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BitCoin Plunges Following US Government Seizure Of Silk Road Website, "Dread Pirate Roberts" In Custody

Tyler Durden's picture




 

Earlier today, one of the most popular websites that use and promote the use of BitCoin, Silk Road, was shut down by the US government. As Reuters reports, U.S. law enforcement authorities raided an Internet site that served as a marketplace for illegal drugs, including heroin and cocaine, and arrested its owner, the Federal Bureau of Investigation said on Wednesday. The FBI arrested Ross William Ulbricht, known as "Dread Pirate Roberts," in San Francisco on Tuesday, according to court filings. Federal prosecutors charged Ulbricht with one count each of narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy, according to a court filing. Anyone visiting the site would be greeted with the following "game over" screen.

As part of the raid, The FBI said it has also seized approximately $3.6m (£2.2m) worth of bitcoins. The agency described it as the biggest Bitcoin seizure to date. It is unclear just how the FBI will keep the money: since there is no physical manifestation, and increasingly less practical uses, will it just be stuck on some FBI hard disk in perpetuity?

Further details from the FBI's complaint via BBC:

"From in or about January 2011, up to and including September 2013, the Silk Road Hidden Website... has served as an online marketplace where illegal drugs and other illicit goods and services have been regularly bought and sold by the site's users," court papers filed in the Southern District of New York state.

"The complainant further alleges, in part, that the Silk Road Hidden Website is designed to facilitate the illicit commerce hosted on the site by providing anonymity to its users, by operating on what is known as The Onion Router or Tor network... and by requiring all transactions to be paid in bitcoins, an electronic currency designed to be as anonymous as cash."

It adds that Mr Ulbricht - who is alleged to have gone by the pseudonym Dread Pirate Roberts - had generated sales of more than $1.2bn via the Silk Road.

The FBI believes he took cuts ranging from between 8% to 15% and was subsequently involved in a money laundering operation to hide the activity.

 

A second document alleges that private communications recovered from the Silk Road's computer server suggested the suspect had been willing to pursue violent means to defend his interests.

 

It said that messages sent in March and April indicated he had "solicited a murder-for-hire" of a Canadian Silk Road user nicknamed FriendlyChemist who had tried to extort money by threatening to release the identities of thousands of the site's users.

 

Subsequent messages indicated he had been sent a photograph of the victim after paying $150,000 to have the blackmailer killed.

 

"I've received the picture and deleted it. Thank you again for your swift action," Mr Ulbricht is alleged to have written to an assassin.

Who is the Dread Pirate Roberts?

The court documents described Mr Ulbricht, 29, as a former physics student at the University of Texas, who had gone on to study at the University of Pennsylvania between 2006 and 2010.

 

It was here, according to Mr Ulbricht's LinkedIn profile, as quoted by court documents, that his "'goals' subsequently 'shifted'".

 

He wrote on the social network that he had wanted to "give people a first-hand experience of what it would be like to live in a world without the systemic use of force" by "institutions and governments".

 

Authorities said he took to online forums to publicise Silk Road as a potential marketplace for drugs back in January 2011.

 

In one such message, a user believed to be Mr Ulbricht allegedly said: "Has anyone seen Silk Road yet? It's kind of like an anonymous Amazon.com."

 

Investigators said he used the same channels months later to recruit help - starting with a search for an "IT pro in the Bitcoin community".

 

The FBI said Mr Ulbricht would appear in San Francisco federal court later on Wednesday.

And more from NYMag:

The dark Internet's favorite massive drug marketplace, Silk Road, was shut down by the FBI last night and its alleged mastermind arrested on an array of colorful charges after a nearly two-year undercover operation.

 

Twenty-nine-year-old Ross Ulbricht, a.k.a. "Dread Pirate Roberts," was picked up in San Francisco and accused of running the underground e-warehouse while allegedly laundering money, trafficking narcotics, and even hiring a hit man to kill one of the site's users. Fittingly for a computer nerd, not a Heisenberg, he left a rich personal trail online.

 

According to the federal complaint, filed in the Southern District of New York, "Silk Road has emerged as the most sophisticated and extensive criminal marketplace on the Internet today," enabling "several thousand drug dealers" to move "hundreds of kilograms of illegal drugs." The site's sales totaled about $1.2 billion in the form of 9.5 million Bitcoins (naturally). About $3.6 million in the Internet currency has been seized.

 

Ulbricht, though, wasn't exactly great at covering his tracks, attaching his name, photo, and personal e-mail address to Silk Road business, eventually resulting in his arrest.

...

Last year on his Google+ account, Ulbricht, who's now charged with facilitating the sale of drugs through the mail, asked, "Anybody know someone that works for UPS, FedEX, or DHL?"

...

On YouTube, Ulbricht ("ohyeaross") liked videos by Ron Paul, along with clips called "The Market for Security" and "How to Get Away With Stealing." (Of Paul, Ulbricht once told his Penn State Univeristy paper, "There's a lot to learn from him and his message of what it means to be a U.S. citizen and what it means to be a free individual.") Most recently, he followed the Vice channel.

The immediate result has been a quick and brutal dump in the USD-equivalent value of the BitCoin currency itself as can be seen on the chart below:

And a chart showing the move in proportion:

That the US government would crack down on BitCoin and all affiliated services should not be surprising and is happening just as we warned it would back in March when we first charted the initial ramp of BitCoin. This move was especially inevitable considering none other than the ECB "warned" in November of 2012 against virtual currency Ponzi schemes (though it has no problem with fiat equivalents).

So is this the end of the crypto currency? It is unclear, but judging by the sudden lack of publicly available BitCoin pricing data, ostensibly to prevent a chaotic selloff or merely a result of the onslaught in trading volume, the end may be nigh for this monetary alternative.

 

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Wed, 10/02/2013 - 14:24 | 4014702 Non Passaran
Non Passaran's picture

Dude, read old posts on BTC here on ZH or go to misses.org to catch up with the reality.
BTC is a currency, not money.

Wed, 10/02/2013 - 15:18 | 4015033 quasimodo
quasimodo's picture

Don't tell this to the guy who takes pics of his abs in the mirror after wanking off

Wed, 10/02/2013 - 16:06 | 4015298 Withdrawn Sanction
Withdrawn Sanction's picture

BITCOIN is just another Fiat Money scheme

This is a careless mistake.  It is not fiat as it was not imposed by dictat/edict w/force of law behind it.  You're free to use it or not.  Ponzi it may be; fiat it is not.

Fri, 10/04/2013 - 14:36 | 4015343 MeelionDollerBogus
MeelionDollerBogus's picture

Same reason the herd of sheeple think global warming is a hoax - it serves their personal needs to act as if it can't be real so they get very, very angry when evidence shows up that it is in fact reality.

Wed, 10/02/2013 - 14:03 | 4014605 Son of Captain Nemo
Son of Captain Nemo's picture

And while they are at it, why not trumped up charges against all of the dealers and investment firms that deal in precious metals?  Did Bart Chilton forget something with his announcement last week?

This is what American justice looks like -if you allow it.

Devastated over the demise of Bitcoin but I'm almost positive that if we get our house in order and start throwing our legislative crooks in jail for financial fraud and war crimes a new chapter will be written that will allow entrepreneurs and ideas like silkroad to thrive again.

 

Wed, 10/02/2013 - 14:15 | 4014656 XenoFrog
XenoFrog's picture

Where do you purchase your child porn and drugs with gold/silver bullion?

