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Schlichter: "Bitcoin Is Cryptographic Gold"

Tyler Durden's picture




 

Submitted by Detlev Schlichter via DetlevSchlichter.com,

The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostile. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity. In my view, Bitcoin as a monetary concept is potentially a work of genius, and even if Bitcoin were to fail in its present incarnation – a scenario that I cannot exclude but that I consider exceedingly unlikely – the concept itself is too powerful to be ignored or even suppressed in the long run. While scepticism towards anything so fundamentally new is maybe understandable, most of the tirades against Bitcoin as a form of money are ill-conceived, terribly confused, and frequently factually wrong. Central bankers of the world, be afraid, be very afraid!

Finding perspective

Any proper analysis has to distinguish clearly between the following layers of the Bitcoin phenomenon: 1) the concept itself, that is, the idea of a hard crypto-currency (digital currency) with no issuing authority behind it, 2) the core technology behind Bitcoin, in particular its specific algorithm and the ‘mining process’ by which bitcoins get created and by which the system is maintained, and 3) the support-infrastructure that makes up the wider Bitcoin economy. This includes the various service providers, such as organised exchanges of bitcoins and fiat currency (Mt. Gox, Bitstamp, Coinbase, and many others), bitcoin ‘wallet’ providers, payment services, etc, etc.

Before we look at recent events and recent newspaper attacks on Bitcoin, we should be clear about a few things upfront: If 1) does not hold, that is, if the underlying theoretical concept of an inelastic, nation-less, apolitical, and international medium of exchange is baseless, or, as some propose, structurally inferior to established state-fiat money, then the whole thing has no future. It would then not matter how clever the algorithm is or how smart the use of cryptographic technology. If you do not believe in 1) – and evidently many economists don’t (wrongly, in my view) – then you can forget about Bitcoin and ignore it.

If 2) does not hold, that is, if there is a terminal flaw in the specific Bitcoin algorithm, this would not by itself repudiate 1). It is then to be expected that a superior crypto-currency will sooner or later take Bitcoin’s place. That is all. The basic idea would survive.

If there are issues with 3), that is, if there are glitches and failures in the new and rapidly growing infra-structure around Bitcoin, then this does neither repudiate 1), the crypto-currency concept itself, nor 2), the core Bitcoin technology, but may simply be down to specific failures by some of the service providers, and may reflect to-be-expected growing pains of a new industry. As much as I feel for those losing money/bitcoin in the Mt Gox debacle (and I could have been one of them), it is probably to be expected that a new technology will be subject to setbacks. There will probably be more losses and bankruptcies along the way. This is capitalism at work, folks. But reading the commentary in the papers it appears that, all those Sunday speeches in praise of innovation and creativity notwithstanding, people can really deal only with ‘markets’ that have already been neatly regulated into stagnation or are carefully ‘managed’ by the central bank.

Those who are lamenting the new – and yet tiny – currency’s volatility and occasional hic-ups are either naïve or malicious. Do they expect a new currency to spring up fully formed, liquid, stable, with a fully developed infrastructure overnight?

Recent events surrounding Mt Gox and stories of raids by hackers would, in my opinion, only pose a meaningful long-term challenge for Bitcoin if it could be shown that they were linked to irreparable flaws in the core Bitcoin technology itself. There were indeed some allegations that this was the case but so far they do not sound very convincing. At present it still seems reasonable to me to assume that most of Bitcoin’s recent problems are problems in layer 3) – supporting infrastructure – and that none of this has so far undermined confidence in layer 2), the core Bitcoin technology. If that is indeed the case, it is also reasonable to assume that these issues can be overcome. In fact, the stronger the concept, layer 1), the more compelling the long-term advantages and benefits of a fully decentralized, no-authority, nationless global and inelastic digital currency are, the more likely it is that any weaknesses in the present infrastructure will quickly get ironed out. One does not have to be a cryptographer to believe this. One simply has to understand how human ingenuity, rational self-interest, and competition combine to make superior decentralized systems work. Everybody who understands the power of markets, human creativity, and voluntary cooperation should have confidence in the future of digital money.

None of what happened recently – the struggle at Mt. Gox, raids by hackers, market volatility – has undermined in the slightest layer 1), the core concept. However, it is precisely the concept itself that gets many fiat money advocates all exited and agitated. In their attempts to discredit the Bitcoin concept, some writers do not shy away from even the most ludicrous and factually absurd statements. One particular example is Mark T. Williams, a finance professor at Boston University’s School of Management who has recently attacked Bitcoin in the Financial Times and in this article on Business Insider.

