437 thisandthat
thisandthat's picture

right... and hope and dreams, too...

Fri, 04/05/2013 - 00:58 | 3411176 ebworthen
ebworthen's picture

I know, but who controls the networks?

Remember, the Internet started as a military network.

Any declared "emergency" could give TPTB absolute control over them.

Fri, 04/05/2013 - 07:02 | 3411556 thisandthat
thisandthat's picture

Do you also pee outside of the bowl, as well as thinking outside of the box?

"Does everything have to be fucking spelled out for some people?" - because you think know anything?...

Do you agree Tor, for instance, only still exists because it's still more of an asset than a liability for its promoters (and you know who these were, don't you)?

Fri, 04/05/2013 - 05:14 | 3411484 thisandthat
thisandthat's picture

Either way, it's getting tiresome. It looks no different than pushing ETFs or whatever without coming clean about it. Ironically, the more they push it, the more adverse the reaction - I'm beginning to hate the crap out of it.

Fri, 04/05/2013 - 09:33 | 3412241 fonestar
fonestar's picture

Silver and lead cannot be transfered anywhere on Earth in an instant.  Bitcoin has them both beat in that regards.  Time is still going forwards.  It is reasonable to surmise that time will still go forwards, technology will still go forwards after the fiat currencies crash.

Thu, 04/04/2013 - 22:12 | 3410760 Dane Bramage
Dane Bramage's picture

It (bitcoin existence/phenomenon) is an interesting development.  One that I think would not have occured were it not for the government monopoly on irredeemable, debt-based currency.  Real thru-the-looking-glass stuff...  trading fiat currency for virtual currency.  

Fri, 04/05/2013 - 04:58 | 3411476 Urban Redneck
Urban Redneck's picture

The best thing about bit coin is that it has the ability to open peoples eyes to simple truth that ALL currency is actually worthless on a long enough timeline, regardless of whether it is cotton-linen blend or digitial, or centralized or distributed.

medium-of-exchange vs medium-of-savings,

the species of money that can exist in both states on a perpetual timeline is rather limited... 

Thu, 04/04/2013 - 22:14 | 3410761 Pinto Currency
Pinto Currency's picture

 

-

Thu, 04/04/2013 - 22:15 | 3410771 Spastica Rex
Spastica Rex's picture

Yes - why aren't we talking about Mexicans, Muslims, and Negros?

Thu, 04/04/2013 - 22:44 | 3410892 EscapeKey
EscapeKey's picture

Where's trav7777 when you need him

Thu, 04/04/2013 - 23:25 | 3410996 Ahmeexnal
Ahmeexnal's picture

Trav7777 went black, that's why he aint ever coming back.

Fri, 04/05/2013 - 00:49 | 3411153 willwork4food
willwork4food's picture

He's with a white girl now?

Thu, 04/04/2013 - 22:29 | 3410838 fuu
fuu's picture

Mario Draghi answered a Zero Hedge question today in a presser. Tyler is on point.

http://www.zerohedge.com/news/2013-04-04/mario-draghi-responds-zero-hedg...

Fri, 04/05/2013 - 05:18 | 3411485 debtor of last ...
debtor of last resort's picture

So it's not a bitcoincidence?

Fri, 04/05/2013 - 09:14 | 3412111 fonestar
fonestar's picture

Bitcoin is the "real issues" simple man.

Thu, 04/04/2013 - 22:17 | 3410779 NoDebt
NoDebt's picture

Sorry.  That was my fault.  I finally got driven over the edge by the BitCoin crazies and took the plunge last month.  Then all hell broke loose.  BTC shot to the moon relative to the dollar (and every other currency), ZH started printing articles about it incessantly, black helicopters started following me around.... quite frankly, all the publicity has been a bit overwhelming.

I still barely understand it all, but when you're in a tornado you're gonna go where the wind blows you.  ;)

Thu, 04/04/2013 - 22:20 | 3410802 EscapeKey
EscapeKey's picture

Ugh, so you invested in something without really understanding it?
Best of luck to you, but to me that's the equivalent of buying a lottery card. Or a dot com in 1999.

