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Guest Post: Bitcoin As Cryptographic Gold?

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Submitted by Detlev Schlicter via,

Could Bitcoin Be The Money Of The Future?

The crypto-currency Bitcoin is still merely a speck on the global monetary landscape. It is young, experimental, and for all we know, it may ultimately fail to break into the monetary mainstream. However, on a conceptual level I am willing to call it a work of genius and arguably the most exciting development in the field of money for more than 130 years. Let’s say since the start of the Classical Gold Standard in 1879. Does this sound like hyperbole? Well, let me explain.

The Decline and Fall of Capitalist Money

The 20th century was, broadly speaking, a period of almost constant monetary decay. At around 1900 most economists, politicians and bankers would have correctly stated that global capitalism – an international market economy facilitating the free exchange of goods and services across political borders and thus allowing extensive human cooperation through trade – required an international, apolitical, and hard form of money. Such money was gold. It was the basis of the capitalist economy and it imposed strict discipline on all market participants. Crucially, that included governments and banks. Governments had to operate pretty much like private businesses. They had to balance their books, i.e. live within the means provided by taxation, and if they borrowed money in the marketplace their lenders were at full risk of default as no government could print money (gold) to repay loans or even meet interest payments on loans. Banks, of course, issued banknotes or bank-deposits that were not backed by gold but still used by the public as if they were money proper – these were and still are ‘money-derivatives’ – but again they did so at full risk of default as nobody could ‘print’ bank-reserves (gold again) to bail out the banks in case the public tired of the ‘derivatives’ and wanted to hold gold instead.

Over the course of the 20th century – or to be precise, from 1914 to 1971 – the monetary system was completely changed as a consequence of a number of entirely political maneuvers, all of them undermining the quality of money. Today, hard, international and apolitical money has everywhere been replaced with entirely elastic, national and politicized money, with money that central banks issue under a territorial monopoly at no cost and with no meaningful constraints on issuance, and that the central bankers use to ‘manage’ the ‘national’ economy (itself increasingly an out-of-date-concept), and to fund the state and grow the domestic banks (which, under the protection of a lender-of-last-and-first-resort, now issue unprecedented amounts of money derivatives).

Today the global monetary map resembles a patchwork of local, “nationalistic” paper monies, each of which is a political tool, often openly manipulated in an attempt to benefit the local export industry at the expense of foreign competitors or to ‘stimulate’ the ethereal concept of ‘aggregate demand’. Not surprisingly, the global economy is drowning in debt (increasingly public sector debt), suffers from a bloated financial sector and international trade tensions, and stumbles from one crisis to another, each one worse than its predecessor.

Bizarrely – but not entirely surprisingly – politicians, bankers and modern ‘enlightened’ economists now tell us that this unhinged financial system is to our benefit, really, just trust us.

Truth be told, the present monetary system is a hindrance to free trade, properly functioning markets and human cooperation across borders, and it might already be on its last leg. Yet a powerful but entirely misguided, consensus seems to have taken hold of public opinion, namely that ‘elastic’ money could be beneficial if money’s supply was only managed astutely by some clever monetary central planners.

I wrote Paper Money Collapse – The Folly of Elastic Money and the Coming Monetary Breakdown to challenge that consensus, to show that ‘elasticity’ of supply is always a negative for money. Elastic money is not needed. It is entirely superfluous. Moreover, elastic money is always disruptive. A monetary system based on an inherently elastic and constantly expanding supply of money is unstable and ultimately unsustainable. The reason why gold made such good money for thousands of years is precisely its essentially inelastic supply.

The word ‘Bitcoin’ does not even appear in my book. The reason is simply that I had not heard of Bitcoin by the time I handed in my final manuscript in early 2011. But when I learnt about Bitcoin soon afterwards I was immediately fascinated. Like many others, I could conceive of ‘internet money’ or ‘virtual money’. As I had explained in the book, money does not have to exist in physical form and the fact that most money today is electronic money poses no problem for the monetary theoretician. The problem with this type of money is not that it is immaterial but that its supply is completely elastic, and I simply could not see how money that was not based on a nature-given and strictly limited commodity could have an entirely inelastic supply. It was Bitcoin’s inelasticity by design that I saw immediately as one of its greatest strengths and its true genius.

My work rehabilitates the gold standard. It shows that it was a mistake to abandon gold as the basis of our financial system and replace it with entirely elastic state fiat money. When (not if) the present fiat money system finally ends we could and should return to gold. The only alternative I now see, at least on a purely conceptual level, is Bitcoin, or something like Bitcoin: Hard, apolitical immaterial, virtual money.

Bitcoin is cryptographic gold

By now most readers will probably have heard of Bitcoin and have some notion of what it is. But in any case, let me give you a quick run-down. The economist Nikolay Gertchev, in a blog on the Mises Institute website, explains it quite well, although Gertchev, like many other members of the “Austro-Libertarian” movement, is somewhat reserved when it comes to embracing Bitcoin. I am surprised by the extent of scepticism in that community and believe that in general it is unfounded. But first the description:

“A bitcoin is a unit of a nonmaterial virtual currency, also called crypto-currency, by the same name. (Bitcoin is a medium of exchange that only exists in the virtual world. DS) 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.”


Bitcoin is immaterial money yet strictly limited in its supply. Once 21 million units are in existence, probably in 2140, that’s it. No more Bitcoin can be issued. In fact, the supply of Bitcoin is more inelastic than the supply of gold. Also, the available supply of Bitcoin at any moment in time is substantially more transparent than that of gold.

If Bitcoin ever became money in its own right (how it could do so, I will discuss below), then it would be international, hard and entirely inelastic money. Like gold it also does not decay, is homogenous and (almost) perfectly divisible. Bitcoin fulfils all the requirements of good money. In the long run, gold does not have to fear fiat money, which is always suboptimal as it always is national, politicized, manipulated, unstable and inflationary money. For one thousand years, state paper monies have come and gone. Gold (and silver) stayed. Gold just has to sit still and wait for this, the latest and most audacious and arrogant, experiment with global free-floating paper money to fail, and it will come back. But now it faces, potentially, its first meaningful challenger: inelastic crypto-currency, Bitcoin.

Money of no authority

There is no central authority that issues Bitcoin and can manipulate its supply for its own gain or for any alleged ‘greater good’ of society. Positively cringe-inducing, although sometimes unintentionally funny, are the embarrassing attempts by establishment spokespeople to discredit Bitcoin on account that, unlike all that astutely managed state fiat money, Bitcoin would not constantly be losing purchasing power. In fact, just as in the case of gold, Bitcoin’s purchasing power can reasonably be expected to constantly appreciate over time.

But, so we hear the assorted ‘enlightened’ economists of the Keynesian persuasion exclaim in horror, that would mean we would all suffer from dreadful deflation, from which only an elite of highly-qualified government-appointed central bank bureaucrats and a well-oiled printing press can save us. Apart from the fact that these self-appointed money masters have neither proper economic theory nor the experience of a thousand years of financial history on the side of their destructive agenda, they obviously do not even comprehend how far their system of manipulated funny money has already discredited itself.

Inelastic money can satisfy ANY demand

As I have explained in Paper Money Collapse no society (not even a healthily growing one) needs a constantly expanding supply of money. Money is a unique economic good. Because it is the medium of exchange, money is the only good that is demanded exclusively for its exchange value, not for any use-value its substance (if it has a substance at all) may also have.

Nobody who has demand for money has demand for a certain quantity of paper notes, or a certain weight of gold, or a certain number of digits on a computer hard-drive. Money-users have demand for the exchange value that these items contain in exchange for other goods and service, i.e. qua being accepted by others as money. Demand for money is always demand for readily exercisable purchasing power.

Once a good is widely accepted as a medium of exchange (whether that good is gold, paper tickets, or sequences of digital ones and noughts), the public can, at any moment in time, hold precisely the amount of money – readily exercisable purchasing power – it wants to hold. If the demand for money goes up, the public will sell non-money goods for money or reduce money-outlays for non-money goods. As a result, the money-prices of non-money goods fall and the purchasing power of each monetary unit (whether gold, paper tickets, or digital code) will rise. This process satisfies – automatically, instantly and naturally – the higher demand for money. The public now holds more readily exercisable purchasing power in the form of money, not because a clever, über-prescient money producer has created new money units, but simply and much more straightforwardly, because the exchange-value of the existing money stock has increased.

Once a good is widely accepted as money, no further production of that good is required. In fact, as I also demonstrated in Paper Money Collapse, any attempt to flexibly inject money into the economy in order to ‘stabilize’ money’s purchasing power, or, as is declared policy today, to constantly debase it at an officially sanctioned rate, must not only fail in its primary objective (‘price level stability’) but must cause grave distortions in the wider economy. Furthermore, the steady secular deflation that is to be expected under inelastic money, such as gold or Bitcoin, is not only not economically disruptive, it is even beneficial. Just consider one aspect: as money will then have a moderate positive real return, people who have no knowledge of financial markets and investing, and who do not have the resources to hire professional advisors, can save by simply holding money. This is impossible in our fiat money economy of constant inflation and increasing monetary instability.

