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Citi: Bitcoin Could Look Attractive To Reserve Managers As A Complement To Gold

Tyler Durden's picture





 

Bitcoin and other Internet currencies are viewed by some as a Beanie baby fad and, as Citi's Steve Englander notes, by others as revolutionizing the financial system. Market acceptance of alternative currencies now looks to be growing a lot faster than the pace at which the supply of Bitcoin and Bitcoin wannabees is expanding the Internet money supply. The responses fell into five categories which we feel are well worth considering before trading or utilizing the digital currency (including Bitcoin's role in reserves management).

Englander's previous "Bitcoin as a currency" report generated a lot of comment. In the note, he argued that something as replicable as Bitcoin would generate a lot of imitators and that there was an infinite supply of Bitcoin-like competitors at low marginal cost. The responses generally fell into five categories:

Citi's Steve Englander Addresses 5 key responses to his previous more negative view on Bitcoin.

1)    Bitcoin is a generic payment system as much or more than a specific store of value and has tremendous advantages over current payments systems

2)    Its run-up in price represents dissatisfaction with central banks and money printing and the desire for a currency not driven by political opportunism

3)    First mover and networking economies of scale advantage will make Bitcoin and a couple of other internet moneys dominate Internet money in the future

4)    It can keep growing as long as there was a group of individuals and businesses willing to accept it

5)    It’s a tulip bubble and will collapse

 
1) Bitcoin as a payments vehicle

Many commented that Bitcoin was revolutionary as a payments mechanism, rather than as a store of value. The run-up in the price of Bitcoin could be viewed as speculative but its impact on the payments system would be durable, even if the price stabilized or fell.  Bitcoin’s competitors are credit card companies, wire transfer companies, weak fiat currencies and the like. Its advantage was that that its secure cryptography gives it strong security with respect to falsifying transactions and the transactions cost is almost zero.  So you would not have to hold Bitcoin in order to transact in it, at least not for very long.

Anonymity was also viewed as a plus by many, but whether governments can, will and should get some handle on internet transactions is under debate. Some also argue that its decentralization is an advantage. The ‘ledger’ that keeps track of Bitcoin transaction seems resistant to fraud, but there have been issues with Bitcoin exchanges and other elements of the transactions process.

Investors who focused on the potential Impact of Bitcoin on the payments system sometimes saw  the Bitcoin appreciation as a distraction. Bitcoin’s sharp price run-up is attracting more involvement now, but could be a disadvantage if price ever took a big fall.

2) Bitcoin as an alternative to fiat currencies

When G3 central banks are expanding their balance sheets like there is no tomorrow, you can understand the search for alternative stores of value. Some make a ‘wisdom of crowds’ argument that monetary management is likely to be better if it reflects the judgment of a diffuse constituency of users rather than a central bank governor or board. In short, this is the gold standard, but with a lot more portability and ability to transact. That said, Bitcoin protocols are decided by a group of programmers, and their goodwill is taken for granted.

To some investors it is perfectly clear that the combined judgments of individuals across the globe will be superior to the centralized policies made by central banks. To many holding this viewpoint, the ineptness of global central banks has made the bar for outperformance pretty low. This view  probably appeals to you if you think the panics of 1837, 1873 or 1893 were preferable to the Great Recession of 2008 (http://en.wikipedia.org/wiki/Panic_of_1837, http://en.wikipedia.org/wiki/Panic_of_1873, http://en.wikipedia.org/wiki/Panic_of_1893). In those times the absence of a central bank did not preclude private sector speculation from generating bubbles and panics. Admittedly, some of those panics started because of failed attempts to manipulate or corner certain markets, a feature Bitcoin’s proponents may feel it is immune to.

Bitcoin started as an experiment in a currency that was neither commodity-based nor backed by a governmental authority. There is a risk that participants in the Bitcoin ecosystem may become more self-interested over time, the way broadcast television started with Paddy Chayefsky and quickly morphed into The Beverley Hillbillies. Even now it is unclear to what degree the ‘miners’ out there should be seen as public servants.

We are left with the possibility that the properties of a Bitcoin ecosystem that comes to be driven by individual self-interest will differ from its intended properties. Greed and panic could enter as a significant part of the ecosystem. By contrast, central banks have a mandate to stabilize the economy and financial system, even if you see their performance as inept in practice. Nevertheless, it is not so obvious that a good system driven by individual self-interest will produce a more stable economic and financial system than an imperfect system of central banks trying to stabilize economic and financial markets. Many supporters of Bitcoin argue strongly that this is the case, however.

2a) Bitcoin as a reserves alternative

Reserve managers are likely wondering whether Bitcoin is the answer to their most perplexing problem – where to find a pure store of value, how to avoid currencies backed by erratic central banks  and how to dethrone the USD from its perch in the international monetary system. Bitcoin is much more interesting than the IMF’s SDRs from a reserve manager perspective because it is independent of major currencies. The reserve manager operational problem is two-fold: 1) how to sell a truckload of USD, and to a lesser degree EUR and JPY, without excessively depressing the value of the USD that they are selling and 2) what to buy when there are few attractive, liquid alternative. Bitcoin doesn’t avoid 1) but addresses 2) to some degree.

Bitcoin with its inelastic supply and deflationary bias would look attractive to reserve managers as a complement to gold, and in contrast to fiat currencies in unlimited supply. As a group, reserve managers are conservative and probably would like to see how Bitcoin evolves.  Given the reserves management problem discussed above, there is some incentive for the biggest reserve managers to encourage development of this market to see if it is viable in the long term. Even if it ends up just as a transactions vehicle, countries may choose to transact in Bitcoin or the like, if it enables them to reduce the overhang of USD that they need to hold because of its role in international trade and finance.

Conclusions: i) Reserve managers will not be the first to adopt Internet currencies but they have incentives not to be the last; and ii) The USD would likely be undermined on its international role, were this to occur.

3) First mover advantages

This may be the most contentious area. Bitcoin fans argue that being the first in any area where there are networking economies gives you an immense advantage. Replicability is not an issue because potential imitators will find that businesses and households will sign up with the network that gives them the greatest ability to interact. The analogy is drawn to Internet retail and social media businesses where the business model can be copied but where a couple of companies at most dominate the space. (On the other hand, I still have my login/passwords to a variety of ‘first movers’ services that no one under 40 would even recognize.)

With respect to money, households and businesses will choose the one with the greatest acceptance, so the first mover has a big advantage even if the technology can be copied. This is a very important argument for entrepreneurs involved with Bitcoin and the few other currencies that are leading the charge to commercialize it..

Where diseconomies of scale enter Bitcoin is through the price exposure. The maximum amount of Bitcoin is predetermined and looks likely to be hit in the 22st century. The supply of Bitcoin is set to grow relatively slowly, arguing that the price should keep rising. You can argue that the price of Bitcoin is irrelevant, since it simply reflects the unit of account for transactions. You can also see that there is a host of alternatives that may have some modest advantage over Bitcoin. Both holders of Bitcoin and transactors in Bitcoin have to assess whether the Bitcoin network advantage is strong enough to outweigh the benefits from Bitcoin alternatives. You can find examples of both, but networking situations in other domains are less dependent on reputation than are Bitcoin and other Internet currencies. And such reputational equilibria are very fragile, and probably will not survive any unaddressed issues of theft or fraud.

Moreover, if you transact in Bitcoin,  you likely will choose to hold some to facilitate transactions. The speculative surge in Bitcoin may be a disadvantage if you can find a substitute that has similar characteristics but less of a speculative component. The question is how expensive is it for a business or individual to have more than one internet currency and how much of a disincentive is it to hold a Bitcoin if the price is high, when there are good substitutes with lower prices.