Money and the state: Fact and fiction

Apart from all the scare-mongering in William’s article – such as his likening Bitcoin to an alien or zombie attack on our established financial system, stressing its volatility and instability – the author makes the truly bizarre claim that history shows the importance of a close link between currency and sovereignty. Good money, according to Williams, is state-controlled money. Here are some of his statements.

“Every sovereignty uses currency.”

 

“Trust and faith that a sovereign is firmly standing behind its currency is critical.”

 

“Sovereigns understand that without consistent economic growth and stability, the standard of living for its citizens will fall, and discontentment will grow. Nation-state treasuries print currency but the vital role of currency management– needed to spur economic growth — is reserved for central bankers.”

Williams reveals a striking lack of historical perspective here. Money-printing, central banking and any form of what Williams calls “currency management” are very recent phenomena, certainly on the scale that they are practiced today. Professor Williams seems to not have heard of Zimbabwe, or of any of the other, 30-odd hyperinflations that occurred over the past 100 years, all of which, of course, in state-managed fiat money systems.

Williams stresses what a long standing concept central banking is, citing the Swedish central bank that was founded in 1668, and the Bank of England, 1694. Yet, human society has made use of indirect exchange – of trading with the help of money – for more than 2,500 years. And through most of history – up to very recently – money was gold and silver, and the supply of money thus practically outside the control of the sovereign.

The early central banks were also very different animals from what their modern namesakes have become in recent years. Their degrees of freedom were strictly limited by a gold or silver standard. In fact, the idea that they would “manage” the currency to “spur” economic growth would have sounded positively ridiculous to most central bankers in history.

Additionally, by starting their own central banks, the sovereigns did not put “trust and faith” behind their currencies – after all, their currencies were nothing but units of gold and silver, and those enjoyed the public’s trust and faith on their own merit, thank you very much – the sovereigns rather had their own self-interest at heart, a possibility that does not even seem to cross William’s mind: The Bank of England was founded specifically to lend money to the Crown against the issuance of IOUs, meaning the Bank of England was founded to monetize state-debt. The Bank of England, from its earliest days, was repeatedly given the legal privilege – given, of course, by its sovereign – to ignore (default on) its promise to repay in gold and still remain a going concern, and this occurred precisely whenever the state needed extra money, usually to finance a war.

Bitcoin is cryptographic gold

“Gold is money and nothing else.” This is what John Pierpont Morgan said back in 1913. At the time, not only was he a powerful and influential banker, his home country, the United States of America, had become one of the richest and most dynamic countries in the world, yet it had no central bank. The history of the 19th century US – even if told by historians such as Milton Friedman and Anna Schwarz who were no gold-bugs but sympathetic to central banking – illustrates that monetary systems based on a hard monetary commodity (in this case gold), the supply of which is outside government control, is no hindrance to vibrant economic growth and rising prosperity. Furthermore, economic theory can show that hard and inelastic money is not only no hindrance to growth but that it is indeed the superior foundation of a market economy. This is precisely what I try to show with Paper Money Collapse. I do not think that this was even a very contentious notion through most of the history of economics. Good money is inelastic, outside of political control, international (“nationless”, as Williams puts it), and thus the perfect basis for international cooperation across borders.

Money was gold and that meant money was not a tool of politics but an essential constraint on the power of the state.

As Democritus said “Gold is the sovereign of all sovereigns”.

It is clear that on a conceptual level, Bitcoin has much more in common with a gold and silver as monetary assets than with state fiat money. The supply of gold, silver and Bitcoin, is not under the control of any issuing authority. It is money of no authority – and this is precisely why such assets were chosen as money for thousands of years. Gold, silver and Bitcoin do not require trust and faith in a powerful and privileged institution, such as a central bank bureaucracy  (here is the awestruck Williams not seeing a problem: “These financial stewards have immense power and responsibility.”) Under a gold standard you have to trust Mother Nature and the spontaneous market order that employs gold as money. Under Bitcoin you have to trust the algorithm and the spontaneous market order that employs bitcoins as money (if the public so chooses). Under the fiat money system you have to trust Ben Bernanke, Janet Yellen, and their hordes of economics PhDs and statisticians.

