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Bitcoin Or A Bank? Here's How They Stack Up
Submitted by Michael Krieger of Liberty Blitzkrieg blog,
The following graphic was put together by the folks at Promontory Financial and is extremely telling. It looks at three ways in which a U.S. citizen might choose to go about sending a $1,000 downpayment to Europe for the purpose of renting a vacation home. They put Bitcoin side by with with a traditional bank wire as well as a credit card transaction. The results might surprise you...
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That is certainly a reasonable course to take.
I completely agree with you. BTC is solidly in the speculative phase, has been for the better part of a year, and may well be for some time. That is why any BTC user, be they seller or buyer, must manage their risk tolerance. The hope would be that once the adoption phase passes there is a more stable price that allows for reasonable risk management. Before 2013 it was arguable more stable than in the last year, although increasing in fiat value rapidly. Currently with the high profile it enjoys the price has seen high prices and volatility. As the system matures ideally it will stabilize and lead to less transaction risk. To point to current volatility as a risk factor is valid, to point to it as a failing point is yet to be determined. Throughout human history volatility has accompanied many new stores of value and investments. As always, risk tolerance and speculation go hand in hand. Only history will judge the final outcome. For now there is significant potential and risk. Fortunes will be made and lost but the short term profit does not dictate long term viability per se.
On another note..
A somewhat reasonable potential valuation of BTC on the premise of gauging it against other international money transfer options, eg western union, makes a lot of sense to me. A first order evaluation of market cap may be be too simple however. One estimate I have seen in comments here estimates 1 BTC at $5k given WU cap. But if Tx costs are indeed lower and there is no share structure as it is a distributed network then market value vs transactions processed will probably be lower than WU valuation. Its a diffEQ of value it replaces vs lower margins. Where does it stabilize is the '$64k' question.
But the speculation of potential tech/status quo disruption carries a risk premium as well.
FRUCUATIONS? FRUCUATIONS?!
Frucuamericans!
not on the time-scale of a transfer, which is instant.
if you left it sitting there it might fluctuate. it would be at least 5x more likely to double than to halve, however.
Not really true. A transfer requires confirmation, that may take multiples of tens of minutes depending on number of confirmations required. Thats inherent to the block chain. And no idea where you're pulling that 5x number from. It's volatile but not nearly so certain to go up like that.
All currency are just public agreements to use that item as a medium of exchange. It's usually criminal/licentious elements that decide which way we go with what technology. VHS vs beta- porn industry decided. Ak-47- war criminals decided. Art, music, food, politics- these things were all at societies fringes at one time and as they became more mainstream they gained value. No difference here.
Bitcoin schmitcoin! I'll pay with FIAT Fnordnotes! Where else can you legally spend counterfeit money?
Shame they forgot the currency exchange rate risk of going in and out of Bitcoin, which is easilly as high as 10% (or $100 in the example) in a single day.
That's a silly argument. Anybody who would bother to transact regularly in BitCoin is going to keep a running balance of BitCoins handy.
If you travel regularly to Europe, do you change your dollars in and out of Euros before and after every transaction you make? No, you buy a bunch of Euros the first time you go, and then spend them, and then buy more as necessary. When you get back to the US, you just keep the leftovers because you know you'll be going back again soon. And in fact, you'd probably open a Euro-denominated bank account just to avoid the exchange rate risk.
well I thought that, but it seems you hook up to something called `BitPay` and they accept the Bitcoin for you - turn it into Fiat there and then (if you wish) and credit you the fiat - via a Bitcoin transaction. So a vendor can still set his prices in Fiat, but use Bitcoin as the settlement medium.
I'm surprised, that I wasn't surprised at all.
Whoever thinks bitcoin is going to save them from the mess coming is a fool.
Nothing is going to save us from this mess. But, BitCoins might help us find a way out after the collapse.
And don't say, "well, they'll just crash the internet!" If they do that, we've got bigger problems than BitCoins. The entire global supply chain relies on the internet.
There won't be any "after this", this is it boys and girls.
yes this is it, and the $ will not crash against the euro or the yen or the yuan...but it can be the one who crashes the most against bitcoin!