4) The Bitcoin ecosystem is growing exponentially

There is a short to medium term Bitcoin argument that goes something like this. We are just scratching the surface of payment system/alternative currency development. Whatever the competitive environment, in a market that is growing exponentially fast, any reasonable player will get bid up. Ultimately when market growth flattens out, there will be a sorting out of winners and losers, but that flattening out is not visible anytime soon, barring disaster. If this is a repeat of the Internet bubble, we are in 1997, not 2000, so the gravitational pull of the technology will mask small warts and crevices in individual applications.

This is not an argument most of us feel comfortable with, because there is the risk that our calculus is wrong or that some disaster either through fraud, government interference or some breakdown in the system occurs before the market flattens.  However, many investors feel so confident that we are just in the takeoff stage, that they see themselves with a margin to invest. They also have incentives to advocate forcefully the widening of the market because that enhances the value of all existing applications.

5) Tulip bubbles

About 40% of the comments I received argued outright that Bitcoin and similar internet currencies were bubbles, or tools to evade taxes, or conduct illegal activity. Basically, the view was that the Bitcoin appreciation reflects a mixture of greed and optimism, as in Boileau (1674), “A fool always finds a greater fool to admire him." The major issues have been touched on above – replicability, susceptibility to government interference, security vulnerabilities outside the ‘ledger’ level, inability to reverse any transaction, dependence on reputation, fragility and so on. Those who think this is the internet in 1997 should recall that the NASDAQ was back to 1997 levels in 2002, and even briefly touched 1996 levels, so getting in early may mean getting in really early. Just as with the railroads and Internet, it may revolutionize society more than it makes money for investors.

Some investors argued the reverse of most of the pro-Bitcoin commentators, seeing it as most likely a bubble but on the off chance that it wasn’t, it was worth buying a couple in case the price kept shooting up. It was viewed as the high risk, high return investment, with compensation that it was good cocktail party conversation.

Conclusions

Bitcoin and other Internet currencies are viewed by some as a Beanie baby fad and by others as revolutionizing the financial system. Market acceptance of alternative currencies now looks to be growing a lot faster than the pace at which the supply of Bitcoin and Bitcoin wannabees is expanding the Internet money supply. That is unlikely to persist over the medium and long term, but for now it looks as if it would take a major scandal, security breach or heavy-handed governmental intervention to derail it.

Internet currencies suffer from the absence of an anchor to determine their value and from their dependence on reputation and fashion. Replicability is an issue that the Internet currencies will not be able to overcome easily. The role in the payments system is very concrete to investors, although many also see value in a currency in inelastic supply whose value is determined by consensus rather than the monetary authority.  Among skeptics, a minority think that security is a much bigger issue than proponents admit. However correct the longer-term concerns, there is nothing obvious to derail the expansion of Internet currencies in the near-term, as they are meeting both legitimate and illicit economic and social needs.

 


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Thu, 12/05/2013 - 22:38 | Link to Comment VD
VD's picture

social needs > CB / 1% sociopathic control needs

Thu, 12/05/2013 - 22:45 | Link to Comment markmotive
markmotive's picture

If you're worried about the NSA or other government agencies riding your a$$, electronic money certainly doesn't seem like a good idea.

'No way to hide from NSA except live in cave & revert to handwriting'

http://www.planbeconomics.com/2013/12/no-way-to-hide-from-nsa-except-liv...

Thu, 12/05/2013 - 22:55 | Link to Comment wintermute
wintermute's picture

Big banks see the light. Who wants some action in a revolutionary new global payments system far better than anything seen before? 

Thu, 12/05/2013 - 23:07 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

For the hard asset classes (ex. real estate, paintings, etc.) a 95% Au (some Ag or Pt OK too) and 5% Bitcoin seems perfectly rational to me.

Gold to $55k?  Mmm...

BTC to 7 oz Au?  Mmm...

I am still delving into BTC.  When I learn more (and I have some interesting news coming soon-ish), I will let all of my ZH friends know.

Thu, 12/05/2013 - 23:37 | Link to Comment bunzbunzbunz
bunzbunzbunz's picture

A 1 Trillion dollar market cap on bitcoin means each 1.0 is worth ~ $50,000. That doesn't mean a trillion is put into bitcoin, just that the psychological value of the whole bitcoin system is 1 trillion. Just saying...Also get some free at http://freebitco.in/?r=25727

Thu, 12/05/2013 - 23:52 | Link to Comment BLOTTO
BLOTTO's picture

Satoshi Nakamoto

.

Is it not important to know who the creator of bitcoin is?

Thu, 12/05/2013 - 23:59 | Link to Comment fonestar
fonestar's picture

No, it is not important at all to know who he is.  I believe his decision very wise as Bitcoin should only be judged on it's technical merits.

Fri, 12/06/2013 - 00:03 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Fairly soon, fonestar, I will have some anecdotal evidence to share with all of you my ZH friends re BTC and Au.  That is how I will judge BTC, can I get gold with it.

Fri, 12/06/2013 - 01:05 | Link to Comment itchy166
itchy166's picture

There is a precious metal dealer in my city who will buy or sell gold/silver for Bitcoin or buy and sell Bitcoin for dollars.

Fri, 12/06/2013 - 01:08 | Link to Comment fonestar
fonestar's picture

Go for it.  You can buy gold with pretty much any currency.

Fri, 12/06/2013 - 02:08 | Link to Comment linniepar
linniepar's picture

Bought some silver with 2.43 litecoins. He gave a discount for using crypto. He doesn't need to know how cheap I got them. ;)

Fri, 12/06/2013 - 10:30 | Link to Comment LongBalls
LongBalls's picture

When you withdraw cash to make a purchase there is no record of said transaction. With Bitcoin you are toast. BITCOIN NEEDS TO BE REJECTED at all cost. It will be turned into a method of tracking every single move you make for taxes and otherwise. We are being baited into the system. What do you think the billion dollar NSA facility in Utah is about. Your cell phone?

Fri, 12/06/2013 - 00:08 | Link to Comment BLOTTO
BLOTTO's picture

I understand...

However, is 'who' not as important as 'what?'

.

I mean, the road to hell is paved with good intentions...if some piece of shit created it, is it not neccessary to be at least cautious?Thats all.

Fri, 12/06/2013 - 09:30 | Link to Comment yrbmegr
yrbmegr's picture

How do you know?  Who controls the code?  Who can change it?

Fri, 12/06/2013 - 11:40 | Link to Comment Saro
Saro's picture

The reference software implementation is open source. He linked you directly to the code.

Anyone can download it and modify the software to their heart's content.  However, if you don't play by the rules of the Bitcoin protocol, no one will accept your transactions.  The protocol cannot be unilaterally changed by anyone.  It's fixed.

Fri, 12/06/2013 - 00:30 | Link to Comment Unpopular Truth
Unpopular Truth's picture

BLOTTO - if the code behind Bitcoin were a secret, then yes, absolutely, one should be suspicious. But it is open source!

Fri, 12/06/2013 - 01:01 | Link to Comment fonestar
fonestar's picture

Yes, if Bitcoin were not open source nobody would use it anyway and this would be a non-issue.

Fri, 12/06/2013 - 10:51 | Link to Comment yrbmegr
yrbmegr's picture

Said another way, if everybody KNEW bitcoin is not open source, nobody would use it.

