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As Bitcoin Soars Over $300, A Question Arises: Could It Become A Global Reserve Currency?
Having now tripled since August, Bitcoin's break above $300 ($324 highs) raises an important thought experiment - can a digital currency act as a global reserve currency?
It seems yesterday's CNBC discussion that Bitcoin is nothing but a beanie-baby fad just served to feed the beast... on heavy volume after Draghi's comments...
Charles Hugh-Smith, from OfTwoMinds blog, attempts an answer of just that question:
Could a non-state issued digital currency like Bitcoin become a global reserve currency? The idea came up in my recent conversation with Max Keiser on the Keiser Report during our discussion of reserve currencies.
The idea is intriguing on a number of levels. In terms of retaining value though thick and thin, the ultimate reserve currency cannot be printed (and thus devalued) with abandon by a government. Gold and silver have served as the ultimate reserve currency, as precious metals can be traded for commodities and services, provide collateral for debt and serve as reliable stores of value.
While many observers believe gold is still the only reliable reserve currency (or if you prefer, the only reliable backing for government-issued paper money), it's a worthy thought experiment to ask if a digital currency could also act as a reserve currency.
Since there is no real-world commodity backing the digital currency, its value must be based on scarcity and its ubiquity as money. The two ideas are self-reinforcing: there must be demand for the digital money to create scarcity, and the source of demand is the digital currency's acceptance as money that can be used to buy commodities, goods, services and (the ultimate test) gold.
It follows that the first step in a non-state issued digital currency becoming a reserve currency is that it isn't created in quantities that dwarf demand. If the digital currency is issued with abandon, it cannot be scarce enough to gain any value. If I own one quatloo (our hypothetical digital currency) and a trillion new quatloos are issued tomorrow, the value of my one quatloo will decline to near-zero.
The second step is its widespread acceptance globally as money, i.e. a store of value and something which can be traded for goods and services.
There is a bit of a built-in conflict in these two requirements. To be useful in the $60 trillion global economy, the quatloo must be issued in size: there must be enough of it around to grease transactions large and small in all sorts of markets. Using the U.S. dollar as a guide (since the USD is the primary reserve currency), we can estimate that a minimum of $1 trillion in quatloos would be needed to become a practical global currency.
To act as a reserve currency, another trillion or two would be needed, as nations would hold these quatloos as reserves. (Nations hold an estimated $7 trillion in USD reserves, about $3 trillion euros and $1 trillion or so in yen, pounds and other currencies.)
But issuing quatloos in these quantities would remove any scarcity value. Thus the issuer of the quatloo would have to carefully issue more quatloos only when demand justified the need for more monetary "grease" for the global economy.
If on the other hand skyrocketing demand/scarcity drove the value to the stratosphere, holders of the quatloo would rejoice, but this volatility would present its own set of risks for those seeking to use the quatloo as a reserve against currency volatility in the home-country currency. If a digital currency can leap ten-fold in a short time, then might it not drop with equal volatility?
Volatility is the enemy of reserves; the holder of reserves needs a liquid (meaning it can easily be sold or traded in size) currency that predictably retains its value. A volatile currency poses risks, as do currencies that cannot be traded in size without drastically influencing the market value of the currency.
These conditions pose a steep challenge for any digital currency, but they are not insurmountable. Even as a niche currency, non-state issued digital currencies could play a role in the global economy, especially if government-issued fiat currencies destabilize/ devalue due to massive money creation by desperate central banks and state treasuries.
Is scarcity enough to back a non-state issued currency? Bitcoin offers a real-world experiment.
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Meanwhile, in Russia if you pay with Bitcoin, you get a 10% discount:
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Actually, they did; hence, FED and current s(h)ituation...
You are correct, which is why Bitcoin is not acting only as money right now but also as a store of wealth, like gold. It is arguable whether or not it should be, though it was designed to be scarce as precioius metals are while also acting as money does. When all bitcoins are mined, in a perfect world, the value would be stable. But it also matters how much of the economy is being facilitated by bitcoin. If you are only trading a billion dollars of goods a year in a currency, each unit isn't going to be worth as much as if you are dealing with trillions in goods. Your analysis assumes static systems across the board.