It's like farming:
The farmer doesn't know what the weather will be. So he plants several crops, understanding that some will do well and some will do poorly, but in the end he will have enough to feed his family, and maybe, just maybe, have a little extra cash.
Seems to me that China is the real game changer. Correct me if I am wrong, but doesn't most of the Chinese population lack access to what we take for granted in the West (Visa, MC, Debit, etc.). If they want to purchase products over the internet, the best system for them currently is Bitcoin. Although I love gold, it is not a convenient system for everyday transactions. Even if only a small portion of the Chinese people begin using Bitcoin as a transaction medium over the internet, the market cap potential is huge. This implies that Bitcoin has much, much more upside.
Bingo. Westerners take their credit cards and SWIFT transfers for granted. There are 2 billion people in India and China who don't use that system.
The biggest risks of BitCoin is not that it won't succeed-- it will, spectacularly. The two biggest risks are that (1) there is a technical flaw that will get exposed when a billion people are using it and (2) the Satanic Bankers figure out a way to capture BitCoin and use it to implement the Mark Of The Beast.
And when does the Chinese government start exchanging their worthless USD into Bitcoin, and then buying Iranian oil with them - skirting santions.
USD to Bitcoin to Iranian Oil
And in Iran, Bitcoin to Chinese manfactured goods and gold...
We are not used to currencies with the qualities that Bitcoin has; think outside the box.
i was going to say "its already happening" but the truth is , only some bitcoin companies driving the price up, when any goverment or bank states that has taken a position on btc, the subsecuent rally will dwarf anything you've ever seen.
Regarding #2, I don't think that Bitcoin will be the MOTB. If anything, the MOTB will likely be an officially sanctioned, legally required alternative to Bitcoin created by the PTB during a future worldwide economic crisis.
Either way, we'd be fucked.
Bitcoin is proof!!!!!
That there is no shortage of suckers, morons, imbeciles, miscreants, greater fools, and assorted other vermin.
Enjoy your physical gold bought at 1900.
LintCoin(c) My Pocket Lint...Your Money
It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.
Mr. Kipling is happy to be remembered...but he might come along and ask you why you take his words as your own...
It's not Teddy Roosevelt?
It's not Teddy Roosevelt?
You think you know, but you don't really. I don't know either. No one does. Take a little money and roll the dice. It might go to a million dollars, it might go to zero. Given the sad state of fiat globally, I dont think it would take much of a spark to see people bailing into bitcoin as a perceived store of value. Diversification is paramount simply because you don't know. I have some USD in the bank, some USD in the safe, some CAD in a Canadian bank, some PM, my forex brokerage account is offshore and funded in AUD. These I know it all positions will be your downfall.
Well said. I do think, however, that when fiat tanks people will run to safety. Bitcoin is the opposite of safe. Own gold.
The longer this fiat ponzi continues, the more people are educated about its frailty and the better off Bitcoin will be.
This example also assumes that the sender and receiver convert from and to currency in the transaction. If one or both parties deals entirely in BTC and doesn't convert to other fiat then transaction cost is as little as $0.01 equivalent, or free. Granted, that is not the situation now as the BTC volatility presents risks to holding a balance long term, but presumably if BTC becomes a mature medium of exchange and its volatility decreases with acceptance then it would not be unheard of for the currency conversion fees to be reduced or removed from this example.
Similarly in the bank example if the sender already had an account denominated in Euros then the fees may be reduced, but I am not aware of any commercial wire transfer service which has fees of $0.01 or free as even a possibility.
All snarky commentary aside, while I am not a bitcoin user, I very well might be in the future. It is intriguing and innovative, and, even the most anti-bitcoin posters should agree that at least it's not a debt-based system, like almost everything else.
I am a silver "hoarder" and thankfully, my basis is still less than the current market price. Silver has been currency for centuries, and I will likely acquire more if the price remains in the current range. An aside: I showed some of my silver to a friend, after giving her $$ as a dividend on her investment in silver (we have basically a bond agreement). I keep the silver and pay her annual dividends. We're both happy.