Wed, 10/02/2013 - 14:25 | 4014708 walküre
walküre's picture

You're a tool. How much are they paying you a month to post this crap?

Wed, 10/02/2013 - 15:16 | 4015011 TheGardener
TheGardener's picture

He is supposed to be here for 3 years + , so I suppose
he is made to post out of jail...

Wed, 10/02/2013 - 15:48 | 4015209 phyuckyiu
phyuckyiu's picture

The irony of course is Xeno gives away pics of her hand in her snatch for free on facebook:

http://www.spamvault.de/ipb/index.php?s=ea346098a10809eaa8dc1066d4537b72...

Who wouldda known?

Wed, 10/02/2013 - 16:32 | 4015435 Son of Captain Nemo
Son of Captain Nemo's picture

She's on B.B.'s payroll as a public relations expert on ANY currency other than the U.S. dollar.

Those Israeli's have alot of welfare checks at stake courtesy of the U.S. taxpayer should our currency fail.

Oh and almost forgot it will also help pay for all that rhinoplasty Xeno will be requiring again in the not too distant...

Wed, 10/02/2013 - 21:32 | 4016773 laosuwan
laosuwan's picture

good question. if you find out, let me know.

Wed, 10/02/2013 - 23:07 | 4017161 TheHound73
TheHound73's picture

"Devastated over the demise of Bitcoin "

Wow, this is certainly news to me!  Bitcoin is just fine.  Sure it lost some value today compared to the USD but who cares? Bitcoin is around for the long haul.

Wed, 10/02/2013 - 14:07 | 4014613 exodus11
exodus11's picture

Load up bitchezz. Another cheap entry point for BTC.

Wed, 10/02/2013 - 14:46 | 4014825 crakinshot
crakinshot's picture

Walk the talk...

Wed, 10/02/2013 - 16:16 | 4015350 MeelionDollerBogus
MeelionDollerBogus's picture

Even cheaper at $2. Even cheaper still at $0.20. No need to rush in.

Wed, 10/02/2013 - 14:08 | 4014619 AuEagleNest
AuEagleNest's picture

They can't get my bitcoins. I lost my laptop in a boating accident and buried my droid in the backyard.

Wed, 10/02/2013 - 14:08 | 4014622 adventure007
adventure007's picture

The summary of the CEO on linkedin

 

Ross Ulbricht's Summary

I love learning and using theoretical constructs to better understand the world around me. Naturally therefore, I studied physics in college and worked as a research scientist for five years. I published my findings in peer reviewed journals five times over that period, first on organic solar cells and then on EuO thin-film crystals. My goal during this period of my life was simply to expand the frontier of human knowledge.

Now, my goals have shifted. I want to use economic theory as a means to abolish the use of coercion and agression amongst mankind. Just as slavery has been abolished most everywhere, I believe violence, coercion and all forms of force by one person over another can come to an end. The most widespread and systemic use of force is amongst institutions and governments, so this is my current point of effort. The best way to change a government is to change the minds of the governed, however. To that end, I am creating an economic simulation to give people a first-hand experience of what it would be like to live in a world without the systemic use of force.

Wed, 10/02/2013 - 15:21 | 4015049 Spastica Rex
Spastica Rex's picture

"abolish the use of coercion and agression [sic] amongst mankind"

What a poor use of the word "amongst." He obviously didn't take many English classes.

Wed, 10/02/2013 - 16:57 | 4015562 Son of Captain Nemo
Son of Captain Nemo's picture

Maybe. But if you can architect a set of apps and code like that, who really gives a fuck!

Wed, 10/02/2013 - 16:10 | 4015324 Withdrawn Sanction
Withdrawn Sanction's picture

Just as slavery has been abolished most everywhere,

Really?  Question:  are slaves only those who have 100% of the products of their labor taken by force?  Or are those who have, say, 35% or 50% of the labor product forcibly taken also slaves to that extent?  Talk amongst yourselves...

Wed, 10/02/2013 - 14:11 | 4014629 Nostradumbass
Nostradumbass's picture

Wow - look at all those scary badges! People in costumes - judges, cops, wearers of business suits, dress that way to evoke and maintain an air of authority. Once we realize that their "authority" does not exist, we are free.

 

https://www.youtube.com/watch?v=VqomZQMZQCQ

Wed, 10/02/2013 - 15:27 | 4015075 TheGardener
TheGardener's picture

No "sorry we are closed" kind of thing, bold, preposterous
brinkmanship "this site has been seized" . They will be made to walk the talk. If their air of authority is as thin in real life, we have been had big time and if not we just
need to exhale and the hollow monster will crumble and
disappear like the smoke it is.

Wed, 10/02/2013 - 16:15 | 4015354 MeelionDollerBogus
MeelionDollerBogus's picture

Other than the guns they use to shoot resisters.

Wed, 10/02/2013 - 14:10 | 4014634 yogibear
yogibear's picture

Watch for the banksters and the US government to seize savings and investment accounts. The financial criminals are getting bolder by the minute.

In the mean time the young sheeple graze on kardashians. The media has the masses mesmerized.

Wed, 10/02/2013 - 14:48 | 4014835 bank guy in Brussels
bank guy in Brussels's picture

That US $ 19 trillion in retirement funds is at the centre of their plans

Fits right in with Tyler's guess about how much is needed to fill the holes in the shadow banking system

Assets will be taken and put into the gov't pension 'lockbox' for the US citizens' 'security' of course

Wed, 10/02/2013 - 15:19 | 4015042 ImpotentRage
ImpotentRage's picture

Hence why I purged my retirement account earlier this year. They can't steal what I don't have :P

Wed, 10/02/2013 - 16:22 | 4015391 Withdrawn Sanction
Withdrawn Sanction's picture

The financial criminals are getting bolder by the minute.

You say "bold" I say desperate.  True, the outcome in either case is similar, but the comedy is not.

Also, I think you are right, they will make a grab for retirement accounts, 401Ks and the like and yes it will (financially) hurt those who accounts are so looted.  But think about it for a minute.  What are they stealing when they do it?  Piles of (then) worthless securities (pledges) denominated in a worthless currency.  Good luck boyz, with that one.  

They so deserve the negative karma they are unleashing on themselves.  It would be uncharitable of me to gloat, but I do smirk a bit, I confess.

Wed, 10/02/2013 - 14:12 | 4014642 highwaytoserfdom
highwaytoserfdom's picture

And the laundering  bankers are in DC and the muppets watch the one percent marked to who knows what print for dividends and supply constraint buy-backs....      Just who are these people working for? Fast and Furious  fascism non investment klep·toc·ra·cy?.  Yes Boston strong as the average cop makes 110,000 a year....

http://www.nytimes.com/2010/03/21/world/asia/21marja.html?pagewanted=all...

Wed, 10/02/2013 - 14:12 | 4014643 Swarmee
Swarmee's picture

Waiting for value of USD and all other fiat currencies to tank any second now because they are also used in drug transactions... Oh wait.

Wed, 10/02/2013 - 14:16 | 4014660 XenoFrog
XenoFrog's picture

It's a difference of scale. There's a ton of US currency out there (Thanks Ben). There's comparatively not that many bitcoins.

Wed, 10/02/2013 - 14:44 | 4014813 oddjob
oddjob's picture

So by describing FIAT it in tonnes, you really have no idea how much is out there.

Wed, 10/02/2013 - 16:17 | 4015356 MeelionDollerBogus
MeelionDollerBogus's picture

Even those issuing new currency themselves have no idea. How could you?

