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The Difference Between Gold And Bitcoin, As Explained By Elliott's Paul Singer
Some perspective on the two "alternative currencies" - bullion and bitcoin -from the man who has run a hedge fund for 37 years and currently manages $23.3 billion, Elliott's Paul Singer.
Bitcoin
After 37 years in the investment-management business, we are not easily shocked. However, two things about bitcoin have shocked us recently. One is that bitcoin and some of its fellow alternative currencies are finding such favor among investors while gold (the only real alternative currency) is languishing. The second is that the most heated investment-related conversation we have had in many years was with a young person who, when told of our mild dubiousness toward bitcoin, basically lost it and started yelling in its defense. Bitcoin comes with passion and belief – at least at the moment.
There is no more reason to believe that bitcoin, a computer-generated, algorithm-driven currency of supposed limited supply, will stand the test of time than that governments will protect the value of government-created fiat money. One difference: Bitcoin is newer and we always look at babies with hope.
If you are looking for an alternative currency, look into gold. It has stood the test of thousands of years as a medium of exchange and a store of value. Better yet, it is not just a computer entry out in the ether somewhere, and it was last seen available at a good price.
Bitcoin and its relatives speak to understandable impulses (against big government, in favor of freedom and modernity), but we do not see this particular experiment lasting. At least you have to work really hard to dig gold out of the ground.
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No, if the computing power goes down the rate of mining goes down. Accordingly if the computing power goes up the amount mined goes up.
There is no fixed rate of anything, certainly not bitcoin's production.
For bitcoin production to be a fixed rate vs time regardless of computing power it would have to be generated by nature itself & tied directly to any of the constants that actually dictate the nature of reality, how particles are formed, forces interact, radioactive decay, etc. It isn't.
if you were one of those in the beginning who aquired them for pennies or mined them early, how could you not cash out, making 10000% profit? do you REALLY think its going to 10k+? come on. good for you guys, but people not selling most of them are crazy for not cashing out. In an age where everything computer related is less and less secure, especailly from the prying eyes of govts, trusting your wealth to a computer program is nuts
99% cashed out <$100 each, bet on it
Bitcoin will be controlled or destroyed.
http://gothamist.com/2014/01/29/ny_department_of_financial_services.php
Just the beginning.
Bitcoin will be controlled or destroyed.
Ah, your happy fantasy. Malice does not become you.
"The second is that the most heated investment-related conversation we have had in many years was with a young person who, when told of our mild dubiousness toward bitcoin, basically lost it and started yelling in its defense."
The man is speaking to you CH1. You should listen. No malice or hard feelings.
She didn't speak with malice; nor did her post indicate happiness at anyone;s expense. Examine your own position. all she did was offer a different opinion; it 's what scientists do. it doesn't mean they hate you. It just means there seems to be more aspects of this to examine.
The truth isn't malice, it's just the truth.
what i can't wrap my mind around, is that as long as there no exchange of fiat (big IF i realize), how could they be regulated or taxed by any state?
if someone's computer mines a unit of crypto into existence and thus owns it, how can that unit be taxed or regulated if it's not a product of one's labor or a payment of a debt?
will it be through the commerce clause? if so, then wouldn't interstate transactions be exempt if the laws are coming via the states?
Everything falls under the taxman's umbrella, at least on paper. Saying that profits from Bitcoin are taxable is not a very controversial statement. However tax authorities have not made clear whether profits (and losses) are counted as personal income or capital gains or business expenses. This has implications to miners as well as speculators and can have implications while making purchases with BTC. It is also not clear how many people will self-report these gains or the government's response if BTC turns into a form of tax revolt.
yes, but if profit is measured in the "currency of the realm" and a cryptocoin can be "created" and then "given" to another without ever having to engage the currency of the realm (or one's labor), then how can one accurately define "profit" in order to tax or regulate it?
methinks the potential for disruption is being underestimated by the speculative desire to force a round peg into a square hole. it remains to be seen whether that is intentional or not.
Bitcoin is not the first time trades have been accomplished without a fiat component. This is all established in barter and "in kind" tax guidance. Tading labor for a tribe of goats, the exchange has to be marked to market and taxes are due based on that. If said employee and employer actually pay the tax is another question.
yes, but crypto mining is not labor done by a human, it's work done by a machine. big difference in the tax code.
No it isn't. It's the same because all machine labor is the product of human labor & all benefit of machine labor goes to humans.
Incorrect. It's priced to what the IRS says it is.
Market value is what market participants say it is no matter what other trades happen.
IRS value is the highest price to their advantage, not what's honest.
Accurate? You don't need accuracy when you have the IRS. Pick a number any number. Whatever number does you the most harm & gives the most to the IRS is now the official answer.
Go on, tell me they won't do that. They already think they can apply the chosen price (their choice) to BARTER, today, no further regulations needed.
tax & regulate the underlying structure: the electric grid & the communications grids.
So until you've got your own, of both, and can defend them without fail, there's a serious problem.
Gold just works. Even when the power and/or Internet are down. And gold can be hidden in my wazoo or under the daisies.