Thu, 04/04/2013 - 23:06 | 3410953 NoDebt
NoDebt's picture

I invested less in BitCoin than I did in Powerball all last year.  Believe me, it wasn't about making money on it directly.  I was about learning it from the ground up so I had a frame of understanding to even engage in a discussion about it.  It was money well spent, I think (even though I have technically "made money" since I got in around $48/BTC).  If I lose it all, which I expect to eventually, I've still learned something that might be worthwhile later.

Crazy?  Like a fox, maybe.  I know stuff a lot of other people don't now.  I'll pay a few bucks for that kind of knowlege.

Where I'm really stupid is that I tend to share too much of what I've learned (often the hard way) with others for free.  THAT is the definition of true stupidity.

Thu, 04/04/2013 - 23:13 | 3410968 EscapeKey
EscapeKey's picture

No, that's fair enough. I've done that before as well - if unsure, do an initial minor investment and see where it takes you. I always consider failure a really powerful way to learn, and if only small amounts are on the table, it's no biggie. What is stupid is people who fail, and refuse to learn from it, say by blaming the weather, the neighbour, or "the establishment" (etc).

My own personal investment in BTC is having a few 7970's in my office mining away. Electricity is part of the package, so I don't pay extra for that, and my PC is standing unused while away anyway.

Fri, 04/05/2013 - 00:54 | 3411164 willwork4food
willwork4food's picture

No it's not. Sometimes sharing your knowledge is the template for success. ..and good Karma.

Fri, 04/05/2013 - 06:35 | 3411538 Room 101
Room 101's picture

@nodebt said: "Where I'm really stupid is that I tend to share too much of what I've learned (often the hard way) with others for free.  THAT is the definition of true stupidity."

More than likely you've engaged in an informal exchange.  Information is extremely valuable, but also very time sensitive in most cases.  The way you get more info is by trading what you have.  Or buying it outright.

Fri, 04/05/2013 - 01:12 | 3411212 Harrison
Harrison's picture

Bitcoin is not an "investment", it is a means of storing value. That value will fluctuate just like EURUSD or JPYGBP. In fact, as we've seen, stress events like Cyprus are driving people to search wildly for any means possible to protect themselves, resulting in really wild fluctuations in BTC.

That doesn't mean BTC is bad, or that it is good. It just exists.

Fri, 04/05/2013 - 05:08 | 3411482 Urban Redneck
Urban Redneck's picture

EITHER your are storing fixed units of value OR the value of those units is fluctuating.

If both are occurring simultaneously, then what you have isn't a currency, it's an ongoing investment transaction (wager) and certainly not a means of storing value. 

Fri, 04/05/2013 - 00:33 | 3410784 Prisoners_dilemna
Prisoners_dilemna's picture

To use bitcoin a person must first allocate capital to accessory technology...well our glorious leader is handing out smart phones to those who can't allocate their own capital. The accessory tech IS given. Everyone else owns a smartphone, just look around at the people in restaraunts or driving their cars. The technology is ubiquitous. Only the dinosaurs dont have them yet.

Bitcoins convey a certain anti-establishment viewpoint...therefore if a person doesnt like bitcoin it stands to reason that they must like centralized authority and the resulting tyranny.

And finally... AU and AG have a comparative advantage over bitcoin... /sarc therefore I refuse to understand bitcoin, appreciate it for what it can do, and ponzeeeeeeee. end /sarc

Thu, 04/04/2013 - 23:39 | 3411023 rotagen
rotagen's picture

Yeah, it's a hologram... not at all like what we have now... Doh !

Thu, 04/04/2013 - 22:01 | 3410722 Dane Bramage
Dane Bramage's picture

Bitcoins are imperishable

 

Disagree.  Electricity.

Thu, 04/04/2013 - 22:03 | 3410731 vulcanraven
vulcanraven's picture

The other variable that NO Bitcoin advocate seems to want to address, Bitcoins are highly vulnerable to government intervention.