Having said all that, I can't believe this digital currency will be in the end all of digital currencies. How new cryptotechnologies are folded into the current infrastructure will largely effect how much staying power it has when competitors start popping up all over the place. At the value it currently is at, and the way it has shut out casual miners, there will be a push for other currencies to take its place and there will be more fools to support it as everyone wants in on a gold rush.
I hold no bitcoin whatsoever right now. It's an interesting thing to watch though.
Something parallel to your comment I was just reading:
"...as all of you would expect, people would from their own experience be led to rush for the only thing they know and understand, and start using gold. But this very fact would after a while make it very doubtful whether gold was for the purpose of money really a good standard. It would turn out to be a very good investment, for the reason that because of the increased demand for gold the value of gold would go up; but for that very fact would make it very unsuitable as money. You do not want to incur debts in terms of a unit which constantly goes up in value as it would in this case, so people would begin to look for another kind of money; if they were free to choose the money in therms of which they kept their books, made their calculations, incurred debts or lent money, they would prefer a standard which remains stable in purchasing power." F.A. Hayek
Money doesn't need "a standard of value". All it needs is to have a constant value in and of itself. Traders determine price. When we get beyond barter and introduce money as an efficiency to allow trades to happen over time and space and in multiple steps, all a trader has to do is know how much money his object will bring and how much money he must now give for the object he wants. All his trading partners are doing the same.
In a perfect trading environment, the value of what he has can change over time and space. The value of what he wants can change over time and space. But the value of the money ... the medium of exchange ... must never change over time and space. This can only be true if inflation of the money itself is guaranteed to be zero.
Such a guarantee is simple to grant. All you have to do is certify trades; monitor defaults; and collect interest equal to defaults. You must also detect counterfeiting and mitigate it with interest collections as counterfeits are broken trading promises (i.e. defaults).
Gold, capital, collateral, large stone wheels, etc. ... none of these can guarantee they will never contribute their own unwavering value into the trading equation.
The medium of exchange "must" expand and contract with trader's propensity to make trading promises. It must never change value because of something like scarcity or new found abundance.
I agree with you. The essay I quoted was discussing the various events in Austria and Sweden during their gold standard, when currency in gold coinage was varying in value and Menger's recommendations for aleviating the pressure. Even under a gold exchange standard, you can have variations in minted coin from the spot price, as happened in Sweden and Austria. All the more reason for multiple competing currencies not linked to nationstates.
Nothing about a properly managed Medium of Exchange dictates that it have a monopoly or that it be linked to a nationstate.
BitCoin has "deflation" built in. Deflation is every bit as bad as inflation. There is only one proper level for inflation and deflation. That level is "zero"!
Umm, no.
Deflation isn't necessarily bad per se. It depends on investor and money holder expectations. If users of a currency come to expect a certain level of deflation as stable, they will organize their economic affairs to coorelate to that reality. They won't go into high levels of debt, and thrift will be incentivized. In an inflationary environment, debt is incentivized especially in our current situation where we have negative real interest rates. The danger is sudden changes in deflation or inflation. If a currency is mildly inflationary, and has a bout of deflation, companies and people are destroyed financially.
Wrong. Deflation, like inflation, "is" bad per se ... and every other way as well. Money as a Medium of Exchange wants to play no role in a trade itself. It just wants to facilitate the trade. It can only do this while being benign to all the trading partners. It can give no advantage or disadvantage to any trader. That being the case, inflation must equal deflation which must equal zero.
Perfect Money, as you describe it, is hard to imagine actually being created. Especially if it needs to be decentralized and trustless based.
What's the ticker symbol for bitcoin?
URFCKD
XBT
What's your point?
bCON
It's XBT: http://www.xe.com/currencyconverter/convert/?Amount=1&From=XBT&To=USD
Fuck global reserve currencies....it's just a vehicle for tyranny. Let's have 'value' return as currency.
The volatility issue would take care of itself given enough time for the widespread adoption of bitcoin and its maturity as a medium of exchange. But governments with central banks simply have too much power collectively, and should bitcoin grow to a credible threat to their control over the flow of money and the extraction of wealth, it will be dealt with.