One other thing: In 1999, nobody knew what PayPal was. I was one of the early adopters and have been using it ever since. I recently secured a piece of real estate with a down payment made through PayPal. So, while PayPal is essentially digital currency analogous to fiat currencies, it is a transaction mechanism that did not exist 15 years ago. I wouldn't be so critical of bitcoin right now. Give it time. Obviously, it has governments scared, which is always a good thing.
Make sure it is the very near future! Price is on the up again, recovered from the last crash and going strong. Since I sold 1kg of silver the price of silver to buy BTC, silver dropped 5%, and the bitcoin value increased almost +200%.
Not scared, but rather, enthused about the opportunity to crack some heads while stealing their assets, all in the name of protecting "the children" from those evil terrorists who seek to evade Uncle Scam.
Government critters want nothing but crisis that they "need to do something" about.
Which is the only reason why I'm not a proponent of Bitcoin, as freedom such as this simply will never be allowed in our fascist global state.
A good, encrypted file cannot be distinguished from line noise...
Re: Keys, keep them secret, keep them safe!
You just pissed off Peter Schiff and all the gold coin dealers, denying them 2% at each end.
Bitcoin is tooooo volatile! Scarrryyyy. Tell that to the Mexicans who held pesos during the tequila crisis, the Russians after they defaulted, or the Cypriots who had money in the bank that got stolen. Boo! Ben is printing a trillion dollars a year but people love their shit paper. Freeee corzinnnneee!
BTC will begin to stabilize above $10,000. Even if remains, in the $10 - $500 range (where most daily transactions take place) the volatility will be much more manageable. Price discovery, my friend.
I bought another several hundred dollars of gold and silver today. I used profits from selling this "crap." I have withdrawn all of my original investment and I skim a little every day or so.
Do I think bitcoin is going to take over the world?
I don't care.
I have several hundred dollars more of the old money. I have many thousands of the new money.
Why isn't everyone doing this? Why bitch when you can accumulate?
What if you don't want to rent a house in Europe? Who can afford that anyway?
Mike, you also omitted 2 cheaper methods, if you got the 'connections'*:
1. Cash in the mail, sent $100 per envelope. 2. HAVALA (neither is readily traceable)
* Won't work on 'mericans, who like to 'click' their way through life, but bitch about the NSA. They'll then spend more time & energy to up the ante in the spy vs. anti-spy SW arms race. What irony.
There is also a 3rd option: XOOM.com --> $4.99 (traceable, but cheap) Been there, done that, works like a charm. Will Never, Ever, NEVER use a bank wire again.
You learn something every day, eh? I'm all for "free Enterprise". Get it? Kirk out.
FYI, I heard that sending cash in the US Mail is now against the law.
Like most crime, they have to catch you first. The USPS volume of mail is one extremely large haystack!
Of course. My point was more that they are busy making everything related to cash, and transacting in cash, illegal. Then of course, selectively prosecute for political ends.
BTW, its Hawala.
"The [hawala system] were created because of the dangers of traveling with gold and other forms of payment on routes beset with bandits."
The Wall Streeters will be busy contriving up a new cash flow derivative to arbitrage this transaction fee difference.
https://blockchain.info/tx/1c12443203a48f42cdf7b1acee5b4b1c1fedc144cb909...
This may interest some, the net worth in USD is circa 150M.
Here's the discussion:
http://www.reddit.com/r/Bitcoin/comments/1r87p5/omfg_what_is_going_on/
Wow. That $150 million bitcoin address will put it at the top of the BitCoin Rich List
http://bitcoinrichlist.com/top100
An interesting comment from Reddit, which I cannot vouch for:
"It is disappointment to me to see that 100 addresses have 20% of all bitcoins. So much for wealth distribution"
They probably all belong to Satoshi. The new king of the world.
What a fucking scam.
Over.
Seems a pretty good vehicle to get around capital controls dont you think?
I'm sure there are a few Greeks who had wished that they owned Bitcoin and not EUR
I don't know why I'm opining on this my words are no more valid than others above me. But here's my take on bitcoin.
1) it's claim to fame is that's its secure. Until it's not.
To date no one has come forward showing weakness of bitcoin.