 

Thu, 04/04/2013 - 22:20 | 3410792 XenoFrog
XenoFrog's picture

People need to consider how much it helps the Governments and Central Bankers for people to "invest" in scams like bitcoin rather than physical gold and silver.

Fri, 04/05/2013 - 00:56 | 3411169 Matt
Matt's picture

I doubt it makes a difference. All of the gold and silver is being bought, by someone, somewhere. It's not like there are massive inventories of silver coins and bullion building up at the mints. It's just a matter of who is buying it, and what price they pay.

Fri, 04/05/2013 - 01:17 | 3411220 Harrison
Harrison's picture

You mean as opposed to crushing the bid on gold, as ZH has shown has been happening for decades now? (Article a few months ago showing that if you bought gold at the open and sold at the close, you'd be up some ridiculously insane percentage as compared to holding it overnight -- because the central banks have been deliberately punishing gold for years to scare people away from it.)

Thu, 04/04/2013 - 22:38 | 3410874 Kirk2NCC1701
Kirk2NCC1701's picture

Elaborate, if you're so knowledgeable.  Step in the ZH ring with facts & info.  [Ding]

Thu, 04/04/2013 - 22:49 | 3410913 EscapeKey
EscapeKey's picture

[crickets]

Thu, 04/04/2013 - 22:48 | 3410900 NoDebt
NoDebt's picture

Not this guy.  That's exactly where the wheels come off, if and when they come off.  Not like Gold is immune to this sort of government intervention, but BitCoin is much more reliant on exchanges (MtGox, for instance) that could be shut down by such means.  And there are multiple other ways it could be hobbled.  The peer-to-peer aspect of BitCoin is much less developed (accepted and intuitively understood) than than, say, exchanging a weight of gold as payment (that has thousands of years of exchange history behind it and is RADICALLY more distributed geographically and culturally).

BitCoin was started in Japan.  MtGox is in Japan.  Japan is on the verge of a shit storm both monetarily and possibly militarily.  Most exchanges of BitCoins go through MtGox in Japan.  Do the math.

I told everyone here I was going into it as "research" and I have.  My findings so far:  there ARE problems in BitCoin world.  They are numerous.  They may survive despite those problems.  They may not. 

If there is only one thing you should know from my experience it is this:  virtual/digital currency is a SERIOUS threat to central banks everywhere.  And I do mean serious.... but not now.  Maybe in 10 years.  Maybe never.  But if you sit in front of your screen at ZH in frustration at what central banks are doing day after day (as most of us do) please realize that the idea of independent virtual currencies pushes against that kind of manipulation by it's nature.  They may not be our friend but they are not exactly our enemy either.  They're just...... fucking different.  They ain't anything like gold, they ain't anything like dollars, they're...... something else.  If I could explain it further, believe me, I would.

Please don't just piss all over it because you can't hold it in your hand.  You probably don't hold all the dollars you own as physical currency, either.  Gold you can, and that's where it's "physicality" advantage shines through. 

What's my gut tell me about BitCoin?  It's the 'MySpace' of virtual currencies.  It will peak, collapse, become irrelevant and be replaced by something else.  But the idea of virtual currency is probably not going to be killed- it will live in some other form that appears to come out of nowhere (probably some MIT or Harvard dropout's dorm room).  Ultimately, it will be accepted by governments and then it will become like any other manipulated currecy- full circle back to "powers that be" controlling it.  Enjoy the ride while it lasts because it won't last forever.

Thu, 04/04/2013 - 23:15 | 3410976 jcaz
jcaz's picture

All it REALLY is is a couple of guys over on Second LIfe, who wandered off the reservation....

BitCoin-  Those "Dungeons and Dragons" dudes open a bank......

Thu, 04/04/2013 - 23:20 | 3410987 NoDebt
NoDebt's picture

That ain't far from the truth, actually.  Just remember those D&D freaks are the same guys who are probably running the HFT algos today.  So..... never undrstimate the ability of geeks to take over significant portions of the world.