Wed, 10/02/2013 - 14:16 | 4014658 booboo
booboo's picture

If it don't cluck, fuck or shuck it ain't worth a puff of shit in the coming black wave.

Wed, 10/02/2013 - 14:17 | 4014665 kragsquest
kragsquest's picture

How many times do we need to spell "inevitable" in all its forms before the followers of Egold, BitCoin and all the other variations of it get stung once again??

Wed, 10/02/2013 - 14:18 | 4014668 SgtShaftoe
SgtShaftoe's picture

Bitcoin is a transactional currency, just like FRNs.  Anyone expecting to preserve purchasing power over the long term in BTC is deluded.  Though there may be opportunities to trade for profit.  I don't pretend to know that currency market enough to play it, but it's probably better odds than roulette. 

As I've said before and I'll say again:  Bitcoin is next to "diamonds" for smuggling wealth out of dangerous circumstances.  If you're so worried about Bitcoin going down because of a loss of the Internet, or loss of worldwide electricity, you don't understand risk or distributed redundancy very well.  The Internet and block chain of Bitcoin will very likely outlive all of us.    If the lights go out world wide, or across the US for any lengthy period of time, we're all dead anyway. Bitcoin, gold, or dragons teeth won't save our sorry asses then. 

Wed, 10/02/2013 - 14:53 | 4014866 seek
seek's picture

Actually bitcoin is inherently deflationary by design, so if it actually does see widespread use, it's likely that purchasing power would increase. That has certainly been the case so far over the few years of history bitcoin has.

Wed, 10/02/2013 - 15:11 | 4014992 swedish etrade baby
swedish etrade baby's picture

Thats one of the reasons its stupid. The first bitcoins were easy to generate. As botcoins are created more computations are required to create new ones. That makes bitcoins a pyramid scheme.

Wed, 10/02/2013 - 15:32 | 4015100 seek
seek's picture

I don't see how declining availability = pyramid scheme. If that were true virtually all commodities are pyramid schemes as well. The production was intentionally designed to mirror that of a commodity rather than to allow unlimited printing like traditional fiat. I see that as a huge plus rather than a minus.

There may be good reasons to avoid bitcoin, but the mechanism behind how coins are brought about and managed isn't one of them.

Thu, 10/03/2013 - 10:45 | 4018283 MeelionDollerBogus
MeelionDollerBogus's picture

yes it is. I could easily use pgp signatures (gpg now) to sign certificates (and revocations) for units of gold, silver, oil, etc., that I own(ed) and trade. That would be far more efficient than bitcoins in production & yet still limited to what I have. Those who doubt me can consider all my certificates to be null & void - now no matter how many I produce, honest or not, they are as ZERO in the money supply to those who care.

Same way as how I'm not dumb enough to take gold certificates or GLD but I'll happily take gold ounces .9999 fine and those nice 0.1 oz maples are good too.

The mechanism for bitcoin is clumsy & slow, the benefit of it is zero. Bitcoins have no value, I can't make things from them. I also can't operate on the grid: I need food, water, etc., that has no attachment to the internet. Period.

I use the grid now only by force, not by choice. Once it's gone I will regret only not having harvested more prepper knowledge from it. I will still learn on my own but it's faster seeing the mistakes of others for gardening, tool-making, med kits, etc.

Every last video I find on this I save (to DVD), archive (index everything), re-watch a couple times & go do it if I have the chance.

Wed, 10/02/2013 - 15:51 | 4015220 MeelionDollerBogus
MeelionDollerBogus's picture

no, you don't understand just how bad it will get:
the grids will be EXPLODED with bombs. The power grids will be MELTED from radiation and from neglect they will also corrode & crumble.
You have no idea what's coming. You think just a block or 2 will go out, and a server or ISP will go down?
99% of them will be wiped out & the only safe places to be on Earth will be far, far away FROM anywhere a grid ever has been. THAT'S where I will be, where it's safe to grow food & go outside. No grid will be available.
The reason you think no one will make it is because you're just not invited TO those safe havens.

Wed, 10/02/2013 - 16:32 | 4015438 Withdrawn Sanction
Withdrawn Sanction's picture

99% of them will be wiped out & the only safe places to be on Earth will be far, far away FROM anywhere a grid ever has been. THAT'S where I will be, where it's safe to grow food & go outside. No grid will be available.

Serious question:  If your scenario comes to pass, why do you want to survive under such conditions?  The same question applies to those wealthy few who've built shelters and bunkers to survive whatever.  Surviving into a post-apocolyptic MadMax world does not seem desirable, but I admit I could be missing something.

Wed, 10/02/2013 - 19:12 | 4016121 emersonreturn
emersonreturn's picture

failed to register green vote, WS, but i agree wholly.  

Thu, 10/03/2013 - 10:42 | 4018258 MeelionDollerBogus
MeelionDollerBogus's picture

My instinct is to survive at all costs.

I can not question it or change it.

Wed, 10/02/2013 - 14:19 | 4014670 ActionFive
ActionFive's picture

Never should have related these to dollars

Wed, 10/02/2013 - 14:18 | 4014672 Peter Pan
Peter Pan's picture

Did the government close down the site because of Bitcoin or because it was competing with the governments own drug business?

Wed, 10/02/2013 - 14:20 | 4014677 SgtShaftoe
SgtShaftoe's picture

YES

Wed, 10/02/2013 - 15:51 | 4015227 MeelionDollerBogus
MeelionDollerBogus's picture

I dunno, do governments steal because they have so many guns or because so many people pretend it will never happen to them?

Wed, 10/02/2013 - 14:21 | 4014690 Debugas
Debugas's picture

the problem with bitcoin is double-spending (spending the same coin twice) and how to prevent it

in order to prevent it the transaction ledger is maintained. Its size now is close to 10 gigabytes and anybody exchanging his goods or services for bitcoins has to have access to the up-to-date version of this ledger

 

now compare how you check a dollar banknote for authenticity with this cumbersome bitcoin authentication nightmare...

 

Wed, 10/02/2013 - 14:25 | 4014695 Long Gamma
Long Gamma's picture

Silk road is a market place. Bitcoin is a digital currency. They are not necessarily related.

Does any else find it strange that Bitcoin is plummeled a couple weeks before the U.S. is on the verge of default.

...just sayin'

Wed, 10/02/2013 - 14:24 | 4014707 mccoyspace
mccoyspace's picture

USD price seems to be stabilizing after a 15% drop.

Wed, 10/02/2013 - 14:26 | 4014709 Iam Yue2
Iam Yue2's picture

A great namecheck for the Mises Institute in the charge sheet.

Wed, 10/02/2013 - 14:28 | 4014722 Conax
Conax's picture

One reason I wouldn't buy bitcoins-

The gubmint has super computers, the Japanes have some, the Chinese.

Any time they want they could mine the piss out of them, draining off the value.

The other reason- Clarence down the road there has no clue.

 

Wed, 10/02/2013 - 14:34 | 4014759 NaiLib
NaiLib's picture

And once they have mined them all? You think they will start printing?

Wed, 10/02/2013 - 14:46 | 4014832 Conax
Conax's picture

They will start the process of demonization/outlawing them if mining them all doesn't keep the lid on, I suppose.

 

Wed, 10/02/2013 - 15:01 | 4014926 seek
seek's picture

That's some really bad reasoning. There may be plenty of legitimate reasons to not buy bitcoin, but what you are saying reflects and inherent misunderstanding of bitcoin.