I'll take "Non-Reactive, Non-Synthesizable, Indestructable Elements" for $1200 please Alex.
It's the raging passion, the religious fervor, the inability of Bitcoin devotees to listen or debate, and the cult like invocations of math and absolute inviolability - that worry me the most about alternative currencies.
I agree with you ebworthen. You know, I fully understand the desire to cast of the chains our gov and bankers have enslaved us with. And I understand that transactions via BTC are virtually cost free. However, placing your faith in an intangible asset that was created by unknown parties, is surrounded by controversy, and is rapidly invoking the ire of TPTB, represents a serious error in judgement. There have been many conflicting statements about BTC that continue to shroud it in uncertainty and muddy the waters - it is untraceable and anonymous, except it is neither. Huh? And like I have stated elsewhere, TPTB do not tolerate competition. They will either find a way to control and profit from it, or they will destroy it. I am fairly sure it will be the latter. Pretty simple really.
anybody here ever hear of the 'philosopher's stone'. it did all kinds of 'cool' stuff including turning lead into bitcoins. i meant gold. :)
it's not cost-free either. The cost is in electric power & time and in hardware to process the blockchain.
And in cost to pay for the communications grid of choice (which typically is tcp/ip over fibre & copper wires but in theory doesn't need to be, as it could be all wireless & for that matter, could be detached entirely from the Internet).
Hell if I set up a digital HAM modem purely using the old protocols of the BBS days it wouldn't be Internet but it would move bitcoins.
Not that I'd want to waste my time on something like that when I could instead be sending PGP signed keys & messages vouching for gold at various locations, audited & confirmed by others with PGP / GPG, and we could side-track this entire bitcoin nonsense.
eb - for me, i see the best placed of the 'occupy wall street' crowd 'believing' behind this. the one's in the basement with a mom and dad who will still donate for them to buy more 'mining' hardware.
anyone who doesn't think goldman sachs (and a few others similar) has unlimited resources at this point humming away doing mining is seriously mistaken. all the hackers in mom's basement with what they think is unlimited gear should check out the fact that lloyd blankfein is worth 300+ million fcking dollars and that buys a lot cpu's. if there is any money to be made in bitcoins - by now, goldman has that market cornered.
A few points:
By design, the mining network is open to anybody (you, me, Goldman Sachs, the mafia, the government, etc) to connect to and help secure the network in return for some Bitcoin currency.
12 million coins have already been mined, miners are competing for the remaining 9 million coins that will trickle out slower and slower as time goes by.
The miners I know are still receiving the amount they expect to receive in porportion to the computational power they are contributing to the network.
INCORRECT.
By design the mining gear is able to be used before shipped & those with the lowest income have NO POWER to manufacture their own high-performing ASICs and NO power to stop shipment patterns where mining-machines are used THEN sold when they aren't fast enough to be worth the money they cost.
By DESIGN fab-labs which produce those chips are in the hands of the MOST RICH people in the world.
I don't like Bitcoin. I only buy the other 82 crypto's.
I think the main difference is that the FED doesn't have a trade desk at the main bitcoin exchange to whack it if it gets out of hand.... yet.
I'm confident they do & have used it already a few times.
Everybody is focused on giving an answer instead of focusing on what's the correct question.
What's the correct question?
What happens to Bitcoins when the interwebs goes DARK?
same as the entire financial system as we know it.
Not the entire financial system; just the part that doesn't involve real coins.
absolutely agreed
What is the matrix.
Shit, at this stage it's time to ask "what ISN'T the Matrix?"
Only gold is real money, that's all the argument which attracts gold buyers like bugs to the candle? Oh I see, that's why they call themselves gold bugs.
Crypto currencies are cool as they take power away from banksters and undermine their plans to enslave us all....but they are not really an investment...just a means of exchange. Gold...is an investment and a means of exchange...As both stick it to the banksters both are good.
Real investments pay returns, neither gold or bitcoin do that. So I see no difference here.
Gold pays returns.
You obviously know nothing of writing covered calls or leasing gold. That's a cash return & it means keeping the shiney safe in hand the entire time.
An investment is NOT SOMETHING which "pays a return" in the form you intended, which is a fiat/cash return dividend while holding the underlying shares/units.
An INVESTMENT is something which RETURNS A PROFIT, including principle returned, on any time frame - no dividend "income" required, though if available it is to be added into the profit/loss calculation.
Kids. You will learn the hard way.
What happens to Bitcoins when the interwebs goes DARK?
What happens when a moon sized meteor made out of cotton candy slams into the earth?
If the internet goes dark the last thing you'll be worrying about is bitcoin.
anyone born before 1993 care to guess?
They hibernate in the blockchain until civilization is re-established. If MadMax scenarios are the way you plan every financial decision, your choice should be obvious.
However, in real life I rarely if ever use Gold to conduct business. I usually use fiat currency that can be printed into oblivion. But now limited-supply Bitcoin currency is edging into the marketplace.
bzzzzt wrong.