But from over 20 years in IT security any time anyone claims something is secure I automatically know not to trust it. I've been around long enough to know nothing is secure. Nothing. Period. Hashes, ciphers, algorithms fall over time as CPU increases and math advances.
2) this one is more personal. I have serious doubts about a product and the creators motives when they release a product anonymously. Sunshine is the best disinfectant. This aspect has always bothered me about bitcoin.
3) this is also personal. A personal belief. If you don't hold it, you don't own it. Bitcoin could vaporize if the net goes down. Or it's exploited in any way. I just don't trust something I can't hold in my hands or that relies on silicone and electrons to exist.
These are just my views and as stated are no more valid than anyone else's. But there you go.
It depends on how you use it. Buy and hold is a huge gamble, I agree. But into Bitcoin - across international border - and then back out again is extremely useful.
As far as your #3 goes, the same is true for USD. (or stocks, or bonds, or your retirement plan, etc.)
Start doing some due diligence on BitCoin. There is a crap-ton of info about it on the internet. A lot of the issues being raised here on ZeroHedge have been thoroughly hashed-over on technical blogs already, in some cases, years ago.
Understand that we here are late to the party. Kind of like buying gold in 2008 instead of 2003... I hope. Hopefully NOT like buying gold in 2011.
bitcointalk.org
bitcoin.it
Info I would rely on only.
Bitcoin transaction cost go to zero if you transmit your Bitcoin payment directly to the landloard.
The author forgot to articulate one very important characteristic - the timing of the transfer (how long does it take for the transaction to complete).
Bitcoin has an advantage here as well!
Of course this graphic doesn't illustrate that your $1000 bitcoin purchase is only worth $470 minutes after buying it due to ridiculous volatility. It is assuming a STABLE value of BTC, something that hasn't happened yet. Maybe someday this will be viable, but it isn't in its current state.
If you're looking for stability from Bitcoin, you're going to have to wait awhile.
I also agree, I am SO frustrated that all of my bitcoins keeping crashing up in value. It makes me very angry that my net worth rises with each passing month.
Face it, we should just give up now and admit that even though we are right it doesn't fit the "metals only" narrative, so we really should be wrong. Just sell your Bitcoin now, it's the right thing to do.
I think it goes beyond a metals only viewpoint. Some people are just unable to adapt to changing circumstances. Evolve or die is still the law.
The only reason I want people to adopt Bitcoin is so I can trade with them without the prying eyes of banks and governments.
"my only regret in life is that I didn't buy more bitcoin when they were $5" All out of bubblegum circa btc price of $30
Reposted now for your benefit as the price sits around $800
I bought at $30 too.
I'm honored that my words are so closely followed here. Serious biz, no sarcasm.
Then you must be interested in Zerocoin.
The important part of this is implied: the other two methods depend on the loving kindness of the banks or their agents. Bitcoin just needs the network. If the network is down, banks don't work either and we're in big trouble anyway.
Bitcoin will hit $1 million in 4-6 years and there will still be the chorus of the clueless that will be denigrating it.
Bitcoin is a bubble created in reaction to fear. It will go up more, then fall. Get in now, get out in 2 years. Money.
They're painting the tape.
http://falkvinge.net/2013/09/13/bitcoins-vast-overvaluation-seems-to-be-...
Evil speculators!!!! OH NOES!!!!
This diagram is missing the lines showing the transfer of the personal and transaction infromation from SWIFT and Credit Card to the NSA/GCHQ
At this point I almost want to get the network of small business accounts that have my trust to start accepting Litecoin just to fuck over the Bitcoin speculators.
The winner is who gets mainstream acceptance, not the one that a few thousand people traded to the moon between themselves.
The volatility of Bitcoin is its biggest turnoff to established honest business.
Being first sometimes is not what brings success.
Does anyone have any idea how many establishments in the world have adopted bitcoin?
My bet is on banks setting up their own bitcoin to save on paperwork.
Bitcoin's ten minute verification time seems too long to me for retail transactions. Can you imagine going to a gas station, filling up your tank and then being told you have to wait around for ten minutes while the transaction clears?
Ten minutes is OK for money transfer or internet purchases, but too slow for retail.
With all the retail end closing and being replaced with Internet businesses, is that so great a problem?