The rate that bitcoins can be mined is essentially fixed, and descreases over time. More computing power does not equal more bitcoins, just a bigger share of the limited quanity that are mined. Production is not unrestricted so they can't be inflated or printed.

The amount of computational capacity on the bitcoin network just passed 1,000,000,000,000,000 hashes per second (1 petahash) about two weeks ago. This is 40 times the hashing capacity the network had on January 1st -- and bitcoin is actually being produced at half the rate it was this time last year, due to algorithm.

So no, super computers change nothing and have zero impact on value, and as it stands the bitcoin network is likely more powerful at hashing than the total capability of the governments mentioned.

Wed, 10/02/2013 - 16:01 | 4015266 MeelionDollerBogus
MeelionDollerBogus's picture

The rate at which government super-computers can harvest bitcoins is thousands if not millions of times faster than anyone else on Earth.
Fail. This changes EVERYTHING. you can't beat this if ONLY THEY have the supercomputers. ONLY THEY have them. Done in one.

Once the supercomputers get them all or most of them your benefit to have them is near zero. That's an undeniable fact of the math.

Wed, 10/02/2013 - 16:31 | 4015444 seek
seek's picture

Wow, I don't even know where to begin here.

The rate that bitcoins can be harvested is fixed, and can't be overridden. The network adapts to the computing power used. No one can mine "millions of times faster." The average rate of mining is a constant. Throw more compute power at it, network adjuststo keep it at the same constant. So say otherwise is just -- braindead. That's the actual undeniable fact of math.

If "only they" have supercomputers, then two things have happened. They've banned the internet (bitcoin is now dead) and they have 51%+ capacity necessary to double-spend bitcoin. But oops, they can't spend it, because they had to take the network down to control it.

But hey, let's break the rules, and say that from now on, only the government can mine bitcoin. Ha ha! You got me! Not quite. About half of all bitcoins have already been mined. And remember, bitcoins aren't a fractional reserve currency, nor can they be created beyond the algorithmically enforced rate at will. The pre-existing bitcoins already mined still exist -- the best the government could do would be to spend their mined bitcoin -- bitcoins the market is already absorbing happily at the current rate. So outcome: no effect. But this is the government, so they want to really fuck up bitcoin, so they don't sell them. Outsome: the bitcoins already circulating increase in value.

To stop bitcoin, you have to kill the internet. Bitcoin may become a major currency, or stay a quirky little hobby currency and be forgotten, but inherent to how it's constructed, the government can't wave some magic supercomputer wand and make it go away. Years ago they could have taken control of it, but it would have been obvious, and that ship has sailed.

 

Thu, 10/03/2013 - 10:41 | 4018239 MeelionDollerBogus
MeelionDollerBogus's picture

You are incorrect. The rate at which bitcoins can be harvested PER TIME UNIT of real physical time CAN NOT be limited or controlled. You can only limit it per CPU CYCLE, it's a number of INSTRUCTIONS.

With super-computers there are more CPU cycles available & with expensive computers they are available only to the rich governments & corporations.

YOU ARE NEITHER.

A computer which processes 10 quadrillion instructions per second CAN PRODUCE MORE BITCOINS than one running at 100 MEGAHERTZ.

CORRECT.

You disagree?

Think about it.

I actually have a computer science degree but this is BASIC LOGIC.

They do not, repeat, DO NOT EVER NEED TO SPEND BITCOIN. They just need to have more than you SO YOU CAN'T USE THEM.

That's it.

You Fail.

It's THEIR NETWORK. IT'S THEIR SUPERCOMPUTERS.

Your controlled portion of computers and network is not even 2%. NOT EVEN 2%.

Think about that.

If you're still arguing this with me you have a hammer stuck in your skull AND you fundamentally misunderstand what the NSA intrusions to corporate networks actually means. FUNDAMENTAL FAILURE.

It's not your network. IT'S THEIRS. It wasn't that way a decade ago. It was that way in its DARPAnet origin. You can't just carelessly let others at 'your' property (networks) and still claim its yours. They control it now, you can't even get near enough to take it back.

You think 'your' bitcoin packets can't be detected and STOPPED at all times?

take down the whole network!!

They will one day but regardless that is not needed.

Simply blocking all encrypted traffic will do it & that will happily proceed.

Stop being dense. Remove the ballpeen from your skull. Think about it.

Wed, 10/02/2013 - 21:16 | 4016716 ForTheWorld
ForTheWorld's picture

If the math is wrong, then the fact is wrong.

Thu, 10/03/2013 - 10:34 | 4018226 MeelionDollerBogus
MeelionDollerBogus's picture

but the math is right so I am right.

These people with supercomputers can probably generate 100 btc for every 1 you produce.

That's a fact. They simply have that many more computers & CPU cycles operating under their control.

Wed, 10/02/2013 - 16:36 | 4015469 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Let's see the fastest supercomputer in the US is 16 petaflops, fastest in the world is 35...and the Bitcoin network is +/- 12,000. Uh huh, that'll work.

Wed, 10/02/2013 - 14:28 | 4014723 exodus11
exodus11's picture

This is good for BTC. The negative PR propaganda has always been that BTC was used for all these nefarious activities. Now they can't say that. So the negative PR is gone for now and back up BTC will go. This will be just another event in a long line of past and for sure future events where BTC will go down temporarily only to go back up again.It has no where to go but up as long as the fiat currencies and gov. do what they do. This is a no brainer.

Eventually, someone else will fill the Silk Road shoes and that activity in the BTC market will come back again.

Nothing has really changed.

Wed, 10/02/2013 - 14:28 | 4014739 DOGGONE
DOGGONE's picture

"Exceptionalism" will be the USA showing these track records to its citizens.
The Public Be Suckered, here:
http://patrick.net/forum/?p=1223928

Wed, 10/02/2013 - 14:30 | 4014747 DOGGONE
DOGGONE's picture

"Exceptionalism" will be the USA showing these track records to its citizens.
The Public Be Suckered, here:
http://patrick.net/forum/?p=1223928

Wed, 10/02/2013 - 14:30 | 4014750 NaiLib
NaiLib's picture

So this would be "the end"? Wow now this is getting interesting. Some 3MUSD worth of BTC seized by FBI from someone that sold illegal products for BTD, would mean "the end" of BTC? If that would be the case the USD would have ended a long time ago. OR the British Pund, or The Euroe etc etc. Comment like that really tell more about the onec making them than anything else.


Wed, 10/02/2013 - 14:39 | 4014774 Missiondweller
Missiondweller's picture

This is why both Bitcoin and GoldMoney cannot succeed. You must at least clear through the banking system to keep compliant with the USA Patriot Act and avoid being accused of clearing funds for terrorists, drug lords and tax cheaters.

A gold bullion debit card is the only choice because it allows you to use gold as your base currency then convert to cash "just in time" to complete transactions. This allows you to keep your balance in gold units and the Feds can't accuse you of using the "fake currency" or avoiding taxes.

Gold is taxed as a collectible and you generally self report.

Wed, 10/02/2013 - 16:06 | 4015292 MeelionDollerBogus
MeelionDollerBogus's picture

You're mistaken: goldmoney isn't IN the USA so if they have to drop all US commerce, they can.
As for the future it will be pricing items in gold or silver weight.

Dollars won't even exist. At all.