The people moving into bitcoin are precisely the kinds of people the statists love to punish for their independence, so look for the price to rise and more wealth to be moved into the system before it is crushed.
If Bitcoin acceptance was widespread, how would you set prices?
Right now the price is set based on the exchange rate in other currencies. But who gets paid for their labor with Bitcoin?
In order to use Bitcoin you have to transfer you Dollars, Euro, Yen, etc into Bitcoin to buy something valued in Dollars, Euro, Yen, etc.
The only reason why you would ever use Bitcoin is the hope that during the time you transferred your dollars and the time you buy something, the value of Bitcoins will have risen allowing you to buy more in dollars than you could before. Everything is still based on a dollar value.
That makes Bitcoin a wonderful speculative investment, but not a currency.
Tell me how I'm wrong there.
"If Bitcoin acceptance was widespread, how would you set prices?"
How are prices set in USD?
"The only reason why you would ever use Bitcoin is the hope that during the time you transferred your dollars and the time you buy something, the value of Bitcoins will have risen allowing you to buy more in dollars than you could before."
Or because it allows to me to send money to anyone, anytime, anywhere, with no middle-men or fees. PayPal can't close my account. JPM Chase can't send my transaction details to the feds for auditing. The merchant won't have to jack up their prices to pay Visa's insane fees. And yes, I expect one day people will be paid directly in bitcoin on a hourly basis. Why not?
oh my goodness, if only i had been paid in bitcoin. even just last week, let alone 2009.
I am paid 100% in Bitcoin and also hire out contract work in bitcoin. Yes, I currently buy the local currency with it when needed.
I would point you to two errors I believe you are making in your assumptions. The first is your assumption that some process must be identified that will set the price of bitcoin relative to some other currency. There is such a process - the free market. We have been indoctrinated since childbirth to believe that nothing can exist that does not first have a controlling authority. But it is the belief in the need for this authority that is the trap, and the allure of bitcoin is the prospect of escaping it. By the way, it is very important to understand that there can be no absolute value in anything - everything is priced in relationship to something else, or to a basket of something elses, or more practically, to the collective experience that allows us to estimate the relative value of a thing, whether it is an ounce of gold or FRNs. We need a frame of reference for this, so we happen to do this mental shorthand in dollars today. It was once done in pounds sterling, and before that in reals, and so on.
The second error you are making is temporal. It is necessary to realize that this phase of the introduction of bitcoin is subject to much speculation-driven volatility. I would venture to guess that quite a bit of this volatility is due to the fact that central banks have created a sea of liquidity, and everything we wish to treat as an asset is being tossed about upon it. Meanwhile, astute observers grow increasingly concerned about the future value of the currency they own when their central bank is furiously debasing it. If it is allowed to mature (and I highly doubt that it will), stability would eventually come to bitcoin, at which point it could serve handily as an alternative currency. Viability for any currency is a function of trust, and it is still too soon for bitcoin to have established a large enough base of trusting owners to evade the current levels of volatility. But this pace of change is being accelerated by the gradual erosion of trust in the dollar.
little revelation. only thing that gives value to anything is a man itself. what i'm saying is - number of humans in existence (consumers) is something we have to take into account when valuing something. think about a depopulated world with 100 persons remaining. wouldn't everything lose most of its value only because there is almost no demand as the quantities per person are astronomical? for example what would be all the gold worth? i would say almost nothing. or if it would be owned by one person? this wouldn't give him any power, even if he could pay 20 bullies to be his army because as the rest of 79 who might be producing food etc just wouldn't be interested in it, of course if not forced or tricked into accepting it (history?).
my point is, when world population starts to decline, most everything starts to loose value, as the value can be value only in the eyes of the human beings. for an extended period of time, this has never happened in history. in principle this translates into notion that only real value is in human interaction which gives a context to our whole existence as species. it's a sick world if one has revelations as basic as this.
My brain hertz.
Electronic, trackable, controllable fiat... how perfect!
At this point, I am 90% sure that Bitcoin was created/introduced by TPTB under the guise of being "anti-dollar" to trick people into accepting electronic fiat currency.