Thu, 04/04/2013 - 23:41 | 3411027 Cursive
Cursive's picture

@NoDebt

I agree with you that BTC is analagous to mySpace. BTC is an introduction to decentralized payment transations and financial disintermediation. But, it has serious flaws and will be overtaken or subsumed by another system like Ripple or something not yet in existence.

Fri, 04/05/2013 - 16:49 | 3414231 aminorex
aminorex's picture

> serious flaws

Such as?  Pics or it didn't happen. 

Thu, 04/04/2013 - 23:05 | 3410956 Bunga Bunga
Bunga Bunga's picture

Of course, Fed could mine bitcoins themselves and then manipulate the price.

Fri, 04/05/2013 - 01:01 | 3411188 Matt
Matt's picture

Would be hard to do with ~1% of the money supply.

Fri, 04/05/2013 - 04:17 | 3411446 LuisCypher
LuisCypher's picture

Bitcoins are highly vulnerable to government intervention.

 

How?
Really, I am asking, they can't stop you using it for personal trade. Any laws they implement would require that you voluntarily comply and you would need to actually declare that you hold them.

Thu, 04/04/2013 - 22:07 | 3410741 mayhem_korner
mayhem_korner's picture

 

 

Portability also becomes a challenge when digital goes dark...

Thu, 04/04/2013 - 22:29 | 3410758 EscapeKey
EscapeKey's picture

Good luck keeping your food refrigerated once that goes.

Thu, 04/04/2013 - 22:36 | 3410857 Dane Bramage
Dane Bramage's picture

If one hasn't implemented a plan on survival w/o the grid electricity... well, best of luck.

Thu, 04/04/2013 - 22:37 | 3410861 EscapeKey
EscapeKey's picture

That's nice in theory, but won't work for the millions living in say New York or London.

Thu, 04/04/2013 - 22:40 | 3410882 Dane Bramage
Dane Bramage's picture

It sure as hell won't!   Woe unto them.   I think they got a little dose of reality with Sandy.

Thu, 04/04/2013 - 22:57 | 3410934 mayhem_korner
mayhem_korner's picture

 

 

Below is the sum total of what the unprepared learned from Sandy:

 

 

.

Thu, 04/04/2013 - 23:07 | 3410959 Dane Bramage
Dane Bramage's picture

Oh, a few people probably became painfully aware of the fact that Uncle Sugar wasn't there straight away with the skittle shitting unicorn... ditto Katrina.   A crises-driven society, says I.

Thu, 04/04/2013 - 22:13 | 3410762 Dave Thomas
Dave Thomas's picture

They're hashes they don't need electricity to exist, just like the numbers in your bank account.

This is such a shit argument too, if electricity was gone to such an extent to halt bitcoin transactions, bitcoin would be the last of your worries.

Thu, 04/04/2013 - 22:21 | 3410805 XenoFrog
XenoFrog's picture

And in that case, holding physical gold and silver, being able to barter for food and water won't be one of my worries. Mabe you can sharpen the flash drive with your bitcoin wallet saved on it into some sort of weapon in order to procure your dinner.

Thu, 04/04/2013 - 22:54 | 3410926 Dane Bramage
Dane Bramage's picture

I lol'd.   I do wish all due success to anything outside of .gov's monopoly.  I hope folks profit from whatever trades they make w/Bitcoin, though it does seem a bit ponzi-esque imho.  But, "honest & sound money", it is not.  & the fact that FRN's are not lawful money (vs de facto, "color" of money) is not lost on me either.

Fri, 04/05/2013 - 04:18 | 3411447 fredquimby
fredquimby's picture

A ponzi is when something is sold more than once to more than one person isn't it?

I thought the whole peer to peer "confirming the transaction" tech behind this is specifically confirming that the coin HASN'T been sold twice.

Hence if so, it is not a ponzi.