Fri, 12/06/2013 - 01:23 | Link to Comment One World Mafia
One World Mafia's picture

Through its open-source Android project, Google has agreed to incorporate code, first developed by the agency in 2011

Google spokeswoman Gina Scigliano confirms that the company has already inserted some of the NSA’s programming in Android OS. "All Android code and contributors are publicly available for review at source.android.com." Scigliano says, declining to comment further.

See, there's no need to worry: the reason the NSA is generously providing the source code for every Google-based smartphone is for your own security. Oh but it's open-sourced, so someone else will intercept any and all attempts at malice. We forgot.

http://www.zerohedge.com/news/2013-07-09/nsa-has-inserted-its-code-andro...

Fri, 12/06/2013 - 01:36 | Link to Comment fonestar
fonestar's picture

Well you do raise some valid concerns in the sense that you may trust that the application you are running is open-source and vetted but it may do you no good if the device you are running the application on is not entirely open-source and is perhaps crafted by malicious actors.

Fri, 12/06/2013 - 02:45 | Link to Comment One World Mafia
One World Mafia's picture

It says code, but yes the NSA puts backdoors in every piece of hardware it can too.

Fri, 12/06/2013 - 02:51 | Link to Comment fonestar
fonestar's picture

Yes, you need to avoid anything TPM related and ideally a device should be entirely open-source from the BIOS on up.

Fri, 12/06/2013 - 04:34 | Link to Comment TheHound73
TheHound73's picture

Interestingly use of Bitcoin on Android devices found certain vulnerabilities in the Android code.  Specifically, hackers found a weakness in Android's random number generator by trying to steal funds from Android wallets.  This weakness exposed many other programs besides bitcoin, but the Android developers quickly recognized and fixed the problem.  Way-to-go bitcoin.

Fri, 12/06/2013 - 10:50 | Link to Comment yrbmegr
yrbmegr's picture

How do you know?

Fri, 12/06/2013 - 00:50 | Link to Comment merizobeach
merizobeach's picture

"Bitcoin should only be judged on it's technical merits."

Oh, good, here you are.  I have a technical question for you or any techie bitcoiners.  Please be so kind as to address the issue about the blockchain raised in this brief article: http://stormcloudsgathering.com/bitcoin-what-youre-not-being-told

Thanks.

Fri, 12/06/2013 - 01:06 | Link to Comment seek
seek's picture

So the basic argument from the link is: the blockchain holds all transactions, so it gets bigger with more transactions, and if it were due do VISA-level transactions it'd need to add another terabyte of storage roughly every week.

Then the argument takes a leap, along the lines of "bitcoin is doomed because the storage requirements are far beyond what a normal user would have. Without the storage, no bitcoin." This leap is where it goes wildly wrong.

Virtually all clients but the reference client (bitcoin-qt) already operate without downloading the blockchain locally, so that argument is moot. The network is already operating in that mode. All phone-based wallets (android) operate in this mode; think about it, the blockchain is already well over 10GB in size, it wouldn't even fit on an 8GB phone, and the data charges for downloading the blockchain would blow 5GB/mo limit most phones have.

There are tiers of users of bitcoin. At the lowest levels are the thin clients on phones, and "fast" wallet software like Multibit. They don't have local copies of the blockchain, but rely on external servers. Then there are full-fledged peers, running bitcoin-qt or another full client, that do keep a local blockchain copy; on this same tier are servers and miners that keep blockchain database copies as well. The scalability issue affects (at most) a portion of bitcoin users using a full peer -- and if storage requirements become too much for them, they can switch to a thinner wallet client like Multibit and all is well.

Meanwhile, miners and those with a vested interest will happily add storage capacity. It's exceedingly cheap and just part of operating the network and making a profit from mining or payment processing.

Nutshell: non-issue.

Now on top of this, let's talk about value-added bitcoin services. Someone who wants to create turnkey bitcoin payment processing will sell this service to businesses. This someone could even be VISA. It's very, very likely that they will aggregate payments internally before handing them over to the blockchain -- indeed they may even mine their own blocks to validate the payments, skimming off a little bit of profit with transactions that don't hit the bitcoin network. Such consolidation will likely reduce the amount of data added to the blockchain by a meaningful amount, making this even more of a non-issue.

 

Fri, 12/06/2013 - 01:34 | Link to Comment merizobeach
merizobeach's picture

Thanks for the perspective and info.  I am not technically inclined on this issue.  That said, if you'll forgive another layman's question, as the difficulty of mining new bitcoins increases over coming years, do the increasing computing requirements at some point necessitate a floor in the price in order to make continued mining viable, like PM production?  How do you see this playing out?

Fri, 12/06/2013 - 05:41 | Link to Comment zhandax
zhandax's picture

Seek, I am trying to get up to speed on this as well as some of the newer data mining programs.  Distributed storage appears rather common among higher level data platforms these days.  Is it true that BC did not use this strategy?

Fri, 12/06/2013 - 15:19 | Link to Comment seek
seek's picture

The bitcoin block chain is actually pretty small -- a few tens of GB at the moment, so there's no need for it to be distributed in the sense of cloud computing, etc.

The bitcoin storage itself is very distributed, however, as many clients maintain a full copy of the blockchain, so there's literally on the order of 100,000 copies of the blockchain distributed across the peer network, which helps performance considerably.

Note that there is nothing preventing a client (such as a web-based client) from using distributed storage if they wanted to -- that implementation would simply be separate from the bitcoin protocol, which just cares about being able to access a complete copy of the blockchain when needed, not where it's stored.

Sat, 12/07/2013 - 06:42 | Link to Comment zhandax
zhandax's picture

Well, thanks.  You have solidified my resolve to change ISPs before the end of the year.  It would take me hours to download a 'few tens of GB" now.  Hate to loose my email address, but if you are going to make an omelet.....

Fri, 12/06/2013 - 06:42 | Link to Comment Pseudonymous
Pseudonymous's picture

The marginal miner may go out of business if his reward goes below cost. That would reduce the difficulty, which has happened before. This increases the bitcoin reward for the remaining miners.

The reduction of the difficulty would happen with a lag of up to the amount of time required to mine 2016 blocks, which is the period between difficulty readjustments set in code, which is normally about two weeks. A sudden collapse in mining power (hashrate) would have the effect of slowing down transactions (taking longer than 10 minutes on average for a confirmation) until the next 2016-block period comes, when confirmation times should go back to normal.

As far as I can tell, the process has worked and will continue to work pretty well, with no shocks like the one described above. It might be worrying if too large a share of the existing miners become unprofitable, but this is unlikely as there are miners with widely varying cost and reward functions (e.g. there are miners with access to very cheap electricity and application specific hardware that can't be used for much else i.e. low opportunity cost).

Fri, 12/06/2013 - 09:54 | Link to Comment XitSam
XitSam's picture

There are organizations using networked, free computing to generate Btc.

http://tech.slashdot.org/story/13/11/30/177206/bitcoin-miners-bundled-wi...

Fri, 12/06/2013 - 15:13 | Link to Comment seek
seek's picture

"do the increasing computing requirements at some point necessitate a floor in the price in order to make continued mining viable, like PM production?"

Yes and no. This really isn't a simple question even though it looks like it is.

There are two components to mining compensation. The dominant component today is in fact actual mining -- when a miner solves a block, it gets to claim a 25 bitcoin reward for itself. The other component is transaction fees, which are pretty low at the moment but expected to scale up as the mining rewards go down. So this is where the coins themselves come from. The expectation is that the rewards from mining combined will decline over time, which means the value of the coins produced goes up (same cost inputs / few coins = more cost per coin.)