Truly international

As Bitcoin has no issuing authority it has no country of residence or origin. It is truly global money. It can be used for payment anywhere in the world without going through banking systems or foreign-exchange markets. It is undeniable that the multitude of local paper monies poses a considerable hindrance to free trade and thus the rise of living standards in large parts of the world as this system necessarily introduces an element of partial barter into international trade relations. Today’s massive foreign-exchange markets are nothing but a make-shift, a crutch to deal with the suboptimal and politically motivated arrangement of various local currencies. This market ties up capital (both financial and human) without adding any real wealth to society.

If Bitcoin were to get widely accepted – and that is still a big if – it could become a great platform for connecting potentially any two counterparties in the world in direct financial transactions. It is the ultimate disintermediator: no banks needed.

At this point it might be objected that it only connects people who have access to the internet or smartphones but this is obviously a rapidly shrinking barrier. On my travels in Africa last year, I found that internet access was usually more ubiquitous than bank branches. And by the way, Kenya and Tanzania already have M-Pesa, the world’s most developed mobile payment system that uses the mobile phone network to facilitate money transfers. These countries could easily make the transition to smartphone-based payment systems without ever making the detour through clunky bank branch networks.

On the issue of tying down capital, Bitcoin wins hands-down against any other financial system, including a gold standard. Bitcoin does not require any physical storage, which naturally is always expensive. Bitcoin is monetary raw material and payment system in one. (Although, fascinatingly, the free market has already created physical Bitcoins.)

Money requires trust. We presently do not live under a gold standard but, as Jim Grant has observed so astutely, a PhD-standard, a system of flexible, state-sponsored money, managed by people like Ben Bernanke and his team at the Fed, who enjoy the privilege of implementing policies based on their own faulty monetary theories and hair-raising interpretations of economic history, while a cheap-money-addicted class of speculators plays them like a fiddle and laughs all the way to the bank. The appeal of gold has always been that it does not require the public to put trust in a ‘money elite’ but that it only has to trust gold’s creator: mother nature. With Bitcoin you only have to trust the algorithm, and as this is open software, there cannot even be a hidden agenda. Bitcoin, just like a proper gold standard, is hard, capitalist money with no politics, no Federal Open Market Committee meetings, no monetary policy, no central banking bureaucracy. It is free market money.

Common objections to Bitcoin

Given its free market and ultra-hard-currency credentials, the scepticism towards Bitcoin in parts of the Austro-Libertarian community is somewhat surprising. I think some of the objections are easily refuted. There is, first of all, the idea that Bitcoin could have many imitators, which would undermine its uniqueness and reduce its attractiveness. If Bitcoin itself cannot be inflated, what about the concept of crypto-currencies, could it be inflated by too many different currencies on offer?

This argument strikes me as weak. By all accounts Bitcoin’s design and cryptographic robustness are an exceptional accomplishment. It is not as if any hacker of medium talent could pull off something similar tomorrow. But even if he could, the argument completely underestimates first-mover advantage in the area of goods and services with substantial network effects. How many people have launched a second Facebook or a second Twitter since these inventions kicked-off the social media craze, although technologically, these inventions are much simpler than crypto-currency? – Nobody. The network effects of these goods are immense. Once they have a certain acceptance it is hard, if not impossible, for late-comers to break in. These goods and services have value for their users predominantly because others use them too, and the more people use them, the more valuable they get. There is no good for which this is truer than money – the general medium of exchange. Customized money is an oxymoron. Consequently, once a form of money is accepted, it is very difficult to take business away from it.

This feature of money is obviously a problem for Bitcoin in its fight against established state paper monies but is equally a big plus when it comes to keeping potential new entrants into the crypto-currency arena at bay. Bitcoin now dominates the market for crypto-currencies (it pretty much IS the market for crypto-currencies, in my view) and I believe that only the discovery of major flaws in Bitcoin – none seem to have surfaced in its four-year life up to now, and every day they are less likely to appear -, or if some vastly superior crypto-currency came along but I am hard-pressed to see in which aspect it could outperform Bitcoin. But just launching another crypto-currency – a Bitcoin clone – is certainly not going to put a dent into Bitcoin.

Menger and Mises would love Bitcoin

Many ‘Austrians’ get thrown off by Menger’s theory of the origin of money and Mises’ so-called ‘regression theorem’, and somewhat rashly conclude that Bitcoin can never achieve money-status because it did not originate from a non-money commodity. Mises was correct when he stated that something could only become money if it had previously, that is, before it was used by somebody as a medium of exchange in its own right for the first time, established some value in trade. For if that had not been the case, how could the first person to employ the commodity as money have any point of reference by which to assess its value and determined its exchange value for the first monetary transaction? However, this theorem, which remains unrefuted in my view, does not apply to Bitcoin. Bitcoin can simply piggyback on established forms of money that already have exchange-value and derive its original value from them before it does, over time, establish its own value.

The same has, in fact, happened in the case of paper money. The paper notes that are used as money today did not start their ascent to widely used and generally accepted monetary assets from humble beginnings as commodities – that is, as mere paper – but started out as paper-claims on physical gold. Gold was money and the paper tickets simply a technology to transfer ownership of gold. When the first banknote was used it did not derive its exchange value from its paper content but from the fact that it could be exchanged for a fixed amount of gold. That was the necessary reference point – in accordance with Mises’ regression theorem. Paper money started as payment technology and as the public got used to paying with paper rather than with gold coins and gold bars, the underlying gold content could be reduced over time and ultimately the link to gold completely severed. What gives value to these paper tickets today? – The fact that the public still accepts these paper tickets in exchange for goods and services. That is all. And in fact, it is all that is needed. Any form of money –even gold, which still retains some functionality as industrial commodity or consumption good (jewellery), although that functionality is now irrelevant for its role as monetary asset – any form of money derives its money-value from the trading public and the public’s willingness to exchange the monetary asset for goods and services.

And herein lies in fact Bitcoin’s biggest challenge. However, this challenge is not of a conceptual nature. The concept of Bitcoin as money is, as I have tried to show above, extremely compelling. But Bitcoin has to offer something to the average money-user that state paper money cannot offer. Just as the banknote bestowed an instant and discernible benefit to each money-user relative to heavy gold coins, that allowed it to become a widely used medium of exchange in its own right and ultimately even operate without any link to gold, so Bitcoin has to set itself apart from fiat money and overcome fiat money’s powerful network advantage. The fact that fiat money is suboptimal in terms of its inflation characteristics and its disruptive effects on the broader economy is not something that bothers the average money user at the moment he desires to engage in monetary transactions, and do so as conveniently, securely and easily as possible. The state paper money system today offers easily useable ‘computer money’ and the broader public is still happy to use it. Why switch to Bitcoin?

Will Bitcoin get accepted by the wider public?

It is my impression that the community of Bitcoin users, although apparently growing strongly, is still largely composed of those who are fascinated by the technology as such and who want to be part of something new, and those who like it for ‘ideological’ reasons, i.e. those who detest state paper money or dislike the banking system. Thus, there is apparently still a big contingent of computer ‘nerds’, hackers, crypto-anarchists, anti-government libertarians and Occupy-Wall-Street-types among its user base (which is not to say that there are not many who do not fall into any of these categories). How could Bitcoin attract a broader base of money-consumers beyond these groups?

One powerful aspect is cost. Bitcoin transactions are free, so Bitcoin could become – or maybe it is already – the Skype of payment systems. Another attraction could simply be the usually reasonable, and with some effort potentially considerable, anonymity and untraceability that Bitcoin offers. This seems to be a hotly debated topic. On the one hand, Bitcoin is incredibly transparent. All transactions are literally in the open domain. However, each ‘user’ is only identified by his ‘address’ and the number of addresses is practically unlimited. One could use a new address for each transaction. This may not mean instant untraceability from ‘the authorities’ but then again, certain techniques and add-ons, some of which are still being developed, have the potential to increase anonymity and untraceability even further. Additionally, it is possible to acquire Bitcoin for cash – rather than via the established and already regulated exchanges – and thus anonymously.

This means Bitcoin could be used, as is a frequent charge against it already, for illegal transactions involving drugs and guns. But people do not have to be drug or arms dealers, or even ordinary tax cheats, to appreciate a certain degree of financial privacy. As bank secrecy laws disappear everywhere and as almost all governments are waging a ‘war on cash’, by which any transaction that involves more than just petty cash is to be moved to electronic systems within the state’s fiat money network, so that ‘the authorities’ achieve full ‘transparency’ as to what the citizenry is up to at any moment, there could well be a widespread demand for ‘outside’ electronic payment systems offering privacy. For example, a range of ‘activities’ exist engaging in which may not be, or not yet be, illegal but considered a major potential embarrassment to the parties involved if made public (gambling, pornography, escort services), so that many people would not want to have payment for them on their permanent records. This potential development is not lacking in irony: Our modern information society with its trends towards the ‘transparent citizen’ and unlimited data storage holds many threats to a free society, privacy and individual liberty. It would be fitting if countermoves to these trends emanated from the same technology.