Thu, 04/04/2013 - 22:30 | 3410840 Dane Bramage
Dane Bramage's picture

I don't depend on a bank account either.  Nor do I count on the electrical grid always being there.  Self-reliance has its rewards.  No worries at all. :)

Thu, 04/04/2013 - 23:02 | 3410943 EscapeKey
EscapeKey's picture

The vast amount of people out there are not like you, and depend on their credit cards for daily purchases. Imagine if those stopped working overnight.

But those who sit and loudly proclaim that they "stack their PMs" (while posting misguided opinions about stuff they don't know much about) doubtfully fully appreciate that their lives would instantly be transformed into a living hell, would gold be the only medium of exchange, where a struggle for survival would be the norm rather than the exception.

Don't put all your eggs in one basket is all I say.

Thu, 04/04/2013 - 23:18 | 3410982 Dane Bramage
Dane Bramage's picture

I suspect many in the precious metals as a prudent store of wealth are more conscious than the CC crowd.  Preparedness definitely isn't one-dimensional.  Most, I suspect, have their "beans, bullets & band-aids" (or what-ever vernacular is applicable) in order prior to allocating for wealth preservation.  It is precisely those former items that become really valuable after a catastrophe.  Look at the fuel market post-Sandy, especially after .gov (e.g. NJ) insituted rationing & price-controls.   Ammo & mags, etc., have turned out to be one of my most prescient investments!

My heart would go out to the poor Gotham-dwelling, CC-using masses if an extended grid-down event were to occur, as it does for the Cypriot euro depositors who went to sleep rich and woke up poor.  Some lessons hurt more than others. 

 

Thu, 04/04/2013 - 23:24 | 3410994 EscapeKey
EscapeKey's picture

judging by lots of posts here on ZH, I wouldn't make that assumption. It appears lots of posters are actively looking for the collapse, beliving after the systemic reset that they will be rich because they've got gold and silver.

rich. to buy what, exactly? food will be scarce, fuel non-existant, and our formerly friendly neighbours would rather see your blood than let their children go hungry for a 3rd day running. our formerly quiet, peaceful lives would be transformed into a dystopian nightmare in an instant.

be careful for what you wish, you just might get it...

Thu, 04/04/2013 - 23:27 | 3411000 NoDebt
NoDebt's picture

Good point.  One I've made myself here several times, saying "Anarchy is only fun in the beginning."

Fri, 04/05/2013 - 00:00 | 3411059 in4mayshun
in4mayshun's picture

So the point is to spend it now...I'm goin to Vegas

Fri, 04/05/2013 - 00:19 | 3411086 Dane Bramage
Dane Bramage's picture

I'm an "apocaloptimist" ("knows it's all going to shit but feels good about it anyways").   A correction is coming, and it is necessary.  How long can the world let a cartel create "money" from nothing?  Sheesh!  Although I have no idea and try to prepare for any probable eventualities, I suspect a fiat currency collapse would be a great thing for society.  Ditto for the end of nation states (good riddance!).  Anarchy is not chaos.  Anarchy is what Bastiat referred to as Spontaneous Order, and that is a beautiful thing.  Central planning, social engineering, servitude, etc., are what is causing all the ills in society. 

Fri, 04/05/2013 - 04:23 | 3411450 fredquimby
fredquimby's picture

Apocaloptimist

 

Nice.

Fri, 04/05/2013 - 00:57 | 3411092 Bunga Bunga
Bunga Bunga's picture

Right, every node has a copy of the blockchain (history of all transactions) on its harddrive, so the "account balance" does not disapper without power.

Thu, 04/04/2013 - 22:14 | 3410764 The Shootist
The Shootist's picture

One word, E.M.P.

Thu, 04/04/2013 - 22:41 | 3410884 Kirk2NCC1701
Kirk2NCC1701's picture

Don't be such a simpleton.  If an EMP knocks out power, your problems will be FAR bigger than Bitcoin, ATM's or even gold coins.  In the first days and weeks, NO one will give a shit about your coins.  Precious or otherwise.