Hey, give me the algorithm any day!

Money of no authority

But Professor Williams does seem unable to even grasp the possibility of money without an issuing and controlling central authority: “Under the Bitcoin model, those who create the software protocol and mine virtual currencies would become the new central bankers, controlling a monetary base.” This is simply nonsense. It is factually incorrect. Bitcoin – just like a proper gold standard – does not allow for discretionary manipulation of the monetary base. There was no ‘monetary policy’ under a gold standard, and there is no ‘monetary policy’ in the Bitcoin economy. That is precisely the strength of these concepts, and this is why they will ultimately succeed, and replace fiat money.

Williams would, of course, be correct if he stated that sovereigns had always tried to control money and manipulate it for their own ends. And that history is a legacy of failure.

The first paper money systems date back to 11th century China. All of those ended in inflation and currency disaster. Only the Ming Dynasty survived an experiment with paper money – by voluntarily ending it and returning to hard commodity money.

The first experiments with full paper money systems in the West date back to the 17th century, and all of those failed, too. The outcome – through all of history – has always been the same: either the paper money system collapsed in hyperinflation, or, before that happened, the system was returned to hard commodity money. We presently live with the most ambitious experiment with unconstrained fiat money ever, as the entire world is now on a paper standard – or, as James Grant put it, a PhD-standard – and money production has been made entirely flexible everywhere. This, however does not reflect a “longstanding bond between sovereign and its currency”, as Williams believes, but is a very recent phenomenon, dating precisely to the 15th of August 1971, when President Nixon closed the gold window, ended Bretton Woods, and defaulted on the obligation to exchange dollars for gold at a fixed price.

The new system – or non-system – has brought us persistent inflation and budget deficits, ever more bizarre asset bubbles, bloated and unstable banking systems, rising mountains of debt that will never be repaid, stagnating real incomes and rising income disparities. This system is now in its endgame.

But maybe Williams is right with one thing: “If not controlled and tightly regulated, Bitcoin — a decentralized, untraceable, highly volatile and nationless currency — has the potential to undermine this longstanding bond between sovereign and its currency.”

Three cheers to that.

 

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Sun, 03/02/2014 - 20:25 | 4499129 medium giraffe
medium giraffe's picture

Aw god, you just know how this comments section is going to turn out.  I'm leaving before he shows up.

Sun, 03/02/2014 - 20:26 | 4499133 Dear Infinity
Sun, 03/02/2014 - 20:31 | 4499147 knukles
knukles's picture

Bitcoin is Schrodinger's gold

Sun, 03/02/2014 - 20:34 | 4499163 Unpopular Truth
Unpopular Truth's picture

10 mins I will never get back. (and I love bitcoin!)

Sun, 03/02/2014 - 20:41 | 4499184 Soul Glow
Soul Glow's picture

Japanese equity, bitcoin, the dollar....there really aren't too many solid investments out there right now.  But gold is looking good ;)

Sun, 03/02/2014 - 20:52 | 4499238 Alea Iactaest
Alea Iactaest's picture

I was ready to go all in on BTC but then I heard about LiteCoin and DogeCoin and... Seriously folks, I'm in if you can just tell me which one is "just like gold."

TIA

Sun, 03/02/2014 - 21:15 | 4499333 Pladizow
Pladizow's picture

BTC requires that instead of you placing your faith in a Gov controlled fiat, you place your faith in a Gov controled internet!

WTF is the difference?

Sun, 03/02/2014 - 21:30 | 4499404 HarryWanqer
HarryWanqer's picture

Is Tyler Durden actually Ben Bernanke then? It would be hilarious if you fools were played all along.

Sun, 03/02/2014 - 21:59 | 4499532 Bob
Bob's picture

I heard he was born in a mental institution. 

http://www.hark.com/clips/kjpqpclzyg-tyler-durden

Sun, 03/02/2014 - 22:31 | 4499671 fonestar
fonestar's picture

Sorry, fonestar was having his $500 jalopy towed off a hill.

fonestar is still with you (and also with you).

Sun, 03/02/2014 - 23:01 | 4499782 Bob
Bob's picture

.

fonestar is still with you (and also with you).

Now that was funny as hell!  +1 

You're certainly keeping your sense of humor! 

And I've got no special axe to grind against bitcoin, fwiw. 

In all fairness, I'm overwhelmingly inclined to give the entire operation a pass on good intentions. 