An additional boost to Bitcoin may come straight from the crumbling state paper money infrastructure itself. The cases of Iceland and in particular Cyprus have driven home the point that ‘money in the bank’ is far from safe, and even if your deposits have survived the bank collapse and the ‘bail-in’, you may not get them out of the country any time soon as capital controls are likely be imposed. As the overstretched paper money economy staggers towards its inevitable demise, more of these instances will occur providing an additional opening for Bitcoin. To the best of my knowledge, Bitcoins cannot be confiscated and Bitcoin accounts cannot be frozen Additionally, you store Bitcoin yourself rather than put them into a fractional-reserve bank that would conveniently use them as ‘reserves’ for its own ‘money derivative’ production.

What are Bitcoins worth?

I agree with Jon Matonis that nobody can give a reasonable answer but that the outcome is probably binary: Either Bitcoin ultimately fails and the individual Bitcoins end up worthless. Or Bitcoin takes off and Bitcoins are worth hundreds of thousands of paper dollars, paper yen, paper euros, or paper pounds. Maybe more. Those who buy Bitcoin as a speculative investment should consider it an option on the future success of the crypto-currency. At time of writing, Bitcoins are trading at $127 and £83 at Bitcoin-exchange Mt. Gox.

On a personal note, my biggest ‘liquid’ asset continues to be physical gold. As I explained on numerous occasions, I consider gold to be the essential self-defense asset in the ongoing paper money crisis. Gold is not being used presently by the wider public as a medium of exchange either but its two-thousand-plus year history as global money means that it retains monetary asset status and that its historic function as a liquid and lasting store of value – a function that fiat money cannot fulfil – remains unrivalled. By comparison, the brand-new crypto-currency Bitcoin has to first earn its stripes as a monetary asset by proving itself as a ‘common’ medium of exchange. That is why I view Bitcoin very differently from gold, although the attraction of both has its origin in the demise of entirely elastic, politicized state fiat money. I will certainly continue to follow the Bitcoin revolution with interest and sympathy.

In the meantime, the debasement of paper money continues.


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Thu, 04/25/2013 - 21:00 | 3500670 Lost Wages
Lost Wages's picture

I refer to the price of Bitcoin as the "Craptographic Stupidity Index." It tells me how many wanky college students and wannabe libertardians had money burning a hole in their pocket.

Thu, 04/25/2013 - 21:12 | 3500707 kushmere
kushmere's picture

Aye, many did in 2010-2011. I was one of such. Many others are now far richer than they thought they would be in such a short time. Just because you don't understand it doesn't mean its bad.

It just means your stupid.

Thu, 04/25/2013 - 21:14 | 3500722 infiniti
infiniti's picture

It just means your stupid.  YOU'RE



Thu, 04/25/2013 - 21:15 | 3500729 kushmere
kushmere's picture

Aye, I really shouldn't post while enjoying evening delights.

Thu, 04/25/2013 - 21:23 | 3500753 nmewn
nmewn's picture

Can you stop at any gas station with a bitcoin and make a purchase? Lowes, Publix, Walgreens? Most tansactions of bits are made on-line.

Now who's stupid?

Thu, 04/25/2013 - 21:32 | 3500780 aphlaque_duck
aphlaque_duck's picture

Can you spend gold at the gas station? Same fucking difference.

Thu, 04/25/2013 - 21:40 | 3500797 Harlequin001
Harlequin001's picture

I can take my gold and exchange it with anyone that will accept it, just like you can with Bitcoin.

Problem is no one accepts bitcoins, unless you have a computer, and even then they're very few and far between.

and I prefer to at least have the ability to purchase something as basic as water even during in a power cut, and if I buy it with cash, or gold, no one knows it's me that bought it.

Thu, 04/25/2013 - 22:11 | 3500911 Muppet of the U...
Muppet of the Universe's picture

HEY YOU!  Just wanted to grab someone's attention on the way down - The world's supply of gold is not going to run out in the next few months.  This is nearly impossible.  This is called dip buying, and its nearly over as prices are back at 1500ish.

Do not listen to ZH - They have become charlatans. They have literally become pump and dumpers. Do not let the dealers hoodwink you, they say they have no gold b/c they want you to pay insane premiums.  Why do all of you dunces buy silver eagles when you could buy engel or matthey for < half the over spot cost?  Its all metal - stop being stupid.  In 5-10 years, and more likely 15-30 years, there will be supply issues.  But the economy won't even last that long.  Don't let dealers hoodwink you.  You woke up and learned about investment and barely scratched the surface on finance and asset prices. 

& FFS, the comex isn't going to blow up.  Look at when JPM added its gold position to the comex and when it dumped it?

That would mean JPM lost a fuckshitton of money.  Guess what its actually for the comex reserves, which reflect the price.

Now whether Comex has the stuff or not?  I can't honestly say.  But I would bet a million to one, that you and all you buddies heard comex doesnt have the gold/silver from a bullion youtuber who is prob a phys dealer.

Phys dealers wnt you to think Comex will crash so you buy phys and not paper gold.  It makes them money.  They have a financial reason to make you believe comex = crash.  Remember the banks can print money in zirp environment, they can literally buy as much phys as they want and put in the comex, there was 10 million ounces produced in us alone last year.

China goes long metals b/c china wants a hedge against a us dollar blow up.  But china has to hold dollar if china wants us to buy all their worthless shit.  Its a mutual benefit that will net profit china immensely in 5-10 years.  But right now people just buy on dps and trade paper price in futures., so they can live comfortably.  Get it?

You aren't gonna crash shit by buying phys.  They can PRINT MONEY.   GET IT?  We will have hyperinflation b4 we run out of phys. Get it?  Asset prices and bubbles are everywhere begging you to participate, get it?

Do some more learning, and look to other commodities and assets for opportunity.  The goal is to make money, not sit on a bunch of metal thinking that when the sheeple lose their shit in the fan you'll be rich.  That's fucking stupid.  Money is mostly made b/c the sheeple haven't lost their shit, and you won't make any money if they do.  I know you hate the guy, but for fucks sakes if you had gone for the money bernanke would have made you a small fortune.  & guess what?  Its qe4eva.  They may at some point actually lessen qe, or go one talking about ending it but it will never stop, and even if lessened, will likely go right back to increasing. 

Think don't panic, and then zerohedge will stop posting retarded sht designed to make muppets panic.

Thu, 04/25/2013 - 22:18 | 3500929 Harlequin001
Harlequin001's picture

No I don't get it.

I have not the first fucking clue what you're trying to say here...

Fri, 04/26/2013 - 01:25 | 3501270 TwoShortPlanks
TwoShortPlanks's picture

With a few exceptions, Gen-Y can't tell the difference between the real world and the online world, so don't expect them to be able to distinguish between Real Gold and Fools Gold.

Time for some Pre-1970's common sense on money and wealth.

BitCoins are not physical. Their existence relies upon data which in turn is based upon 1s and 0s moving as traffic between parties. Their value is based upon trust between the holders of that data and pricing is determined by what the collective deem as fair price, nothing more.

Fiat Currencies are not physical (with the exception of Base Money which is merely paper pointing to a promise). Their existence relies upon data which in turn is based upon 1s and 0s moving as traffic between parties. Their value is based upon trust between the holders of that data and pricing is determined by what the collective deem as fair price, nothing more.

Physical Gold & Silver are physical. Their existence relies upon the Laws and Forces within the universe at steady state. Their value is based upon the physical possession of the matter itself ("Trust" is not a consideration, security is), and pricing is determined by what the collective deem as fair price, nothing more.

  1. Fiat currency is a promise to pay
  2. Bitcoins are a promise to pay
  3. Paper Currency is a physical note pointing to a promise to pay
  4. Paper assets are a promise to pay
  5. Credit Cards are a variable negative promise to pay (Card is merely your identity)
  6. Physical Gold is itself the payment

The key difference between Fiat and Physical is this; Fiat requires 'Trust' in order to uphold it as a store of value whereas Physical requires 'Security' in order to uphold it as a store of value.

In bad times trust is weak, in good times it is strong. Therefore, your choice of medium should reflect your perception of current and future reality (Bad luck Gen-Y).

The events of Cyprus affect Fiat. The events of the Gold Takedown affect PMs. They are skimming and stealing from both ends.

As the global slow down progresses (30 years to bottom without a crash), there will be a progressive erosion of 'Trust', with it, you should possess a diminishing sense of 'Security'. Since possession is the ultimate form of security (which is different from ownership mind you), Fiat becomes risky whereas Physical becomes less risky. Risk then moves to hiding said possession in a safe location (even Dogs know how to hide a bone for security). The ultimate safe location has no security, something which is hidden (Boating accident included).

The Central Planners understanding of the term 'Ownership' and 'Property' is subjective, so your understanding of 'Trust' and 'Security' should be iron clad.

Knowing the full extent of 'Trust' and 'Security' in both today's and tomorrow's terms, will determine your medium of choice today and with it, your plan of acion.

But know this; both the dog with a bone and a 4 year old child with a Lollipop know the difference between 'Trust' and 'Security' you?