My take is that Bitcoin was created by pissed off ex-members of the intel community as a jump on the TPTB's plans for electro-money. TPTB aren't creative enough to come up with Bitcoin. The thing that makes me think that Bitcoin is NOT a creation of the TPTB is the use of the secp256k1 algorithm in Bitcoin. If this was a trick of the usual suspects, they'd have used the more crackable secp256r1 algorithm, called P256 by NIST and the NSA.
Yes, almost every step of the way the algorithms picked for bitcoin seemed to be prescient with respect to being secure. Plus using the double-hash on top of this was just a fucking brilliant move.
My read is that bitcoin is about as anti-TPTB as it gets. Full transparency, decentralized, and loaded with anti-manipulation features. This is not something the bad guys designed, but what you'd get if you trained a half-dozen Snowdens to be mathematicians.
Good grief.
And Goggle started sucking the sheep in by saying "We Do No Harm".
All just blah, blah, blah and then POW POW, you're shackled to a tree with no clothes on.
No thanks, I prefer the shiny stuff.
Over.
If you have knowledge of any specific flaw in Bitcoin, you have a captive audience in me. I certainly would like to hear it so I can get out now.
Do you?
It was presented yesterday in full detail. Tune in more often please, or look at the threads yesterday. The protocol has been hacked by a professor and his students.
Over.
You mean the "selfish miner" theoretical white paper released recently that relies on getting a third of the total hashing power of the system and then requires everyone else to jump on board to their detriment?
It's an interesting idea, but it's (A) not a hack, and (B) totally unrealistic.
http://www.techienews.co.uk/972801/secure-bitcoin-wallet-inputs-io-hacked-unable-pay-user-balances/
An online wallet or exchange is not Bitcoin.
That's like saying gold coins are an insecure money because someone once stole them out of a safety deposit box.
Fuck global everything. Go localcoin.
"you don have to worry, if you got no money, people on the river are happy to give." Rolling on the River bro.
Keep it local.
Over.
Let's say Bitcoin goes to $450k per Bitcoin.
How many people actually hold large stores of Bitcoins? A few thousand? A hundred thousand? You aren't talking about millions of people here.
Say Bitcoin does go sky high and a couple thousand people become multi millionaires, in dollar terms, in short order. How is that any different than the Rothschild banking cartel we have now? Making a new 1% bourgeoisie class that can rub the little people's faces in the dirt.
That is what Bitcoin supporters want right? To be rich without having to work for it.
All this talk about Bitcoin being used as a currency and upsetting bankers is complete bullshit. Of course a Subway would want to have someone pay them for a sub with Bitcoin if the value of the Bitcoin was running 20% higher every day. You think the guy running the Subway would take Bitcoin if the currency lost 20% that day?
Bitcoin is showing every sign of being a pump and dump scam. I remember my sister thought her Beanie Babies would make her rich, then she couldn't even get $1 for them on Ebay.
To put it as concise as possible, bitcoin is the exact reverse of the Rothchild banking scam.
Put a dollar in a bank, at no interest, and come back in a few years and it's worth less, because the banksters stole from you with inflation.
Put a bitcoin in a wallet, at no interest, and come back in a few years and it's worth more, because it's designed to be deflationary. Bitcoin favors savers over printers. Gold would be similar if it weren't manipulated the way it is. Bitcoin has an open ledger, the blockchain, which makes manipulation transparent, and because you have to transfer bitcoin within the block chain, you can't do naked shorts or other tricks to manipulate it.
I'm a bitcoin supporter, and I'm not doing it to get rich without working. I'm doing it because I'm pissed off at TPTB for manipulating every fucking investment open to a little fish like me, and stealing my savings. So I put my money into precious metals covered in lake silt, and bitcoin.
Bit coin can not be manipulated, bullshit, yes they can manipulate that shit, anything fucking digital can be manipulated
It can be manipulated to the same extent that physical gold can be manipulated. No more, no less.
Ever hear of COMEX?
Over.
that's paper, not physical
Oh, sorry. I thought you could take delivery. My bad.
Paper move physical price dumb dumb. Wake the fuck up.
Over.
My words were chosen carefully.