Sun, 03/02/2014 - 23:03 | 4499788 boogerbently
boogerbently's picture

All the Bitcoin owners with any media power will now start scratching for their survival.

Sun, 03/02/2014 - 23:08 | 4499811 fonestar
fonestar's picture

Bitcoin does not need to scratch for survival.  It's the honeybadger of money.

Mon, 03/03/2014 - 01:26 | 4500333 Troll Magnet
Troll Magnet's picture

If it's just like gold, why don't they just buy gold?

Fuckin' idiots..

Mon, 03/03/2014 - 01:57 | 4500388 fonestar
fonestar's picture

Because it's not exactly like gold.  Bitcoin is more fungible, faster to transact with and is a smugglers wet dream.

Mon, 03/03/2014 - 05:55 | 4500669 anu
anu's picture

Bitcoin's biggest advantage over Gold: Its purely virtual and can thus be sent over the net to anywhere in an instant.

Gold's biggest advantage over Bitcoin: You can hold it in your hands.

 

It completely escapes me why people in this forum behave as if Bitcoin makes gold less shiny. The opposite is the case.

Mon, 03/03/2014 - 13:31 | 4502209 centipede
centipede's picture

It completly escapes me why anybody would compare Bitcoin to gold. Cryptocurrency can be created out of thin air by just anybody. I can create Centipede_coin1 currency and then as many others cryptocurrencies as I wish more - Centipede_coin2, Centipede_coin3, Centipede_coin4, ... Centipede_coinN. How is it better than government fiat? It is actually much worse because theoreticslly everybody can create countless cryptocurrencies out of thin air.

Mon, 03/03/2014 - 18:59 | 4504007 TheHound73
TheHound73's picture

Would anybody buy Centipede_coins, would any economic activity take place on them? I wouldn't but I do buy bitcoins and participate in the bitcoin economy.

Sun, 03/02/2014 - 23:08 | 4499814 Bob
Bob's picture

Yup.  Who wouldn't?

Sun, 03/02/2014 - 23:16 | 4499846 TeMpTeK
Sun, 03/02/2014 - 23:03 | 4499789 fonestar
fonestar's picture

The internet is not "controlled" by government moron.  If it were, the blog you are posting on would not exist.

Sun, 03/02/2014 - 23:29 | 4499838 Bob
Bob's picture

Now you see our dilemma. 

--Tyler Durden

Or you at least sense it, methinks.   

Sun, 03/02/2014 - 23:37 | 4499937 knukles
knukles's picture

That, fonestar, is one of the shallowest comments I've ever read.
Bar none.
The whole purpose of the fucking thing from a PTB perspective is to keep control over you, which is predicated upon the participant's voicing of opinions without significant restraint operating under the assumption of impunity. 
Which cannot be done without extreme degrees of freedom for the participants.
Else the plants that cannot bloom by day must flower in the night.

You just shot any credibility.

Mon, 03/03/2014 - 00:20 | 4500159 fonestar
fonestar's picture

fonestar is one of the shallowest virtual characters you will meet on the internet.

Mon, 03/03/2014 - 00:01 | 4500065 rubiconsolutions
rubiconsolutions's picture

fonestar = the "Magic 8-Ball" of economics.

Mon, 03/03/2014 - 01:23 | 4500326 fonestar
fonestar's picture

Shut up and

BUY BITCOIN!!

Mon, 03/03/2014 - 04:33 | 4500604 flyingpigg
flyingpigg's picture

Gold is a long term store of value, nothing cryptic about it.

If bitcoin is cryptographic gold, Mt Gox is cryptographic Fort Knox.

Mon, 03/03/2014 - 05:41 | 4500658 fonestar
fonestar's picture

No, that does not make any sense.  But like Mount Knox, Fort Gox actually had something in it at one point...

Mon, 03/03/2014 - 08:27 | 4500791 tradewithdave
tradewithdave's picture

@pladizow

Your comment regarding a "government controlled internet" relative to cryptos is THE point. What is the difference?  There's plenty of difference.  One, there are plenty of governments that control currencies that will never control the internet and frontier economies using cell phone networks as forms of currency and exchange must be brought under control. Two, there are new tunnels being dug under the internet (i.e. openlibernet.org, netsukuku, dyne) and open mesh networks that threaten the telecoms control of infrastructure which is why Facebook is being propelled into a global position to control all messaging. This leads me to the question of just how much computing power will it take to crack PGP?