Thu, 04/04/2013 - 23:02 | 3410944 Dane Bramage
Dane Bramage's picture

YEah.. because storing your wealth in something that could actually be useful in the event of such a calamity is stooopid.  /s

 

There was another Bitcoin article here recently that stated "Bitcoins are 1/2 of a completed transaction.  Until they are sold, you are out.." or something to that effect.  Listen, if one wants to play/trade w/Bitcoins, more power to them.  But a fail-safe store of wealth they most certainly are not.  Get your preps prioritized and then put your wealth preservation into something that has had historic value (e.g. gold, silver).  If, after that, you've still disposable funds with which to gamble... best of success!

Fri, 04/05/2013 - 00:04 | 3411064 in4mayshun
in4mayshun's picture

Totally agree Dane. I'm all for Bit Coins for fiat, untraceable and all that, as long as everyone understands they only represent money ie. gold or silver

Thu, 04/04/2013 - 22:45 | 3410897 EscapeKey
EscapeKey's picture

Yeah and you'll drive away from an EMP zone in exactly what?
Your car is chock full of electronics, sure to fry under those circumstances just as well.

Thu, 04/04/2013 - 22:19 | 3410776 void_ptr
void_ptr's picture

Lack of electricity doesn't render bitcoins perishable. They're stored on every node's copy of the block chain and their backups. Lookup "non-volatile memory". The moment electricity comes back on, trading resumes. If electricity never comes back on anywhere ever, you might have a point, but then we will all be living in the stone age.

Fri, 04/05/2013 - 01:07 | 3411198 Matt
Matt's picture

Bigger problem: Internet gets segmented for a week. Blockchain splits in two on opposite sides of the Internet disconnection. Once the Internet goes back on, boom, all your transactions disappear because the other side of the network has more hashing power.

Thu, 04/04/2013 - 22:20 | 3410793 Yamaha
Yamaha's picture

What I like is the homeless guys are fucked also..........

Fri, 04/05/2013 - 09:30 | 3412225 little buddy bu...
little buddy buys the dips's picture

maybe someone else sees throught the propaganda and decided to speak.

 

bitchcoin...LOL

Fri, 04/05/2013 - 09:40 | 3412299 little buddy bu...
little buddy buys the dips's picture

maybe someone else saw the propaganda and decided to speak.

 

bitchcoin...LOL

Thu, 04/04/2013 - 22:01 | 3410716 zorba THE GREEK
zorba THE GREEK's picture

Bit coins? Are they anything like tit-coins? You know, the coins that have tits on one side and a well rounded

butt on the other side. They are okay, if they are made of silver or gold.

Thu, 04/04/2013 - 22:04 | 3410735 aphlaque_duck
aphlaque_duck's picture

You can certainly spend them on T&A. http://www.reddit.com/r/girlsgonebitcoin

Thu, 04/04/2013 - 21:42 | 3410672 infiniti
infiniti's picture

"Prima facie, bitcoins possess all the qualities required from a money (a generally-used medium of exchange). They are perfectly homogeneous, easily cognizable, conveniently divisible, storable at practically no cost, and imperishable."

 

So if they made Garbage Pail Kids cards out of tougher material (such as modern fiat is made from), they would be considered currency?

 

I'm still looking for somebody to make me a 30-year home loan, payable in Bitcoins.

Thu, 04/04/2013 - 21:54 | 3410695 Redneck Hippy
Redneck Hippy's picture

All the qualities of money--like a generally used medium of exchange??  I must be missing something.  How are bitcoins a generally used medium of exchange?

I'm pretty sure that if I fill up my car with gas, my local station is not likely to accept payment in bitcoins.  The response would "Huhh?"

 

Thu, 04/04/2013 - 22:05 | 3410738 CH1
CH1's picture

my local station is not likely to accept payment in bitcoins.

Shit yeah! If it isn't deply embedded in the status quo, it's utter crap!