Wed, 10/02/2013 - 14:38 | 4014783 Sufiy
Sufiy's picture


Crashing BitCoin Brings New Gold Buyers Today 


 We are not surprised: FED does not tolerate any competition to its Ponzi scheme with FIAT money. As with all the games with Gold your faith in any FIAT alternative will be manipulated all the time. The key and crucial difference with Gold - you can stay Off The Grid and it is the Real Money recognised by everybody for thousand of years. The fatal flaw of BitCoin as the alternative to The System is that it is part of The Grid which is totally controlled by NSA. Realisation of this crucial factor will bring new buyers into the Gold and Silver markets. http://sufiy.blogspot.co.uk/2013/10/crashing-bitcoin-brings-new-gold-buyers.html# Gold Smashed Down In Desperation As COMEX Inventory Remains Thin GLD, GDX, MUX, TNR.v

 "Now we have the report from Jesse which shows us the reason for the recent run on the Gold. Game of the musical chairs is unfolding in front of our eyes, there is no Gold left for deliveries as China is taking everything availible from the system now. The very existence of Gold bullion banks fractional reserve system is under question now."

Wed, 10/02/2013 - 14:42 | 4014793 Bear
Bear's picture

Why is every moron associated with any thing in the finance world a druggy?

Oh .... and also "narcotics trafficking conspiracy, computer hacking conspiracy and money laundering conspiracy"

Wed, 10/02/2013 - 15:48 | 4015194 seek
seek's picture

Careful, you're dangerously close to looking behind the curtain there.

Wed, 10/02/2013 - 14:40 | 4014796 omi
omi's picture

I bet by the end of today, there'l be three competitors up and running.

Wed, 10/02/2013 - 14:42 | 4014801 Missiondweller
Missiondweller's picture

Turns out this happened three miles away from me here in San Francisco.

 

http://www.sfgate.com/news/article/Alleged-online-drug-kingpin-arrested-...

Wed, 10/02/2013 - 14:41 | 4014806 highwaytoserfdom
highwaytoserfdom's picture

Buying opportunity and another way to short dollar on loss of "Fiat"   Yea baby TRUST ME...

Wed, 10/02/2013 - 14:44 | 4014812 Dre4dwolf
Dre4dwolf's picture

Bitcoin is doomed to fail because of its inelastic nature.

Its not physically real, so if there is no power or internet data you pretty much dont have access to it as a currency.

Its not elastic enough , all currency needs atleast a little elasticity otherwise its impossible to issue credits to pay for things, which would slow down the economy and cause more damage than its worth.

Its not secure enough, someone somewhere will find a way to jack accounts....... and who is going to refund you your stollen Bitcoins??? no one thats who.

 

Banks may be evil, they may be thieving assholes, but at the end of the day they atleast pretend to provide a useful service and some consumer protection...

As always, the best place to have your money is in your hand, whilst holding a revolver in the other, thats the only way anything actually "belongs" to you..............

If you can't hold it, it isn't real and it can be destroyed at a moments notice.

Wed, 10/02/2013 - 14:58 | 4014903 SpykerSpeed
SpykerSpeed's picture

If the Internet shuts down, so does 50% of all commerce and business.  I'm less concerned about the Internet shutting down than I am about the government banning the trade and use of gold bullion.  Gold is easy to detect and seize.  Bitcoin isn't.

If I can hold money in my hand, then the government can take it out of my hand.

Wed, 10/02/2013 - 15:23 | 4015062 Spastica Rex
Spastica Rex's picture

Unless you possess your own significant military force (probably including nukes), the US government can take anything they want from you.

Wed, 10/02/2013 - 16:13 | 4015341 Tinky
Tinky's picture

Not true. They aren't going to seize assets held abroad (unless one is dumb enough to bank in Yemen, or some such place).

Wed, 10/02/2013 - 16:07 | 4015299 MeelionDollerBogus
MeelionDollerBogus's picture

50%: more like 25% BUT bitcoin will be in with ALL of that shut down. And no, it's far easier to detect packets that are btc than it is to find gold cions hidden away. FAR far easier. If the government can take money OUT of your hand you're not ready to survive. They can't get it out of my hand: they'll lose theirs first.

You'd have to get within inches of my gold to even have a clue where it might be - you can't detect it at a distance & no transaction or holding causes any kind of record or notice from a distance. You're either near me or you're not and if you're NOT TO BE near me for a transaction you WON'T BE because I won't allow it.

Wed, 10/02/2013 - 16:10 | 4015314 Tinky
Tinky's picture

"Gold is easy to detect and seize."

Utter nonsense. There is no chance that gold will be seized.

Wed, 10/02/2013 - 16:37 | 4015473 Debugas
Debugas's picture

how are you going to check if a given bitcoin was not double-spent ?

Wed, 10/02/2013 - 17:38 | 4015720 Missiondweller
Missiondweller's picture

Here's why gold won't be seized:

 

You have to go out and get it.

Retirement plans on the other hand can be taken easily and have a value of around $17 Trillion; close to the amount of national debt.

They're working on that now:

http://macrowealthpreservation.blogspot.com/2012/12/teresa-ghilarducci-w...

http://macrowealthpreservation.blogspot.com/2012/08/progressives-have-th...

Wed, 10/02/2013 - 14:48 | 4014841 TaperProof
TaperProof's picture

the dip was bought, its not like there wont be another "silk road" in no time

Wed, 10/02/2013 - 15:38 | 4015140 bitgroin
bitgroin's picture

But how can there be, now that the Feds have compromised TOR?

Wed, 10/02/2013 - 15:52 | 4015229 seek
seek's picture

It's not established that TOR is compromised. They've compromised hosts, and they caught DPR using pretty normal police work -- he slipped up in a couple areas (I would, however, love to know what commercial proxy service he used that clearly fucked him with logs.)

So far the evidence is that TOR isn't compromised, but that the Feds have a lot of interest in hosting and services that are on TOR. It'd take some balls to do Silk Road 2.0, but it takes some to do most of the activities that were sold on SR already, so I am sure someone will risk it for the money involved.

Wed, 10/02/2013 - 14:51 | 4014855 bitcoinbear
bitcoinbear's picture
It's just a website, not the end of bitcoins. I never even know about the Silkroad page before today. 
Wed, 10/02/2013 - 14:52 | 4014869 bitgroin
bitgroin's picture

No. There is no publicly available Bitcoin pricing data. None at all ... that Zero Hedge interns can be bothered to look for.

http://markets.thegenesisblock.com/

https://www.mtgox.com/

 

Last price $127, by the way.

Wed, 10/02/2013 - 14:56 | 4014892 TaperProof
TaperProof's picture

bitcoincharts.com

Wed, 10/02/2013 - 14:53 | 4014875 Youri Carma
Youri Carma's picture

Some may remember that the VHS video system conquered the world because it had the most porn available on it while the Philips video 2000 system was better and could be played on both sides of the tape.

So, maybe the scum really got worried about Bitcoin when they read this:

The world’s first Bitcoin escort agency http://www.zdnet.com/the-worlds-first-bitcoin-escort-agency-7000021209/

Wed, 10/02/2013 - 14:57 | 4014907 unununium
unununium's picture

The selloff volume is roughly equal to the amount of bitcoin seized.

This strongly suggests that the Feds simply sold the seized BTC.

Which strongly suggests that there has been zero wider market effect on bitcoin.

 

 

 

Wed, 10/02/2013 - 15:00 | 4014917 mccoyspace
mccoyspace's picture

interesting theory....!