The blockchain will not come back because in the same act it will be corrupted. Replaced with other competing blockchains run from virtual machines in NSA-server farms.
They will appear to the net as the majority, and next below majority & so on until the original is like 50th.
Then the grid will get removed an hour later.
Idiot, parts of the internet go dark all the time from power outages, server outages, lines being cut, it's just very small.
No harm comes to me from the entire internet being gone. None.
It's the least thing for me to worry about, like what if one day all cell phones shut off forever? I wouldn't care. Does nothing to me.
Smart people do not depend on the grids.
They'll use their USB keys as swap tokens for Magic the Gathering cards & Beanie Babies.
The SMRT ones will already have a tulip garden on the go.
Has anyone read any good research on the expected effects of isolation or separation of the various properties of money, i.e., numeraire (usd), means of trade (usd, btc), store of wealth, value (gold, silver), speculative (credit), source of liquidity (usd) etc.?
Edit: Meh...it was worth a shot.
My screen name means SAT800 in Math in 1959; before they dumbed down the SAT's twice. I've read the math. explanation of why bicoin is forever invulnerable; and I've read a post from a professor of Math. at MIT; who says; no, it isn't. It just so happens that I agree with him, Dr. Katz; that it is not, in fact, invulnerable; very, very, few things are. I can also see how easy it is to make large sweeping statements about statistics that may or may not be perfectly understood by the speaker, that serve as justification for this opinion that they are invulnerable. But then, we've seen the abuse of statistics to "prove" global warming too. I would have to say that there is doubt, alive and well, amongst, real Math. Professors, as to this supposed invulnerability. Since no one knows whether I have any silver coins or not; is this not a sufficient case in itself? What would I gain by storing value in a complex and possibly, I said, possibly, vulnerable way, that I can store in a simple and invulnerable way? As for their utility as trading units; this seems to me as absurd. I can already buy what I can afford and what I think will benefit me with FRN's on a VISA card; so why should I bother.? Money has two functions; making trades, and preserving value for the future. FRNS's work perfectly for making trades; they are useless for storing value; that's what the Silver is for. Any interest or passion relating to past paper profits from the changing valuation of bit-coins is of no interest to me at all. This is merely a function of the mass mind; it cannot be depended on. I can still buy a gallon of gasolene with a Silver US Quarter just like I could in 1960 when I got out of high school; I could also have rented the use of a horse for a day with the same coin in 43AD. Where a persons savings for their future, or for their family, is concerned, I think a great deal conservatism is appropriate.
Bitcoin
Did you scream ?
"Money has two functions; making trades, and preserving value"
Fiat Money, as currently managed by the state, also has the function to prop up their agenda. Keep using "FRNs on a VISA card" because "why should you bother?" Your children will thank you for it.
Dumbass. If I got a visa I'd run it to the limit, never pay, be liable for nothing, and stop using credit. I don't use credit as-is, haven't for many years.
Free money if you understand the rules.
You're one of those denier-hoaxers?
SAT 50 is more like it.
There are no STATISTICS to prove global warming.
We can SEE global warming from infrared satellite imagery. We can MEASURE the infrared deflection of heat back to the heart from concentrated CO2 and methane. We can replicate it any time any place.
That's EVIDENCE, HARD PHYSICAL REALITY. Physics. None of it's statistics.
if you want to deal in the realm of models & statistics that's to forecast FURTHER ADDITIONAL damage, not the PROVEN EXISTING damage of global warming.
There is also hard evidence of warming on Mars. It's a fact.
"Mars, too, appears to be enjoying more mild and balmy temperatures."
http://news.nationalgeographic.com/news/2007/02/070228-mars-warming.html
Mars has an orbit very different than Earth, that's the reason.
There's no reason, in fact, to expect anything about Mars & Earth to share in common with weather at the same moment in time. Different distances from the sun, different orbit axis, different solar-orbit period.
You do know this, right? No? Now you do.
These are 100% unrelated.
If the sun was the cause, which you are hinting at, it would BURN the inner planets before warming the outer planets before even being measurable to us.
It's something called the inverse square law. Look it up.
"inverse square law..." "...Mars & Earth to share in common with weather..." "...it would BURN the inner planets..."
HOLY CRAP! Someone needs to call the scientists at NASA & JPL and let them know about this as soon as possible!
BTW, you may want to look at increasing your dosage.
They already know & they already agree with me.
double post deleted
BitCoin may be excellent, or horrible, I don't know enough to tell anyone to buy or not to buy. I do stay away from it though and stick to proven investment and wealth storage vehicles.
I am however seeing a trend in people who share the same very valid concern, that there could be a Wall Street strategy to make BitCoin a Global Currency.
I found this article very interesting;
http://www.globalresearch.ca/will-digital-currency-replace-the-us-dollar-wall-street-strategy-to-make-bitcoin-the-global-currency/5361021
I do not doubt for one second that the whole Bitcoin thing was conjured up by one of our more secret agecies for 2 reasons:
Soak up money only to be destroyed when it suits them. After all nothing easier to destroy something that doesn't even really exist
and
thus limit the amount of speculative money otherwise going into silver and gold.
it's definitely dampened the potential hot money going into the precious, especially from the silicon set. but just maybe, that's not a bad thing in the long run, as long as gold continues to track energy/work, as it's already proven to do for thousands of years.
stability in a store of value is a feature, not a flaw, yes?