On the expense side, it's basically the cost of the miners + cost of power. Now, bitcoin is interesting because the difficulty in mining scales in both directions depending on the compute performance of the network, so there really aren't increasing computing requirements beyond a certain minimum necessary to process transactions and needing more blockchain storage, of course. You're seeing the computing requirements grow faster than needed because everyone is chasing the bitcoin rewards right now. In the past, when GPU mining dominated, what happened was that performance scaled so high that power expense became the limiting factor. Presumably we'll see the same thing happen with ASIC mining. Thus power costs set the price floor, but it's a combination of power costs plus the amount of mining compute power that ultimately sets the floor. (E.g. we could have power cost at a constant $/KWh and fewer miners, and they'd need to use less power and thus have a lower floor price than more miners.)

That said, the price floor based on power alone is really low. My miners consume about 3.6 KWh and produce about 0.4 BTC per day (24 hours) so that's 24 Hr * 3.6 KW/h * 0.15 $/KWh =  $12.96 for 0.4 bitcoins, or about $32 per bitcoin. Back in January my GPU mining rig had a cost of about $14 per bitcoin (it was actually negative return, power costs were higher than the value of bitcoin mined.) Plenty of people were mining negative-value bitcoin at the start of the year, so it shows that the floor in pricing is a soft one. (Hence my "no" in yes and no.) Given the costs v. the returns right now, the floor is pretty irrelevant as BTC is trading at 30X the power-based floor price.

My expectation is we'll see a leveling off in mining compute power sometime in the next few years, as the cost of mining equipment reaches a point where there is significant negative ROI. This all depends on the exchange rate, however. When I got my mining ASICs online in September I was looking at a negative ROI over the life of the miners, and was mining solely to minimize losses. Once the exchange rate took off, ROI went positive. If the exchange rate stabilizes then within a short amount of time (a year or two) the negative ROI appears and the compute power will stabilize as well, and then the floor prices could, but not necessarily will, come to be a factor.

Thu, 01/02/2014 - 06:29 | Link to Comment merizobeach
merizobeach's picture

Thanks again.

Fri, 12/06/2013 - 03:21 | Link to Comment Harlequin001
Harlequin001's picture

'It's very, very likely that they will aggregate payments internally before handing them over to the blockchain -- indeed they may even mine their own blocks to validate the payments, skimming off a little bit of profit with transactions that don't hit the bitcoin network.'

So you say it's possible now to do transactions outside of the bitcoin network, many of which will never hit the blockchain, and it will likely happen to reduce filesize.

Sounds like a magnet for every fraudster and scammer on the planet does it not? 

How is anyone supposed to audit this blockchain for integrity, and indeed will they?

Fri, 12/06/2013 - 10:54 | Link to Comment yrbmegr
yrbmegr's picture

This.

Plus, who can change the code?

Fri, 12/06/2013 - 15:32 | Link to Comment seek
seek's picture

Being a payment processor aggregating payments offline requires no changes to the current code. You're simply creating an independent financial ecosystem that periodically syncs account totals with the blockchain. Doing it this way loses some of the advantages of bitcoin, but potentially allows the payment processor to do value-added services (such as reversing a transaction between two parties that are both customers of the processor.)

Fri, 12/06/2013 - 15:29 | Link to Comment seek
seek's picture

I'm saying it's possible to do transactions outside the network the same way VISA does today. Let's say VISA comes out with a bitcoin app, and a VISA BTC point-of-sale system for stores. They can have you made a deposit in BTC to VISA (which shows up on the blockchain as a transfer to VISA), and maintain internal accounting of the BTC, letting you "spend" them at a store. For VISA, they just make an accounting entry show the bitcoin transfer within VISA's own accounting, and it never hits the blockchain -- because it's actually not a bitcoin transfer. At the end of the month, say the store cashes out, and VISA does another transfer (on the blockchain) to the store in BTC.

End result is two transfers on the blockchain, even though there may have been many accounting based transactions within VISA. At this point you're basically trusting them the same way as you would a bank, and any accounting issues, etc, you'd have to take up with VISA, as they're happening outside the network.

As far as magnet for scams, it's a wonderful point of attack, just like exchanges are. The vulnerabilities are at the edges of the network, where trust is involved (bitcoin itself eliminates the trust issue.) If a scammer can open a bogus exchange or bogus value added payment processor and get bitcoins dumped on them, then they can run away with the coins.

The blockchain can still get audited -- what can't get audited is accounting transactions within the payment processor that is structured this way. Obviously over payment processors may choose to only do their work on the blockchain, and use the auditability of 100% of their transactions as a selling point.

Fri, 12/06/2013 - 01:12 | Link to Comment fonestar
fonestar's picture

There are already wallets available that do not require the downloading of the entire blockchain.  As well there are technologies that are capable of compressing and truncating the blockchain to make it more managable.

Fri, 12/06/2013 - 06:59 | Link to Comment fiftybagger
fiftybagger's picture

Fonestar,

I'm using your first comment on any Bitcoin thread as a contrarian sell indicator.  If I ever see 100% up votes I'm dumping half my BTC.

Silver For The People

The Bitcoin Channel

Fri, 12/06/2013 - 00:49 | Link to Comment RideTheWalrus
RideTheWalrus's picture

Satoshi Nakamoto = Tim Osman

 

Fri, 12/06/2013 - 00:59 | Link to Comment SgtShaftoe
SgtShaftoe's picture

If one is given a map by an unknown source, and one has the capability to verify the terrain to the map to see it is correct, is it really necessary to know the true identity of the author? No. It is exactly what it is, and you're free to dig through the gritty details of the protocol. Most who have done so, have a neutral or positive view toward BTC.

Thu, 12/05/2013 - 23:53 | Link to Comment Ignatius
Ignatius's picture

I expect China to protect it's gold hedge (reserve) by supporting the paper gold price if btc continues to rise.

Fri, 12/06/2013 - 00:19 | Link to Comment Mine Is Bigger
Mine Is Bigger's picture

China is still in the accumlation mode.  So, lower prices would actually help.

Thu, 12/05/2013 - 22:57 | Link to Comment knukles
knukles's picture

Of all the gin joints in all the world, Citi has to recommend Bitcoin...

And you're telling me it's not a preplanned deal, the introduction of the cashless crypto-currency financial regime...
The NWO comes into your pocketbook.

Gentlemen, we do not negotiate with fascists and Marxists.

Fuck Bitcoin

Thu, 12/05/2013 - 23:10 | Link to Comment Grande Tetons
Grande Tetons's picture

Tyler. 

For manana? 

http://www.youtube.com/watch?v=PfeA94BedQI&feature=c4-overview&list=UUEHsSWvrGVSIA63OV3J6vhA

 

Super nodes....hmmm...reason for central bank endorsement? Nahhhhhhh  

Thu, 12/05/2013 - 23:41 | Link to Comment game theory
game theory's picture

The original bitcoin paper addressed the issue in the video you linked. Nodes don't need to maintain the full chain of blocks.  

Thu, 12/05/2013 - 23:54 | Link to Comment Grande Tetons
Grande Tetons's picture

The argument...if need be...could be made for the sake of stability. To protect the children as it were. 

http://blockchain.info/nodes-globe?series=mostStable

Thu, 12/05/2013 - 23:05 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Of all the gin joints in all the world, Citi has to recommend Bitcoin...

Play it, fonestar. You played it for her, you can play it for me.

Thu, 12/05/2013 - 23:46 | Link to Comment hmmmstrange
hmmmstrange's picture

JPM has the largest holdings in gold. Fuck JPM sell your gold.