PS. If Fiat Currency is a promise to pay, and a Credit Card is a negative promise to pay, then we must observe that the difference of rates offered between your savings and you CC debt is robbery. Your promise to pay and their promise to pay should be roughly the same. Banks are modern Vikings; they rape, they pillage, but most of all, they stink!

Fri, 04/26/2013 - 01:58 | 3501383 fonestar
fonestar's picture



Gold - The money of kings

Silver - The money of gentlemen

Copper - The money of beggars

Debt - The money of slaves

Paper - The money of con men

Bitcoin - The money of hackers

Fri, 04/26/2013 - 03:25 | 3501423 wintermute
wintermute's picture

Zerohedge is clearly a well-balanced blog:

Tyler Durden is a freaking GENIUS mega-trader, while most of his commenters are PIG-SHIT thick swamp-dwelling dinosaurs.

Bitcoin is the most important development leveraging the internet since the world-wide-web. It has the capability of restoring sound money, forcing all governments to run balanced budgets, shrinking government, shrinking banks, shrinking the surveillance state, liberating individuals, reinvigorating capitalism.

Too bad so many dinosaurs cling to their 5,000 year-old lumps of shiny metal and continue to simply bleat about the greed, thievery and stupidity of governments and banksters while the solution is staring them in the face.

Fri, 04/26/2013 - 03:48 | 3501442 Jack Napier
Jack Napier's picture

Not disagreeing with the importance of BitCoin, but it is still at the mercy of things that these powers can influence; your electricity and your Internet connection. On the grid as they say. Not the place to be dependent on when you're in a jam.

Fri, 04/26/2013 - 05:29 | 3501500 Lore
Lore's picture

TwoShortPlanks -- That was a great post (above).  The generation that grew up texturbating on shiny, blingy, debt-enabling smartphones has trouble grasping the qualitative distinction between information processing and wealth.  By extension, this is why the crisis that looms is so hard for many so-called experts to understand.  Trillions of dollars in "book value" are attributed to nothing but keystrokes.  What a stupid, amazing con! 

Evil comes in many guises. BitCoin is another sucker's game, like Carbon Tax or Medieval Catholic Indulgences: SOMETHING FOR NOTHING.

People willing to trade their freedom for temporary security deserve neither and will lose both. - Ben Franklin

Fri, 04/26/2013 - 08:19 | 3501719 TwoShortPlanks
TwoShortPlanks's picture

Thanks Lore,

These fucktards, who can't see beyond their own iCock, don't even realize that much of the world's internet traffic passes through the United States....Bitcoin can and will be crushed like a bug if it ever shows to have legs. Even the blocking of a fraction of Bitcoin transactions will cause investors to flee.

Fri, 04/26/2013 - 10:26 | 3502238 JimBowie1958
JimBowie1958's picture

So how would they crush bitcoin, genius?

Taking over the servers? It's an international peer-to-peer network and bitcoins can be saved to a cd; so that wont work.

Crushing the main exchanges with DDOS and fake account spamming? They tried that and failed.

Will they crush it with rumor-mill, astroturfing campaigns and loss of confidence? Yeah, that has been going on for a year now and it still hasnt worked.

Man up and face the facts; you dont know what you are talking about and are reacting from fear/suspicion of things you do  not understand.

Sat, 04/27/2013 - 04:09 | 3505129 Tapeworm
Tapeworm's picture

I do not recall the helpful poster's name that put up the link for USD/FRN prices of bitcoin and the tremendous arbitrage opportunities with it.

 To me that says that it might be very well worth fooling around with it for arb gains, but spreads like that coupled with the recent price crash make it unsuited for real commerce payments at this time.

 That is not to say that I dismiss bitcon altogether. It would be great to capture even half of the arb between dealers, or whatever they are called.

Fri, 04/26/2013 - 05:52 | 3501516 i-dog
i-dog's picture


"Not the place to be dependent on when you're in a jam"

... or when you're in a rural backwater ... or any less-developed country ... 

Btw, how long does it take to clear a Bitcoin transaction? Milliseconds, seconds, minutes?

Fri, 04/26/2013 - 12:29 | 3502795 TPTB_r_TBTF
TPTB_r_TBTF's picture

Unless it takes days!

Sat, 04/27/2013 - 04:30 | 3505148 Lore
Lore's picture

You make an interesting point. Electronic payment complements "green" Agenda 21, which attempts to herd everyone like collectivist cattle into "densified" apartment ghettos.  If you aren't equipped for e-commerce at approved outlets, then you can't shop at the local retail outlet for the global plantation.  Evil, isn't it?

Fri, 04/26/2013 - 04:57 | 3501480 TwoShortPlanks
TwoShortPlanks's picture

"PIG-SHIT thick swamp-dwelling dinosaur", sounds like you know me, uncanny!

Thu, 04/25/2013 - 23:09 | 3501085 Oldballplayer
Oldballplayer's picture

I show my insane, 90 year old mother in law a silver dollar and she knows what it is and where it came from. I show her a metal bar and she might "get" that it's silver, but she would be suspicious about what it was worth. That is what the premium is for: being able to sell it easily because it is well known and trusted.

Fri, 04/26/2013 - 00:57 | 3501324 Panafrican Funk...
Panafrican Funktron Robot's picture

"they can literally buy as much phys as they want"

Because there's an unlimited supply of gold!

Oh, wait.

Fri, 04/26/2013 - 11:33 | 3502533 Svendblaaskaeg
Svendblaaskaeg's picture

Goldenfreude much?

Sat, 04/27/2013 - 17:37 | 3506264 Libertarian777
Libertarian777's picture

you're absolutely right!

damn US Mint are so stupid, they haven't actually run out of 1/10th oz gold coins... there are infinite supply on Comex for those, they can easily just print more.

Thu, 04/25/2013 - 21:39 | 3500798 alien-IQ
alien-IQ's picture

I know with 100% certainty that 1 oz of gold will have the same purchasing power in 50 years as it does today, if not greater. Can the same be said for bitcoins?

Thu, 04/25/2013 - 21:42 | 3500812 kito
kito's picture

very bad call to say with 100% certainty..............very bad call......................

Thu, 04/25/2013 - 21:43 | 3500818 Harlequin001
Harlequin001's picture


Has it ever been worth less after any 50 year period?

Fri, 04/26/2013 - 12:34 | 3502805 TPTB_r_TBTF
TPTB_r_TBTF's picture

bah! I canT wait for 50 years!

Thu, 04/25/2013 - 21:45 | 3500825 alien-IQ
alien-IQ's picture

Give me one example of a time in the last 2000 years in which gold had no purchasing power and I will recant my statement.

ball's in your court. have at it.

Thu, 04/25/2013 - 21:55 | 3500857 I think I need ...
I think I need to buy a gun's picture

in the end

one us dollar's value is -0-

one bitcoin      value is -0-



Fri, 04/26/2013 - 05:35 | 3501503 Lore
Lore's picture

Kito is just being argumentative, demonstrating lack of study. I like the classic suit example. You can always get a nice suit for the same amount of metal.

Fri, 04/26/2013 - 07:43 | 3501661 malikai
malikai's picture

Sounds to me like Kito's just being pragmatic.

Sat, 04/27/2013 - 04:19 | 3505140 Tapeworm
Tapeworm's picture

You seem to be the type that ascribes "intrinsic value" to glod. The POG is a faith based system nearly as much as the "value" of a FRN "dollar".

 Gold has no more intrinsic value as any other commodity of fiat "money".

 Gold acts as money because of the faith of many people in a metal that has been money in the past. There is enough of it out there to smooth supply/demand fluctuations which indeed makes it more "moneylike".

 I really do not care about the number of junks that I will get for pointing out the obvious to metal worshipers. I find that Au/Ag are the best vehicle for money in that they fulfil the requirements of a commodity money system.

Thu, 04/25/2013 - 21:46 | 3500819 A Lunatic
A Lunatic's picture

In the not too distant future........


Me: Dear Mr. gas station attendant, I do not have any Dollars but I will give you an ounce of GOLD for twenty gallons of fuel.

Mr. gas station attendant: Fuckin' A DUDE!!!! Here, take a bag of chips too........




Me: Dear Mr. gas station attendant, I do not have any Dollars but I will give you these here bitcoins for twenty gallons of fuel.

Mr. gas station attendant: (racks 12 gauge) Get the fuck outta here douchbag!!!

Thu, 04/25/2013 - 22:41 | 3500991 Harlequin001
Harlequin001's picture

'an ounce of GOLD for twenty gallons of fuel'

That doesn't sound like a good deal at all...

but at least you would get your fuel...

Fri, 04/26/2013 - 01:00 | 3501329 taniquetil
taniquetil's picture

Me: Dear Mr. gas station attendant, I do not have any Dollars but I will give you these here bitcoins for twenty gallons of fuel. Just...hold on, gotta wait for the confirm...just...ok....hold on....I just....give it a second





ok there's 1, to wait for 5 more...