I know it is astronomical (hacking PGP), but with the stakes at the level they are and with blockchain 1.0 standing strong what does the "Wealth of Networks" look like in ten years, twenty, thirty?  The timing of private label rollouts such as "complementary" Ethereum and Silbert's Second Market while Edmund Edgar's RealityKeys.com and Chris Odom's Open Transaction/Monetas emerge from the corners of cryptoland set the stage for a showdown over network resources.  

The way I see it, it's a battle of centralized server power vs. decentralized mobile phone power with the telecom carriers as the new sovereigns in the post-central-bank era.  The inconvenience for the Diane Feinsteinians (a government of men rather than a government of laws) is that although centralized servers are controlled by centralized media, the voting booth is controlled by Iphone carrying voters (Diebold withstanding).  Samantha Sunstein (i.e. Cass Power) and the behavioral economists are going to need to eat their Wheaties for what's ahead.  

Ethereum's self-proclaimed metaphor as being the petrodollar to Bitcoin's gold should be telling in that just because you close the gold window doesn't mean that someone won't throw a brick through it and eventually even the Keyne's glass repairman starts experiencing diminishing returns.  The race to replace the central bank era with the decentralized democratization of money is on.  

www.tradewithdave.com 

Sun, 03/02/2014 - 21:16 | 4499344 Slave
Slave's picture

None of them are like gold. Gold has been money throughout human history. Bitcoin is a volatile, speculative experiment.

Sun, 03/02/2014 - 21:54 | 4499477 Bob
Bob's picture

Experiment indeed. 

Maybe even a proof of concept/study by the PTB of the response of people around the world to the introduction of a purely electronic currency. 

If you believe in a NWO, then surely you expect it to introduce electronic currency when TSHTF.  They can control it--and us--in so many more ways.  Prohibited activities, tax evasion . . . anything suggesting you buy shit you shouldn't buy with money you "shouldn't" have. And effortless revaluations, a la Orwell in 1984 

Bitcoin was a great test case.  They'll be talking about it in the history books long into the future. It will be attributed to the academic discipline of Consumer Psychology. 

Which is why, btw, I think the notion of holding gold for use of any monetary kind . . .  except during the first week or two after a worldwide economic implosion/zombie apocalypse . . . is incredibly naive.   

Soon after the coming Great Meltdown, precious metals offered as money will only be meaningful to a few people engaged in a deeply heartfelt circle jerk. 

Everything of consequence will be done in newly minted electronic currency. 

JMHO. 

Sun, 03/02/2014 - 22:49 | 4499735 Drifter
Drifter's picture

Computer geeks vs banking cabal.

I can guess how that'll turn out.

Sun, 03/02/2014 - 23:04 | 4499791 fonestar
fonestar's picture

So can fonestar, the hackers always win.

Tue, 03/04/2014 - 03:16 | 4505623 MeelionDollerBogus
MeelionDollerBogus's picture

We shall show our invincibility with new outfits!

Anyone object to red?

Mon, 03/03/2014 - 00:35 | 4500208 MeelionDollerBogus
MeelionDollerBogus's picture

-1.

Problem with your theory is that this collapse must be special instead of being just like all the other collapses of resources & civilizations battling for resources in the whole of human history.

So far all the signs look the same which means gold & silver would continue for thousands of years FROM THIS DAY to be money just like thousands of years before. NO change.

Mon, 03/03/2014 - 02:26 | 4500435 MEAN BUSINESS
MEAN BUSINESS's picture

All the signs? You know damn well all the signs are NOT the same and that this collapse is, so far, on a scale of the great dying. Gold and silver will continue for billions of years, BTC and homo sapiens, and 9X% of species, not...

Why all the pc when it comes to bitcoin not janus Bogus? The timeline is more like 200-500 yrs for us at this rate, not thousands.

Which one of us is confused? Again, you know damn well this collapse is special.

The Sixth Extinction: An Unnatural History by Elizabeth Kolbert 2014

Tue, 03/04/2014 - 03:14 | 4505619 MeelionDollerBogus
MeelionDollerBogus's picture

ALL the signs relative to money.

Nothing has changed.

If Fukushima wipes out the Northern Hemisphere bitcoin will go with it because the survivors in the Southern Hemisphere largely have no interest or use for it & won't be connected by the Internet grid that bitcoin MUST HAVE to exist.