Wed, 10/02/2013 - 15:03 | 4014930 WTFUD
WTFUD's picture

Probably already said but when ' game over ' appears on JPM i will feel great.

Wed, 10/02/2013 - 15:01 | 4014936 22winmag
22winmag's picture

Don't deal drugs, the government and multi-billion dollar pharmaceutical companies hate competition.

Wed, 10/02/2013 - 15:06 | 4014948 Save_America1st
Save_America1st's picture

Let's not forget that the drugs are mostly imported by the Feds, CIA, and factions of the military.  (not busting on military, it's just a fact is a fact...it's documented and proven.).

My point is, the biggest drug dealers in the world, ours and other governments, just don't like competition.  When you compete against the governement at the same time in both currency and drugs, well that's gotta be the ultimate no-no, right?

Shutting down that site, whether the accusations are truthful or not (and by the way, what in the hell happend to INNOCENT UNTIL PROVEN GUILTY????) probably just means the government is lying about the drugs, etc. and just has a boner for busting Bitcoin as an alternative form of exchange any chance they can since it's BETTER than their fiat toilet paper bullshit.

But nothing's better than silver and gold, bitchez ;-)

And, oh yeah, before I forget:  FUCK YOU, BERNANKE - AND FUCK ERIC HOLDER TOO! 

You want to find the real criminals well all you have to do is find out if they work for any form of government and BINGO!!!

Wed, 10/02/2013 - 15:51 | 4015210 W74
W74's picture

Gub'Mint imports drugs. Profits from Sales.

Ups spending on "enforcement". Money for M/LE-IC

People get arrested. Money for Corrections.

People serve sentences.  Money for "Treatment" programs

People have no options.  Do drugs.

Repeat step One.

Families get Destroyed.  Individuals get Destroyed.  Taxpayers get gang raped by at least 4 of the biggest dicks (complexes) the government has to offer, in all holes, over the course of decades.  No big deal right?

Wed, 10/02/2013 - 15:04 | 4014951 Al Capowned
Al Capowned's picture

One illegal drug site gets busted in one single country and peoplet hink its the end of Bitcoin so many knee jerk invester pussies who dont understand funadamentals

 

Wed, 10/02/2013 - 16:08 | 4015306 MeelionDollerBogus
MeelionDollerBogus's picture

Fundamentals: can't make anything from btc, costs too much energy to make btc from servers, is not legal curency anywhere in the world (except now Germany) and is more volatile than Zimbabwe or Argentine currency heading to hyper-inflation or confidence collapse.
Useless. Intrinsic value: $0

Wed, 10/02/2013 - 16:42 | 4015497 Withdrawn Sanction
Withdrawn Sanction's picture

 Intrinsic value: $0

Nothing, I repeat, nothing has "intrinsic" value (i.e., value in and of itself).  There is no such thing as value without a valuer.  

Thu, 10/03/2013 - 10:49 | 4018218 MeelionDollerBogus
MeelionDollerBogus's picture

Nature values itself in terms of material properties like mass, charge, quantities, etc., the human is not the measure of value. All physical things have intrinsic value.

Once you do add humans, however, things which are material have the most real, lasting value whatever is the need - manufacture, ingestion or trade and that is intrinsic value for material use in the material world. Everything else has no intrinsic value. None. Anything traded for the sole purpose of just attaching to other trades has NO intrinsic value because it can't be made into things or ingested, burned as energy.

Intrinsic value is a function of PHYSICS.

Wed, 10/02/2013 - 15:09 | 4014982 soopy
soopy's picture

Just in time for the Breaking Bad finale! hmmm...

Wed, 10/02/2013 - 15:12 | 4014994 BlackVoid
BlackVoid's picture

What a moron, running a business like this from the USA.

Wed, 10/02/2013 - 15:12 | 4015004 ImpotentRage
ImpotentRage's picture

Haven't people learned by now that the government has a monopoly on ponzi schemes?

Wed, 10/02/2013 - 15:19 | 4015035 unununium
unununium's picture

Tyler, take a look at your first BTC chart. Note the massive imbalance between bid (100,000K) and ask (79K) at the time your chart was posted.  Which turned out to be the bottom.

 

Wed, 10/02/2013 - 15:22 | 4015057 MeelionDollerBogus
MeelionDollerBogus's picture

You mean BAIT. Just imagine how many transactions were nabbed before the public notice.

Wed, 10/02/2013 - 15:21 | 4015044 MeelionDollerBogus
MeelionDollerBogus's picture

a) btc hits its intrinsic value of probably no more than $5 usd

b) lots of other sites are ready to pop up like torrent sites to take the place of the Silk Road

Wed, 10/02/2013 - 15:22 | 4015047 world_debt_slave
world_debt_slave's picture

yep, those thieves stole my silver in 2007 when they raided the Norfed/Liberty Dollar warehouse and railroaded Bernard von Nathaus (still without sentencing). Wrote letters to the judge and acting AG without a response and no property returned.

Don't think you're immune to illegal theft of your property if and when the gov decides to go after it's citizens.

Wed, 10/02/2013 - 15:43 | 4015168 W74
W74's picture

Do go on sir.  When did this happen?  Under what pretexts?

Wed, 10/02/2013 - 15:52 | 4015230 world_debt_slave
world_debt_slave's picture

you can find it online but the Liberty Dollar was founded in 1998 to compete against the fiat currecy called the dollar. The treasury department and secret service said no problem with this gold and silver based money, until the Liberty Dollar started supporting Ron Paul for president and reproducing Ron Paul coins for his run for president. That is when SHTF and the FBI raided the Idaho warehouse and stole all the silver and gold held there.

http://en.wikipedia.org/wiki/Liberty_Dollar#Federal_Government_response

Wed, 10/02/2013 - 16:31 | 4015431 W74
W74's picture

Says it all here:

Attorney for the Western District of North Carolina, Anne M. Tompkins, described the Liberty Dollar as "a unique form of domestic terrorism" that is trying "to undermine the legitimate currency of this country".The Justice Department press release quotes her as saying: "While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country."

Wed, 10/02/2013 - 16:45 | 4015512 Withdrawn Sanction
Withdrawn Sanction's picture

they are every bit as insidious and represent a clear and present danger to the economic stability of this country

My o my, who knew the dollar was so fragile that it could not stand the competition?  Man you cant make this stuff up.

Wed, 10/02/2013 - 15:23 | 4015059 Ghostdog
Ghostdog's picture

Seems like they do more work when they are shut down

Wed, 10/02/2013 - 15:29 | 4015078 pipes
pipes's picture

Tyler's definition of "plunges" needs some work.

Once again, the vocabulary is more reflective of wishful thinking than it is of reality.

Wed, 10/02/2013 - 15:35 | 4015087 robertocarlos
robertocarlos's picture

Surprisingly, post 65 coins will also be a great medium of exchange.

Edit: Opps, I forgot the Americans do not have two dollar coins. You're gonna need a bigger purse.

Wed, 10/02/2013 - 18:35 | 4015979 Save_America1st
Save_America1st's picture

Nickels will be the best post 1965 coins.  Stock up on them.  They will have high nickel and copper value and will be the perfect denomination to us if necessary.  I pick up 20 dollars worth of rolls of nickels all the time at the banks.  The tellers are idiots and have no clue why you would want them, but if they ask just say you need them for cash register change, don't say to "hoard them, etc. etc. etc.".

There's a reason Kyle Bass bought a million dollars worth of them!