Thu, 04/04/2013 - 22:46 | 3410907 Kirk2NCC1701
Kirk2NCC1701's picture

The truth is, if you were to look up the definition of a "Late Adopter" (of a product, service or behavior) in the Marketeer's Dictionary, chances are... you'd see the picture of a Redneck.  Need we argue further?  ;-)

Thu, 04/04/2013 - 22:10 | 3410751 mayhem_korner
mayhem_korner's picture

 

 

Cigarettes have many of the same characteristices, and I suspect will be more useful as a "medium of exchange" over the next 10 years.

Thu, 04/04/2013 - 22:15 | 3410768 EscapeKey
EscapeKey's picture

Perhaps if you're a prison bitch.
Bitcoins enable instantaneous transfer of funds without including the banks.

Fri, 04/05/2013 - 04:30 | 3411460 fredquimby
fredquimby's picture

If you found a simliar person who valued GPK cards as you do, and you used them to pay your GPK friend to mow your lawn, then yes, I would say that that transaction used a GPK card as a currency to facilitate the contract/business between the two consenting parties.

Your point being?

 

Thu, 04/04/2013 - 21:45 | 3410673 Robot Traders Mom
Robot Traders Mom's picture

Bitcoin is faith, like many other things. We need more competing currencies, although 'mediums of exchange' is probably better wording. A true, legitimate currency has to be backed by something other than faith. 

 

Gold, silver, oil, water, land, ammo, food, etc all have true value, whether survival value or historical value.  

Thu, 04/04/2013 - 22:15 | 3410778 EscapeKey
EscapeKey's picture

As is gold. If no one wanted gold tomorrow, that would effectively be worthless. It's premise is history, but history has to start sometime.
The only things arguably which aren't fiat are food, shelter, and bitchez!

Thu, 04/04/2013 - 22:35 | 3410853 Robot Traders Mom
Robot Traders Mom's picture

Gold has been money since our earliest documentation, 5,000 years ago. 

 

As I said, a currency needs to be backed by a medium with historical, survival, and/or economic value.

 

Bitcoin has more in common with monopoly money than it does with gold. 

Thu, 04/04/2013 - 22:38 | 3410872 EscapeKey
EscapeKey's picture

There is no such thing as 'value' outside of your mind, unless you agree with the Ricardian labour theory of value, which to me is total shit.

Thu, 04/04/2013 - 23:13 | 3410972 infiniti
infiniti's picture

Really? No value outside of one's own imagination? How the fuck do you get to work in the morning, eat, etc? The power of your own mind?

 

Still looking for someone to make me a residential mortgage loan payable in bitcoins, perhaps you are a lender?

 

Didn't think so. No one will exchange spot US Dollars for future bitcoins, even if the loan is backed by real assets.

Thu, 04/04/2013 - 23:19 | 3410978 EscapeKey
EscapeKey's picture

i already said that food, shelter, and women are essentially when it comes down to it the only non-fiat entities. i wasn't talking about bitcoin.

do you even know what the ricardian labour theory of value is all about? your post indicates nothing of the sort.

Fri, 04/05/2013 - 00:10 | 3411074 Dane Bramage
Dane Bramage's picture

I can appreciate your point about value.  Many folks speak of intrinsic value, though the labor theory of value is bullshit as well.  I hold that all value is subjective.  Example: if you are dying from dehydration I guarantee you'll value water above all else.  Gold does have an extremely long and consistent history of having subjective value.    It isn't too difficult to invest in other areas that would be very low-risk for losing their subjective value.  One simple commonality of all these things, for me, is that they are tangible.  A virtual store of value is a bit (pun intended) esoteric for my tastes. 

Judging by your posts, you've not a clear understanding of what "fiat" means.  Fiat has nothing to do with valuation and 100% to do with dictation, government dictate, that is; fiat - A formal authorization or proposition; a decree. 

