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Bitcoin As An Alternative Currency? - Libertarian Vs Pragmatist

Tyler Durden's picture


One question that keeps popping up, and was addressed to some extent by NAB's recent report, is whether all the elements of the current Bitcoin are necessary for a viable alternative currency.  And, as Citi's Steve Englander asks (from a libertarian and pragmatic perspective), if they are not, or can be improved on, where does that leave Bitcoin’s first mover advantage?


Via Citi's Steven Englander,

The libertarian streak in me likes the anonymity of Bitcoin transactions, but there  is a rational part of me that asks whether that aspect is essential if I am paying for a latte in Soho.  Similarly if the Bitcoin wallet can be made more secure by dropping  anonymity, how many transactors will give up transactional security for libertarian principle? Giving up anonymity may make Bitcoin transactions more secure, and I suspect almost all transactors will value security much more than anonymity.

Going further, Bitcoin’s decentralized nodes are not needed, if there was less concern about keeping Bitcoin outside the current payments/fiat currency system. The nodes allow transactions to be validated by the Bitcoin community, but you can have efficient transactions without the particular validation system used by Bitcoin.   The secure ledger of transactions can be centralized rather than decentralized. Bitcoin’s particular approach may be attractive for those who really want to operate outside the current financial system. There may be both legitimate and illegitimate reasons for this, but the vast majority of  transactions do not have this need

Going even further, if Bitcoin or an alternative currency embraced the financial regulatory system to make it more secure, how much payments efficiency is lost? You can still have secure, instantaneous transactions but inside the financial system there may be more security against fraud and more recourse if your Bitcoins are contained in your PC which gets hit by a meteor.

So there is this story about a special recipe for potato fritters (a very good recipe that I have tried). When a chef is handed the recipe, she decides to  ‘improve’ it by replacing each ingredient one-by-one with something more familiar. Having done so, she and her husband decide that the final result isn’t nearly as good as advertised and is pretty close to what they prepare all the time.  In eliminating anonymity, decentralization and non-regulation, much of the original intent of the Bitcoin developer(s) is being thwarted. The question is whether the core innovation of Bitcoin has been compromised or whether unneeded baggage is being  dropped.

For the record, mining Bitcoin is waste of resources from a social perspective. The amount of CPU and electricity needed to mine Bitcoin is high, and from a social viewpoint about as valuable as building defenses against attacks from Mars. What the mining  does is decide the allocation of the limited amount of Bitcoin produced each period and encourage the ledger to be kept. There is a  real social cost to the decentralization designed into Bitcoin.

If Bitcoin is a payments technology, much of what makes it efficient and attractive can be retained, while dropping some features that most users find unnecessary. Bitcoin may become less attractive to illicit users as a result, but that is a sacrifice many will be willing to make. Culturally, the developers of Bitcoin may find this evolution extremely unattractive, because the distrust of the financial system and of financial authorities was one of the motivations for its development. However attractive philosophically, many users will vote for pragmatism over principle and a Bitcoin clone that satisfied this pragmatic streak could be able to overcome the first mover advantage.

So far I have ignored Bitcoin as a store of value, but the proponents of Bitcoin as a store of value/speculation crucially need Bitcoin to be unique and have strong barriers to entry, despite the replicability of the technology. If it turns out that investors/miners will arbitrage between Bitcoin and other mined alternative currencies, the outcome will be that there are many perfect or near perfect substitutes for Bitcoin, and the effective supply will be much larger than would be suggested by the gradually increasing and ultimately capped supply of the original Bitcoin.  This will mean that valuations will be very fragile because in the long-term there will be no ability to limit the supply of Bitcoin lookalikes ... unless some subset of Bitcoin-like currencies gain government/central bank endorsement which gives them an advantage over non-endorsed Bitcoin-like currencies.

Further, the Fed is now started on tapering and the BoE is talking about tightening, however slowly. Whatever sins major central banks commit, they are forgiven rapidly when they show any sign of moving back to orthodoxy,  provided they have not hugely compromised price stability, and sometimes even when they have. Improved confidence in some G4 fiat currencies is giving gold bad days, and the willingness to take the risk on alternative currencies may be inverse to how unrestrained major central banks are in their reserves creation.  Investors and central banks are looking for improved stores of value beyond fiat currencies, and Bitcoin possibly may be one of them. There are scenarios in which it could work as a store of value  but there are clearly many, many outcomes in which Bitcoin is one of a bunch of alternatives with a very indeterminate value.

Bottom line, there is the possibility that Bitcoin represents a big step forward in payments technology, but there are also seem to be straightforward ways to improve on its security, make it less attractive to criminals and more attractive to governments. It is far from guaranteed that that it will emerge as a stable store of value. Either function would be enhanced if it were within the financial system and embraced by the authorities, but it is unclear whether the Bitcoin philosophy will change fast enough or whether an alternative alternative will pip Bitcoin’s original first mover advantage.


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Mon, 12/30/2013 - 22:41 | 4287229 VD
VD's picture

almost could have been written by the likes of Paul Krugman! what a douche! and a total faux libertarian!

Mon, 12/30/2013 - 22:53 | 4287254 Clowns on Acid
Clowns on Acid's picture

No not really. I didn't get that from the article. What I got was the practical issues of BitCoin becoming an accepted means of implementing transactions. One area that the author did not cover was settlement time. How long does it take t be confirmed that one's transaction is completed for X BitCoin, and that transaction was executed at a Bitcoin rate of abc / usd.

Business pay apporx 3% for credit card transactions which they would love to save thru BitCoin. The issue becomes howlong do they have to hold the Bitcoin received from the customer before transacting that Bit Coin into USD. 

Mon, 12/30/2013 - 22:56 | 4287261 VD
VD's picture

yes, really. and if you'd learn about BTC some, you'd know that transaction time is nearly instantaneous and yet another superior feature.

Mon, 12/30/2013 - 23:05 | 4287284 Clowns on Acid
Clowns on Acid's picture

From what I understand .. confirmation of trade price takes  more thasn 15 minues and sometimes a day ... depending on the amount of BiTCoin.

Drop the smug reply VD ya douche. I have seen you post and you and not an expert on anything.  

Mon, 12/30/2013 - 23:42 | 4287364 MSO
MSO's picture

You are correct. Each transaction must be confirmed at least 6 times before it is validated.  Each found block must be confirmed 100 times (100 new blocks) before it becomes official and I thought transactions did too. But whatever the 6 confirmations are, they're not new blocks.

Tue, 12/31/2013 - 00:17 | 4287444 Prisoners_dilemna
Prisoners_dilemna's picture

"Either function would be enhanced if it were within the financial system and embraced by the authorities, " do I need to comment on this one?

"For the record, mining Bitcoin is waste of resources from a social perspective. The amount of CPU and electricity needed to mine Bitcoin is high, and from a social viewpoint about as valuable as building defenses against attacks from Mars." ?!?!  And auditing the blockchain has absolutely nothing to do with preventing a double spend aka counterfeiting. Oddly he doesn't mention any other form of wasteful spending. Bitcoin is an egregiously wasteful system we have?!?! Really?? This might also be the only libertarian thing he said.... because didn't Paul krugman suggest we should war against Martians to improve GDP?? Going against Paul Krugman gives at least 1 point towards being a libertarian.

In eliminating anonymity, decentralization and non-regulation, much of the original intent of the Bitcoin developer(s) is being thwarted. The question is whether the core innovation of Bitcoin has been compromised or whether unneeded baggage is being  dropped.  I can protect myself from fraud by individuals fairly well. I feel victimized by a certain group of fraudsters and they didn't use Bitcoin to abuse me or my countrymen.

The secure ledger of transactions can be centralized rather than decentralized.
There may be both legitimate and illegitimate reasons for this (decentralized blockchain), but the vast majority of  transactions do not have this need. Whether any consumer knows it or not, they are better off by a return to honest money. The vast majority of transactions these days are probably between cronies and criminals, most of the are connected in some way to the money spigot known at the Fed.


I read to the end. It seems Englander is not a libertarian and does not yet understand bitcoin except as a payment system. "How is this bitcoin different from our current digital form of federal reserve notes?" he asks. As I read his words I got the impression he thought our current monetary system is sound and so bitcoin brings nothing to the table.... except for those darn silk roaders.

His hubris prevents him from seeing the disruptive nature of this technology. I'm glad.

One more banker who will be caught with his shorts down.

Tue, 12/31/2013 - 00:20 | 4287447 fonestar
fonestar's picture

This article was crap.  He's not a libertarian (definitely not a crypto-anarchist) and doesn't understand what Bitcoin is.

Tue, 12/31/2013 - 01:02 | 4287519 CrazyCooter
CrazyCooter's picture

Now that is the kind of rebuttal that keeps me coming back to ZH!




Tue, 12/31/2013 - 02:06 | 4287616 CrazyCooter
CrazyCooter's picture

Fonestar, I am going home after working late and I was really looking forward to your response. In its absence, I will follow up with a more thoughtful critique of your post.

Your previous argument really came across (to me anyway) like this ...

Do you see the light?!?!? Preach the word to the herd, brother! Can I get an amen?!?!