Some Words Of Advice From Kyle Bass:

http://www.zerohedge.com/news/some-words-advice-kyle-bass

 

On nickels:

He still owned stacks of gold and platinum bars that had roughly doubled in value, but he remained on the lookout for hard stores of wealth as a hedge against what he assumed was the coming debasement of fiat currency. Nickels, for instance.

“The value of the metal in a nickel is worth six point eight cents,” he said. “Did you know that?”

I didn’t.

“I just bought a million dollars’ worth of them,” he said, and then, perhaps sensing I couldn’t do the math: “twenty million nickels.”

“You bought twenty million nickels?”

“Uh-huh.”

“How do you buy twenty million nickels?”

“Actually, it’s very difficult,” he said, and then explained that he had to call his bank and talk them into ordering him twenty million nickels. The bank had finally done it, but the Federal Reserve had its own questions. “The Fed apparently called my guy at the bank,” he says. “They asked him, ‘Why do you want all these nickels?’ So he called me and asked, ‘Why do you want all these nickels?’ And I said, ‘I just like nickels.’”

He pulled out a photograph of his nickels and handed it to me. There they were, piled up on giant wooden pallets in a Brink’s vault in downtown Dallas.

“I’m telling you, in the next two years they’ll change the content of the nickel,” he said. “You really ought to call your bank and buy some now.”

Wed, 10/02/2013 - 15:29 | 4015090 All Out Of Bubblegum
All Out Of Bubblegum's picture

Bitcoin isn't going anywhere unless TCP/IP disappears and large prime numbers magically go away.

Wed, 10/02/2013 - 15:38 | 4015135 robertocarlos
robertocarlos's picture

h

How does the money supply increase? They aren't making anymore prime numbers.

Wed, 10/02/2013 - 15:39 | 4015152 All Out Of Bubblegum
All Out Of Bubblegum's picture

> They aren't making anymore prime numbers.

 

You must work for one of the large financial outfits that has no use for math.

Wed, 10/02/2013 - 15:50 | 4015223 robertocarlos
robertocarlos's picture

Come on. That was a joke. Like they aren't making any more land.  maybe they are piling dirt and sort of creating more land, but G-d ain't making any new numbers.

Wed, 10/02/2013 - 15:56 | 4015240 All Out Of Bubblegum
All Out Of Bubblegum's picture

But the Bitcoin network is still kicking out new bitcoins and will for the next decade or so. Maybe longer, maybe shorter. And they'll be worth far more then than they are now, assuming the internet hasn't been EMP'ed by a certain freaked out Banking cartel.

Wed, 10/02/2013 - 15:58 | 4015261 robertocarlos
robertocarlos's picture

They're bound to hit infinity one day. Please don't kick my ass.

Wed, 10/02/2013 - 16:06 | 4015290 All Out Of Bubblegum
All Out Of Bubblegum's picture

Then it would a fork of the Bitcoin blockchain called InfinityCoin. It would be just like the Fed, which is one of the things that Bitcoin was created to fight against.

Wed, 10/02/2013 - 15:45 | 4015186 NOTaREALmerican
NOTaREALmerican's picture

Re:  They aren't making anymore prime numbers.

Actually, they are.  But GS is manipulating the market.

Wed, 10/02/2013 - 15:56 | 4015242 robertocarlos
robertocarlos's picture

There is nothing new under the sun.

Wed, 10/02/2013 - 15:36 | 4015123 Soph
Soph's picture

hrmph, tulip price under pressure

Wed, 10/02/2013 - 15:42 | 4015155 W74
W74's picture

The value went down because TRUST went down.  It really is that simple. 

All it takes is for a few merchants to no longer accept FRN's as payment and kablamo, it's over.  After that a few more, then a few more, then ordinary citizens, then more shops....and after you know it people are going to want to be paid in Loonies, or Dinars, or even Bolivars.

Wed, 10/02/2013 - 15:43 | 4015174 ImpotentRage
ImpotentRage's picture

Thats why the government made legal tender laws... so they can threaten people with brains into accepting FRN's under the threat of violence if they refuse.

Wed, 10/02/2013 - 16:20 | 4015372 W74
W74's picture

"Excuse me sir, will you please accept usurous joo debt as payment for your goods?"

"Uh, someone else's debt?"

"Yesss, you owe this to us and have to pay it back...with interest"

 

Wed, 10/02/2013 - 15:43 | 4015175 All Out Of Bubblegum
All Out Of Bubblegum's picture

The price is recovering from its low of the day. I think the price dropped because the Feds dumped some of the bitcoins they seized as well as the weaker hands going into a panic as they always do when someone farts in Siberia.

Wed, 10/02/2013 - 15:44 | 4015179 Kirk2NCC1701
Kirk2NCC1701's picture

Not to worry, TPTB want to fear-monger to scare people out of cyber-currencies, as they have their own in the works.

When the fiat currencies collapse, they will use the chaos to bring in the Fed/CB version of Bitcoin.  Theirs will come with an RFID.  You won't be able to buy, sell or 'move', w/o them knowing about it.

Check mate w/o the Czech mate, mate!  Welcome to you NWO Global Serfdom!  All bow down to the (anti-Christ) Beast.  >:-(

Wed, 10/02/2013 - 15:47 | 4015201 delivered
delivered's picture

Still not sure about bitcoin as a viable solution long-term. All currencies (fiat, digital, etc.) are of value and can be used as a medium of exchange until their not. What I still need to understand and have a clearer picture on is exactly "what" stands behind bitcoin from a value perspective. We know the USD is backed by promises (which are slowing failing) or more specifically, the Fed's balance sheet which consists of US treasuries, MBSs, and some other assets. Same goes for other countries as well and their central banks as well. 

As for Bitcoin, what I need to undesrtand better is what is the exact nature of the counter claim against the currency? It would appear to me that at some point in the food chain, some type of fiat currency has been exchanged for Bitcoins which basically indicates that the real value support for Bitcoin is worthless fiat currency (which raises questions about the ultimate value of Bitcoins). 

I'm not saying Bitcoin is better or worse than fiat currencies and as an alternative may be what's really needed (i.e., currency competition). But Bitcoin may suffer from the same problems fiat currencies do related to underlying value and economic performance. If in the end, Bitcoin is nothing more than a medium of exchange which is challenging fiat currencies but has no real counter claim of value, then it to will run the risk of becoming quickly obsolete by the next invention. 

The bottom line is that if I'm going to "invest" my hard current fiats into a valuable asset, I'm still looking at real assets that are managed by the strongest companies (and can produce real economic returns that are in demand on a global basis). This includes energy, base agriculture, precious metals, and core/essential technology and services. These should be natural hedges against unstable currencies and inflation.

However for those TSG's out there (i.e., traders, speculators, and gamblers), then Bitcoin certainly does represent an interesting opportunity over the short-term. But just like so many other barter systems that have been tried and ultimately failed (using an alternative currency form to facilitate a transaction), it would be foolish to think that Bitcoin is a solution to the ultimate problem that all currencies in one form or another, are a form of debt that is only supported by the value of the assets it can use as a counter claim. About the only difference I see right now with Bitcoin between other mediums of exchange (whether it is a fiat currency, use of chits, a barter system, etc.) is that it is purely digital making it more feasible to expand/distribute in today's "technology connected world". 

Just because Bitcoin isn't firmly connected to a government doesn't make it free from corruption, manipulation, or theivery. While the core principals behind Bitcoin might have been honorable, we know that humans just can't leave well enough alone as ultimately, greed, arrogance, and corruption will destroy yet another currency.