Theoretically, you could make a "paper" exchange for bitcoins and then "take delivery" of them like you would with gold. In practice this would be nonsensical, since you might as well just transact directly in bitcoins. "Paper" gold is traded because shipping heavy metals is expensive. Bitcoins have no such restriction.
In that sense, bitcoins might be less subject to paper manipulation than gold.
Like Al Sharpton, the reverend Jessy, and Herman Cane might say:
A shoobie, a doobie, a kizzy wiz.
Currency is werency, and I know my biz.
If it's not phyz, then it's just jizz!
Can I get an AMEN!
Over.
You're precisely the kind of open-mouthed idiot that politicians love. So headstrong in your beliefs, whether you worked it out for yourself (or more likely) had it decided for you by somebody else. So willing to be a pliant pawn in the system.
Think Gold is the answer? It would be if it were the 1950's, but it isn't. It's just HALF the equation now. As you sit in your modified basement/bunker, with your baked beans, dried fruit and safe with stacked gold rounds, do you really think that it will be the only thing to save you?
Lets put things into context, shall we? When the U.S.A. goes "full retard" about gold, they're going to enlist the help of every little boot-stomping agency they can, and they'll go over all sale records, root through every basement and shed, and do a preliminary sweep of your property with a Gold Courtesy Discovery Drone.
Seems far-fetched? I'm sure it did when they confiscated gold the first time. "Couldn't happen" they thought, after being forced to relinquish their golden darlings. Guess what, history does repeat, and the only thing that might save you is not playing by the same old Monday Night Football Quarterback Playbook.
That is, if you can possibly extract your head from your ass to actually listen.
bit coin... tulip bulb...
Who says it can't be counterfeited?
There is a mathematical proof to the effect that it is very, very, very hard to do. As in, no human or computer will do it. The proof depends on the majority of nodes in the network being cooperative. This is true because they have a stake in the economy.
What prevents a competitor digital currency (can you copywrite a currency?)?
There are a bunch of them already. Crypto and non-crypto.
http://en.wikipedia.org/wiki/List_of_cryptocurrencies
If I were to get some it would be Litecoin, they are more advanced, and the price is stable.
Over.
Absolutely nothing. It is a free market. They compete on their merits, including social network value. Bitcoin market cap exceeds all others by orders of magnitude. It's like comparing gold to cowrie shells.
I've never heard of a counterfeited tulip bulb. Intrigued...
Anyways, a core property of Bitcoin is that it is emenintly recognizable. There are no worries about getting tungsten filled bitcoins.
"How is that any different than the Rothschild banking cartel we have now?"
Because as they spend it, it will be gone, and they can't have their friends at the Fed print up new stacks for them.
"Of course a Subway would want to have someone pay them for a sub with Bitcoin if the value of the Bitcoin was running 20% higher every day."
If and when BTC becomes mainstream, it's conversion rate to Bennie-bucks won't matter. If I can buy my sandwich at Subway in BTC, and Subway can pay the food delivery company in BTC, and the food delivery company can pay the food processor in BTC, and the food processor can pay the farmer in BTC, and the farmer can by fertlizer in BTC, then it's hypothetical conversion into rapidly devaluing US government wastepaper is meaningless.
Also, it makes it damn easy for anyone to skip out on taxes, so there's that too.
Thanks, but thanks - I can wait for the results of that experiment.
That is why early adopters are/mustbe rewarded.
I agree, but I prefer the variant that has been tested for 5000 years.
If bitcoin becomes a real threat to fiat currencies then major countries will declare it to be nothing more than a medium for illegal activities (money laundering, drug trafficking, white slavery, AND TERRORISM). Slap a big prison sentence for issuing or accepting bitcoins and POOF! You can't openly challenge the world authorities and expect to get away with it on a large scale. They're very corrupt and have ALL the power.
Omnipotence is an illusion. You are buying into their deception, if you believe in it.
A concerted effort by the US government was unable to shutdown silk road for even a month.
You can't stop the signal.
Read Larken Rose's "The Most Dangerous Superstition".
You are free to surrender. Freedom of speech also gives you the right to drum up support for your anti-cause.