Thu, 12/05/2013 - 23:20 | Link to Comment Wahooo
Wahooo's picture

C: divide by 10

Thu, 12/05/2013 - 23:51 | Link to Comment booboo
booboo's picture

Well if Bitcoin goes up in a puff of shit Citi gets bailed out, fonehome, mmmm, not so much.

Fri, 12/06/2013 - 00:01 | Link to Comment fonestar
fonestar's picture

this fone only accepts satoshi

Fri, 12/06/2013 - 00:01 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

just remember.........these fuckers are 10 steps ahead of everyboby else.......

~~~

Fri, 12/06/2013 - 00:54 | Link to Comment tmosley
tmosley's picture

The question remains, does the pinhead run out and sell all his gold every time a bank comes out for it?

You don't negotiate with fascists or Marxists, well, what about AnCaps?  Bitcoin is an AnCap invention, no matter what the no-thinkers (that's people who refuse to actually sit down and THINK about what bitcoin is for five minutes) make up to slander it.

People who are for gold but against bitcoin think that somehow either A. bitcoin is going to steal gold's thunder and are thus TERRIFIED and think they can stop that from happening by acting like trolls (or the irony, given the banker shills that used the same tactics against them for years), or B. that its a big conspiracy to create a whole new market that they don't really control for some reason (while making a bunch of cryptoanarchists into multi-millionaires).

They just don't get that gold and bitcoin go together like fucking peas and carrots.  Hell, bitcoin makes FREEGOLD work.  Transact in bitcoin, save in gold.  Easy peasy.  But no, nothing but sheer existential terror channeled into sour grapes.

Fri, 12/06/2013 - 01:22 | Link to Comment fonestar
fonestar's picture

All excellent points.

Fri, 12/06/2013 - 01:29 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

tmosley, your clear-thinking posts make lots of sense.  BTC and Au work well togther.  But, as I am still learning about BTC, I will take FOFOA's advice (his re gold), and buy only as much BTC as I am comfortable with.

Fri, 12/06/2013 - 00:25 | Link to Comment SgtShaftoe
SgtShaftoe's picture

The NSA isn't god, and they're certainly not very creative. The biggest weakness is the hashing protocol, but that can be upgraded whenever necessary.

The simple fact is: the people on the internet have a faster OODA loop than the spooks could ever dream to have. They lose.

Thu, 12/05/2013 - 22:46 | Link to Comment nope-1004
nope-1004's picture

Banksters embracing it. Ya.... this should turn out well.

900% gain in a few months went unnoticed for what.... 3 weeks?  lmao.  But, it's gotta go higher to climb on boyz!!!

Thu, 12/05/2013 - 23:19 | Link to Comment Tall Tom
Tall Tom's picture

As I exposed it last night there is a Futures Market in Bitcoin. The Federal Reserve, Citibank, JPM and B of AML will just sell Paper Bitcoin as they do with Gold.

 

The party was fun while it lasted.

Fri, 12/06/2013 - 00:30 | Link to Comment TheHound73
TheHound73's picture

Interesting that China specifically prohibited its banks from manipulating the Bitcoin market, yesterday.  Looks like USA banks might try to take her for a spin.  Apart from my offline coin stash, I'm willing to sell high and buy low for a while. As long as the network's up and blocks are getting solved, everything is fine by me.

Thu, 12/05/2013 - 22:41 | Link to Comment frankTHE COIN
frankTHE COIN's picture

Who is the Buyer of Last Resort for these Carnival Chips ?

Fri, 12/06/2013 - 00:15 | Link to Comment TheHound73
TheHound73's picture

sorry gramps, caveat emptor.

Fri, 12/06/2013 - 07:18 | Link to Comment Advoc8tr
Advoc8tr's picture

Wow you're right ... the buyer of last resort for USD can always just press a button and print up all the money it owes me ... silly me, safe as houses.  /sarc

I'll stick with bullion for capital but once you get going with Bitcoin you will see how much better it is for transacting internationally...  a free world currency ?

There is no buyer of last resort and none is needed.  Its only intrinsic value is that it is safe from conterfeiting and a few hundred million people all CHOOSE to use it as a trusted medium of exchange.  The USD price will make a few rich but is irrelevant to its use as a currency as the article points out.  If the price stabilizes at some point in the future and time gives faith in its security it will also make a good store of value with high liquidity given its strictly limited quantity ?

Sat, 12/07/2013 - 01:37 | Link to Comment frankTHE COIN
frankTHE COIN's picture

" High liqiudity given its strictly limited quantity "

My God Child ! have you Ever traded thru a Crash in Your Life !

We Feast off Dumb Money in a crash because of those exact thoughts.

Sat, 12/07/2013 - 01:40 | Link to Comment frankTHE COIN
frankTHE COIN's picture

" High liqiudiity given its strictly limited quantity "

My God Child ! have you Ever traded thru a Crash in Your Life !

We Feast off Dumb Money in a crash because of those exact thoughts.

Thu, 12/05/2013 - 22:41 | Link to Comment chump666
chump666's picture

A synthetic economy becoming reality.

Frightening.


Thu, 12/05/2013 - 23:17 | Link to Comment knukles
knukles's picture

Nice....
Absolutely beautiful in its elegance.

All illusions becoming reality.
Welcome to the NWO's Matrix, peasantry.

Thu, 12/05/2013 - 23:40 | Link to Comment chump666
chump666's picture

Very much so.

Historically we would be in a 21st Century version of 'bread and circuses, an evolving cycle of distractions as everything falls apart.  As long as we believe in the illusion. 

 

Fri, 12/06/2013 - 07:22 | Link to Comment Seer
Seer's picture

I'm with you guys 100%.

This leads to the mother of all rabbit holes.

The farther we've moved away from PHYSICAL/mother nature the worse it gets.

Bitcoin = New God (you cannot see it, feel it or smell it, but they tell me that it exists- you just have to believe)

Thu, 12/05/2013 - 22:43 | Link to Comment HulkHogan
HulkHogan's picture

....this means Citi is selling Bitcoins, not buying. I can't wait for Kohl's Cashcoins. I'll buy the shit out of those things.

Thu, 12/05/2013 - 23:30 | Link to Comment Tall Tom
Tall Tom's picture

No. It means that Citi is claiming to own Bitcoins and selling them naked...Paper Bitcoin...to depress the price and then they will buy to cover their short.....or...maybe not.

 

Hmmm....does this story read familiar???

 

The beauty is...It is a cryptocurrency so nobody can know who owns what. Citi can claim to own Bitcoin...and nobody on God's Green Earth can invalidate what they claim. It is the perfect vehicle...for the perfect FRAUD.

 

Do you know that feeling you get...after stepping in a pile of Dogshit? Yeah...that one.

 

Go Bitcoin. Thanks Satoshi.

 

LMAO.

Fri, 12/06/2013 - 00:10 | Link to Comment HulkHogan
HulkHogan's picture

You missed the second part of my comment though. Soon there will be Kohl Cashcoin, Target Tokens, Walmart Washingtons, JCP Jewels, etc. That's where this leads, and if you work for one of these companies go tell your boss's boss about this great idea. If you tell your boss, he will just tell his boss, fire you, and take credit for it.

Fri, 12/06/2013 - 01:25 | Link to Comment merizobeach
merizobeach's picture

I wrote a short story about this many years ago..  A giant corporation, Megaplex, whose motto was "Everything", claiming to sell everything legally purchasable from a single store; the workers are given housing as an employment benefit and paid in M$, the store's own currency, or at a discounted rate in any other currency, naturally encouraging the recycling of wages back into the store, where employees recieve further discounts.  With ForEx kiosks near entrances and registers, customers may pay with any nation's cash, and receive a minor % bonus when taking change in the store currency or buying it outright.  The rabbit hole got deeper as the story went on, but that was the initial premise: the corporation that evolves into a nationstate--its own land, 'population', currency, dictator...