Let us step away from faith and have a logical "come to Jesus" discussion, shall we? Bitcoin is just a phase in the ABG strategy of central banks. It is not accident and is all by design. There are mountains of fiat to pour into bitcoin (merchants, exchanges, etc) as time goes by to capture the imagination (i.e. greed) of the general public, thus keeping them from taking a fancy to something that can't be (literally) conjured out of thin air. And when bitcoin loses steam (it will) another will step up and keep the music playing for a while longer.

If you like to gamble, there is a lot of upside left to come, but in the end it will go to zero. Just. Like. Fiat.

So, rather than ad hominem attacks, why not address a central theme in the article ...

... the proponents of Bitcoin as a store of value/speculation crucially need Bitcoin to be unique and have strong barriers to entry, despite the replicability of the technology. If it turns out that investors/miners will arbitrage between Bitcoin and other mined alternative currencies, the outcome will be that there are many perfect or near perfect substitutes for Bitcoin, and the effective supply will be much larger than would be suggested by the gradually increasing and ultimately capped supply of the original Bitcoin.

This is ECON 101 (i.e. supply/demand) ... why don't you attack *that* and show how bitcoin is the *only* digital currency that could ever exist? This is precisely what is wrong with fiat. The key issue is not that bit coin is limited (it is), but that there can be infinite digital currencies with many of the same or identical qualities.

This is the opening act in the ABG strategy by central banks ... I am certain there will be more to follow ...



ABG = Anything But Gold

Tue, 12/31/2013 - 04:57 | 4287714 Zero Point
Zero Point's picture

Spot on Cooter.

I made a few bucks speculating (which was fucking hard work mind you), but Bitcoin sure ain't a precious individual snowflake.

Unlike PMs, there are infinite bitcoin wannabes just waiting, and ALL have the exact same utility.

Tue, 12/31/2013 - 06:22 | 4287749 fredquimby
fredquimby's picture

But none have four years experience of resisting being broken.

When they do, bitcoin will be nearly 10 years old.

You can't buy that.



Tue, 12/31/2013 - 07:38 | 4287782 imbtween
imbtween's picture

I predict Doge Coin will assume the mantle of top coin only because they are based on a stupid, yet lovable, internet meme.

Wed, 01/01/2014 - 02:54 | 4290449 aminorex
aminorex's picture

They do not have the same utility because they are not a tiny fraction as secure as bitcoin nor do they have a tiny fraction of the network size that bitcoin has.  The value of a network node rises as the square of the number of nodes in the network.  The value of the bitcoin network rises linearly with increasing hashing power.

Tue, 12/31/2013 - 06:03 | 4287743 debtor of last ...
debtor of last resort's picture

Quite right. I said the same a month ago in the article with a list of crypto currencies.

Tue, 12/31/2013 - 06:23 | 4287750 TheHound73
TheHound73's picture

There would be some warning signs if Bitcoin begins to lose it's first-mover advantage:

Hashpower:  Miners provide security for the Bitcoin network.  If Miner's drop off the bitcoin network and start to mine another currency, this can be observed.  A weakly mined currency can be destroyed by attackers with more computing power. (This is also theoretically possible with bitcoin and should be factored into everybody's risk profile for BTC).

Liquidity: Crypto-currency users will only want to acquire a currency they have hopes to be able to trade with in the future.  This includes over-all user base who might be willing to acquire more currency as well as Merchants acceptance in return for goods or services.

For both of these features Bitcoin is a few orders of magnitude ahead of the nearest competition and there is every indication it will extend the lead in the near to medium term.

Tue, 12/31/2013 - 13:39 | 4287876 fiftybagger
fiftybagger's picture

"why don't you attack *that* and show how bitcoin is the *only* digital currency that could ever exist?"

Because we don't have to show that.  Bitcoin being the only one, or the best one, is only an argument for how high its price may eventually go when all the holders of state fiat come rushing in, not for its utility.  Bitcoin has the same utility at one dollar as it does at one million dollars.  Get it?  Probably not.

Think of it this way.  Let's say that I invent a teleportation machine which can instantaneously send anything anywhere on the planet.  How much value would that have?  Now imagine that I start selling these things.  Would you expect a large demand?  Now imagine a competitor duplicates my machine and starts selling his for half price.  Even though my potential profit has decreased, in what way has the utility of my machine decreased?

Now imagine a world where everyone has one of these machines.  How disruptive to the current order would that be?  So is Bitcoin.

The Bitcoin Channel

Tue, 12/31/2013 - 01:48 | 4287596 Fail2Deliver
Fail2Deliver's picture

I stopped reading when I saw the article was quoting someone from Citi. I have zero faith in anything a bankster is spewing.

Tue, 12/31/2013 - 06:56 | 4287754 Anasteus
Anasteus's picture

... and your decision was right. The whole article is nothing but a hidden bankster's anti-bitcoin propaganda and an insidious attempt to confuse bitcoiners by enumerating objections that are in fact prerogatives, while pretending sort of 'interest' in some aspects of the virtual currency. The deliberation on 'how to manage the currency to attract the authorities' speaks for itself.

I wonder how one can even consider the main statist agent like Citi to be worth mentioning as regards the merits of bitcoin.

-100 for the article.

Tue, 12/31/2013 - 11:16 | 4288227 davidgdg
davidgdg's picture

Transactions are confirmed by the network in 2-3 seconds. For transactions of less than about US 20,000, this is sufficient because the cost and difficulty of a successful double spend would far exceed any gain. The reality is that it is quite unnecessary to wait for confirmations except for ultra-high value transactions (eg cars or houses) when a delay of a few minutes is neither here nor there. This is far superior to any existing payment method.

Mon, 12/30/2013 - 23:10 | 4287298 Seer
Seer's picture

Poor reply.  Simple as that.  For two reasons:

1) You failed to read what was written;

2) So far BTC proponents (such as yourself) have tended to sidestep the issue of clearing.

On this second point is what I have issues with: well, someone should slap you up-side the head the first point.  I'd been there and done that with crypto-currencies.  Development ALSO boasted cheaper transation costs.  Trouble is, however, it wasn't ours to really cost out; this is the same for the BTC folks- in no way can you cost it out.  This leaves the whole "cheaper transaction costs" argument/selling point as null and invalid.  Yes, I get it that peer-to-peer transactions can be done "instantaneously" and with basically no cost, but, again, if you read the article you should catch the ramifications of having this all go mainstream- absolutely will need to have some clearing party in the mix, and w/o knowing what their costs are likely to be you cannot say that such a feature will be cheaper: perhaps so, but how much? (those pitching new things always tend toward over-externalizing costs [under acknowleding true costs]).

BTW - The writer of this article needs an editor.  Really shoddy work... painful to read.

Mon, 12/30/2013 - 23:23 | 4287325 bobert
bobert's picture

It seems that GS is vying for the clearing house job.

Tue, 12/31/2013 - 02:52 | 4287654 dark pools of soros
dark pools of soros's picture

At least GS seem to have 'gotten it' about bitcoin more than the other bankers for whatever reason.  Looks like they know how to just come in and play the game the way it is suppose to be played.  What they will do after they get their claws in might be another story but the other bankers seem to just 'be mad' that they can't control it from the start.



Tue, 12/31/2013 - 06:55 | 4287765 malikai
malikai's picture


They mad, bro.

Tue, 12/31/2013 - 00:31 | 4287480 digi
digi's picture

I don't understand what you mean? The miners clear the transactions. If Goldman Sachs wants to mine thats good for them, they will have to follow the rules of the protocol like everyone else or make their own coin and convince everyone they should use it instead. For the next couple decades the mining transaction fee will remain low as it is of trivial cost for a miner to include a transaction as long as they are receiving the block reward. As for what happens once the block reward diminsishes, no one is quite sure yet but there are plenty of developers pondering over it and they have a decent chunk of time to figure it out.

Tue, 12/31/2013 - 01:01 | 4287510 Clowns on Acid
Clowns on Acid's picture

digi - This what I was trying to get answered, and Seer touched upon it. For businesses to accept BitCoin and tus "save" their 3-5% credit card charges, the3y need to be able to:

  1. Recognize that their offer of $100 for their product (for example) has been hit / transacted upon. Receive the $100 equivalent of Bitcoin.
    1. How does business connect to BitCoin ? How does customer send $100 of BitCoin to Business? 
  2. Now that buisness "owns" $100 equivalent of Bitcoin, how does business manage the price risk / volatility of its present $100 of BitCoin?
    1. Presumably business wants to immediately sell the BitCoin for at least $100. How long will it take for the business to do that?   
Tue, 12/31/2013 - 01:11 | 4287543 Prisoners_dilemna
Prisoners_dilemna's picture

I suggest you read up on the Bitpay service and ask their 15,000 merchants. That was one of the three payment processors that was considering working with. That's bitcoin as payment processor.


Bitcoin as libertarian money has a slightly different answer...

"If I accepted a strong currency as payment would I convert any of it to a weak currency except for the portion that I have to for taxes etc"


The CEO of did a second interview and his libertarian side came out. I will not be at all surprised to see target employees receive partial payment in bitcoin. isn't the first company to do this, but they might be the largest.

Tue, 12/31/2013 - 01:21 | 4287567 CrazyCooter
CrazyCooter's picture

They can't because the denominator is (really) in gold?