Gold is owned and controlled by "the man". BTC is owned by tech types. If you hate the man then BTC seems like the way to go. When the weekend comes or a holiday and you need some bread do you sell your gold? No. You could sell some little bits of your bitcoin. Liquidity into cash may aid in Bitcoins' popularity. BTC has a charm to it. They're like lucky charms. If the value goes to zero, then it depends on how much gold you invested to obtain the Bitcoins. If your opportunity cost is low then your doing alright. The more expensive Bitcoins become, the less desirable they are. Gold will never fail to shine but it is generally illiquid. BTC is an asset class in a diverse portfolio. Reserve currency? It's gonna be like the metric system. I'll give you .0004567 BTC for that frog. Deal?
Re: Gold is owned and controlled by "the man".
People only say this because they can't understand why their "investment" in gold isn't rising (as valued in fiat dollars) to the "expected value" that the "investors" think it should be.
But, what if gold is actually not manipulate by "the man" and is actually correctly predicting deflation? What if gold isn't an "investment" but is just an insurance policy?
Soon the US Govt. will be able to pay off the national debt with those confiscated Silkroad bitcoins!
it is not clear that the fbi would be allowed to hold the coins that long. but yes, it will eventually be true that the 144kBTC in the FBI wallets would suffice to retire the debt. the debt will also have been devalued by then, however.
A digital, decentralized cryptocurrency as the reserve currency?
But who would build teh roadz??????
There may, at least for now, be a limited supply.
A. That can change
B. It is infinitely divisible
You won't find me using it and supporting the globalist wet dream of a 100% electronic global fiat currency.
What I have found is that there is generally why things are kept a secretm SUCH WHO CREATED BITCOIN, and generally the reason things are kept secret is because they are bad. Would it change people's impression if people knew that Bitcoin was created by globalist central elitist bankers? What if it was the Gnomes of Zurich whi mined the Bitcoins?
A. No, it can't. 21 million is the max, baked into the protocol.
B. No, it isn't. Each coin is divisible to 8 decimal places.
Any protocol modification which is in the majority interest is going to be adopted eventually. Devaluing by increasing the cap will never be in the interest of bitcoin holders. However, it is a trivial and relatively uncontroversial change to extend the number of digits of precision.
Okay bitcoin, I'm sorry I didn't trust you. Yes, I boasted to all how magificent you were, how wonderful a decentralized currency is--but never trusted you enough to replace my fiat money with. Now, I am shamefully humble. If you could just please come down now babe, to you know like 130...I promise I won't mistrust you BTC...I promise...let's talk down here...
You might have some luck at 260, but the book gets pretty deep after that.
$130 might be like asking for a Bently for Christmas, but seeing the volitility of BTC in the past, I wouldnt doubt if it came under $200 again. I'll be ready when it does. This is the only time I want BTC to come down
Yes.
Seems as though there's a simple solution to the scarcity issue... they could just do the equivalent of a stock split.
precisely. bitcoin are infinitely divisible. there will always be enough continuum for everyone to share.
Consider the new paper from Ittay Eyal and Prof. Emin Gün Sirer about miners colluding and eventually destabilizing the currency. Mining pools already exist and are rapidly approaching the critical mass needed to form a majority pool for mining. To think the costs of mining are "prohibitive" when monied global players are already well involved is naieve and foolish. But you all have fun with that runup. Impressive as it is, there are many who haven't fully calculated the mining angle, or the Global fiat providers simply pulling the kill switch. And, no, don't argue with that silly "but but but it's distributed and encrypted!" BS. It can all come tumbling down, any time and your ability to defend is zero. Better to accept that now than delude yourselves with rainbows of cash coming out of unicorn butts and fairy tears filling your cup.
I also read their paper. It seemed to suggest that the algorithm depends on new blocks being added and that miners who discover blocks but don't expose them gain an advantage. I haven't looked at the algorithm (and would not likely understand it if I did) but the article led me to believe that information found in a new block is helpful in finding the next new block (but evidently not necessary or anyone not revealing a block would stop the process). It is this feature that makes people continue to find new blocks rather than to find additional keys into existing blocks (which evidently exist but are harder to find than new block keys)?