"SciFi writers are just out-of-work philosophers." --former philosophy program classmate

"SciFi is not about the future." --a critique of Idiocracy

Fri, 12/06/2013 - 06:41 | Link to Comment The Final Countdown
The Final Countdown's picture

Sounds like Amazon

Fri, 12/06/2013 - 07:25 | Link to Comment Seer
Fri, 12/06/2013 - 00:18 | Link to Comment TheHound73
TheHound73's picture

If challenged, it is simple to prove you own coins.

Just digitally sign a text message with the key to the address with the coin balance.

The signature is verifiable as is the balance.

Part of the beauty of the system.

Fri, 12/06/2013 - 07:17 | Link to Comment ijunk
ijunk's picture

"The beauty is...It is a cryptocurrency so nobody can know who owns what. Citi can claim to own Bitcoin...and nobody on God's Green Earth can invalidate what they claim. It is the perfect vehicle...for the perfect FRAUD."

If someone wants you to believe they have bitcoins it's trivial for them to prove it by using their private keys to "sign messages" to the effect. If they won't then you have no reason to believe them.

Fri, 12/06/2013 - 11:49 | Link to Comment Saro
Saro's picture

"Citi can claim to own Bitcoin...and nobody on God's Green Earth can invalidate what they claim."

And JPM can claim to own gold, and nobody on God's Green Earth can invalidate that claim either.  You can't prove a negative, after all.  They can, however, prove ownership of a particular address by signing a message with the private key to that address.  It's trivial, actually.  Cryptography 101.

It's good to be skeptical, but you should always do your homework before yelling out your opinions in public.

Thu, 12/05/2013 - 22:49 | Link to Comment Unpopular Truth
Unpopular Truth's picture

The smartest government will solve its debt as follows: (a) buy a lot of bitcoin (b) call it legal tender for paying taxes, in addition to the current fiat. The ensuing appreciation alone will do the trick. Will only work for the first government that does it.

Fri, 12/06/2013 - 00:51 | Link to Comment TheHound73
TheHound73's picture

Now that right there is crazy talk better suited for some "fringe blog".

Fri, 12/06/2013 - 07:27 | Link to Comment Advoc8tr
Advoc8tr's picture

Sounds like a great idea if you ask me.  Give them 1 last free ride out (first one in only) but once Bitcoin became the national currency no more gov funny money and the shrinking would begin.

 

Plus that kinda move would make my small stash worth a lot more .... anyone work out what the price per BTC would need to be for the limited quantity to cover a few nations current fiat supply ?  Big number no doubt.

Thu, 12/05/2013 - 22:50 | Link to Comment williambanzai7
williambanzai7's picture

THE BITVERSE

Thu, 12/05/2013 - 22:56 | Link to Comment hungrydweller
hungrydweller's picture

That is AWESOME WB!  An exact representation of what crapcoin is all about.  The buttcoin apologists may whine but the bottom line is that ANYTHING that is "bit" based is controllable.  No one can control your real assets.

Fri, 12/06/2013 - 11:51 | Link to Comment Saro
Saro's picture

"No one can control your real assets."

Gold and silver cannot be stolen?

As with Bitcoin, it all depends on how good you are at hiding them.

Thu, 12/05/2013 - 22:58 | Link to Comment Rock On Roger
Rock On Roger's picture

Why is it gold colored? Can't you find your own damn color?

 

Stack On

Thu, 12/05/2013 - 23:00 | Link to Comment matrix2012
matrix2012's picture

WB7, it looks like another jewel crown for the .01%... instead of diamonds it's now decorated with bitcoins :-)

 

ha ha ha... the 21st century imaginary crown

Thu, 12/05/2013 - 23:35 | Link to Comment williambanzai7
williambanzai7's picture

I consider myself to be neutral on this subject, unless the attacks are coming from the statists and fiatists. My position is the statists who feel threatened by PM and/or Biscoin should STFU.

They just love to disparage "bugs", goldbugs, bitcoin bugs, silver bugs, mattress stuffers yadda yadda

However, one of the observations I have is that some of the run-ins that occur between certain Bitcoiners and PM stackers  reminds me of the vitriol that occurs between pro-choice advocates and right to lifers. It goes much further than a simple disagreement. It borders on the religious. Just sayin'

Meanwhile, the price behavior of Bitcoins and PM is something that is being driven or minipulated by forces transcending the various factions simply talking their respective books.

BTW, I have found it very difficult to find level reading on this subject. Most of what I come across is adversarial in one way or another.

Thu, 12/05/2013 - 23:59 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Bearing Guy likes both, but Au much more.  I have a tiny holding of BTC now, just enough to purchase some gold soon.  I welcome suggestions as to who is good in the BTC for gold coin space.

If my BTC for gold deal goes through OK, and IF (big if!) BTC prices continue to trend up (in general), then I will likely hold continue to hold on to some BTC.  My special circumstances and all, pezez...

Fri, 12/06/2013 - 00:14 | Link to Comment williambanzai7
williambanzai7's picture

There seem to be many people hedging with both. But the price of entry now seems rather frothy.

Fri, 12/06/2013 - 01:16 | Link to Comment Manipuflation
Manipuflation's picture

The issue becomes a matter of legal tender laws.  What is legal tender and what makes it so?  To who's advantage?  Cui bono?

This is not my first trip around the Sun.  

Fri, 12/06/2013 - 07:36 | Link to Comment Seer
Seer's picture

Exactly!  And I think that this point needs to be examined more closely.

Either Bitcoin is outlawed or it is embraced.  If embraced then there can be no doubt that that would entail embedding some tracking: the "terroist" thing- I think that the recent statements from China tipped off the masters' intent.

"This is not my first trip around the Sun."

I prefer to be "wise," yes.  The older you get the more these movies the more tiring they become.

Fri, 12/06/2013 - 00:07 | Link to Comment nicholforest
nicholforest's picture

The fractal nature you have ascribed to bitcoin is profound. Complex adaptive systems are self-organising and self-similar at different levels. Very much like the various human responses to the oppression of The Machine. Bitcoin is one example of such decentralised responses. As is: open-source software, bit-torrent and unconditional love, to name but a few.

Fri, 12/06/2013 - 00:13 | Link to Comment williambanzai7
williambanzai7's picture

Five years ago I read a bunch of trading books. Mandelbrots Mis-Behavior of Markets and a few other similar books were a eureka moment for me. 

Fri, 12/06/2013 - 05:52 | Link to Comment The Abstraction...
The Abstraction of Justice's picture

I know a university professor of mathematics who thinks that chaos is all you need know about economics. He does not hold a gram of gold, and would not listen to me when I suggested he get some.

Fri, 12/06/2013 - 00:29 | Link to Comment SgtShaftoe
SgtShaftoe's picture

What if I swing both ways? I like both. Bitcoin offers a little yield while I wait for gold to take off.

Fri, 12/06/2013 - 01:06 | Link to Comment Manipuflation
Manipuflation's picture

Accurate.

Fri, 12/06/2013 - 05:52 | Link to Comment The Abstraction...
The Abstraction of Justice's picture

Try using it, rather than just reading about it.

Thu, 12/05/2013 - 23:11 | Link to Comment wintermute
wintermute's picture

Genius WB7.

Fri, 12/06/2013 - 00:01 | Link to Comment BLOTTO
BLOTTO's picture

Juliacoin

its behaviour is chaotic...