Local intranets can't cut it: the network must be global & synchronized or there is no bitcoin.

I understand this far, far better than you do.

If you fracture the network to fracture the currency it loses all value because no one will know how to trade them with each other. They will have competing blockchains & that means they will try to invalidate each other, not add to each other as additional currency units, and if they did act as additional currency units that also breaks the 21 million limit which ruins bitcoin again, and even then all those bad scenarios are "good" scenarios if the grid you need survives but it will not.

Bitcoin iz fail.

Sun, 03/02/2014 - 22:33 | 4499681 fonestar
fonestar's picture

Who fucking cares if Bitcoin is "volatile"?  Did you change your depends this morning?

Sun, 03/02/2014 - 20:52 | 4499243 0b1knob
0b1knob's picture

Bitcoin was the next big thing but that was like a week ago.

Now its a joke and not a very funny one either.  Cryptographic gold?   More like virtual beanie babies.

Sun, 03/02/2014 - 21:19 | 4499292 XenoFrog
XenoFrog's picture

If bitcoins were so great, people wouldn't have to work so hard to constantly tell me that it's as good as gold.

Why not just buy gold and silver?

Sun, 03/02/2014 - 21:33 | 4499417 lickspitler
lickspitler's picture

The Fonestar of the bitcoin haters is back.... to pronounce another death of Bitcoin.  Wow silver looks good laying around like a beached whale

Sun, 03/02/2014 - 22:34 | 4499691 fonestar
fonestar's picture

and the fonestar of the fonestar is also back.

Sun, 03/02/2014 - 21:45 | 4499480 Unpopular Truth
Unpopular Truth's picture

To answer your question as to why people are working hard to explain why bitcoin is so good:

Because the hate comes from people who fail to comprehend that bitcoin is unlike ANYTHING seen before.

In their mind, no new things can exist. Bitcoin MUST be like something existing. So, bitcoin must be like something already existing. Beanie babies, tulips.

In time, they will be educated. Until then, they will make fools of themselves, and to your point there will be fools trying hard to educate them. Mind you all bitcoiners love PMs.

Sun, 03/02/2014 - 22:43 | 4499718 fonestar
fonestar's picture

All good points and yes, when it comes to Bitcoin there is nothing like it in human history to compare it to.

Mon, 03/03/2014 - 06:04 | 4500672 Acet
Acet's picture

So if I started a currency based on fossilised cow turds, it would be as good as Bitcoin since it also "is unlike ANYTHING seen before"?!

 

There is one big reason why, even though Gold is as inherently worthless as Bitcoin, the former is a worthy store of value why the later is just another Ponzi scheme:

- None of the assholes who mined and aquired Gold when it was easy are alive and trying to get suckers to jump in the bandwagon and give them real stuff for it.

Gold took millena of increasing difficulty to extract, while Bitcoin did it in less than a decade which is is reflected into how only 8 people hold a huge percentage of all bitcoins. Gold also took millenia to become a well established, widespread store of value and in its decade Bitcoin most certainly didn't achieve that (not even close)

As thing stands, Bitcoin is just a Ponzi-scheme for those who know enough technology to use it but not enough to make it. Time will tell if it ever makes the cut as currency: personally, given its susceptibility to brute force attacks with quantum computing and to large actors with control over a significant proportion of the internet tier 1 nodes, I doubt it will live long enough.

Mon, 03/03/2014 - 08:00 | 4500763 TheHound73
TheHound73's picture

After reading your comment I clicked on my Bitcoin wallet, dragged it over to my Recycle Bin, just about to drop in there when I thought, "nah", I'd rather see how this whole thing plays out.

Mon, 03/03/2014 - 09:02 | 4500874 webbie
webbie's picture

Dude stop spreading FUD.... You saying "personally, given its susceptibility to brute force attacks with quantum computing and to large actors with control over a significant proportion of the internet tier 1 nodes, I doubt it will live long enough." 

 

That is complete bull...like why don't you people actually do some research, at current network hash rates, there's no computer even remotely close to a 51% attack and the probability goes further down every hour!

 


Mon, 03/03/2014 - 14:09 | 4502375 centipede
centipede's picture

You are right. That is certainly not the reason why Bitcoin is just another Ponzi scheme. In fact large actors do not need supercomputers to attack any cryptocurrency. They just need to create a new one and many others. And you don't even need to be a large actor to do that. New cryptocurrencies (countless of them) can be created out of thin air by just anybody with the available technology. Is it not even much worse than government fiat?