It's also my understanding that there is a limited number of total blocks defined in the algorithm (or the nature of it). That being the case, after the last block is discovered, the attention would move to finding additional keys to already discovered blocks. This would in effect be counterfeiting.
Counterfeiting is inflationary. BitCoin is "by design" deflationary. Are we therefore to expect balance with the counterfeit inflation matching the designed deflation, or will the inflation eventually prevail and leave us in much the same situation we have now where 100 years later our dollar is worth 4 cents and the counterfeiters making up the 0.1%?
there is no need to defend against a logical contradiction.
@thissen
only congress has the constiutional power to create laws, that has nothing to do with delegation of power
sadly the feds long ago gerrymandered the line between constitutional and unconstitutional into a fractal fog, such that there is no meaningful rule of law in the US any longer
@thissen
only congress has the constiutional power to create laws, that has nothing to do with delegation of power
i'm in support of anyone or anything that is challenging the FED and bennybuck
alt currency revolution bitchez
When you see a J-curve like that - don't most people sell?
there is definitely money to be made shorting BTC. the tension in the market is high enough so that it is a very unsafe thing to do. much safer to buy every day, the same dollar value, no matter the price. maybe skip a "j" day or two. maybe double up after a flash crash. but stick with it until the growth of the BTC economy starts to slow down on a same-quarter basis. at that point, you might like to convert to PMs.
Could a non-state issued digital currency like Bitcoin become a global reserve currency? The idea came up in my recent conversation with Max Keiser on the Keiser Report during our discussion of reserve currencies.
I went there. If anyone else does, his thoughts come in about the last three minutes. The rest was largely a waste of time.
The authors comments on Keiser clearly reveal that he does not understand money at all. But he is in universally good company, just as the opponents of Copernicus were.
The world does not need a GRC (Global Reserve Currency).
It needs to dump the USD from the GRC throne. In its place, it needs a set of Regional Trade Currencies and BTC. Of which each country has its share in reserve. Trade can then be settled directly between two countries, or in any of the regional currency in which they reside. Trade between countries in different regions can be settled with the regional trade currencies.
No need for BIS, which is a thin veil for the US hegemony (USD/Fed and NSA) and whatever small cadre of elite foreign masters that the US Gov answers to.
In a nutshell, no, because of the uncertain regulatory environment in which Bitcoin operates.
Global reserve currency. Does that phrase strike you as depending on a local jurisdictional regulatory policy?
Bitcoin is already a global currency. Reserve money is any you have stashed away. Reserve currency is an artiicial construct that has to be enforced by legal tender laws and is used to restrain international trade.
Bitcoin is already a global currency. Reserve money is any you have stashed away. Reserve currency is an artiicial construct that has to be enforced by legal tender laws and is used to restrain international trade.
I'll take Beanie Baby Fads for $400, Alex.
NO not in bitcoins, REAL MONEY Alex.
Thank you.
The globalists have always desired a true global currency as the apex of their plans. A digital currency makes the transition so much easier since it globalizes the context of money in the human psyche. The idea of a nation-state becomes instantly an anachronism. The acceptance of Global government is eased into; like slipping into a deep sleep while behind the wheel. You know you should not, you even fight it. but ultimately it wins out no matter what you do.
Using a currency other than a superpower's reserve currency has real and symbolic advantages. The UN for instance wanted a global tax, global military and global currency. A global currency provides a short cut to the first two.
BitCoin could be the globalist's easy path to securing a global digital currency - BitCoin could lure in the most anti-government types into the system first and then...well the sheep will follow.
All the globalists would need is control over the shared ledger and a backdoor into the algorithm protected chaining blocks -...NSA?
Well, bitcoin is worth nothing. It is a bit worse than the tulip bulbs as you don't even get tulips. At the moment some people believe it will be worth more, so they buy it. But the real value of bitcoin is exacly zero.
Nothing stops anyone for starting XCoin tomorrow, based on similar principle like bitcoin. After a while, there will be 100s of such currencies, bitcoin being one of them. Also, with bitcoin, there is a problem of inequality - new currency should be made in a way that everyone has fair and equal chance to diversify into it.