Tue, 12/31/2013 - 07:43 | 4287770 digi
digi's picture

You can do all of those things yourself or you can have a 3rd party payment processor do them for you. Both of these are beneficial compared to the current system. Before there was no DIY option of accepting online payments short of convincing your customers to mail you some cash through the postage. And the barrier of entry to becoming a bitcoin payment processor is much lower than becoming one for USD via credit cards.

If going the DIY route which is the true idea behind bitcoin, p2p. The business would download the client and setup their wallet. They then give the wallet address to the customer, who using their own client software would send payment from their wallet to the business. All of this can and is automated in software down to a couple of clicks or less. The business can now decide to hold the bitcoins or transact with them. If they choose to trade back in to fiat they would most likely use one of the exchanges where the mess of the fiat transfer system will have them getting their dollars in around about a week.

Tue, 12/31/2013 - 01:18 | 4287562 TheHound73
TheHound73's picture

Once a transaction is broadcast, it can't be taken back.  The main issue with clearing is double-spending... A customer broadcasts two transactions simultaneously hoping the second transaction being sent to his own address is the one that gets accepted into the blockchain while walking away with the goods "paid for" by the first transaction.  While extremly rare, blocks can be discarded. 6 blocks (about 1 hr) settlement time is used when absolute settlement is required.  For most cases, receiving the initial broadcast message or waiting for 1 block is acceptable.  

Note: The main bitcoin payment processors, Bitpay and Coinbase, take on double-spend risk as well as currency volatility risk on behalf of their merchants.

Tue, 12/31/2013 - 03:19 | 4287664 dark pools of soros
dark pools of soros's picture

depends on the accounts..   it seems that if an account on coinbase is verified you will get your bitcoins instantly even without any confirmations. (sending from another wallet)


I know since I have done it many times and able to sell during peaks with no wait.


there is way more to learn with bitcoin by actually using it than reading from a bunch of hater essays



Tue, 12/31/2013 - 06:33 | 4287757 Headbanger
Headbanger's picture

VD:    One nasty cyber attack or hack or loss of power and thus internet from storms, earthquakes, solar flares, meteors, aliens and especially the Central Government you're trying to thwart in pumping Bit Shit.. Will instantaneously wipe out all the "superior features" of it!

But please stay in your little cyber fantasy world cause we don't need you freaking out in the real world where real shit happens.

Wed, 01/01/2014 - 02:57 | 4290451 aminorex
aminorex's picture

The fact that the bitcoin network is vastly more secure against these threats is precisely why inferior coins are relatively worthless.

Tue, 12/31/2013 - 08:16 | 4287803 Hong Kong Phooey
Hong Kong Phooey's picture

False.  I traded between two exchanges last night (Bitstamp and ANX) looking for some price arbitrage.  Took over 30 minutes to make the transfer into BS, then another 45 into ANX. Not even close to instantaneous. Maybe faster than a wire transfer but 1h15 is a long time when you're hitting the refresh button every 30 seconds and watching the order book move against you.

Tue, 12/31/2013 - 08:22 | 4287813 silvermail
silvermail's picture

- If I created Bitcoin, so I can change the algorithm and thus abused in the my selfish interests.
- If a group of people created Bitcoin, then this group can change and thus abused in the selfish interests of the entire group.
- If a person has created something, then people can change it in the selfish interests.
- Gold was created by God. A person can not change the will of God.
In the text of the Bible and in the text of the U.S. Constitution, there is no word about Bitcoin.
Bitcoin - it is only new scam and new fraud.

Mon, 12/30/2013 - 23:00 | 4287272 TheHound73
TheHound73's picture

Citibank is free to build centralized features on top of the bitcoin protocol and hope for clients to flock to these "value-added" services.  Or Citi could build a new centralized currency from the ground up.  Whatever, better get crackin' Citi-dudes, clocks a'tickin.

Tue, 12/31/2013 - 00:15 | 4287431 chemystical
chemystical's picture

Yeah, gotta agree with the faux libertarian assessment.  I'm far from a Btc fan, but this snippet says it all:

"embraced the financial regulatory system to make it more secure"

That's as big an oxymoron as you'll ever read, and anyone who proposes it with a straight face is a trojan horse.

 Then this:

"...make it less attractive to criminals and more attractive to governments"

That's like throwing the baby in with the bathwater.  The second that government confers its blessings and adopts it, is the second that it's dead as a freedom vehicle.  Libertarian?  If you claim to be a libertarian - particularly today - then WTF are you seeking liberty from if not government?  Otoh it's always good to see who is a shill.



Mon, 12/30/2013 - 22:41 | 4287236 buckethead
buckethead's picture

A libertarian that values security over anonymity? VD has it. <(little pun)

A rather statist view of currency for a libertarian


Mon, 12/30/2013 - 23:50 | 4287397 Spigot
Spigot's picture


Tue, 12/31/2013 - 00:16 | 4287446 pipes
pipes's picture

...or he does.


And he's deliberately misrepresenting circumstances, fudging definitions, creating strawmen, making leaps of logic, and generally protecting the staus quo.

Tue, 12/31/2013 - 03:21 | 4287665 dark pools of soros
dark pools of soros's picture

oddly ex-GS'er has dove in with no worries but the other bankers all talking shit,....  interesting development



Mon, 12/30/2013 - 22:42 | 4287237 seek
seek's picture

I disagree that mining bitcoins is a waste or a social cost. Mining keeps the ledger up-to-date and makes if difficult for the ledger to be manipulated, and prevents bitcoins from being a fractional reserve currency. I have no doubt whatsoever that eliminating the ability to naked short the currency, and eliminating the ability to do fractional reserve banking, is a social gain. Likewise, decentralization is a gain, as it prevents a central authority from controlling the currency.

Mon, 12/30/2013 - 22:58 | 4287265 DoChenRollingBearing
DoChenRollingBearing's picture

I was going to be my usual rude self and cut in above, but seek here raises a great point.  My understanding (limited) is that BTC becomes stronger and so valued more not just as more are mined, but as more are used/spent.  I must have missed what Englander wrote about social cost, or maybe it was just so bogus that my mind skipped right over it...

Any decentralization nowadays is a gain, a big net plus.

Printing money, whether linen or electrons, takes energy as well.


One day, I hope that a top-flight math guy can come to ZH and write up just how secure (or not) BTC really is.   It's OK with me (and I hope to The Tylers That Be) if he writes a "long version (a la FOFOA).  

Lay it all there, Zero Hedge and the NSA need to know!

Mon, 12/30/2013 - 23:51 | 4287390 Rock On Roger
Rock On Roger's picture

I think all of us realize that there is no security on the internet, thus there is no security with bitcoin.


Stack On

Tue, 12/31/2013 - 00:22 | 4287439 DoChenRollingBearing
DoChenRollingBearing's picture

Ah, R.O.R., I've meaning to get around to responding to you.  


Yes, physical gold in your own possession is the best single form of financial security in town.  And "Stack On" is excellent advice, especially as very few have gold, and even fewer have enough.

But, BTC and gold are complements to each other.  Gold is the Store of Value.  BTC is a nice experiment into a possibly new way of carrying on business (as a Medium of Exchange).  Or even bringing out capital quietly (on your flash drive) when bringing 20 oz of Gold Eagles in a tube has higher risks at the airport...

I concede that there is no final answer yet on security of Bitcoin, there could be exploitable flaws in its structure...

But, gold has its risks: theft and moving it out of the USA in quantity.

Using BTC to buy gold is a worthwhile experiment, which I will invesigate further.

Tue, 12/31/2013 - 00:55 | 4287498 Rock On Roger
Rock On Roger's picture

I have to agree that Bitcoin may be useful for exchange of goods or services but bitcoin is certainly not good for saving. It is the same as fiat currency, useful for exchange but not for saving.

Bearings would make a useful medium of exchange too, as long as the people doing the trading agreed to the medium. Espcially the balls and rollers without the races.

Gold and silver are not the only things I use to save money, diversification is necessary for safety.

And bitcoin is really nice for tracking money, gold, not so much.


Stack On DCRB


Tue, 12/31/2013 - 01:23 | 4287561 DoChenRollingBearing
DoChenRollingBearing's picture

Only a few bearings would work as medium of exchange in Peru: bearings for Daewoo Tico and our top sellers (each) of our other brands.  When we get those pieces, that is close to "instant money".

You may be interested to know that for reasons unknown to us that the component markets (steel balls) has dried up there, even though Mighty SKF (largest bearing company in the world) stopped bringing steel balls into Peru.  We had a shot a while back, but why there is no demand, we have not figured that one out.

Will do, roger that, stacking on.  Have been, since the 1980s...

Tue, 12/31/2013 - 00:43 | 4287487 digi
digi's picture

Bitcoin security is based upon math. It has nothing to do with the current structure of the internet. I can make a wallet and receive coins without ever going online. The odds of finding a certain number between 0 and 1*10^77 are significantly closer to 0 than the odds of finding a buried stash of gold on the surface of earth, not to mention a safe in someones house.