Gold can't handle a little competition from an asset class that is less than 1/1000th its size (in terms of market capitalization)?
If gold holders got off their hoarding asses and started building a vibrant economy based around gold as a medium of exchange, the demand for bitcoin would decrease. But gold would still struggle when it comes to payments over distance when time and costs are of the essence.
There are no such costs.
Survival is in-your-face purchasing. Nothing else matters. To pretend otherwise is to imagine a utopian world in which it's all-so-important to destroy your value (money), pretend it's stored in bits (it isn't) and send them, to get what? Nothing. Nothing at all. You are not receiving anything of value until tangibles arrive to YOU.
It matters not if I can turn $900 of value into $0 of bitcoins and send them half way around the world: until goods arrive to ME I am at a 100% loss & they may never arrive. That's a failure gold helps you avoid. With silver & gold IN HAND and goods IN FRONT OF YOU for a trade you can't be caught with your pants down.
Or land. Consider safe passage, land, stored food, all cost money (value) and that money (value) can be soaked up by derivatives, treasuries, taxes, fines, outright theft using eminent domain or deposit-box raids & other tricks. Bitcoin is just another such trick at the fiat exchanges: until goods are priced in btc in a stable manner everywhere the attack is to buy with printed money then sell to slam down the price and buy what people are selling at that lower price then finally take btc off the market for the masses as the thousands of wallets then which WILL be majority holders will all be controlled at NSA server-farms or the Federal Reserve itself.
When dealing with border guards or pirates [personal experience here] gold works! Try offering them bitcoins. HAHAHAHAhahahahahahahahahaha......................
gave my girlfriend a bitcoin ring. she thought we were engaged, she was so thrilled.
MIT Technology review article: But Bitcoin may not be quite as secure as everybody thought. Today, Ittay Eyal and Emin Gun Sirer at Cornell University in Ithaca say they’ve discovered a flaw that allows any organised group of Bitcoin miners to take over the currency. And they say that some groups today are already big enough to do the job.
http://www.technologyreview.com/view/521521/bitcoin-vulnerability-could-...
That's right, a currency that has the Fed shitting its pants enough that it can't arrest people who process it fast enough is a flash in the pan. I hold gold. But Bitcoin is the far more immediate threat to the federal government and as such should be adopted by liberty-minded people ASAP.
The anti-bitcoin comments on this forum are breathtaking in their ignorance of technology in general and BTC in specific. I am wondering if the average age on here could possibly be even older than my own.
the tech is so amazing , it can be duplicated ad nauseum for pennies.
you paying 1000 for something like that?
better you than me
clearly bitcoin is a tool OF the Federal government. it's their way to attack YOU, not the other way around.
It has stood the test of thousands of years as a medium of exchange and a store of value.
Wrong. Gold has held value compared to the dollar (because the dollar has been purposely mismanaged), but it has not competed with the dollar as a Medium of Exchange (MOE) in my life time (70 years). I have never entered into a single transaction using gold as a MOE and I don't know any one in my lifetime who has.
BitCoin and Gold have the same set of flaws. Among them is the false premise by which they are offered as a Medium of Exchange. That premise is that they are "scarce". Both are essentially useless. Gold has some value if you are plating bugs for electron microscopy, plating and wiring computer circuits and showing off to your friends (jewelry). BitCoins have no value whatever. But value isn't necessary for a MOE that is properly managed as long as what the MOE stands for has value ... and trading promises have value.
A Medium of Exchange (MOE ... money) stands for "a promise to complete a trade". It is created by traders and is extinguished when they deliver on their trades. If they DEFAULT it is recovered through INTEREST collections. Supply and demand for money are always in perfect balance ... it's the nature of a trade. By the relation INFLATION = DEFAULT - INTEREST, inflation is guaranteed to be zero all the time everywhere if the MOE is properly managed (but it has never been properly managed because it is not in the interest of TPTB to properly manage it).
BitCoin and gold are both deflationary. They will never match the amount of trade and savings they are supposed to "back". There will always be less than needed. With gold this is obvious. There's only one ounce per person on earth. With BitCoins it's even worse ... 1 BitCoin per 285 people.
What a joke. Get real people!
I'm sure you'll get spammed with hate but it's nice to read the voice of reason on this site once in awhile. The gold and bitcoin mania is more driven by psychological dynamics than financial ones. Reading through these comments for years I have found that depending on who they are and where they live they think that "owning" gold, land, a gun or guns, botcoins, etc. will be THE KEY to suriving a financial apocalypse or major crisis of some sort. It's all a fantasty driven by fear. Power owns. If you're not in charge you're just holding for someone else. Hoarding something of value in a crisis will get you killed faster than crossing an 8 lane highway wearing a blindfold. Macho BS will not bail you out. Compared to people in the developing world even the toughest southern redneck hillbilly is a fat, pampered twot who wouldn't last a week without some modern conveniece/medication. If the rule of law goes (even unjust rule is generally predictable) there will be nowhere to hide and nowhere to run. A house is only a metaphorical castle. Gold, guns and god will not save your ass from a gang or roving felons or a despotic governemnt. You're fucked. Period. Better to invest in social stability and community though the political process though I'll admit that that ship seems to have sailed. So we're just fucked. Let the macho bullshit commence.