Fri, 12/06/2013 - 00:06 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Plus real and imaginary numbers and all!

Fri, 12/06/2013 - 00:26 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

That is a very nice fractal against a great background. Beautiful WB7.

Thu, 12/05/2013 - 22:51 | Link to Comment Son of Captain Nemo
Son of Captain Nemo's picture

Let Me Repeat...

Package for fonestar!

This from a 2011 broadcast on "working with the Federal Government"...

http://12160.info/forum/topics/bitcoin-developer-confirms-he-s-working-with-gov-to-give-control

Thu, 12/05/2013 - 23:15 | Link to Comment dryam
dryam's picture

Thanks, that was informative.

Fri, 12/06/2013 - 00:44 | Link to Comment seek
seek's picture

The comment "working with the federal government" is taken so far out of context on that page as to be an outright lie.

For a bitcoin exchange to operate in the US above the hobby level, it needs a money transmitter license, the same as Western Union. Exchanges -- in the US -- without them get shut down. The developer mentioned is not working with the US government, nor has he done and changes in software for the government -- he simply replied to a question that the exchanges are getting licensed. There is a huge difference between the two that makes that site's assertion that "Bitcoin developer Jeff Garzik explicit confirms on TV he is working with government and keeps updating the bitcoin protocol often to give control and power to US goverment" completely incorrect and is obviously so once you watch the video in context.

Anyone handling any significant amount of money has to deal with anti-money-laundring laws; when a used car dealer turns in a report on a large cash transaction, it doesn't mean that the mechanics at the dealership work for the Feds. The fact that Garzik answers a question by pointing out that exchanges are complying with US law regarding licensing is getting interpreted as updating the protocol for the government is pants-on-head retarded and speaks more to the agenda of the person speaking it than it does to the truth of the matter.

There haven't been any meaningful changes to the bitcoin protocol or bitcoin software made since their release that aid the government in any way, and if there were, people would reject the new clients and bitcoin would fork.

 

Fri, 12/06/2013 - 11:30 | Link to Comment Son of Captain Nemo
Son of Captain Nemo's picture

On your comment(s)

Anyone handling any significant amount of money has to deal with anti-money-laundring laws...

Yes and which "laws" might those be?  The ones that protect JPM and HSBC?

There haven't been any meaningful changes to the bitcoin protocol or bitcoin software made since their release that aid the government in any way...

Stay tuned.

Fri, 12/06/2013 - 11:55 | Link to Comment Saro
Saro's picture

"Stay tuned."

Keep reading: "people would reject the new clients and bitcoin would fork."

Changes to the protocol would cause a fork in the blockchain.  Essentially, any change the government tried to make would create a completely new cryptocurrency (GovCoin?), and Bitcoin would continue on as it always was, immune to tampering.

Thu, 12/05/2013 - 22:54 | Link to Comment Dre4dwolf
Dre4dwolf's picture

The social needs is online gambling.

People want to gamble online, and Bitcoins facilitate that need.

If there was an online casino that let you buy and sell dollar denominated playing chips, it would pretty much serve the exact purpose bitcoin is serving.

 

Bitcoin appeals to human vices, its propped up/backed by chinese gambling, american drug addictions and the need to secretly wire money between countries ;).

The dollar is backed by threat of force and murder (what? you don't want to sell me your oil for dollars? , invasion incoming, send in the drones).

 

Thu, 12/05/2013 - 22:56 | Link to Comment HulkHogan
HulkHogan's picture

I'd buy some today if the WSOP site would let me use them.

Thu, 12/05/2013 - 23:20 | Link to Comment Marco
Marco's picture

"If there was an online casino that let you buy and sell dollar denominated playing chips, it would pretty much serve the exact purpose bitcoin is serving."

Yeah, but the barrier of entry for bitcoins is lower than daytrading FX.

Thu, 12/05/2013 - 22:56 | Link to Comment matrix2012
matrix2012's picture

Long Live Bitcoins!!!

 

I plan to convert 30% of my wealth into bitcoins, to ride on its sky-high sudden fortune... :-)

 

ha ha ha... but to think again, will first give it another 2-year span to see its ultimate destiny.... ha ha ha ...

 

what a 21st century big joke LOL

 

 

“Lots of people are betting on the greater fool..."

Thu, 12/05/2013 - 23:08 | Link to Comment Thing1Thing2
Thing1Thing2's picture

"Bitcoins, bitcoin wannabees and the Internet money supply" is getting so much attention it too big to fail, blah, blah, blah, yeah right.  This is something the FED will be sure to kill for the for the mass market and wall street folks.

Thu, 12/05/2013 - 23:23 | Link to Comment knukles
knukles's picture

Hey, wait a minute....

That's the same line generated 100 years ago this month about the Creature from Jeckyll Island!

I shit you not!

Hurray hurray hurray, step right up, getchurs while they last, and if you call now, we'll double the deal, just add shipping, handling, your social security and your DHS RFID implant ID number and we'll pipe the shit straight into your home.... This offer is for a limited time only, brought to you by Mike Hayden Enterprises, Box 666, Washington DC

Fri, 12/06/2013 - 00:53 | Link to Comment Manipuflation
Manipuflation's picture

My power is off.  Now what?

Fri, 12/06/2013 - 07:41 | Link to Comment Seer
Seer's picture

Well... you're no one if you don't have power! </sarc>

Thu, 12/05/2013 - 23:13 | Link to Comment villainvomit
villainvomit's picture

Hey VV give me a bid on a million BC.....

 

PASS  ! 

 

Canicula asina caniculae!

Thu, 12/05/2013 - 23:13 | Link to Comment loveyajimbo
loveyajimbo's picture

Color me skeptical.. I think Obunga is a muslim homo criminal non-citizen incompetent fraud... and I think Bitcoin will explode like the tulip thing...

Thu, 12/05/2013 - 23:48 | Link to Comment Tall Tom
Tall Tom's picture

Bitcoin is planned as the replacement for the US Dollar. They want to be able to tax Bank Depositors on their Savings through charging them to have Savings Accounts. The Central Planners believe that this will stimulate the economy.

 

Of course, in response, the Savers will just withdraw their cash from the Banks.

 

So they want to make Paper Currency a thing of the past. They outright declare by Fiat that Paper Currency is valueless, no longer a Legal Tender. Or they hyperinflate the value of the US Dollar away to zero.

 

Bitcoin becomes the replacement currency.

 

All of you involved in making Bitcoin a viable currency were COMPLICIT in bringing this reality to a fruition. Your short term GREED has screwed you, and everyone else, in the long term.

 

Of course Satoshi was an NSA Operative. What would you expect?

 

The Central Planners play the people like a God Damned Symphony playing instruments and singing hymns to Satan, the Beast.

Fri, 12/06/2013 - 00:40 | Link to Comment SgtShaftoe
SgtShaftoe's picture

Fact 1: the CBs aren't creative.
Fact 2: governments require a currency that can be printed into oblivion
Fact 3: corrupt groups depend on secrecy of mechanics (closed source code) to conduct evil. Those things cannot survive the light of day.

Bitcoin breaks many of these requirements. Unless this is an abolutely BRILLIANT! managed retreat (unlikely). It's organic.

Fri, 12/06/2013 - 09:44 | Link to Comment Seer
Seer's picture

"Organic," yeah, that's the word that comes to mind when I think of computers/electronics! </sarc>

Fri, 12/06/2013 - 00:59 | Link to Comment TheHound73
TheHound73's picture