Fri, 04/26/2013 - 09:22 | 3501667 malikai
malikai's picture

Or, buyer sees price quoted on gas station screen in U$D and BTC. A QR code is displayed which buyer scans using his phone. Buyer hits send and transaction is complete either immediately (low value) or after x confirms (dependent on value).

Even a rig buying 100+gals can use this process quickly. And the transaction fees will still be lower with near-zero chance of doublespends(chargeback). As opposed to a standard credit card transaction where visa/mastercard get their nice fat cut, not to mention gas station's intermediate provider. And then there's chargeback risk, which visa/mastercard and the providers are all too willing to pass down to the gas station.

Now, if that rig was hauling a supercomputer with enough power, bandwidth, and luck to execute a 51% attack.. Well, I guess the driver would have better things to do than steal gas.

Fri, 04/26/2013 - 23:28 | 3504918 Harlequin001
Harlequin001's picture

'Or, buyer sees price quoted on gas station screen in U$D and BTC.'


Fri, 04/26/2013 - 11:10 | 3502433 JimBowie1958
JimBowie1958's picture

In the not too distant future........

 Me: Dear Mr. gas station attendant, I do not have any Dollars but I will give you an ounce of GOLD for twenty gallons of fuel.

Mr. gas station attendant: Fuckin' A DUDE!!!! Here, take a bag of chips too........

Not too distant future? Well, then surely gas stations somewhere are taking them NOW.

Which ones would they be? Name and address, please.....

Nah, I didnt think so.


Thu, 04/25/2013 - 22:12 | 3500907 nmewn
nmewn's picture

"Can you spend gold at the gas station?"

Hell yes, its got the denomination right on it. I garon-fucking-tee you they would, happily so. If I were so stupid or in need of what they were selling.

With or without internet access and the power being on.

I'll bet YOU (as a matter of fact) if the power was out and I needed gas I could get the cashier or manager to lock the fucking door and stick a hose in their OWN gas tank, in their own car and siphon the gas out for a single gold coin.'

Can a bitzer say that?

I didn't think so.

Thu, 04/25/2013 - 22:36 | 3500985 Harlequin001
Harlequin001's picture

"Can you spend gold at the gas station?"

I think it speaks volumes about the mentality of Bitcoin investors that one could actually make a statement like that...

Fri, 04/26/2013 - 04:14 | 3501463 simo.smo
simo.smo's picture

I think it speaks volumes about the presions precious metals investor, when every argument about bitcoin ends up with "What will you do if there was no power?" ;)

Fri, 04/26/2013 - 05:47 | 3501510 Lore
Lore's picture

Have you examined the condition of your nation's infrastructure lately?  It's a wonder that there aren't more brownouts.  (Expect that soon, in the interest of cutting costs.) How much worse could it be in time of war? 

This discussion reminds me of an article following a snowstorm in my area a couple years ago.  Two dingbats wrote a column subsequently complaining how the local internet was down for hours, leaving them unable to check the weather forecast, and when it came back up, to their consternation, the site wasn't updated.  They were serious.

Fri, 04/26/2013 - 09:22 | 3501977 Goner
Goner's picture

Bitcoins can be stored on your cell phone so even if the power went out you could still make payments. While I agree with you that our infrastructure is crumbling, cell service is not often effected by things like snow storms or brown outs.

This is not to say I would have my life savings in bitcoin, far from it.

Fri, 04/26/2013 - 23:29 | 3504924 Harlequin001
Harlequin001's picture

so what WOULD you do if there was no power?

Fri, 04/26/2013 - 07:55 | 3501676 dark pools of soros
dark pools of soros's picture

And most of your stupid comments are made online... Perhaps just talk in realms where you like your money, mmmkay?

Fri, 04/26/2013 - 17:04 | 3503878 TraderTimm
TraderTimm's picture

The problem with mises regression theory is it fails to recognize the intangible as being worth something. Such as binary zeroes and ones. Most commerce flows through that virtual conduit, including the major exchanges that set the price of gold.

Gold and Bitcoin work together very well, and will continue to do so.

Thu, 04/25/2013 - 21:17 | 3500733 Aeternus
Aeternus's picture

I do not advocate storing your wealth and units of labor in BitCoins. I did however buy 1,000 bitcoins when they were trading near $5.00.


What did I do with those 1,000 bitcoins when they reached just over $120 per bitcoin you might ask?


I exchanged them at an online bullion store that accepts BitCoins and recieved phyzz in exchange. One of the best trades i've ever made.


Other than that, FUCK BITCOIN.

Thu, 04/25/2013 - 21:30 | 3500769 A Lunatic
A Lunatic's picture

Duly noted.  -IRS-

Thu, 04/25/2013 - 21:48 | 3500836 Aeternus
Thu, 04/25/2013 - 23:18 | 3501103 francis_sawyer
francis_sawyer's picture



Bravo... The bitcoin daytraders seem more than willing to demonstrate their stupidity on a daily basis...

Fri, 04/26/2013 - 06:39 | 3501564 nmewn
nmewn's picture

lol...bitcoin daytraders...thats about the size of it.

Fri, 04/26/2013 - 08:00 | 3501686 dark pools of soros
dark pools of soros's picture

Francis and nmewn still stroking each other about hating bitcoins... Make a cute couple

Thu, 04/25/2013 - 21:31 | 3500774 infiniti
infiniti's picture

what online bullion store accepts bitcoins as payment?

Thu, 04/25/2013 - 21:39 | 3500800 seek
seek's picture

There are others, plus you can probably arrange something via Pretty sure silkroad has a few that will do transfers as well.

The premiums are pretty hefty, but that may not be an issue depending on how one obtained the bitcoins.

Thu, 04/25/2013 - 22:04 | 3500887 Haole
Thu, 04/25/2013 - 21:54 | 3500859 RideTheWalrus
RideTheWalrus's picture

I did the same thing during the 'Twinky Window' of 2011.

Fri, 04/26/2013 - 09:11 | 3501929 Debt-Penitent
Debt-Penitent's picture

Hey, I still have a pallet of Twinkies.  They're great!  With coffee, tea, soda, Jagger, hell anything!  Now, off for my insulin shots!

Thu, 04/25/2013 - 23:11 | 3501081 prains
prains's picture

The Fed will not stand for bitcoin to be more than a nuisance, if it goes mainstream it will be hacked, fracked, whacked and smacked into bitchcoin. can't run a world reserve currency on the fancy of one guy running bitchcoin. it will be dealt with 

Fri, 04/26/2013 - 08:30 | 3501764 malikai
malikai's picture

Who is this guy? Do you know him?

Let me know and the drones are on their way..

Thu, 04/25/2013 - 21:26 | 3500760 Kirk2NCC1701
Kirk2NCC1701's picture

I can accept that many ppl (Late Adopters, in marketing circles) do not wish to use cyber currencies, or that the less tech savvy feel uncomfortable with it (security issues in their minds). That's all fine and legit.

What I cannot accept or respect, is that not only will too many make disparaging comments that betray ignorance and emotional decisions, but that they also lack the smarts/insight ti realize that "The enemy of my enemy is my friend".

BTC is the enemy of your enemy: fiat money. It's time you wrapped your mind around that, and you stopped undermining it with half-baked, self-gratifying comments.

Thu, 04/25/2013 - 21:39 | 3500779 Abraxas
Abraxas's picture

Fiat money is not my enemy. Those who print it recklessly are. As for the bitcoin, I guess my mind is too economically conservative to accept it. If it goes up, I'd be proven dinosaur and if it crashes I'll think I was so smart not to get in it.

Thu, 04/25/2013 - 21:39 | 3500805 Supernova Born
Supernova Born's picture

First principles, Clarice. Simplicity. Read Marcus Aurelius. Of each particular thing ask: what is it in itself? What is its nature? What does it do, this baseless fiat?

Thu, 04/25/2013 - 21:45 | 3500816 Abraxas
Abraxas's picture

It's a thing. How can a thing be my enemy? A gun or poison cannot be our enemy. People can.

I haven't read MA admittedly, but I did read von Mises.

Thu, 04/25/2013 - 21:49 | 3500837 Supernova Born
Thu, 04/25/2013 - 23:29 | 3501144 Kirk2NCC1701
Kirk2NCC1701's picture

Good points, good link. Thx! And thx to above replies, for their intelligent and well argued response -- even if they don't necessarily agree.

A good, healthy debate helps move the yard sticks in our common learning and enlightenment, I believe. Cheers.

Sat, 04/27/2013 - 06:44 | 3505194 Tapeworm
Tapeworm's picture


Sat, 04/27/2013 - 01:29 | 3505018 Long_Xau
Long_Xau's picture

Fiat money is not your enemy? It should. It is not simply a "thing" - it is an idea. It only becomes a "thing" when people work for it - and they do, including through coercion. By accepting it you are inevitably supporting it, i.e. participating in it.

Time to choose sides.

Thu, 04/25/2013 - 21:35 | 3500785 A Lunatic
A Lunatic's picture

I'll take a flock of chickens over a pocketful of Bitcoin when SHTF any day.............