Tue, 12/31/2013 - 01:09 | 4287542 Rock On Roger
Rock On Roger's picture

If your transactions are done via the internet then those transactions are not secure. Can you make a wallet and receive cons (oops, I meant coins) without electricity?

I don't need electricity to dig for gold. Any stick will do.  And I don't need electricity to trade that gold for some labor, or some food or shelter. Good luck trying to trade a bitcoin for a chicken to eat after the power has been off for three weeks.

Ask some guy from Toronto how life has been without electricity these last few days.


Stack On

Tue, 12/31/2013 - 01:36 | 4287551 Prisoners_dilemna
Prisoners_dilemna's picture

I asked him...

he said his gold taste delicious and he wishes he had more bic lighters.  The Official Money of SHTF.


Actually the friend near Watertown NY on lake Ontario said his wood stove was running fine and he expected the power would be on soon. He didn't try to offer his gold to the electric company to fix his current lack of electricity although I suspect gold is just as useless as bitcoin in Toronto right now.


"any stick will do"  I'm pretty sure that's wrong.

And good luck trying to eat a chicken after the power has been out for 3 weeks.

And when your neighbors on both sides are out of food, after 3 weeks, you're going to walk your gold to the 7-11 to pay for your bread?? That's still there after 3 weeks.



Tue, 12/31/2013 - 02:11 | 4287627 Rock On Roger
Rock On Roger's picture

7-11 is about a three day walk, I'll get tired carrying all that gold. Chicken tastes mighty fine cooked on the wood stove, The city fuckers are the ones going to go hungry, not me, nor my neighbors.

In fact I'm skilled enough that I could make a pan from the bark of the stick, use the stick to dig the gravel to put in the pan, and use the bark pan to wash the gravel from the gold. That is one way to use a stick to dig gold.


I suspect your watertown friend could help you out in that regard, it sounds as though he has some wisdom.


Stack On


Tue, 12/31/2013 - 05:25 | 4287727 Oldballplayer
Oldballplayer's picture

This power going out argument is bullshit.

If the power truly goes out, without the prospect of coming back on, we are so screwed that nothing is going to make it through.

Food and antibiotics become the coin of the realm. Followed closely by cooking and heating fuel.

It is a silly argument. Especially if you are within a couple hundred miles of a nuke plant. Then iodine pills are the most important thing in the world.

Tue, 12/31/2013 - 06:27 | 4287753 fredquimby
fredquimby's picture

Good luck trying to trade a bitcoin for a chicken to eat after the power has been off for three weeks.

I would say that bitcoin is really all about a successful digital future that works, not for apocalypse riding.

Tue, 12/31/2013 - 07:15 | 4287773 digi
digi's picture

Are you suggesting that a transaction is not secure if there is any hypothetical situation in which it could not take place? It seems like if that is the case you are making up your own meaning for the word "secure" that doesn't really align with the common definition. And yes, as I said in my last post, you can make a wallet and recieve coins offline without electricity. The person sending the coins will need electricity or a way to communicate with someone who has access to it.

Can you transport and transact in gold over large distances in large quantities when you are immobilized due to govt restrictions? Must be insecure right?

Wed, 01/01/2014 - 02:57 | 4290453 aminorex
aminorex's picture

Can you make a wallet and receive cons (oops, I meant coins) without electricity?


Yes, you can.  It's not easy enough for someone like yourself, perhaps, but I can do it, with some software changes and an off-grid radio.

Tue, 12/31/2013 - 02:04 | 4287614 Prisoners_dilemna
Prisoners_dilemna's picture

@Rock on Roger

There is very little security anywhere from a tyrannical government enabled by endless currency notes that the whole world accepts.

That is not a flaw with bitcoin.

Also because bitcoin is secure, we can actually use it to avoid tyrannical governments.

I think you need to flip your thinking a little and see the possibilities in bitcoin.

Bitcoin is not gold and it wont get smashed down every other wednesday morning.

TPTB do not control bitcoin.

The sooner you come to understand this, the sooner you can start extracting yourself from the tyrants grasp.

Tue, 12/31/2013 - 02:20 | 4287630 Rock On Roger
Rock On Roger's picture

I know internet security is not a bitcoin flaw, but i have a feeling that the tyrants will tax the shit out of bitcoin. But then again they'll tax the shit out of gold too.


So how can I safely save my profits for a rainy day? That is my dilemna.


Stack On

Tue, 12/31/2013 - 03:24 | 4287666 dark pools of soros
dark pools of soros's picture

'all of us'   spoken like a true sheep that needs validation of ones fears


how about you just speak for your fucking own self and actually make a valid point?


Tue, 12/31/2013 - 07:08 | 4287771 malikai
malikai's picture

For a guy that can 'live off the land' and all that - he sure does spend a lot of time making failed arguments on the internet.

Mon, 12/30/2013 - 23:19 | 4287316 Seer
Seer's picture

"Likewise, decentralization is a gain, as it prevents a central authority from controlling the currency."

The bankers are laughing...  The point of this comment is that there's the ideological "Bitcoin" going up against centuries-old inbreeding- folks who CONTROL everything in the existing REAL WORLD.  Yeah, I totally wish that their grip could be ripped loose, but anyone thinking that there's not going to be a fight and that they'll roll over....

I find it rather sad that we have to replace one elitist system with another though.  Electricity and technology are necessary in order to trade with Bitcoin.  Much of the world's population isn't capable of using Bitcoin: and the prospects of this changing are more than remote (we're in contraction for the long-haul; economies of scale in reverse are going to kill all thoughts/hope of expanding electicity and tech).

Mon, 12/30/2013 - 23:55 | 4287404 Greenskeeper_Carl
Greenskeeper_Carl's picture

i wish you bitcoiners all the best, seriously. But there is nothing stopping it from going "fractional reserve". Goldman is getting in on it, and so are more mainstream people, which is bad for a supposedly free and decentralized currency. Nothing is stopping them from doing fractional reserve shenanigans with bitcoin. the more widely accepted bitcoin becomes, the more likely that is to happen. I know what all you guys say, the blockchain blah blah blah, you cant make up bitcoin out of nothing, etc. But you cant make up an ounce of real gold either, yet we have a futures exchange where there are 50+ claims on each ounce of real gold, and the sytem goes on. Gold requires real energy to extract out of the ground, yet central banks have managed to create the widely accepted equivelant out of thin air with 50/75 to 1 leverage to keep the price down, what makes you all so sure this wont happen with bitcoin?


Tue, 12/31/2013 - 00:19 | 4287450 SgtShaftoe
SgtShaftoe's picture

Yes, at some point, cryptocurrencies will get perverted.  The bad money chases out the good will protect smart people from being burned. 


I see bitcoin as lubricant to gold and silver, but that's just me. 

Tue, 12/31/2013 - 01:36 | 4287467 Prisoners_dilemna
Prisoners_dilemna's picture

I believe the answer is actually fairly simple once you hear it.

"Here's the problem: To book my profit (from shorting bitcoin), I ultimately want dollars.

With normal currency options you can choose to collect in whatever currency you are using to bet against another currency. So if you are betting the price of a euro will fall against a dollar, you can collect in dollars when the contract settles, thereby offsetting the fact that the euro just dropped in value.

You can't currently do that with bitcoins. All of the bitcoin options and futures contracts are settled in bitcoins. This is a very bad deal. Because even if I end up with a bitcoin windfall, they will be worth a lot less when I convert them back into dollars.

Here's the math:

To open an account, it has to be funded with 0.1 bitcoin, which will cost $110 as of Thursday morning.

The put option costs 0.045 bitcoins, leaving 0.055 bitcoins still in the account.

After our imagined 55% plunge, the value of the put contract has soared to 0.12 bitcoins.

Combine that with what is still in the account, and it's now 0.175 bitcoins.

At a bitcoin price of $500, that's a mere $87.50.

That means even if you are right, and you call the top of the bitcoin bubble, correctly predicting a whopping 55% plunge in the value of the currency and do all of this, you would lose $22.50.

You can get around this by upping your bet against bitcoins. If instead you buy two contracts, for $99, and once again the price plunges 55%, you will end up making a whopping $15. And I haven't factored in fees, which would probably run you about $4 for the whole transaction, including the dollar-to-bitcoin round trip, taking your profit down to $11.

On top of all that, this isn't like trading on the New York Stock Exchange. Midday Wednesday, MPEx appeared to shut down, and the prices of the contracts disappeared. I was told this happens a lot. As of early Thursday, the exchange still wasn't listing prices."



Is JP Morgan losing money by shorting gold??  In dollars or phyzz?

If JP Morgan shorts Bitcoin on the paper market to acquire bitphyzz for themselves or others.... well thats about as bullish an indicator as I need. I just need to wait out the manipulation and let their game fail on its own.

Paper gold has been moving sideways since 2011??   Three years they've either stuck it to us or given us a chance to BTFD depending on when you bought and your time frame for holding.

This doesn't change gold in the long run and it won't change bitcoin in the long run.... if an exchange even exists to pull this stunt on. Which today it doesn't.


Black Swan, bitchez.