"they live they think that "owning" gold, land, a gun or guns, botcoins, etc. will be THE KEY to suriving a financial apocalypse or major crisis of some sort"
And what was it exactly that Jews were sewing into their clothes as they excaped the Nazis? And what kinds of investments survived hyperinflation in Zimbabwe and numerous South American countries?
ROFL @ "Jews ... excaped the Nazis". That's not exactly how it worked out for the Jews, did you stop reading the newspaper in 1939?
Their gold certainly lived on in the vaults of Swiss Bankers, the jews who owned it not so much. But you're the exception, right? I'm not saying gold is worthless, it will always be worth something. So what?
http://en.wikipedia.org/wiki/File:Buchenwald_Property_80623.jpg
Hoarding NOTHING of value in a time of crisis will get you killed far faster than hoarding what is of value.
Just ensure you can defend what you hold. Many can & will.
Gold mania? Idiot. There is no gold mania. Barely anyone gives a damn about gold, never talks about it, holds none & intends to keep it that way.
This isn't hate-mail, this is how the world works & always has.
I have never entered into a single transaction using gold as a MOE and I don't know any one in my lifetime who has.
You might want to do some research on monetary history before you make such a claim. The dollar was backed by...........wait for it..............GOLD right up until 1973. In effect, every transaction you, and everyone in the world, used gold for their transactions until the gold window closed and we began our descent into fiat hell.
Ya'know the guy very carefully chose his words (MOE). MEDIUM OF EXCHANGE. Have you ever traded gold for something else? Because then you would be using it as a MOE, dipshit. AU was so important to the purchasing power of the Buck that as soon as the Dollar went fiat it became worthless, right? Please send me all your worthless paper money. You and Fonefart are obviously <30 and high on life. Go down to Wal mart and pay your utility bill with a Kruggerand, maybe you'll get some Isle of Man cat coins back in your change. I hear that they're collectible.
Others have done this:
when the utilities are inclusive in rent & rent is accepted in gold or silver coin (it has been already reported on youtube by sources I trust) it's a done deal. I've also bought food with silver maples before.
Wrong. Gold has competed against EVERY other medium of exchange for thousands of years for their entire duration, short ones, and that proves the point.
NONE can compete the full thousands of years because none last more than a few decades, tally sticks being the exception that lasted longer but it's still gone.
It's always a mistake, too, to compare money amount vs population size. The only comparison that matters is tangible money vs tangible goods. Not population.
It's goods we buy, not people.
Most certainly bitcoin has unique flaws gold can never have.
Gold doesn't require a power grid to operate.
Gold doesn't require a communications grid to be exchanged.
Gold doesn't require mankind's influence to make it exist.
The world was deemed flat for centuries.
So for bitcon to hang around for a few years, that's nothing.
When the first person is mugged for bitcoins, then I'll believe.
Will you settle for bitcoin bank robberies where the exchange was ran by an 18 year old? http://www.businessinsider.com/the-history-of-bitcoin-theft-2013-11
If you believe Bitcoin is run by nsa & central... this actually gives me faith. Its their final route out of the rout to end up in control of the cash even if they cant control the populations... Oh and hello, after 3 years watching ZH, I finally decided to get involved ;) Im not big on gold personally tho i would love to see shiny, I live in rented accomodation in a country i cant protect it with arms... 3 nutters turn up with a will to raid my place, they will find me unable to defend my physical position... I was in city of london today outside RBS.. you can see most of them Outlook on one screen Facebook on the other - hell in a handbasket.. We all know the fiat is overblown and correction is coming in a fierce way. Stop fighting over what will be the successor, start fighting over how we should all get along, cause we are breeding the lazy and sheeple need a shepherd, "it is, what it is"...
You can actually secure gold inside clothing, like in a belt, or a hidden pocket. If you stick to nothing larger than 0.1 oz coins you can carry a lot of purchasing power with no obvious sign it's there unless you're forced to walk through a metal detector or perhaps your clothes are burned, revealing metal objects.
Jokes aside the main argument against bitcoin is simple: how can you value ANYTHING with it?? I mean geezus look at a chart! That thing is all over the place! The only people who think bitcoin is money are speculators hoping to sell it for more than they paid for it.
Growing pains. BTC is still very much in the process of price discovery. It started at absolutely zero, after all. Currently 5 to 10 million people own bitcoin. Will that number increase or decrease? By how much? How much economic activity will eventually take place inside the stack of 21 million bitcoins? How much can be priced in now? What will the government response be?
logic-fail. Fiat price discovery should STOP. Goods should be priced in btc, btc should not be priced in any fiat. The exchanges should not exist. They are the ponzi-magnifier.