Thu, 04/25/2013 - 21:43 | 3500813 Harlequin001
Harlequin001's picture

'The enemy of my enemy is a fucking illuson'

One day I'm sure you'll get it.

Thu, 04/25/2013 - 21:42 | 3500814 nmewn
nmewn's picture

Its time bitzer's wrapped their heads around this.

Since the inception of money, bankers & governments have dreamed of the day when they could have everyone in a box, their box.

You need to process that before we continue.

Thu, 04/25/2013 - 23:35 | 3501169 prains
prains's picture

yes and that's  why once glass steagal got the punt all the fucking bankers went fucking banana's with any get rich rob the sheeple scheme they could fucking float, they have been waiting for fucking decades to ROB THE POOR

Fri, 04/26/2013 - 06:00 | 3501519 StychoKiller
StychoKiller's picture

Yet, if someone were to hand you a $50 Gift card, you would have no problem using it at whatever store issued it, even though the gift card could be stolen from you and drained because it has zero security...

Fri, 04/26/2013 - 06:40 | 3501568 nmewn
nmewn's picture

Its what I've said about bitcoin all along, its a conduit FOR money, not actual money.

Thu, 04/25/2013 - 21:53 | 3500856 tmosley
tmosley's picture

If Uncle Scrooge ever taught us anything, it is that you should NEVER trust easy money.

Beware of speculating in new and ill-proven concepts.  9 times out of 10 you wind up bankrupt.  Maybe this is the 1 time out of ten that you strike it rich, but I wouldn't bet real money on it.  Maybe Vegas money.  

Thu, 04/25/2013 - 22:23 | 3500943 bluskyes
bluskyes's picture

When Warren Buffet announces that he is buying some bitcoin for investment purposes, I will have another look. Don't invest in things if you don't understand how they work.

Fri, 04/26/2013 - 08:08 | 3501704 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

It's a decentralized electronic currency. That's it, now you know.

The reason the price is bouncing around so much is because it is thinly-traded. That will change as more volume comes in. You can see every trade ever done, and there is SIZE moving in, multiple $500K buy orders in a row. These orders are not the exchanges (those are listed differently), this is investors.

It's now been included in the HTML5 spec, which means soon there will just be an icon in the browser. Click to send. Just like they have a simple standard for email (mailto/) they will have one for payments (payto/). Email can be sent anywhere and everywhere with no hassles, now money can be too.

Snail mail was fine until they invented something faster better & cheaper (email). Regular money was fine, until they invented something faster better & cheaper. This one has the added advantage of not having any fascists hanging off of it.

Fri, 04/26/2013 - 09:37 | 3502061 Goner
Goner's picture

I have a small amount of money in bitcoins for a purchase here and there. Just like I have a small amount of money in a bank. I don't keep my savings in bitcoin OR a bank. I am not speculating on bitcoins rise or fall to make money, I simply enjoy paying with bitcoin and not having to go thru a bank or be charged fees.

However the greatest impediment to bitcoin as I see it now are the scams/ shadiness of it. For example I purchased coins from an exchange that takes 5 days to transfer (and that is fine) But by the time 5 days had passed and bitcoins had made a decent jump in price at that time. The exchange simply cancelled my order and told me I could try to purchase again, but at current prices

Read some of the bitcoin forums and its filled with scams. Granted this is mostly on the mining side but it spills over some.

Thu, 04/25/2013 - 21:58 | 3500864 RideTheWalrus
RideTheWalrus's picture

"It's time you wrapped your mind around that, and you stopped undermining it with half-baked, self-gratifying comments."

I'll have you know my self-gratifying comments are FULLY baked!

Good Day to you Sir!



Fri, 04/26/2013 - 01:01 | 3501335 Panafrican Funk...
Panafrican Funktron Robot's picture

I like bitcoin better than any currency other than gold.  I guess that's probably the more positive way of expressing why a lot of us prefer to stay in gold.  Many of us have been burned by paper schemes and have learned the "if you don't hold it, you don't own it" lesson the hard way, and you can't hold a bitcoin.  Again, not really knocking it as it's certainly better than government fiat currency, but as a store of wealth (I don't engage in speculative trading), gold is better place for me.

Fri, 04/26/2013 - 09:47 | 3502110 Goner
Goner's picture

I agree with you, but I think this statement misses what most people use bitcoin for. Its not about a long term store of wealth (that's gold) its about day to day transactions. Most people here have a bank account with enough cash for their day to day needs. These accounts fund the banks we hate via fractional reserve and fees they charge both the account holders as well as the merchants we shop at.

IF bitcoin becomes more widely used our day to day spending money (or some of it) could be in bitcoin vs a bank. No fees for sorting my bitcoins, not fees to transfer my bit coin and no fees to the merchant. The Banks get ZERO. That's how I see/ use bitcoin

If the power goes out, if the Bernake takes down bitcoin I lose it. The same why you lose your money if your bank goes under or gets Corzined.

Fri, 04/26/2013 - 11:25 | 3502479 JimBowie1958
JimBowie1958's picture

I agree mostly. PMs can be scammed off of a person, counterfeited and taken by the government by force as has been demonstrated not too long ago.

Still I trust PMs more than BTC, but at this current moment in time, I think PMs have been suppressed too easily because of a gullible publoic that will by by paper gold sight-unseen. If people were more serious about gold purchases (physical only) and the government more stable, I would have all PMs.

So for now I am diversified, and trying to prep for multiple contingencies.

Fri, 04/26/2013 - 13:47 | 3503145 Thisson
Thisson's picture

Bitcoin has serious flaws, such as vulnerability to 51% attack, to name just one.  The US government does not like Bitcoin, and it would be EASY for the government to shut bitcoin down using a 51% attack.   Bitcoins are fine for a medium of exchange, as the window of exposure is small, but SOMEONE is going to be burned badly when Bitcoin is ultimately quashed by the state.

Thu, 04/25/2013 - 23:10 | 3501071 defencev
defencev's picture

The author think that critisism based on multiplicity of cryptocurrencies is weak. But other forms of cryptocurrencies already exist (litecoins, freicoins) and it is hardly possible to prohibit the new ones (unless somebody would want to restart  exactly the same software where some patent issues can be involved). Moreover, there are quite serious theoretical attempts to improve the concept

(zerocoins). The author contradict himself by invoking the argument of the strength of bitcoin network (in comparison with possible rivals) by admitting that it is accepted by only relatively small group of nuts and criminals. Everybody who would be willing to invest several million dollars can easily start new cryptocurrency. That strongly undermines the idea of sparsity by which the author apparently is so fascinated. Bitcoins is a total bullshit and have  no future.

Fri, 04/26/2013 - 04:36 | 3501479 Urban Redneck
Urban Redneck's picture

The author achieved the heretofore impossible tack of making Goldbugs, BitBitches, AND Keynesians ALL appear smarter than himself.  Blindly worshiping at the alter of inelastic money is best left to children in their parent's basements, who do not have to be a responsible member of a society.  

Society by definition CONSUMES food and ENERGY which must be PAID for, since practically no one PRODUCES enough food and energy to meet their own CONSUMPTION NEEDS.  Everyone not engaged in SUBSISTENCE production, need a medium of exchange to store the value of the good and services they produce to exchange for their CONSUMPTION NEEDS, and everyone needs needs a store of value for proceeds of their EXCESS PRODUCTION, and everyone wants a medium of exchange to facilitate their EXCESS CONSUMPTION, while SAVERS need a store of value to facilitate FUTURE CONSUMPTION NEEDS or EXCESS CONSUMPTION.

The population changes over time, food and energy production changes over time (with no necessary correlation to population size).  So to presume that one NOW can dictate even a workable (much less the optimal) money supply size for even an economic island, much less an economy integrated economy indefinitely into the future is BEYOND STUPIDITY. 

WANTS and NEEDS are two very different things.  Any fixed money supply is incapable of adaption or evolution, in response to changing economic conditions, and economies are not as responsive as super-tankers, much less sports cars to "management" even when smart people without evil intentions are doing the managing.


Once a good is widely accepted as a medium of exchange (whether that good is gold, paper tickets, or sequences of digital ones and noughts), the public can, at any moment in time, hold precisely the amount of money – readily exercisable purchasing power – it wants to hold. If the demand for money goes up, the public will sell non-money goods for money or reduce money-outlays for non-money goods. As a result, the money-prices of non-money goods fall and the purchasing power of each monetary unit (whether gold, paper tickets, or digital code) will rise. This process satisfies – automatically, instantly and naturally – the higher demand for money. The public now holds more readily exercisable purchasing power in the form of money, not because a clever, über-prescient money producer has created new money units, but simply and much more straightforwardly, because the exchange-value of the existing money stock has increased.

Fri, 04/26/2013 - 13:46 | 3503152 Thisson
Thisson's picture

Yes, and for the reasons you describe, even a fixed quantity of money can adjust purchasing power when demand for money increases.

Thu, 04/25/2013 - 21:02 | 3500672 Bastiat
Bastiat's picture

Oh here we go again . . .

Thu, 04/25/2013 - 21:30 | 3500775 Midas
Midas's picture

I think the same thing everytime I see Bitcoin in a headline at ZeroHedge.  Matter of fact, I think I will go outside and do some weeding.