Tue, 03/04/2014 - 00:18 | 4505224 TheHound73
TheHound73's picture

Why use future tense?  Already there are over 200 crypto currency networks running based on the Bitcoin code, a side effect of releasing the code into the public domain.  Doesn't seem to harm Bitcoin much, people aren't buying the copycats.  Combined they have less than 10% the market capitalization of Bitcoin.

Tue, 03/04/2014 - 04:03 | 4505674 goldsansstandard
goldsansstandard's picture

and the leader technically sucks.Anybody can make another operating system, but the network effect limits the choice largely to three players.

BC has a big network and ecosystem. It's a pretty good bet that this network advantage may persist.

Sun, 03/02/2014 - 21:47 | 4499490 tmosley
tmosley's picture

Gold and silver are hard to get across borders.

Also, why not gold, silver, AND bitcoin?

Bitcoin is a DOLLAR replacement, not a gold replacement.  It facilitates transactions, especially long distance ones.  It's also handy in that you can be your own bank.  Eventually you will be able to pay your bills with bitcoin, which will make online banking obsolete.

Sun, 03/02/2014 - 22:05 | 4499551 Ralph Spoilsport
Ralph Spoilsport's picture

I can see paying bills with bitcoin happening. But for now, the killer app for bitcoin is money laundering. You put it slightly differently as facilitating long distance transactions. Fair enough.

Mon, 03/03/2014 - 00:33 | 4500197 MeelionDollerBogus
MeelionDollerBogus's picture

Bitcoin is harder. I need a reliable grid connection OR I need a reliable place to store a computer/device and a border willing to take my gold or silver is more than willing to take my computer/devices and to shut down all outgoing grid connections for power & internet and phone to my destination(s).

Gold & silver are far easier to smuggle out.

Worst of all, as I'm crossing borders I'll need to spend some money in places where there is no grid, because those are the #1 required mid-destinations for crossing borders against the will of your/any government, and that assures me I can not spend bitcoin as money so I can't use it at all for this purpose.

Mon, 03/03/2014 - 01:35 | 4500350 digi
digi's picture

You seem to have a fundemental misunderstanding of the bitcoin system. Your suggestion that it is easier to smuggle gold than bitcoin shows this quite clearly. Please take the time to educate yourself further. Bitcoins are nothing more than an asset ledger that keeps track of who owns what percentage of the blockchain without any arbiter. All you need to access your bitcoins is an alphanumeric string. This can be written on a piece of paper or even memorized in your own brain. Please explain to me again how passing through a metal detector with gold without being detected is somehow easier than memorizing a password without anyone knowing?

Tue, 03/04/2014 - 03:11 | 4505612 MeelionDollerBogus
MeelionDollerBogus's picture

There is no metal detector.

Smart people go where there are none.

Any place a metal detector will be used you will be stripped naked. You will not have a key on paper nor in your brain.

I can see well enough your brain is not advanced enough to hold a passphrase that can take longer than 30 seconds to brute-force. It will be gone. No paper, no disks.

You forget there are naked body scanners.

You won't get anything anywhere going through those scanners & where I will go with gold & silver, your electronics & paper will not endure.

I will make it through, you will not.

Mon, 03/03/2014 - 09:10 | 4500895 webbie
webbie's picture

Yeah you clearly have a lack of knowledge on the subject matter... You can transmit BTC transactions over shortwave radio, circumventing internet all together as long as the nodes are less than roughly 300 miles.

I honestly think you are in denial and just refuse to acknowledge this technology as game changing.

Tue, 03/04/2014 - 03:06 | 4505606 MeelionDollerBogus
MeelionDollerBogus's picture

Clearly you learned nothing of the last world war.

You can jam radio easier than cutting wires.

Idgits, all of you bit-tards.

Sun, 03/02/2014 - 23:50 | 4500015 itchy166
itchy166's picture

Have you ever tried to send $10000 worth of gold to someone in another country?

Mon, 03/03/2014 - 02:42 | 4500468 aminorex
aminorex's picture

considerably superior to gold.   gold has physical risk, i.e. it can be stolen.