Tue, 12/31/2013 - 03:28 | 4287668 dark pools of soros
dark pools of soros's picture

so far Goldman is playing along within bitcoin's world and not making a stink of it like the others..  even google is getting in bed with ripple and apple still has their iMoney they want to use someday...


so far Goldmanites get chapter, who knows but they may end up pumping bitcoin to the $5000-$8000 levels for their own purposes so might be wise to ride in their draft for now  (just avoid being one of their 'sophisticated investors')



Tue, 12/31/2013 - 06:46 | 4287762 TheHound73
TheHound73's picture

Gold has storage and transport issues so trading paper claims to gold is often cheaper and more convenient than taking actual possession.  This process has become bastardized.  On the other hand it is trivial to take possession of a bitcoin.  Creating paper claims to bitcoin is more costly and more complicated than taking actual possession.  Hopefully enought people will come to realize this -- If they don't, fuck 'em.

Tue, 12/31/2013 - 06:58 | 4287766 digi
digi's picture

Fractional reserve banking was invented as a result of people finding it easier to carry around, store, and transact with paper receipts that were redeemable for gold than it was to actually just use the gold. The paper has obvious benefits, the bank can write any arbitrary amount of gold on it and you can then store it in your pocket, it weighs much less and is easier to transport, you can hide it easier to avoid theft, you can carry even discrete units to make transactions easier. Today we are in a similar situation with a large amount of people investing or trading in paper gold because they don't want to deal with storage, delivery and verification of the real physical gold. None of these inconveniences or problems exist with bitcoin. There's no reason to not just receive the actual bitcoin. There's no need to fractionally reserve something that is intangible to begin with.

Tue, 12/31/2013 - 10:31 | 4288093 Toolshed
Toolshed's picture

Your cluelessness is stunning. Now you are confusing fractional reserve banking with paper currency. Do some research.

Tue, 12/31/2013 - 23:08 | 4290219 digi
digi's picture

Maybe my wording was loose but what I am getting at is you can only do fractional reserve when people are willing to accept paper substitutes for a real underlying asset as a result of various inconveniences with said asset. You can't pump up your books by spending depositors money and creating more paper notes than you have backing when no one needs your banking service to begin with, aka bitcoin. This all started with gold receipts, and was perverted into full on fiat currency where the paper substitute is no longer redeemable for anything. If you disagree with the notion that paper notes and fractional reserve didn't go hand in hand with each other throughout history perhaps you are the one who needs to do some research.

Tue, 12/31/2013 - 12:08 | 4288183 silvermail
silvermail's picture

"Bitcoin Mining" - it's just fucking absurd, what if you try to think about it! LOL

In my opinion, "Bitcoin Mining" - is something of clinical psychiatry.

Something from the section where describes the types of "Mass psychosis."

Mon, 12/30/2013 - 22:50 | 4287246 SgtShaftoe
SgtShaftoe's picture

The only thing that really matters is:

Bitcoin transactions are far cheaper to merchants and customers.  Economic laws will take care of the rest.

Bitcoin is disruptive and could really fuck up the banking system, including this douche talking his company line.  I don't know if Bitcoin will last 10 years, but it certainly is doing it's job well, and if it disappears, the next iteration will be better.  Those banking fucksticks are terrified, and they should be.

Mon, 12/30/2013 - 22:50 | 4287252 Carl Popper
Carl Popper's picture

Pray that bit coins and gold deliver us from national fiat slavery

Tue, 12/31/2013 - 03:30 | 4287669 dark pools of soros
dark pools of soros's picture

Gold's price has been compromised.... didn't you get the memo?


if/when Gold's price is unleashed vs the dollar, bread will be $100


Mon, 12/30/2013 - 22:52 | 4287253 Carl Popper
Carl Popper's picture

Pray that bit coins and gold deliver us from national fiat slavery

Mon, 12/30/2013 - 23:08 | 4287294 Dr Benway
Dr Benway's picture

Cheaper for customers, eh? Remind me, what is the average spread if I want to buy/sell BTC?

Tue, 12/31/2013 - 00:14 | 4287440 SgtShaftoe
SgtShaftoe's picture

What does your average small liquor or convenience store get hit with on a card transaction?  Often between 5 and 8.5 percent. 

The spread of BTC will tighten up as the market cap and volume increases.

Tue, 12/31/2013 - 00:26 | 4287463 DoChenRollingBearing
DoChenRollingBearing's picture

When I recently bought my gold coin (0.25 oz Gold Eagle), the BTC fees were $0.10 or about 0.03% (three ONE HUNDRETHS of 1%).  Laughably cheap.  No wonder the Banksters hate it.

Tue, 12/31/2013 - 00:52 | 4287497 SgtShaftoe
SgtShaftoe's picture

that's awesome!

Tue, 12/31/2013 - 00:56 | 4287503 Dr Benway
Dr Benway's picture

Neither of you address customer fees for using BTC, which include buy/sell spread costs. From what I've heard this spread can be 10%. There you have your cost.

You are severaly mistaken if you think that banksters hate BTC. LOL. They love anything they can make money off, that they can manipulate and package and sell to granny investors. Really, when the Winklevii and Goldman jump on board, this should have been your sign your ideological cause had been hijacked.

Tue, 12/31/2013 - 01:32 | 4287575 DoChenRollingBearing
DoChenRollingBearing's picture

Dr Benway

You are correct re spreads on BTC price for gold re BUY price and SELL price, I did not account for that.  In my next piece (where I hope to buy from before I write it up), I will try to be more complete re Total Costs.

Tue, 12/31/2013 - 03:34 | 4287674 dark pools of soros
dark pools of soros's picture

the haters here are wearing clown shoes...  they say they love 'price discovery' but really run under their beds when they actually see it

yes, if there are winners, there are losers...  I guess you can go back to your centrally planned economy and suck its teat



Tue, 12/31/2013 - 23:12 | 4287779 digi
digi's picture

One way to look at it is, and these are rough guesstimates based of chart watching, but if you were just using bitcoin as a transaction medium that would probably take you about a week to get in and out of in current and previous exchange conditions, over 98% of the time the rise in market price of the bitcoins you bought a week ago and are now transacting with made the average 3% spread a non issue. 10% spread has been the market extreme, it's uncommon and usually doesn't last for more than 10mins when someone is buying/selling a large amount of coins and the market has to decide which direction it will be pulled in, aka price discovery. So thats likely above a 98% chance that your fees will be less than 3%, probably around 0% and possibly negative if you got lucky and your coins rose in value before you could spend them. 2% of the time you will get burned by the spread or if you are really unlucky a dip in the bitcoin price. But for everyday transaction it's arguably better than the guaranteed 3% haircut you get 100% of the time from the traditional payment methods.

If you guys like to downvote this notion so much, you probably don't want to take a look at the 4 year log chart for bitcoin, you might puke.

Mon, 12/30/2013 - 23:26 | 4287326 Seer
Seer's picture

"Bitcoin transactions are far cheaper to merchants and customers. "

Care to provide an actual reference to realized costs?

And, as the writer mentions, it's unlikely that those costs are going to stay at the levels they are should any additional layering come in to play.  Folks doing any sort of backing of transacstions are taking on risk, in which case they're going to layer on cost.  Eventually such costs will be known, but in no way to we have any sort of real data to support ANY claims as to over-all transaction costs.

"Bitcoin is disruptive and could really fuck up the banking system"

The banking system is already fucked up.  It's going to implode on its own, with or without Bitcoin.

Mon, 12/30/2013 - 23:52 | 4287392 Non Passaran
Non Passaran's picture

> Care to provide an actual reference to realized costs?

It's essentially free - but if you convert to USD upon completed transaction then the both sides will pay the cost of exchange (getting in and out of Bitcoin, respectively).

But he's got it wrong.

Tue, 12/31/2013 - 00:11 | 4287434 SgtShaftoe
SgtShaftoe's picture

The credit card brands charge between 1.5% and 8.5% on every transaction.  Liquor stores and "high risk" merchants typically are charged the 8.5% fee.  So, yea, do the math.  It's cheaper.  On top of that, merchants like Target spend tens of millions of dollars securing their payment network (point-of-sale - back-office - bank etc.).  If some of these merchants can go entirely BTC, they save big money. 

The mining operations subsidize the transaction clearing cost.  If there's a profit to be made, it will, and escrow services will flourish to meet your question. 

Yes, the banking system is fucked up, and will implode.  However, I'd like to live with 20th century conveniences when it does, so yes, we need something like bitcoin.  Gold and Silver are great, but we don't have to sacrifice much when you add a BTC flavor to the mix. 

Tue, 12/31/2013 - 01:28 | 4287501 Prisoners_dilemna
Prisoners_dilemna's picture

Dude your ruining the flavor of Zerohedge.

When SHTF we wont need BTC because our gold will buy everything we need from our neighbors in the next bunker over.



one idiot even suggested throwing gold at burglars as a protective mechanism.


If you wanna fit in man,   just say gold to whatever topic gets brought up.

Tue, 12/31/2013 - 03:40 | 4287677 dark pools of soros
dark pools of soros's picture

how about you do your own learning?  no one needs to help your ass..  I've made profits and you just make noise.

it's still the wild west stage but the towns are turning into cities so probably still not safe enough for you to bother


Mon, 12/30/2013 - 23:51 | 4287398 Non Passaran
Non Passaran's picture

Any other cryptyo currency has very attractive transaction costs too. :-)

Mon, 12/30/2013 - 22:48 | 4287251 One And Only
One And Only's picture

anonymity vs security = Ben Franklin's argument of "freedom vs. security"

Decentralized public ledger = no need for trusting any individual, the truth is known to to all; centralized = you have no choice but to trust the centralized authority.