You think the first people to rock up with stones got beat down by shiney, shiney won trades over people who rocked up with a cow? dollars beat down gold with guns? how do you think the beginings of money and currency faired when backed by arms, trade laws, trade routes, the promise of more shiney, promise of energy (petro)dollars, promise of convertion to a *real god* (im athiest), promise of lack of death? I am long btc, im also long gold as a single underlying currency.. I am long the human race, I am long innovation. I am also most long a self sufficient freehold homestead with cattle, solar, tidal, wind and desalination plant but thats just me...
This is kind of a strawman argument. I don't think anyone argues that Bitcoin is a great store of value. At best it's a speculative asset in terms of value.
Bitcoin is however a great medium of exchange for long distance transactions. It's a competitor to the banking system, and partnered with gold, it's pretty fantastic.
Bitcoin is a great idea, and if here were only one digital currency, it would offer a real complement to precious metals. It is great that it is limited to 21 Million units. These 'coins' are really just very 'scarce' numbers in a vast sea of valueless numbers. They are hard to find and hard to hack. It is precisely this scarcity and difficulty that allows bitcoins to represent value. (money is just a symbol for value, not value itself). And its obscure nature allows for annonymous and private transactions, which serves the cause of universal freedom. Its a great 'idea', but like all ideas it shrivels under the glare of reality.
The reason is that this kind of encryption technology only relies on a few big prime numbers. Since there are an infinite number of prime numbers, that means there are an infinite number of potential digital currencies. In the end, there is nothing stopping people from making hundreds or thousands or even millions of different digital currencies. The scarcity, and therefore its utiltiy as money is then gone. Ultimately, this is no better than bank credit money which created more-or-less the same way: out of thin air. At least bank credit money is supposed to be backed by collateral, and/or cash flow (like your salary backs your credit card). Admittedly, banks push this principle to the breaking point. But a digital currency is 'backed' by absolutely nothing, which in some ways makes it worse than bank credit money.
Now we could limit all the possible digital currencies to 'just one', but someone would have to enforce that, which would inevitably be a government. And presto we are right back at the classic legal tender by government fiat. That is really no different from what we have now: you can't print your own paper money because you'll go to jail. Likewise you couldn'y just 'make up' a new digital currency because it wouldn't be sanctioned: it wouldn't be legal tender.
On the other hand, there is only one possible system of gold money involving all the above-ground gold. You can't make another system like that out of thin air. This is, and has always has been, the beauty of gold: it is truly scarce, not apparently scarce, not scarce by decree. There is only one supply of gold, period. The fact is utterly immuatable: immune to all corruptions from human greed. If you were to try to make a parallel money system out of gold, you would effectively put two claims on each ounce of gold, which is not money, but a derrivative.
A human failing is to assume that all the people that came before us were stupid. This is ridiculous: they were exactly as smart and as sophisticated as we are. The criminals were just as clever and deceitful, and the autorities were just as diligent in trying protecting the common good. Time after time throughout history, human beings have been forced to protect their money with a system of gold backing. Nothing has changed today. We have new mechanisms, but the prinicples are the same because poeple are the same. Although, digital currencies appear to solve the basic problem of money, they really don't. And thus will we be forced back to gold after a century of gallactic profligacy.
" Its a great 'idea', but like all ideas it shrivels under the glare of reality."
ALL ideas do not shrivel under the glare of reality. Ideas with roots rising from veritas stand the test of time.
The market will decide which digital currencies will survive and which will fail. Merchants, as market participants, will spend resources to accept the digital currencies with the most potential customer base. Customers, as market participants, will acquire the digital currencies with the most merchant acceptance and possibility for resale value/appreciation. These are barriers to entry and they are self-reinforcing. This is already occuring with Litecoin holding steady at about 1/20th of Bitcoin's market cap and the other copycat currencies falling off sharply from there.
Scarcity isn't really the problem. So long as there's no central controller, a change to the total units available can be stable, can find equilibrium. What's a probem is the on-grid nature & the exponentially increasing computing & storage requirements just to use it.
GPG signed messages as vouchers for value, rather than btc vouchers for value which are unsigned & can all fail all at once, is the answer. no blockchain required. In fact all that's needed is a few vigilant among billions to indicate when a transaction is fraudulent so those keys or messages can be invalidated. No blockchain is required nor should it be. We don't have a transaction blockchain for dollars: we don't need one & to have one would be incredibly stupid.