WOW! Well, what are you going to do? Sue me?

Have fun with your paper dollars in your bank, dude.

Fri, 12/06/2013 - 04:15 | Link to Comment Tall Tom
Tall Tom's picture

Gold. I spend the toilet paper...after I use it. LOL

Fri, 12/06/2013 - 01:22 | Link to Comment itchy166
itchy166's picture

The central bankers would replace dollars with SDR's.  Cryptocurrencies make that much harder to do.

 

Fri, 12/06/2013 - 07:49 | Link to Comment Seer
Seer's picture

One point of possible disagreement:

"Of course, in response, the Savers will just withdraw their cash from the Banks."

Well, not disagreement as such, but... are there really "Savers" left?

The clear facts are:

1) The USD is being recalled;

2) There WILL be a replacement, though whether the result will be a global currency is to be seen (must keep in mind that the majority of humans on the planet have no ability to do electronic stuff);

3) TPTB WILL ensure that they stay in positions of power.

Fact #3 is paramont in forecasting the outcome here.

Thu, 12/05/2013 - 23:40 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

CITI = SAUDIS  (Largest single shareholder)

Judge accordingly

Fri, 12/06/2013 - 00:02 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

BTC + AU = Match made in Heaven = Match hated in CB Hell

Expect PR campaign from CBs, MSM and shills accordingly.

Fri, 12/06/2013 - 00:11 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Aye, Cap'n.  As mentioned above, I like Au and BTC.  I like Au a lot more though.

Fri, 12/06/2013 - 01:26 | Link to Comment itchy166
itchy166's picture

Yes, one holds wealth, and the other can move wealth around the planet without being traced.  A perfect match,and an excellent hedge against paper currencies.

Fri, 12/06/2013 - 00:11 | Link to Comment boogerbently
boogerbently's picture

In their zeal to find a safe "fiat" replacement, I'm afraid the usually cynical and careful ZH crowd has embraced the only "game in town".

IT'S AN ILLUSION !!! 

Fri, 12/06/2013 - 00:23 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

"By contrast, central banks have a mandate to stabilize the economy and financial system, even if you see their performance as inept in practice."

 

I see their performance, nay, their very existence, as criminal.

Fri, 12/06/2013 - 00:50 | Link to Comment SgtShaftoe
SgtShaftoe's picture

On the central bank thing: by removing volatility and creating ephemeral stability, they create the environment for super storms, i.e. black swans. The little crashes that barely made the history books are far more preferable to the the fucking ass-raping monster staring us all in the face.

Fri, 12/06/2013 - 01:13 | Link to Comment WallowaMountainMan
WallowaMountainMan's picture

"or an intelligence authoring a map that has no bounds but is limited in space,"

 

botcoin.com is for sale.

 

maybe they'll accept bitcoins

 

:)

 

Fri, 12/06/2013 - 01:18 | Link to Comment Godisanhftbot
Godisanhftbot's picture

 Bitcoin is simply an agreement by a large mob of miscreants to invest value in something that is basically  worthless

 

 How to argue with millions of scum? They can get quite loud when they yell(buy).

Fri, 12/06/2013 - 01:39 | Link to Comment itchy166
itchy166's picture

No different than USD or JPY or any other fiat - they are all just feeble agreements to recognize value where there isn't any.  The difference with Bitcoin is that it can not be inflated away to nothing. 

The grid goes down though, and you'd better have some PM's

Fri, 12/06/2013 - 11:59 | Link to Comment Saro
Saro's picture

"The grid goes down though, and you'd better have some PM's"

The grid goes down, and you'd better have some lead.  I'm not trading the can of beans I need to survive for your shiny rock.

Fri, 12/06/2013 - 01:20 | Link to Comment Godisanhftbot
Godisanhftbot's picture

 Just in principle, I'd like to see it all evaporate overnight , trapping 99% of the idiot holders.

 

 Just like a halted pink sheet scam.

 

 Wont happen though. Makes too much sense.

Fri, 12/06/2013 - 02:59 | Link to Comment cocoablini
cocoablini's picture

Citi wouldn't be saying this without permssion from the FED and the NSA.

Imagine, a currency ONLY supercomputers can "mine." Imagine, the world's largest mathematics dept.(NSA) with no oversight a huge budget throwing their resources into creating bicoins. So, all the gold in China becomes near useless as a transactional currency and the new reserve currency(based on cyber processing) becomes a reserve currency.

The US dollar(sovereign) supplanted by a corporate coin. Nobody can make a bitcoing without a huge computer. You can't pan for bitcoins folks. Its truly a currency designed for the .01%.

Since the US senior currency is self-destructing and the deflation destroys the global economy, the people in charge have designed the reboot mechanism. Look at Japan- deflation is a cancer. Humanity can only run in inflationary environoments and with the currencies going tits up you have to restart with a new pyramid scheme mechanism 

Fri, 12/06/2013 - 05:48 | Link to Comment The Abstraction...
The Abstraction of Justice's picture

YOu need to look into pooled mining. A supercomputer would also less likely perform as well as a bank of decent asic devices.

Fri, 12/06/2013 - 09:40 | Link to Comment Seer
Seer's picture

Kind of depends on whether there's power and a network available or not...

I think it quite unwise to not study/understand the underlying weaknesses of the infrastructure that's required here.

Fri, 12/06/2013 - 07:54 | Link to Comment Seer
Seer's picture

"Humanity can only run in inflationary environoments"

And Mother Nature -the PHYSICAL world- has everything to say about this ability/outcome.

Fri, 12/06/2013 - 05:12 | Link to Comment CultiVader
CultiVader's picture

Tulips anyone? they're trending. Better get some now! Good thing I grow my own.  Hey i hear playdough-coin is about to take off.

Fri, 12/06/2013 - 05:17 | Link to Comment CultiVader
CultiVader's picture

and fuck off fonestar...tired of ur shit...hope u have a fucked up holidays

Fri, 12/06/2013 - 09:28 | Link to Comment Seer
Seer's picture

Though I do not agree with fonestar on this issue I don't think that wishing someone "fucked up holidays" is a mature response.

Anyone putting their "money" where their mouth is deserves some bit of respect.  Time will tell whether things work out for any of us...

Fri, 12/06/2013 - 07:05 | Link to Comment cristo
cristo's picture

  I liquidated 75% of my bitcoins last friday . Thanks suckers !!!!!!

Tomorrow i'm buying a kilo bar of gold and 1000oz's of silver maples . Thank god for the greater fool .

 

 

Fri, 12/06/2013 - 11:58 | Link to Comment Saro
Saro's picture

How much for the other 25%?

Fri, 12/06/2013 - 08:12 | Link to Comment fredquimby
fredquimby's picture

Great post Tyler. Enjoyed the read. Thanks.

I mentioned it before, but protoshares from invictus innovations are clearly going down a "non-currency" route with their protoshares "coin". 

They are proposing DAC's. Digital Automated Corporations, which can be employed for all manner of auto-managing projects, from voting to fund-raising. A fantastic concept.

And as they put it so well: "This Revolution will be Decentralized"

 

Fri, 12/06/2013 - 08:34 | Link to Comment fredquimby
fredquimby's picture

and fuck off fonestar...tired of ur shit...hope u have a fucked up holidays

We should be glad the likes of fonestar still keep posting a different view on here inspite of all the ad hominem attacks against him for simply stating an opinion.

Yes, it is fightclub here, but shouldn't it be the subjects discussed here that are fought over? It would be very boring if it were just 50 "agreed" comments following every article.....

Cheers to fonestar !

 

 

 

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