"mining bitcoin is a waste of resources" ahem.... printing money in order to misallocate capital is a waste of time, resources, and capital created trough innovation.

I stopped there. This is bullshit. "The libertarian in me" what libertarian? This guy wouldn't know liberty if it fucked him in the ass.

Mon, 12/30/2013 - 22:59 | 4287269 nmewn
nmewn's picture


Tue, 12/31/2013 - 01:23 | 4287565 Bay of Pigs
Bay of Pigs's picture

I'm sick of reading this bullshit at ZH. The author was from fucking CITI...

I'm checking out for awhile gang. Been a good three plus years...taking a break now.

ALOHA...and best wishes.

Tue, 12/31/2013 - 01:32 | 4287583 DoChenRollingBearing
DoChenRollingBearing's picture



ALOHA to you Bay!  I'll miss your comments!  Happy New Year and good luck in your endeavors.

Tue, 12/31/2013 - 01:49 | 4287602 Bay of Pigs
Bay of Pigs's picture

Thx DoChen. I will see you in the chat room or drop you a line at your blog.

Just gonna lurk on the main threads now...

Mon, 12/30/2013 - 23:29 | 4287337 Seer
Seer's picture

I agree with the security part.

Tue, 12/31/2013 - 01:54 | 4287504 Prisoners_dilemna
Prisoners_dilemna's picture

Good for you. Security is important.

Hows the dog training coming?  You're not still using peanut butter are you?

Have you been to the shooting range?

Tue, 12/31/2013 - 00:19 | 4287454 indio007
indio007's picture

Seconded, this guy knows jack shit about Bitcoin. He's regurgitating the same "facts" about BTC the MSM does. Doing a little research is too much to expect I guess.


Mon, 12/30/2013 - 22:58 | 4287267 nmewn
nmewn's picture

"There may be both legitimate and illegitimate reasons for this, but the vast majority of  transactions do not have this need."

So here they come for you my purist BitSters. Just submit to the power of the state, to their centralized validation of your efforts and all will be well.

You do know Mt.Gox filed in June? to be incorporated in Delaware, now, what could possibly go wrong? ;-)

Mon, 12/30/2013 - 23:31 | 4287346 Seer
Seer's picture

I think it an utter failure of logic to think that injecting a "bullet-proof" currency in a vastly corrupt world is going to solve anything.  And keep in mind that the top criminals will ensure that they have the necessary control.  How it always goes down, a little tweak here and a little tweak there... if you want to see your currency up in bright lights then better prepare for massive subversions to the "ideal."

Mon, 12/30/2013 - 23:40 | 4287359 wisehiney
wisehiney's picture

The only bullet proof currency is.....bullets!

Mon, 12/30/2013 - 23:41 | 4287367 bobert
bobert's picture

I suspect that you are correct about this Seer.


Mon, 12/30/2013 - 23:44 | 4287372 nmewn
nmewn's picture

And subvert it they will Seer.

The best shot to outrun them is to keep creating different "currencies"...and try to keep it under the radar of the specs next time...and maybe then even I would partake ;-)

Mon, 12/30/2013 - 23:58 | 4287411 bobert
bobert's picture

Glad to see you're still going strong Guy.

Tue, 12/31/2013 - 00:20 | 4287449 nmewn
nmewn's picture

The purists are me (to a certain extent...and I won't go into all their motivations now) the specs are a completely different breed however and I'm as completely ruthless with them as they are cunning with the purists.

Somebody had to do it ;-)

Tue, 12/31/2013 - 00:30 | 4287471 DoChenRollingBearing
DoChenRollingBearing's picture

nmewn and bobert, two CAPITAL guys!

Tue, 12/31/2013 - 00:37 | 4287486 bobert
bobert's picture

And you also Bearing!


Mon, 12/30/2013 - 22:59 | 4287268 Lloydie
Lloydie's picture

Centralisation is a point of weakness. See e gold example. Fiat system have a record of attacking centralised virtual currencies.

Btc mining as social waste is like saying sports cars are a social waste. Yet, bwankers buy sports cars all the time, plus mansions and hookers.

Yes, Btc values are unreliable but they are unreliably going UP in value because they represent a viable alternative to the credit/fiat money system.

Tue, 12/31/2013 - 00:30 | 4287477 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 for "bwankers"  !!

Mon, 12/30/2013 - 23:00 | 4287279 bobert
bobert's picture

"less attractive to criminals and more attractive to governments"

And the difference between these two entities is what?

Mon, 12/30/2013 - 23:14 | 4287307 VD
VD's picture

the governments are much worse than the worst criminals is the difference...

Mon, 12/30/2013 - 23:17 | 4287309 VD
VD's picture


Mon, 12/30/2013 - 23:47 | 4287380 Non Passaran
Non Passaran's picture

The former already have their currencies and have less incentive to get a new one (that's more transparent and difficult to manipulate).

Mon, 12/30/2013 - 23:18 | 4287311 Advoc8tr
Advoc8tr's picture

Someone sue this wannabe for false association with intent to corrupt ... everything he says is the anti-thesis of Libertarianism ... are these fuckers now trying to co-opt the only "ism" worth associating oneself with ?

Tue, 12/31/2013 - 06:54 | 4287739 falak pema
falak pema's picture

spoken like a true "dogmatist" of the Libertarian church. 

And thanks for nullifying the Hegelian meme : dialectics requires thesis and antithesis whatever the game; unless you be a self annointed Pope living in your own Poop. 

If the transcendantal world opposed the Logical (and later Empirical world) by using Saint Augustinian metaphysics of Man's predestiny in God's all knowing presence against Aristotle's metaphysics about questioning the natural laws of the world to apprehend the future; giving birth to astronomy; your new church now creates a new Metaphysics of anarcho-capitalistic mindset.

We ARE because we create capital outside a centralised system is the new MANTRA. (Forget We are 'cos we doubt of Erasmus days or we are 'cos we thinK of Cartesian concoction).

All bow to the God of new Capitalism. Lol, I love these grand theories; like its Bitcoin spawn of new dawn in Internet born FREE BY LIBERTARIAN DECREE

Now puleeese look at the reality of capitalism à la Pax Americana; or for that matter its Chinese, Japanese or European clones...I am all for NEW  FRONTIERS, its MAn's recurrent dream.

But it must never detach itself from the past. We always learn from our past errors; the worst of which come from debased mindsets; not from technicalities.

Long live the decentralisation trend BUT LETS APPLY it where we really need it : In Alternative ENERGY to kill the OIL MONOPOLY and collateral MIC beast. In buying and producing MORE LOCAL to kill "slave labour" outsourcing and the NWO Oligarchy "selfie" mindset of callously raping the resources of the world in Mad pollution disseminating grand schemes of junk food production and "planned obsolescence" of WMD type minefield/dronistan logic.

This current construct is the true dystopia of which the money/currency line is but ONE aspect that could be solved in THREE STEPS.

1° Stop all naked derivative bets immediately world wide in bankster world.

2° Impose Glass Steagall type legislation in all of First World.

3° Clean out the Bankster stables by nationalising massively DODO TBTF banks and BAiling in that crap pile of dirty money from Caymanista LAnd. Kill the Oligarchs illegal and scammed treasure chest. Change the rules of world banking from fractional reserve and compound interest that spawns permanent debt all controlled by a PRIVATE oligarchy bank that controls RESERVE currency worldwide. What a SHAM.

Conversely, if these PTB who run the world do not do this, then wait for the reset and win back the Republic by conventional political means by popular groundswell from the inevitable pain that will result from this reset.

That is how its always played out in the past; lets learn from it. 

Tue, 12/31/2013 - 07:05 | 4287769 Ghordius
Ghordius's picture

excellent comment. I would simplify into two:

2° Impose Glass Steagall type legislation in all of First World

1° Forbid derivative bets for banking and insurance institutions. Betting is ok... in specialized casinos

Tue, 12/31/2013 - 07:28 | 4287778 falak pema
falak pema's picture

"naked bets" with rehypotheticated collateral and OTC trades and dark pools of HFT infrastructure?

These so called specialised casinos are stronger than the republic !

DO we need to waste so much of our financial resources in this sterile complexity? 

By the looks of it! Yes! But it only skews the real economy.

If the derivative trade is linked to real economy so be it...but betting for betting sake...hmmm. Well if they had G-S then they could not pollute the deposit system; there i agree.