When there is only a limited quantity of something and one can steal enough of that substance, one then has enough of it to move the price around to suit one's agenda. If gold is the issue, it is only a matter of figuring out where the physical gold is at and then stealing it. Saying you can steal with impugnity, you go after the big vaults first. You don't need it all, just a majority. Same thing with BTC. Go after the markets and exchanges and the BTC repositories that are largest. Go after the biggest players and you win. Gold mining becomes easier and *cheaper* over time due to better technology. Gold also tracks Oil to some degree, so as oil related mining costs increase, bullion will also increase. Better technology was baked into the cake for BTC and with current technology, the costs of mining BTC keep rising, rather than falling. Theft is easier and cheaper than production. BTC are not guarded like they are gold. It is currently far easier to take down a market or exchange than to raid a vault. Since BTC is anonymous, nobody knows what percent of them are controlled by the chief thief. Gold is old and has better accountability. While it is possible for the thief to steal gold, it will eventually be noticed just as in the case of the German gold.
If that tactic worked it would have been done thousands of years ago. There is no way to magically find all gold & steal it, that's the benefit of tangible assets. The search is too hard, as is the fight to to the stealing part.
No majority of gold is required to get value of gold, all the value needed: you need only to trade it for one thing of value per unit you're holding & willing to let go of. What others have of a tangible is of no consequence. Tangibles don't work like fiat debt units.
BITCOIN IS GOLD +++++BITCOIN IS GOLD +++ BITCOIN IS GOLD +BITCOIN IS GOLD ++BITCOIN IS GOLD + BITCOIN IS GOLD+ BITCOIN IS GOLD BITCOIN IS GOLD+ BITCOIN IS GOLD + BITCOIN IS GOLD BITCOIN IS GOLD ++ BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD++ BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD+ BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD +BITCOIN IS GOLD++ BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD++ BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD+ BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD +BITCOIN IS GOLD BITCOIN IS GOLD ++ BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD + BITCOIN IS GOLD BITCOIN IS GOLD++ BITCOIN IS GOLD+++++BITCOIN IS GOLD +BITCOIN IS GOLD BITCOIN IS GOLD+BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD+ BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLD+++ BITCOIN IS GOLD BITCOIN IS GOLD+BITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD BITCOIN IS GOLDBITCOIN IS GOLD BITCOIN IS GOLD+++ BITCOIN IS GOLD+++BITCOIN IS GOLD BITCOIN IS GOLD+++ BITCOIN IS GOLD+ BITCOIN IS GOLD BITCOIN IS GOLD+ BITCOIN IS GOLD++++++
Bullish for BTC after that , thanks man ..
PS what are your meds, I really wanna try some .
comedy gold, perhaps.
Bitcoin , Bit-chez .........
Physical gold is always a store of value. Bitcoins is and will be more as means of alternative digital transactions. Why compare? Both need to work hand-in-hand as a true alternatives of fiat system.
Can't compare GOLD & Bit Coin ? Gold is real and Bit Coin imaginary.
Bitcoin is bitdust, or bytedust if you get the computer humor.
I think it's a sort of planned honeypot to catch people getting out of fiat.
And would the last people to leave the Fiat system please turn off the fucking light on their way out.
Thanks.
The price of gold is manipulated, just as bitcoin is. Where is the safety?
Atoms provide safety no paper price can: they can't be eradicated nor duplicated through paper manipulation & their intrinsic value is both in hand-to-hand trade and in chemistry, electronics & dentistry for gold. Has some nuclear properties too but none the common man would be involved with.
Fonestar...I love ya, but please stop referring to yourself.
That's just freaking creepy.
Remus approves of Remus-like 3rd-person self-references.
Silver Bitchez! One simple chart explains it all...figure 4 on page 3 of "On the materials basis of modern society" http://www.pnas.org/content/early/2013/11/27/1312752110.full.pdf
Hey Tyler, this is primo ZH data here son!
that's some serious chart porn
love the table on tungsten
Bet you a Bitcoin I could run through these posts and tell you who's over 60 and owns gold at home? Takers?
What good will bitcoins be "if" the internet infrastructure tracks/restricts access to your bitcoin wallet?
Go for it. Usually I add, when talking to my undergrad daughter, you should move out and start ruling the world now, while you know everything.
The irony is as people get older & dismiss new information out of habit or exhaustion, and worse, forget things due to aging, the statement will actually become true but the person who made it will never admit it.
Singer will protect his assets at all cost, from all serious contenders. Now that he and his pals have subjugated Gold, they're focusing on Bitcoin. To be expected: D & C (Divide & Conquer) works on 80% of the public and 80% of bloggers.
Truth is, it is the COMBINATION of GOLD + BTC that is the Fiat-killer. They are like two legs, putting one foot in front of the other, and pretty soon fiat will be walking out the bankster door.
An inconvenient truth he/they would rather you did not know: Gold + BTC takes VoM out of their system, and create a Parallel Economy. An unregulated, free-market economy.
/ But keep going for the D & C distraction, if you got Adult ADD. /sarc
There is no technical reason to believe that bitcoins will be limited in number. Sure, they say the algo "says" so, but who wrote the algo and who has seen the algo? It is reasonable to expect there is a back door to the code to generate additional bitcoins when the time comes.
Look at all the medieval effort spent to create gold from lead... Bitcoin will be no different.
No, it's open-source. The one assumption that's never reasonable is to assume backdoors are in open-source any person can see & change.
You are exactly right captain kirk!!!!