Another thing is that bitcoins are *very* inconvenient by design. As I have to have all the transactions in the chain, it takes *huge* space and requires not only internet connection but pretty much always on internet connection. Try getting fresh client and see how much it takes to catch up. Now think about 256k connection. Now think about a few order of magnitudes more transactions. See my point?
Bitcoin will remain there as long as some guys believe in it. Yet currency which is not an official currency (as I can pay taxes in it) will not stay. Some say that at the moment one cannot pay taxes in gold & silver, and indeed that is the major weakness of PM. However, one could pay taxes in PM for hundreds of years, and the central banks still hold gold - as such it is somewhat possible that in the future one will be able to pay taxes in PM. If that will happen, of course the value of PM will rise sharply (as currently they are only a bit useful in industry, jewellery etc, which is reflected in their price).
The real value of everything is exactly zero. There is no real value.
Competition is good for Bitcoin.
Gosh, some inconvenient design might be the price to pay for running your own bank. There are also light clients such as Electrum and Multibit. My old cellphone has bitcoins loaded and spendable and it was not inconvenient to buy dinner with bitcoin yesterday.
I cannot pay my taxes in yen but sometimes I receive yen in wages (mostly I receive Bitcoin). Therefore, yen will not stay.
Generally, most physical things have some intrinsic value. Bicoin, as non-physical has honestly no value at all. You may argue about how high the value of physical things is. As for bitcoins (and similar 'currencies') there is no doubt the value is zero - the value of all those is just due to people trying to get some cheaper and sell later to a bigger fool.
What value a boulder? If I am the Hulk and wish to smash a car, then ok maybe it has some value, maybe I pay you some widgets for the boulder, deal? Value is in the eye of the beholder. Rare works of art have little value to tribesmen while their most sacred religious objects, for which they would lay down their lives, have little value to you.
Bitcoin was designed to do certain things. For those who understand the utility and potential, this represents value to them and only to them.
Here is how the whole game will change...by making Bitcoin very real, which will lead to a grand new world reserve currency... and eliminate ALL potential regulation problems with bitcoin being equated to currency!!!!!
The real relationship between Gold/Silver and Bitcoins needs to be a marriage!
The way to move the whole thing forward is to open an exchange, like mtgox, but only gold and silver weights, not US$, to
be exchanged/traded for btc. You need small shops everywhere, like a current cash shop, or pawn broker that fronts all of
the small trading for everyone. So you give them some gold or silver and they give you btc or you give them btc and they
give you gold silver based on current exchange rates.. all 3 things cant be touched by megalomaniacs and are outside of
"world money regulation/phantom creation" This also solves the problem of not much liquidity for the easy transfer and
payment using actual pieces of gold and silver over the internet ..... now their value is transferable to btc, which is
easily exchanged anywhere for everything starting with the most important thing wages for employment.
BTC is the same as gold in some ways , it has a finite amount available over time, cannot be "printed" into oblivion,
must be mined and is a store of wealth and no one individual or group owns the system, it belongs to everyone. To marry
the two is perfection, you give liquidity to gold/silver /other commodities via btc so they can be transferred instantly
anywhere for goods and services and you eliminate the governments and richest families from regulating it because oif its
current links to currency which they have always completely controlled for their benefits.
The numbers make sense..if you look at fractional bitcoin system the numbers more then make sense... each btc can be
broken down to units that equal .00000001 so There are really 2,099,999,997,690,000 (just over 2 quadrillion) maximum
possible units in the total maximum bitcoin design. The value of "1 BTC" represents 100,000,000 of these. there is only
around an actual 1 trillion in printed usd $ around and currently 60+ trillion in total debt http://www.usdebtclock.org/
(not including unfunded liabilities ) So there is, or will be by the year 2140 (end of bitcoin mining),
2000 times more exchangeable bitcoin units then us$ in the world and then there are no more BTC,
more gold mined down the road will just change exchange value... just change exchange value..
but both gold and bitcoins have physical limits of the total in existance.
Bob Cecil
The answer is no. And that's a good thing. Deflation is built into Bitcoin, meaning that it would be a horrendously bad idea to use it as a reserve currency.