Tue, 12/31/2013 - 08:24 | 4287814 Ghordius
Ghordius's picture

"These so called specialised casinos are stronger than the republic !"  yes. but why? because they hold the rest of the financial systems hostage, and by that, the republic(s)

and so the circle closes again with... Glass-Steagall

retail banking should be separated from investment banking should be separated from business banking should be separated from asset management should be separated from stock/bonds broker/dealers. and kept small, and so not systemic relevant, and so free to fail, the first tenet of sanity in capitalism


remember that for most people on the planet, stocks aren't anyway important. all those shenigans from dark pools to HTF and so on will eventually face a Muppet Revolt (in order to qualify for "Muppetdom" you need to qualify for Squid clientship, i.e. be quite rich)

Tue, 12/31/2013 - 08:34 | 4287827 tip e. canoe
tip e. canoe's picture

gentlemen, to continue a thread G & I had yesterday:  

let us assume that these are not are not only noble goals, but effective solutions to solving the problems of the global monetary system.   given that the political & legal systems in almost all (if not all) First World jurisdictions in the world have been infiltrated by the ignoble opponents of your proposal:

(1) even if they are ever "seriously" considered, how do you propose to enact these solutions into a legally-binding document not so chock full of loopholes that a private bank with privileged access to central bank-issued capital and an ethically-challenged attorney with a J.D. from the UofPhoenix couldn't drive a semitruck full of interest-rate swaps through?

(2) on a larger scale, how do you enact penalties for Nation-States who make a tactical decision to use their CB system as a weapon in defiance of these legally-binding documents?   sanctions?   threat of force?   if so, who plays the global cop and what privileges do they receive for being the Enforcer?  and who's the Judge & Jury?   and no matter who it be, isn't this simply a continuation of the same Great Game that's been played for millenia now?

(3) Capital these days moves at the speed of light and cares not a whittle for the First World when there's resources to be exploited and peoplie in Power Positions to be corrupted in the Second & Third.    how can your proposed solutions (which by its very nature as regulation, moves more like the Turtle) keep up with any Capital that chooses to wield its derivative weapon from one of these jurisdictions?

so happy to hear that you seem to both agree that DECENTRALIZATION is the secret sauce.   the question that continues to bugger my twisters is, if that is indeed the case, why you continue to argue solutions from come from the top-down (which by its very nature requires a continuation of CENTRALIZATION), instead of using your big ol' collective noggins in brainstormin ideas that can be enacted & realized only from the bottom-up?

the floor is yours, kind sirs...

Tue, 12/31/2013 - 09:20 | 4287855 falak pema
falak pema's picture

In one word : Balance.

Avoid both Charybdis of Caesar's (or money aristocracy Oligarchy) despotism as well as populist and Statist monopoly plays: aka Fascism or national socialism on global scale. That is the historical thread since Enlightenment when our Knowledge system freed Man from obscurantism of past vintage.  We never debase past experience without Consequence. 

Both top down and bottom up logic are therefore vitally relevant. Its not one OR the other.

I would be wary of any political construct that destroys the republic's elected role of top down logic.

But I would welcome any initiative that would encourage power sharing in bottom up logic that allows the citizen to be more proactive within the confines of the LEGAL system, to increase the initiative of CIVIL society. 

The people's elected define the goals and allocate the means. They then monitor the power sharing of execution with civil society (private enterprise) as NEUTRAL referees that lean on the three pillars of state to ensure good functioning and on the fourth pillar (Media) for whistle blowing. That is the ideality of this construct handed down to us by trial and error since 3000 years of western evolution. ITS THE PEOPLE'S ROLE TO CONTINUALLY ENSURE THIS PROCESS IS ADHERED TO... And that is where the rub lies in current first world conundrum; we are like the sheeple of ancient Rome.

I don't see why we should junk the republic top down mechanism; foundation of Jefferson's legacy. But he did believe in decentralised power. MAdison and Hamilton vs Jeffersonian logic; now that is a good framework for goal setting. But within the confines of the Constitution and the system of laws.

Don't throw away 250 years of history, the republican top down people's elected baby, with the current hubristic, Oligarchic, dirty bath water concoction of Neocon dystopia. 

Wed, 01/01/2014 - 08:13 | 4290572 tip e. canoe
tip e. canoe's picture

falak, it might take me a good part of 2014 to fully grok this.  most superb response.   merci monsieur.

perhaps this also provides a clue?
 "the grand jury is an institution separate from the courts, over whose functioning the courts do not preside." - Antonin Scalia 

Tue, 12/31/2013 - 07:13 | 4287774 tradewithdave
tradewithdave's picture

Did you fail to mention Larouche and building all those NAWAPA dams?

Tue, 12/31/2013 - 07:49 | 4287789 falak pema
falak pema's picture

its new to me but thanks for mentioning it.

Tue, 12/31/2013 - 12:01 | 4288408 buckethead
buckethead's picture

Perhaps no one reads this again, but I did want to acknowledge that it is the best post in this thread.

I don't fully understand Bitcoin, but I do understand principles vs dogma. Hailing a new savior generally ends in a similar manner as the previous iteration.

I see Bitcoin as useful, until it isn't. Knowing the latter is the tough part.

Results may vary.

Mon, 12/30/2013 - 23:30 | 4287345 q99x2
q99x2's picture

The reason for governmental security is so they can steal from you. F governments. They are they greatest threat to survival of the species.

Mon, 12/30/2013 - 23:46 | 4287383 Godisanhftbot
Godisanhftbot's picture

 First mover my ass.

 Atari/Commodore, first mover, now de freaking funct.


 Your precious bitcrap will suffer the same fate only it will happen a lot faster.

 Archive this note, and show it to the bankruptcy court when you appear.


Tue, 12/31/2013 - 01:27 | 4287514 Prisoners_dilemna
Prisoners_dilemna's picture

Your best example of a first mover is Atari/Commodore??

And by extension since bitcoin is also a "first mover" it will fail??



Tue, 12/31/2013 - 04:15 | 4287693 fredquimby
fredquimby's picture

I did some hoovering yesterday.

Mon, 12/30/2013 - 23:52 | 4287405 bobert
bobert's picture

Thanks Wisehiney.

I never have liked the phrase "printing money" as it seemed to woefully underdefine what is really going on. Whenever you hear the term on CNBC or Bloomberg it is accompanied by the press printing Ben Franklins. Indadequate picture as is the commentary most often that goes with it.

It would behoove us now to watch the total federal reserve balance sheet and make our decision about whether "tapering" is happening by this metric.



Mon, 12/30/2013 - 23:57 | 4287416 Kina
Kina's picture

I love the image...

Rainbow Shitting Unicorn.... the driving force of Krugenomics

Tue, 12/31/2013 - 00:20 | 4287456 hairball48
hairball48's picture

I'd rather stack my gold and silver coins

Tue, 12/31/2013 - 00:30 | 4287473 indio007
indio007's picture

How the fuck did this tripe find it's way onto ZH?!?!?!

Me thinks Tyler is handing them the rope to ....

Tue, 12/31/2013 - 01:08 | 4287538 mrenticon
mrenticon's picture

This guy clearly doesn't understand BTC.  I couldn't get past the 2nd paragraph and skimmed through the rest.  "I suspect almost all transactors will value security much more than anonymity" << Clearly, he doesn't know the BTC user.

And as others mentioned earlier regarding the social impact, mining has driven technology to create newer and newer tech with fewer consumption of energy. This guy's stuck in 2008, and will confuse many more.  Oh well.

~ briguy

Tue, 12/31/2013 - 01:11 | 4287547 One World Mafia
One World Mafia's picture

What a mess.

Tue, 12/31/2013 - 01:51 | 4287600 Prisoners_dilemna
Prisoners_dilemna's picture

Here’s a question that I’ve asked in the past that needs to be revisited. Unless one wishes to obfuscate, it has a simple yes or no answer. If one group of people prefers strong government control and management of people’s lives while another group prefers liberty and desires to be left alone, should they be required to enter into conflict with one another and risk bloodshed and loss of life in order to impose their preferences on the other group? Yes or no. My answer is no; they should be able to peaceably part company and go their separate ways.

The problem our nation faces is very much like a marriage in which one partner has an established pattern of ignoring and breaking the marital vows. Moreover, the offending partner has no intention to mend his ways. Of course, the marriage can remain intact while one party tries to impose his will on the other and engages in the deviousness of one-upsmanship and retaliation. Rather than domination or submission by one party, or domestic violence, a more peaceable alternative is separation.

I believe our nation is at a point where there are enough irreconcilable differences between those Americans who want to control other Americans and those Americans who want to be left alone that separation is the only peaceable alternative. Just as in a marriage where vows are broken, our rights guaranteed by the U.S. Constitution have been grossly violated by a government instituted to protect them. These constitutional violations have increased independent of whether there’s been a Democrat-controlled Washington or a Republican-controlled Washington.

Americans have several options. We can like sheep submit to those who have contempt for liberty and our Constitution. We can resist, fight and risk bloodshed and death in an attempt to force America’s tyrants to respect our liberties and Constitution. A superior alternative is to find a way to peaceably separate into states whose citizens respect liberty and the Constitution. My personal preference is a restoration of the constitutional values of limited government that made us a great nation.


Bitcoin allows us to "vote with our feet" and maintain our money based voting rights where ever we go with minimal risk of confiscation by tyrants.

Bitcoin doesn't require us to take any entity head on. We elegantly side step whatever force comes our way and seperation occurs naturally.

Thankfully with bitcoin I can both remain anonymous and have near perfect security using a brain wallet.

Finally the market will voluntarily adopt bitcoin. No one will force it on us.