Wed, 10/02/2013 - 18:03 | 4015832 unununium
unununium's picture

> at some point in the food chain, some type of fiat currency has been exchanged for Bitcoins

Bzzt.  True also of gold.

Keep reading.  You'll find all of your concerns well satisfied.

Wed, 10/02/2013 - 15:57 | 4015247 pelican
pelican's picture

Has anything been set up to replace it?  My failing health needs something ease the slow and painful decay.

Wed, 10/02/2013 - 16:05 | 4015287 MrButtoMcFarty
MrButtoMcFarty's picture

Grow your own.

Wed, 10/02/2013 - 16:04 | 4015289 Ignatius J Reilly
Ignatius J Reilly's picture

Read this carefully.

 

When the exchange is dead; so is the medium.  Sea shells, beads, blankets, and fiat.  For Bitcoin to survive is needs to be and exchange of value.  it needs a marketplace.  .... but that's all it needs.  Get eBay to accept Bitcoin and Silk Road is a distant memory.

Wed, 10/02/2013 - 16:08 | 4015304 Constitutional ...
Constitutional Republic's picture

A bizarre and shocking story all round, worthy of a movie - maybe with Rob Lowe as the lead actor, given his resemblance to this character Ross the pirate.

I wonder whether there will now be a series of related arrests and charges for conspiracy, with Bitcoin's lead actors like the Winklevoss family sharing the limelight?

On a humane note, it seems an awful pity that this intelligent young man Ross hurtled downward from idealist to organised crime thug in record speed IF the charges are proved. All for the love of money in the end, it seems. Terrible waste of a life. I hope he is treated with true justice, rather than mindless retribution.

Wed, 10/02/2013 - 16:11 | 4015327 Skin666
Skin666's picture

The end for Bitcoin?!

 

Tyler(s) need to read up on crypto

 

It's unstoppable

Wed, 10/02/2013 - 19:44 | 4016297 diesheepledie
diesheepledie's picture

Anything, especially systems that use assymetric keys can be hacked. You need to read up on what the NSA is building - you don't think they can get your private keys if they want them?

Wed, 10/02/2013 - 21:09 | 4016694 auric1234
auric1234's picture

They can't. Unless they figure out how to do factorization in polynomial cost.

Which is probably not just hard, but impossible.

 

Wed, 10/02/2013 - 16:16 | 4015351 The Heart
The Heart's picture

Everyone knew that you can not compete with the babylonian money-god, especially since THEY are the ones that came up with the electronic track and trace, and tax every single transaction world wide. THIS is THEIR new world oder monetary control system using the SDR's, and digits on a computer like bit-coin.

Of course, you can not let everyone in on this scam because no one wants to play this game of track, trace, and tax. First, they have to rid the planet of those pesky unruly human beings, so those that are left after the ultra-armageddholocaust will gladly accept the beast implanted system. Just before it swallows them whole.

So, since they are going after the criminals, how about this one and his mob?

http://conservativeblogscentral.blogspot.com/2012/10/obama-arming-al-qae...

Did they already try it?

http://patriotaction.net/profiles/blogs/confirmed-attempted-arrest-of-pr...

Peace be with you ALL.

Wed, 10/02/2013 - 16:33 | 4015461 Constitutional ...
Constitutional Republic's picture

Pleasure to read your comments, and your links, 'The Heart'. Peace and resolve be with you and yours too.

Wed, 10/02/2013 - 16:22 | 4015381 ebworthen
ebworthen's picture

Wow, what a pissing match!

What this tells you is that .gov hates competition in the fiat currency realm, and un-annointed money launderer's.

Funny how HSBC and the other big banks enjoy carte blanche to launder all the drug money they can handle.

Wed, 10/02/2013 - 16:28 | 4015418 GoldMeUp
GoldMeUp's picture

This will be a famously ignorant call by Zero Hedge.  There are two majorly wrong things here:

1) "increasingly less practical uses" when infact the uses are growing exponentially

2) "That the US government would crack down on BitCoin and all affiliated services should not be surprising and is happening" <-- also incorrect, as they are only cracking down on illegal activity, not all of the legal legitimate businesses that are growing rapidly.

The ignorance also shows with the use of the capitalisation "BitCoin" instead of "Bitcoin".  It's kind of like if someone were writing an article about the "InterNet" and criticising it - it shows the author is clearly distanced from the topic.

Wed, 10/02/2013 - 19:14 | 4016134 Al Capowned
Al Capowned's picture

I was thinking the same thing , this could be zerohedges Paul krugman fax machine moment

Wed, 10/02/2013 - 16:50 | 4015531 hairball48
hairball48's picture

This is the biggest NON surprise of the year so far. Are my fellow ZH readers really surprised by this seizure?

Wed, 10/02/2013 - 16:56 | 4015550 GoldMeUp
GoldMeUp's picture

The mistake being made from Zero Hedgers is to mistake this seizure of an online illegal drug market place, as some kind of action against Bitcoin.  Selling drugs is illegal - Bitcoin is not.

 

Here's a quote from FBI's criminal complaint document: "Bitcoins are not illegal in and of themselves and have known legitimate uses."

Wed, 10/02/2013 - 17:30 | 4015694 Bunga Bunga
Bunga Bunga's picture

Oh, the government is in shutdown, perfect time to spread some hoaxes, since nobody is there to deny.

Wed, 10/02/2013 - 17:39 | 4015729 Lmo Mutton
Lmo Mutton's picture

Just checking in to see if there was anymore zeno porn.

Zeno?  Zeno??

Wed, 10/02/2013 - 18:38 | 4015978 GeoffreyT
GeoffreyT's picture

First things first: this story doesn't pass a smell test: I would be surprised if the guy arrested actually is TDPR (TDPRs writing 'fist' - language structure, types of typos he makes, etc - indicates he's likely to be a guy in his mid-to-late 40s: it's awful hard to force yourself to write with a fake fist for years on end).

It also seems remarkable to the point of implausibility that the real TDPR - a person aware of the ability and tendency of the State to interfere with private commerce - would host 'his' clearinghouse on a server that would be susceptible to .gov seizure.

In the event that this 'seizure' is genuine, and not FUD - has TD not heard of Black Market Reloaded? Or the ten or so reliable analogues on freenet (for those with almost infinite patience regarding page load times).

Non-US homologue of Silk Road in 3...2...1: the FBI can wander the world, wasting money, trying to unscramble eggs and put genies back in bottles. Stupid cunts who 'just follow orders' are like that: like all good house negroes, they'll do anything - including things diametrically opposed to their own class interests - for a pat on the head from Massah.

 

Wed, 10/02/2013 - 18:45 | 4016011 Randoom Thought
Randoom Thought's picture

A. Isn't the government shutdown?

B. Why would they raid their own operation?

Wed, 10/02/2013 - 18:48 | 4016032 Runs-With_Toast
Runs-With_Toast's picture

No the US Govt can have competition for its own drug running networks

Wed, 10/02/2013 - 19:06 | 4016095 seek
seek's picture

I wonder if this is the Fed's big "in." According to Reuter: In a corresponding civil asset forfeiture action, prosecutors claimed Silk Road and Ulbricht were liable to the government for the value of all transactions involving drug tracking and computer hacking, as well as for money laundering penalties, and a final amount would be determined at trial.

They could claim any bitcoin that passed through silk road belongs to them, I suppose.

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