Thu, 04/25/2013 - 21:03 | 3500678 maskone909
maskone909's picture

Cant go wrong
Oh yeah and guns beer and titties

Thu, 04/25/2013 - 21:18 | 3500738 Ignatius
Ignatius's picture

+2 for tits.

Thu, 04/25/2013 - 21:32 | 3500776 McMolotov
McMolotov's picture

+3 if you're dealing with the chick from Total Recall.

Thu, 04/25/2013 - 21:45 | 3500829 Harlequin001
Harlequin001's picture

Kate Beckinsale?


Thu, 04/25/2013 - 21:51 | 3500840 BLOTTO
BLOTTO's picture

and pot


And its a good hedge.


Because when shit hits the fan on high speed...its best to have some weed.

Im baked.

Thu, 04/25/2013 - 21:04 | 3500681 devo
devo's picture

But I don't want bitcoins.


(...unless they're backed by something).

Thu, 04/25/2013 - 21:47 | 3500831 RideTheWalrus
RideTheWalrus's picture

I'm waiting for the 'Gold 4 BitCoin' retailers to sprout up at the shopping malls.

Thu, 04/25/2013 - 21:09 | 3500685 Long_Xau
Long_Xau's picture

"It's not so much that Bitcoin is digital gold, it's more like gold is analog Bitcoin" - Max Keiser

(I LMAO when I heard him say this)

Thu, 04/25/2013 - 21:14 | 3500718 alien-IQ
alien-IQ's picture

Max does have his moments of brilliance.

Thu, 04/25/2013 - 21:41 | 3500806 Bendromeda Strain
Bendromeda Strain's picture

Except that wasn't one of them, in fact calling gold "analog bitcoin" may be the most shit-headed thing he has ever said. Bitcoin is still a psychological phenomenon. To go mass market, after you explain to all the lofo people how to put a wallet on their Obamaphones, then you have to explain to them why expensive Bitcoins are better than Startup coin, which is cheaper but has the EXACT SAME PROPERTIES. Don't even bother explaining to me, I already know what you are going to say - tell it to the herd. "Oh, Bitcoin is like gold - Digitalbullshit coin is like tin. Can't you see that??"

Thu, 04/25/2013 - 21:54 | 3500854 alien-IQ
alien-IQ's picture

After careful consideration and multiple re-readings, I can say without reservation or embarrassment that I have no earthly idea what the fuck you are trying to say.

But thank you just the same...(I think?)

Thu, 04/25/2013 - 22:15 | 3500923 Bendromeda Strain
Bendromeda Strain's picture

If BTCers can post while drinking - so can I. Lamecoin (BTC clones) may be stupid because they go against the raison d'etre of limited digital currency, but try and explain that concept to some.

Thu, 04/25/2013 - 21:56 | 3500865 Harlequin001
Harlequin001's picture

I'm sure that one day people will realise that Bitcoin merely depletes or slows the amount of money that would have gone into gold, for a while.

when they realise this it will be too late, and they will be stuck in Bitcoin. Good luck with that.

Me, I'm buying gold...

Fri, 04/26/2013 - 02:30 | 3501399 Long_Xau
Long_Xau's picture

Come on, the market is a beautiful thing, it's more fun with more competition.

Fri, 04/26/2013 - 11:29 | 3502498 JimBowie1958
JimBowie1958's picture

Lordy, your sounding like those political party hacks who say that every vote for a third party candidate is like voting for the demonized opponent.

No, it isnt.

A vote for a third party is a vote for a third party.

A purchase of BTC is a purchase of BTC and could have been a million other things.

Fri, 04/26/2013 - 02:26 | 3501397 Long_Xau
Long_Xau's picture

Come on, he has his sense of humor.

As for "Startup Coin" - just don't underestimate the Network effect.

Fri, 04/26/2013 - 13:50 | 3503167 Thisson
Thisson's picture

Walmart, Exxon, Apple or Google could all start up a bitcoin clone that would instantly have greater "network effects" than Bitcoin does now.  There are no barriers to entry.  People who hold bitcoins as a store of value are fools.

Sat, 04/27/2013 - 00:54 | 3504993 Long_Xau
Long_Xau's picture

If those corporations want to do it then they better hurry up. But what motivation would they have?

If any company or organization wanted to start up a Bitcoin clone with any sort of profit agenda they would have to make some material changes. Such a Bitcoin derivative would not really be an independent, no-trusted-third-parties, truly free thing. And this was the basic motivation behind the creation of Bitcoin, and I would say the main reason for its success so far.

One motivation for an organization to start an unadulterated Bitcoin clone could be boosting their image. Like "We care about you being able to buy [our] stuff without paying taxes" - wouldn't exactly work for an "obedient" corporation, but it could work for a renegade corporation or state, or a political, religious or other organization.

People who hold bitcoins as a store of value are fools.

I would say "foolhardy" due to the current volatility and low liquidity. However, placing a small bet spread between multiple cryptocurrencies such as Bitcoin, and readjusting for any new promising one that might emerge, might turn out to be a good speculation.

Thu, 04/25/2013 - 21:09 | 3500687 nuinut
nuinut's picture


Thu, 04/25/2013 - 21:10 | 3500690 nmewn
nmewn's picture

"Once 21 million units are in existence, probably in 2140, that’s it. No more Bitcoin can be issued."

Issued by whom and to what purpose?

Thu, 04/25/2013 - 21:44 | 3500822 Bendromeda Strain
Bendromeda Strain's picture

"Satoshi" - hey, how come all his "assistants" and "helpers" feel comfortable coming forward - even doing headset sales pitches like ShamWow, but "Satoshi" must remain behind the curtain. It's bullshit - scrape it off your shoe...

Thu, 04/25/2013 - 21:58 | 3500870 nmewn
nmewn's picture

From what I understand about "Satoshi" he is not real. Could be three people, the inventors of the concept of bitcoin.

They have a patent on it.

Now, everyone wrap their "collective" heads around that. An anarcho-currency requiring government intervention to protect...a patent.

Can it get any clearer what it is?...sorry to be the bearer of bad news to the emotionally involved, moralistic, high minded, clean & green crowd...but this ain't it, again suckers ;-)

Thu, 04/25/2013 - 23:08 | 3501078 RSBriggs
RSBriggs's picture

Oh, then how about posting the link to the USPTO patent application.

Thu, 04/25/2013 - 21:10 | 3500696 RideTheWalrus
RideTheWalrus's picture

Everytime someone kills a garden fairy, BitCoins increase in value

Thu, 04/25/2013 - 21:21 | 3500701 akak
akak's picture

Any Bitcointard who supports this exploitative form of money is an immoral and heartless person, because all those Bitcoins are mined by silicon-based child slaves forced to work under nonhuman conditions in the bowels of innumerable CPUs. 

And as we all know, the mining of silicon is the most environmentally destructive form of mining known to man. It is madness and extreme selfishness to advocate that the sand from every beautiful beach in the world be greedily raped just to create silicon slaves who are then forced to mine these immoral and evil Bitcoins.

(insert Huffington Post link here)

Nobody needs Bitcoins, so your hoarding of them, and their production by slave labor, is grossly unethical.  I bear the undeniable truth here, and am morally and factually above reproach.  I will now repetitively cut-and-paste this post several hundred times just to make my point.

Think of the young circuitboards!

Thu, 04/25/2013 - 21:27 | 3500752 Croesus
Croesus's picture


Please report to the Bitcoin thread at once!

Please see the attached photo of bitcoin:










(Did you see it?)






Thu, 04/25/2013 - 21:52 | 3500850 RideTheWalrus
RideTheWalrus's picture

Is that a picture of an albino in a snowstorm holding a bitcoin?

Thu, 04/25/2013 - 21:29 | 3500772 Antifederalist
Antifederalist's picture


Where are you holding AKAK?

Thu, 04/25/2013 - 21:33 | 3500783 nmewn
nmewn's picture

Greedily sucking the worlds peak energy reserves for their own selfish internet profits, leaving nothing for following generations. Bandwidth hogging, credit freaks obsessing over the latest plastic "bit miner box" coming onto the market, supplied by capitalists perfectly willing to sell it to them at a premium ;-)

Thu, 04/25/2013 - 21:39 | 3500803 Manipuflation
Manipuflation's picture

Very well done AK.

Thu, 04/25/2013 - 21:11 | 3500705 alien-IQ
alien-IQ's picture

Bitcoin is an idea. A good idea, no doubt. But is it money? Not to me. Not yet at least.

Bitcoin is like religion. It requires putting your faith (and real money) into something you cannot see. Sorry, homey don't play dat.

Thu, 04/25/2013 - 21:27 | 3500766 Bunga Bunga
Bunga Bunga's picture

Fiat is force, Bitcoin is freedom. You can call this religion.

Fri, 04/26/2013 - 13:52 | 3503177 Thisson
Thisson's picture

People freely chose to use Yap stones as money, too.  Doesn't mean it was a smart choice!