Bitcoin allows us to peacefully seccede. For those who are awake and ready to take the proper steps, bitcoin greatly simplifies the process of seccession.


Tue, 12/31/2013 - 02:29 | 4287636 ebworthen
ebworthen's picture

Good God Man - you walk upon a sheet of ice on a deep lake.

If you really want to secede LEAVE THE FUCKING COUNTRY!!!

Bitcoin is:  a ruse, a canard, a magician's trick.

After watching and reading I am convinced it is a either a or an intentional way for TPTB to crush any alternative to Fiat currencies by luring Libertarian minded individuals into it then SLAMMING IT TO ZERO WITH THEIR CONTROL OF THE INTERNET!!!

Do not trust anything you do not hold physically.

Modern society is a construct of images, managed perceptions, manufactured beliefs, contrived relevance, constructed influence, channeled consumption, funneled action, and deluded belief systems.

No better way to rob the Libertarian blind than a binary based currency dependent upon the Internet, electricity, and nodes and channels of communication controlled by the military's of the world.

Great balls of fire I bless the spirit but chastise the naivete of you Bitcoin fanatics.

p.s. - Steve Jobs, Andrew Jackson, and Aristotle are dead in more ways than one.

Tue, 12/31/2013 - 08:04 | 4287796 silvermail
silvermail's picture

Bitcoin - is another classic pyramid, but hidden under the guise of "the latest IT technologies."
Fools always want to believe in miracles.
Fools think, that if they all begin to invest their money in next new Ponzi scheme, they all begin to live more richly.

Party of Fools - is the largest party in the world, which always wins in any election.
All crooks at all times know this and successfully use it.

Party of Fools thinks, that no one should work, no one should to make bread, meat and clothing. All people should engaged only in mining, purchase and sale of Bitcoin . As a result, this common Bitcoin mania, all people will have a lot of money, and a lot of food and clothing.

The idea of universal happiness without difficulty, always captures the minds of fools.
Each time, after the opening of the next grail, fools think that this time they will not be deceived . But each time, they are wrong.
But every time, again and again they find themselves cheated.

Tue, 12/31/2013 - 10:12 | 4288031 Toolshed
Toolshed's picture

I do not believe the average bitcoin user views it as you describe. They see it as an alternative to government controlled currencies, as a way to conduct tranactions anonymously, and possiibly as a store of value. The latter being an absurdity. I can understand the desire to operate outside of government control and the banking cartel. Unfortunately, bitcoin sealed its doom as soon as it moved onto the radar screen of said governments and the banking cartel. Bitcoin devotees will now begin to see just how much it can be manipulated.

Tue, 12/31/2013 - 08:27 | 4287817 bwh1214
bwh1214's picture

I think the problem is they will not allow, us, the productive members of society to leave though actually leaving, or using an alternative currency like gold silver or bitcoin.  If you have any substantial assets they make it very difficult to give up your citizenship.  If you don’t have any assets they charge you 500 dollars for the paperwork, that’s new within the last few years by the way, it used to be free.

As far as starting to use another form of currency, they have not allowed it at all in gold and silver, and people that have tried to have lost millions and in some cases were thrown in jail.  So this brings me to bitcoin.  Do you really think the fact that they are letting you use bitcoin right now to “leave” the system is going to continue.  Half the population and all of the people that make the rules are completely depended on those of us who are productive.  There is nothing stopping me from preforming trade in my preferred method of gold and silver right now without regard for the repercussions without worrying about capital gains but I am not willing to deal with those real world repercussions, I just don’t think Bitcoin users even know what the repercussions are going to be by using that medium of exchange to hold on to more of their wealth

There are a million ways the government could punish those who use bitcoin, the question is why aren’t they when it could be so dangerous to the system?  I fear the people who are using bitcoin to “try” and leave the system are going to be brutally punished.  I am going to read your posted article but I fear peaceful succession will not work, the survival of those in power depend on it.  I hope your right, but am pretty sure you are wrong.

Tue, 12/31/2013 - 23:40 | 4290276 digi
digi's picture

Things would have to get a lot more dystopian a lot faster than they already are for what you suggest to be effective. Shutting down a brick and mortar shop owner for accepting an alternative currency is easy, shutting down an anonymous shop running on the darknet, not so much. Until governments fully commit to an unhindered and full steam ahead attack against any and all liberties, I assure you technology and what's left of the free market will always outpace them.

Tue, 12/31/2013 - 02:22 | 4287632 ebworthen
ebworthen's picture

Good Lord!

Bitcoin is dependent upon electricity, binary data, and the FUCKING INTERNET!!!

Jesus H. Christ can we put this fucking thing to bed already?

There is no tangible limited resource involved.

There is no infallible store of value based upon the Earth.

The only value is determined by TEMPORAL HUMAN CONCEPTIONS AND CONSTRUCTS!!!

Fuck me, I am so tired of this stupid Ponzi scheme and the other one called Wall Street.

God Bless you Bitcoin devotees; your hearts are in the right place but your feet are in a FUCKING TAR PIT!!!

Tue, 12/31/2013 - 03:39 | 4287679 dark pools of soros
dark pools of soros's picture

haha you are an idiot and just get madder the more it lives on

Tue, 12/31/2013 - 04:08 | 4287691 fredquimby
fredquimby's picture

Bitcoin is dependent upon electricity, binary data, and the FUCKING INTERNET!!!

And your bank account full of bank/Govt. mandated binary data and electrons isn't?

Tue, 12/31/2013 - 09:45 | 4287923 IridiumRebel
IridiumRebel's picture

so if the gold in my safe is subjected to keystrokes of manipulation, how is BTC immune from the same? 

Tue, 12/31/2013 - 23:48 | 4290290 digi
digi's picture

Don't let us btc trolls get the best of you. I'm not trying to make the claim that anything is above manipulation, it should be obvious that is the case whenever you are dealing with a market composed of human players. What is important to point out here is that the go to favorite form of manipulation used on gold, selling off paper gold that has no real backing, doesn't work with bitcoin. There are real logistical reasons to have paper gold, and this demand for it allows it to exist and be used to manipulate. There's no reason not to take delivery of actual btc, and therefore no demand for paper btc. If I want to bet on the gold price rising next month for a quick profit, I might would buy paper gold and then sell it off after the rise to avoid having to handle the physical gold. This scenario doesn't exist with bitcoin, if I want to buy bitcoin for a quick flip, since it is electronic I just receive the real thing and that's it. But don't you worry I'm sure plenty of people are working up fun new ways to manipulate btc right now and some of them will work to some extent.

Tue, 12/31/2013 - 10:04 | 4287989 Toolshed
Toolshed's picture

The fact that you assume someone has their currency sitting in a bank account reveals your lack of intellect. Smart people only have enough currency in  a bank to pay their bills. This is merely for convenience. Said smart people would keep their money in a safe and secure location under their control. The binary data you speak of is digital currency. Bitcoin, if anything, is digital currency. FRNs are tangible currency. None of these are money. Do some research on what money actually is.

Tue, 12/31/2013 - 04:43 | 4287705 ebworthen
ebworthen's picture

Boys, God love you, but my real money is in Gold, Silver, and Guns and Bullets.

The digital matrix fiat money is toy monopoly money I use as a tool; I am not going to bet my ass on it because I have no control over it, & that is the point.

If you want to trust "math" and the Interwebs be my guest; not one thing there that has lasted more than 1/2 century much less ten years. 

You may as well be buying tulip bulbs and Twitter shares.

Your hearts are in the right place but you are walking into a nebulous spider web of intangible lies constructed by TBTB.

Tue, 12/31/2013 - 07:40 | 4287784 digi
digi's picture

Last I checked math has been around slightly longer than 1/2 a century. You mentioned you have no faith in fiat yet you use it as a tool. Why is it then when people are suggesting the possibility of a better tool that allows the user much more control, that you seem to be so against the idea. No one is telling you to bet your ass on it. We are all just here pondering.

Tue, 12/31/2013 - 07:54 | 4287792 negative rates
negative rates's picture

Not really, I checked as a kid wit my dad when I needed some help with my math, He said he couldn't help me cause that was new math, and he didn't know new math. Then when I told my teacher she asked me what my dad did for a living? Did he make good money? I says I didn't know, so I went around as a 6 year old to my parents and grandparents and asked what they did for a job, did they make good money?  Oh I want to tell you how well me and my folks got along after that, we joined a car pool just kicks and giggles.

Tue, 12/31/2013 - 09:44 | 4287920 IridiumRebel
IridiumRebel's picture

his issue is not with the history of math

the issue is with the history of manipulation by the overlords


sorry, caps locks got stuck

Tue, 12/31/2013 - 23:51 | 4290296 digi
digi's picture

I am not suggesting that it is immune, I am suggesting that there is a chance it could survive.

Tue, 12/31/2013 - 09:52 | 4287956 Toolshed
Toolshed's picture

I have tried as well to make people understand the extreme danger in playing with intangible assets. It is an exercise in futility. People apparently can only learn the hard way. Oh well. Learn they will.

Tue, 12/31/2013 - 11:15 | 4288225 Ideologue Smith
Ideologue Smith's picture

The day I can put electricity in my hand and stick it in my pocket, is the day its worth something. 

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