Here is how, with Bitcoin, we can free all of the worlds debt slaves = 99% of population!
It will lead to all the regular people all over the world getting paid at the same world
rate for their labor and buying food etc at also the same world rate, and not an
artificial slave rate, dictated by some country leader who is skimming off the top.
..a new universal exchange must marry BTC/LTC ( which is really a
form of an asset not a currency or money ) with gold/silver/commodities
What many people really don't get yet is Bitcoin/Litecoin are the worlds first, very
liquid, average persons, commodity/asset of exchange, that doesn't need any governments or
banks to exist.
Here is how the whole game will change...by making Bitcoin/Litecoin very real, which will
lead to a grand new world reserve liquid trading commodity vehicle (not currency ) ... and
eliminate ALL potential regulation problems with bitcoin/Litecoin being
equated to one, or any fiat government currency!!!!!
The real relationship between Gold/Silver/Commodities and Bitcoins/Litecoins needs to be a
marriage! This will give bitcoins/Litecoins value and gold/silver/commodities liquidity
and bypass all fiat currencies in the world taking away power from the top 85 families on
the planet that have the same assets as the bottom 3.5 billion people. ( and 10's of
thousands of others ripping people off everywhere)
This also solves the problem of not much liquidity for the easy transfer and payment using
actual pieces of gold/ silver / commodities over the internet ..... now their value is
transferable to btc/ltc, which is easily exchanged anywhere for everything starting with
the most important thing wages for employment.
The way to move the whole thing forward is a worldwide UMX exchange, like mtgox.com, but
much bigger, and at some point using satelite coms, only for gold and silver weights and commodities , not US dollars, CDN
dollars, or any other dollars, to be exchanged/traded for btc/ltc/commodities.
You can use small shops everywhere, in small communities, in every country in the world,
like a current cash shop, pawn broker, grocer or gold/jewelry dealer that fronts all of
the small trading for everyone. So you give them some gold or silver commodities etc and
they give you btc/ltc or you give them btc/ltc and they give you gold silver commodities
based on current gold/btc exchange rates on the UMX..
Once married, all 3 things cant be touched by megalomaniacs and are outside of "world money
regulation/phantom creation"
BTC and even LTC is the same as precious metals in many ways, it has a finite amount
available over time, cannot be "printed" into oblivion, must be mined and is a store of
wealth and no one individual or group owns the system, it belongs to everyone.
The numbers make sense..if you look at fractional bitcoin system the numbers more then
make sense... each btc can be broken down to units that equal .00000001 so There are
really 2,099,999,997,690,000 (just over 2 quadrillion) maximum possible units in the total
maximum bitcoin design. The value of "1 BTC" represents 100,000,000 of these. there is
only around an actual 1 trillion in printed usd $ around and currently 60+ trillion in
total US debt http://www.usdebtclock.org/ (not including unfunded liabilities ) So there
is, or will be by the year 2140 (end of bitcoin mining), 2000 times more exchangeable
bitcoin units then us$ in the world and then there are no more BTC
As more gold mined down the road it will just change the exchange value slightly ..but,
unlike "make believe" money, (only .52% of the Bank of Canada's money is real, 1.75% in at
the Fed and the average is .75% in all the central European banks ) .....both gold/silver
and bitcoins/silver/commodities have physical limits on total in existence and are very
real.
I truly believe crypto commodities will eventually benefit the average person on this
planet even more then the internet has .....
Not to rain on your parade, but how about an alternate point of view:
http://www.globalresearch.ca/will-digital-currency-replace-the-us-dollar...
I particularly liked this quote: When people such as Lisa Shield, VP of the Council for Foreign Relations are pitching for Bitcoin...
Now just how world shaking will bitcoin be for the down-trodden masses?
Here is how, with Bitcoin, we can free all of the worlds debt slaves = 99% of population! It will lead to all the regular people all over the world getting paid at the same world rate for their labor... -- bcecil
Perhaps you ought consider that western wages are considerably higher than those in developing countries. The most likely wage pressure, therefore, will be down in the west... How, exactly, will that benefit us poor wage slaves in the U.S.?
This is bad. It seems we both understand that the same amount and quality of labor produced by an American is obviously worth 2 or 3 times that of a human from a developing nation. Bitcoin Abort -- Mayday Mayday.
MtQOX, MtQOX!!! What will I do with my Quatloos if it goes down? No one's taking my quatloos for real assets!!
Gold can't be subjugated, only the people that want it or are made not to want it (yet need it).
Remember, it is not the spoon you are bending because there is no spoon.
It is only yourself that must bend.
I own both bitcoin and gold bullion. Their main difference is, one goes up between the crashes, the other only goes down. Gold has been a government scheme for hundreds of years.
That's the funniest shit I ever read, next to the comment I made a minute ago.
Gold's the product of supernovae - not government.
Bitcoin has teh invulnerables!
Unlike gold, bitc1on can teleport anywhere, even backwards in time & has the fonestar-powered forceshield of ImpossibruMon to repel any EMP and in fact to destroy even gold atoms with Satoshi-power.