Thu, 04/25/2013 - 21:36 | 3500795 nmewn
nmewn's picture

"It requires putting your faith (and real money) into something you cannot see."

The mark of true intellect is saying the least to describe all.

Fri, 04/26/2013 - 11:34 | 3502535 JimBowie1958
JimBowie1958's picture

So if a person buys a program that they download over the internet, they must have just gotten scammed?

Dude, a bitcoin is a thing, just like a Word doc is a thing, or a public encryption key is a thing or the value of an electronic receipt or a digital song, or a streamlined movie you may have paid $5 for.

It isnt a physical thing so much as it is a concept that contains information, valuable information.

Just as the petroleum industry supports the dollar, illegal activities world wide support the demand of BTC because of its anonymity.

BTC and LTC have survived the recent pump and dump done to discredit the market, but it failed because electronic fiat that is uncontroled and and uncontrolable by central banksters is an IDEA WHOSE TIME HAS COME.

Thu, 04/25/2013 - 21:11 | 3500708 A Lunatic
A Lunatic's picture

Most Americans, politicians too for that matter, do not even view Gold as money. Bitcoin doesn't stand a chance.

Thu, 04/25/2013 - 21:16 | 3500732 Yen Cross
Yen Cross's picture

     I'm not a "Shitcoin" miner, and I like the Idea of F**King every sovereign bankster in the galaxy off the grid!

  "For once,and for all", The "barter system" has been around  {since/from the beginning time}, that 'Ancient Aliens' fucked "Earth Monkeys"...

    The F**king list of commodites is long, and it sure as shit doesn't include "promises"!   BITCHEZ...


Fri, 04/26/2013 - 07:17 | 3501621 ParkAveFlasher
ParkAveFlasher's picture

Bitcoin is not money.  it is a cryptographic accounting tool.  it is part-way to money.  hard money advocates will have the same arguments against it as against fiat plus resentments for hogging up the altcurrency spotlight.  But it is not money, it is part money, part exchange language.  Interesting!  I hope bitcoiners don't get too speculative, but I hope the hard money people adopt this language of exchange.

Thu, 04/25/2013 - 21:20 | 3500747 HermesHiccups
HermesHiccups's picture

Geez, Wouldn't it be great if there were hundreds and maybe even thousands of different types of currency (hopefully private) then instead of all you folks having your underoos stuck up your ass and needing to complain how bad Bitcoin is you could keep your mouth shut and buy and use the currencies you felt were the most sound. The good would thrive and grow and the bad would die off and governement would be out of the money business and the sun would shine a little brighter every day!

Thu, 04/25/2013 - 21:45 | 3500826 RideTheWalrus
RideTheWalrus's picture

If there were thousands of different currency types because everyone just made up a new one each week you'd quickly find the person with the eggs, oil, whiskey, daughters, cattle would again be ruling the town as all these thousands of homemade currencies would be worthless as IOU's.

Why don't we just burn the cities, form clans, wage war on ourselves and curse the stars at night as the elite watch it all go down in their spaceship?

If you seen the movie 'Oblivion' that's pretty much their future plan anyway.

Thu, 04/25/2013 - 22:04 | 3500882 putaipan
putaipan's picture

got really stoned the other night... went to see "oblivion", the first minute and a half seeing his

big face filling the screen, listening to his monotonous voice over... i was out of there in under two.

the ticket people asked if there was a problem, i said 'yeah, tom cruise', they laughed/completely

understood and gave me my money back.

Thu, 04/25/2013 - 21:55 | 3500858 Croesus
Croesus's picture

@ Hermes Hiccups:

Getting DotGov out of the money business? That's a good one! 


Thu, 04/25/2013 - 21:22 | 3500749 oddjob
oddjob's picture

Having transactions solely dependant on internet access is lunacy.

Thu, 04/25/2013 - 21:49 | 3500842 Bendromeda Strain
Bendromeda Strain's picture

Fucking spyphones at that - Doucheinger spouts off about the one thing I defer to him for, phone security and Bitcoin digital privacy, and he says it is an idiot's fantasy that Bitcoin is off the grid.

Thu, 04/25/2013 - 21:26 | 3500762 ledzep213
ledzep213's picture

So I just maligned this method ( of buying bitcoins via credit card as a sign of a market top the other day on ZH. I'm thinking that I'm changing my tune. Initiated a transfer to MtGox that might take a few days to clear but am in the meantime buying 0.3 bitcoins a day on

Thu, 04/25/2013 - 21:26 | 3500765 Undecided
Fri, 04/26/2013 - 05:40 | 3501506 Disenchanted
Disenchanted's picture

I liked this part:


After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we're forced to trust.


"In all the over-the-counter markets, you don't really have pricing except by a bunch of guys getting together," Masters notes glumly.


That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.


All of these benchmarks based on voluntary reporting are now being looked at by regulators around the world, and God knows what they'll find. The European Federation of Financial Services Users wrote in an official EU survey last summer that all of these systems are ripe targets for manipulation. "In general," it wrote, "those markets which are based on non-attested, voluntary submission of data from agents whose benefits depend on such benchmarks are especially vulnerable of market abuse and distortion."


Translation: When prices are set by companies that can profit by manipulating them, we're fucked.


"You name it," says Frenk. "Any of these benchmarks is a possibility for corruption."


The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it's only just coming into view.

Read more:
Isn't that snippet I bolded the definition of a conspiracy? Or is that just my theory...
Thu, 04/25/2013 - 21:31 | 3500778 infiniti
infiniti's picture

Meanwhile, back on planet earth, paper silver is moving higher, $24.75 now. Will the 30% premiums still hold?

Thu, 04/25/2013 - 22:09 | 3500807 Cabreado
Cabreado's picture

Rather wordy, so just for fun I did a ctrl/F for "control" -- found it just once, and not in the appropriate context.

There is much delusion (and denial) going on in the world, and surprisingly still to be found in the strangest of places.

Too many people know we have Problems, but dance around the Big Stuff, and pretend that dancing around the big stuff is a worthy cause.
It's rather lame.
That behavior itself earns an el primo spot in the Why-We-R-Fked bucket.


Thu, 04/25/2013 - 21:46 | 3500828 One World Mafia
One World Mafia's picture

The trouble with BC is it is copy and paste software.  Driving up the price of a competitor will drive home that point and scare off buyers.

Thu, 04/25/2013 - 21:47 | 3500834 q99x2
q99x2's picture

Will work for BitCoins.

He missed the point I always make which is that you can transfer bitcoins outside of the Internet in physical form.

Really good post and written with short words. Kind of a neat style.



Thu, 04/25/2013 - 21:51 | 3500847 kito
kito's picture

the fact that people are discussing their "gains" in bitcoin defeats the whole purpose of what bitcoin should be...nto a speculative casino.........rather a stable medium of exchange between parties who offer services/goods to each other...the real value should be coming from the parties themselves and the trade in their talents/wares.......not the medium of exchange..........keep your eye on the ball folks if you want the world to crawl out of its mudhole............................... 

Thu, 04/25/2013 - 21:58 | 3500871 Yen Cross
Yen Cross's picture

  You can just smell the 'stink' of Amerikkas "Financial Engine" dripping through it's iron infrastructure kito.

Thu, 04/25/2013 - 22:12 | 3500908 devo
devo's picture

They will soon be discussing their loses.

Thu, 04/25/2013 - 21:52 | 3500853 Cycle
Cycle's picture

The problem with Bitcoin is that it does not run on a dark net. As currently conceived, it is liable to the whims and fancies of those who enjoy terminating domain names and blocking ISPs in the name of liberty and freedom.

Thu, 04/25/2013 - 22:28 | 3500963 seek
seek's picture

Bitcoin will work with TOR as a passthrough, effectively making your transaction on a darknet.

Given the peer-to-peer nature of it, they'd pretty much have to kill the internet to really stop it, DNS/ISP blocks alone wouldn't work.

Fri, 04/26/2013 - 08:50 | 3501843 Cycle
Cycle's picture

I understand the peer-to-peer nature of it, but when you might want to exchange it for some currency my understanding is that you have to go through an exchange, with a domain name and an ISP.  So - if that's true, even Tor, which I run for the benefit of those in countries with blocked internets, would not get around the fact that those exchanges are not safe from annoying interference by those who believe that information needs to be controlled "for our safety."

Thu, 04/25/2013 - 22:01 | 3500876 taketheredpill
taketheredpill's picture

Gold held in a safety deposit can be seized.  Bitcoin on your PC cannot, unless the police enter "Bastan-style" and scan your PC after you voluntarily (? can't spell tonight) give them your account/password.  Also, if bitcoin ever took off and everybody had some, would people have to worry about stolen laptops?  Home Invasions!  

Thu, 04/25/2013 - 22:17 | 3500931 A Lunatic
A Lunatic's picture

I looked up Bitcoin on and here are a few of the results:














Fri, 04/26/2013 - 00:00 | 3501245 One World Mafia
One World Mafia's picture

I made the same point as you but in not so funny a way and I got three downs with no counterpoint of course.

Do NOT follow this link or you will be banned from the site!