We told you to buy Bitcoin when it was 2 dollars. Now it has recently hit 900 with a market cap still under 10 billion dollars. Some people never learn.
The Bitcoin Channel
Every 3rd Post ist about Bitcoin...it sucks!
This is all well and good. But what happens when the Europeans and the US decide to impose a 50% tax on any transaction where Bitcoins are exchanged for money or goods or services? Does anyone really think that the banksters are just going to stand around and allow themselves to be replaced by a small nonprofit organization?
I wonder how many bitcoins Michael Krieger owns,,, Has he ever disclosed his holdings?
> But what happens when the Europeans and the US decide to impose a 50% tax on any transaction where Bitcoins are exchanged for money or goods or services?
Let them. Bitcoin markets would naturally flow to where there is less regulation and Bitcoin would still continue to rise in adoption.
Meaning that you can only spend them in third world countries. You wouldn't be able to use them for the transaction that this article discusses.
The US is about to become a third world country, in case you haven't been paying attention.
The great thing about Bitcoin, amongst many others, is that it doesn't matter what government does to try to regulate it. They can't. Even the Fed has admitted that it has no authority over Bitcoin, an admission that they can't do shit about it.
Laws can easily be changed. Either by adding a small paragraph to a massive spending bill giving some government agency the authority to regulate and tax digital currency. Or possibly by an executive order doing the same. Actually, couldn't the IRS declare digital currencies to be "collectibles" and apply the 28% tax to "barter" transactions involving them?
They can pass all the laws they want to. Bitcoin is more powerful than legislation and regualtion.
Well, gold was once solid currency accepted everywhere. Then FDR issued an executive order and *shazam*, gold is no longer money, but it is actually illegal for Americans to own it.
I hope the Feds do make Bitcoin illegal. I'd be even richer.
And its immune to the sharks of Wall St and City of London???
Theres a little bit of an issue with the infographic here. If you are a US citizen, you most likely require an international bank wire transfer to get your money into or out of the exchanges where you can buy/sell bitcoins. This infographic would be more accurate if we assumed someone in say Denmark wanted to buy a vacation home in Spain. Anyone within SEPA can easily deposit and withdraw bitcoins without fees.
BITCOIN realtime quotes and NEWS:
http://btcpost.net/index.php
Can you trade baseball cards, comic books or garbage pale kids for bitcoins?
I saw someone ask the following question. It's a theoretical question that can't be answered, but for some reason I find that it causes me to think, hard...
You have a Bitcoin
$750(or dollar equivalent to one bitcoin)
An ounce of Gold
They get buried for 250 years and are discovered by some person(s). Which do you believe the persons will care about?
It's just a question, and it can't actually be answered. But for some damn reason it causes me to think damn hard about it!
Is the person in question a woman? Can the gold be manipulated into the shape of earrings or perhaps a ring, or necklace?
"The results might surprise you..." the article states.
I am surprised actually by how cheap credit card transaction ends up being!
I did switch to a credit card for everyday banking. Still debt free, paying everything off in full every month. I got a combo bank accound that charges no monthly fees, but allows very few transactions after which fees pile up astronomically. The credit card has no per-transaction penalties and is also no-fee due to the nature of the combo contract. So, everything goes on credit and once a month travels over to the main account. Fees - zero. Many non-counted transaction and one actual debit withdrawal.
Sending money abroad? Well, glad I don't travel and don't have distant relatives. The issue is non existent.
As one who travels abroad several times a year and has relatives overseas, I can confirm that any hatred that you may harbor against the current banking system would grow from a spark to a bonfire.
CNBC Cramer: "Treasury should've shut down bitcoin"
http://xfinity.comcast.net/video/cramers-stocks-to-watch-treasury-should...
So Jim Cramer is a Socialist, a Statist, pretending to be a Capitalist??? I am just...just...just so shocked!!!
What's new?
He makes it sound like he doesn't like competition...
My IT man who runs our fire wall is a very intelligent Italian. He rates the encryption on Bitcoins as sophisticated. However a friend of his bypasses all the security and loads up with free goods off fake Bitcoins.
Ever heard of a Ponzi Scheme chaps?