Fri, 04/05/2013 - 00:30 | 3411117 EscapeKey
EscapeKey's picture

fair enough - as you read continuous debates about gold, bitcoins and whathaveyounot, your definitions become a bit blurred. fiat is indeed about decree, and not about belief. thanks for that.

my main point however was that intrinsically, the only things truly worth something are essentials. once they've been catered for, we tend to value things which matter to us personally, which individually differ. and if we all suddenly decided that gold just wasn't cool, then it would be effectively worthless. that's obviously an entirely theoretical proposition, but in reality it'd probably work out just the way you'd be instantly bankrupt if you set up a shop in Piccadilly Circus selling VHS tapes.

Fri, 04/05/2013 - 01:05 | 3411196 Dane Bramage
Dane Bramage's picture

YW &1 up. :)

Indeed, there are absolutely no strict guarantees when it comes to value (even with "essentials") but, at the same time, it isn't that complex.  Or, at least, I prefer to keep it simple.  With Bitcoin, it is simple for me as well; it is man-made.  Bitcoin is better than USD$ in that it is at least not of infinite supply.  However, an infinite amount of competitors could create the exact same thing.  Perhaps Bitcoin could even be the Betamax to their VHS?  Unless some crazy advances in alchemy soon occur, gold has the type of scarcity (among other things) I desire. 

 

Gold is the money of kings, silver the money of gentleman, barter the money of peasants, debt the money of slaves & .. bitcoins?  ;)

Fri, 04/05/2013 - 00:29 | 3411111 margaris
margaris's picture

Exactly, we humans are such hubristic beings.

 

We "create" gods, we "give" value to dead stuff, we "give" authority to the government to rule over us, etc...

Those are simply concepts, and nothing else. There is no EXISTING counterpart in reality for any of those concepts.

 

We act this way because we are at the top of the foodchain, and life is good.

But do people even reflect upon the fact that for everything we eat something has to die?

 

 

Thu, 04/04/2013 - 22:21 | 3410801 Silver Garbage Man
Silver Garbage Man's picture

Hey Robot Mom, I'll give you a bitcoin if you change your avatar.

Thu, 04/04/2013 - 22:38 | 3410870 Robot Traders Mom
Robot Traders Mom's picture

I take that as an insult, considering it is my best picture :)

 

PS-Have you seen my son? His portfolio is long AAPL, NFLX, and Bitcoin. 

Thu, 04/04/2013 - 22:38 | 3410873 dogbreath
dogbreath's picture

Reminds me of the joke with the genie and three wishes. Be careful what you wish for

Thu, 04/04/2013 - 21:44 | 3410675 freshfart
freshfart's picture

Bitcoin is passe.....
litecoin bitchez !

Thu, 04/04/2013 - 21:46 | 3410676 nmewn
nmewn's picture

You don't get to be old being no dumbass. There's a lot of young wise men, de deader than a motherfucker...paraphrasing Richard Pryor.

Thu, 04/04/2013 - 21:47 | 3410679 papaswamp
papaswamp's picture

.... Bottle caps. Life imitates art.

Thu, 04/04/2013 - 21:53 | 3410689 Mine Is Bigger
Mine Is Bigger's picture

Yes.  We've come far from seashells.  Isn't it marvelous?

Thu, 04/04/2013 - 22:03 | 3410725 zorba THE GREEK
zorba THE GREEK's picture

I'll take seashells. At least you can hold them in your hand.

Thu, 04/04/2013 - 22:05 | 3410734 Mine Is Bigger
Mine Is Bigger's picture

OK.  Where should I send the seashells?

Thu, 04/04/2013 - 21:52 | 3410690 GrinandBearit
GrinandBearit's picture

Another bitcon article?

Thu, 04/04/2013 - 21:58 | 3410705 nmewn
nmewn's picture

+1 but the best one by far.

Thu, 04/04/2013 - 22:22 | 3410810 EscapeKey
EscapeKey's picture

It appears as if Tyler has started mining BTC articles.

Thu, 04/04/2013 - 22:26 | 3410830 XenoFrog
XenoFrog's picture

Sad how far ZH has fallen. Maybe next we can get into investing in reverse mortgages and snake oil.

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