Sun, 03/02/2014 - 21:11 | 4499319 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Bitcoin is far superior to our lovely fiat system, and here's why:

http://antonopoulos.com/2014/03/02/failure-is-an-option/

Sun, 03/02/2014 - 21:27 | 4499396 XenoFrog
XenoFrog's picture

http://www.logicallyfallacious.com/index.php/logical-fallacies/94-false-dilemma

"When only two choices are presented yet more exist, or a spectrum of possible choices exists between two extremes.  False dilemmas are usually characterized by “either this or that” language, but can also be characterized by omissions of choices."

Sun, 03/02/2014 - 23:52 | 4500028 itchy166
itchy166's picture

Point?

Mon, 03/03/2014 - 02:19 | 4500414 Mike Hunt III
Mike Hunt III's picture

Because of MtGox going bust? If the Yahoo website went bust would you declare the end of e-mail? No? Same with bitcoin.

Sun, 03/02/2014 - 20:57 | 4499262 CH1
CH1's picture

Gold is always good... and so is Bitcoin.

Cue the Minute of Hate!!

Sun, 03/02/2014 - 21:11 | 4499311 greatbeard
greatbeard's picture

You are one of the more tolerable bitcoiners.  I like your style.  Good luck with it.  Bitcoin is above my comprehension level, but I don't hate it.

Sun, 03/02/2014 - 21:15 | 4499335 nmewn
nmewn's picture

BitCoin is a conduit for money, not money itself...its a simple as that.

Sun, 03/02/2014 - 21:34 | 4499422 tdag
tdag's picture

It's simple, really. If anyone wants to steal gold or silver they at least have to know where it is. With bitcoin, EVERONE knows where it is. Next up is access. In order to steal something you have to have access to it. The only thing separating a bitcoin holder from total loss is a single, digital key. So everything depends on the strengths or weaknesses of that crytographic system. How many stories have we read about supposedly secure systems that became compromised systems in the last year? Last month? Last week?

Sun, 03/02/2014 - 22:56 | 4499535 TheHound73
TheHound73's picture

Aye, you've just paraphrased Point 2 of the above article.  

Put a value judgement on the strength of the cryptology involved (even if it is just lunch money) or stay away from bitcoin completely and continue on with your current winning strategies in life.

Sun, 03/02/2014 - 22:18 | 4499610 nmewn
nmewn's picture

I like the idea of everyone NOT knowing where it is AND only I have the key that CANNOT be deciphered by ANYBODY or ANYTHING.

It is, really that simple.

Sun, 03/02/2014 - 23:57 | 4500049 itchy166
itchy166's picture

"Everyone knows where it is"?

 

You even figure out how many I have, and you can have them. 

 

"The only thing seperating a bitcoin holder from total loss is a single, digital key."

 

Gross simplification.  And, going back to your last statement, if you can tell me the address of even one of my wallets, you can have the key.

 

Not so easy is it?

 

(Hint: some of my wallets are in places that have never been on the internet)

 

Mon, 03/03/2014 - 02:43 | 4500471 aminorex
aminorex's picture

keep spreading FUD.  it keeps the prices down.

Sun, 03/02/2014 - 23:45 | 4499977 Kirk2NCC1701
Kirk2NCC1701's picture

Until it gets recognized by a sovereign as Currency, it is a "conduit for currency", but also acts as a "storage for a basket of currencies" -- given that it is bought, held and sold in so many currencies.

Sun, 03/02/2014 - 23:59 | 4500060 fonestar
fonestar's picture

BitCoin is a conduit for money, not money itself...its a simple as that.

 

Yes, fonestar sees you are starting to learn something about Bitcoin.

Mon, 03/03/2014 - 02:22 | 4500426 Mike Hunt III
Mike Hunt III's picture

If bitcoin is a conduit for money, then what is the money flowing through this conduit. Hint: starts with a "b" and ends with "itcoin"

Sun, 03/02/2014 - 21:33 | 4499416 CH1
CH1's picture

You are one of the more tolerable bitcoiners.  I like your style.  Good luck with it. 

Thank you.

Sun, 03/02/2014 - 21:49 | 4499496 tmosley
tmosley's picture

I like it when people admit things like this, rather than blindly attacking that which they don't understand.

Understanding that you don't know something is the first step toward the truth.

Sun, 03/02/2014 - 20:42 | 4499191 johnQpublic
johnQpublic's picture

i almost want to get some just because them thar theys dont like it

but i wont

Mon, 03/03/2014 - 00:22 | 4500165 fonestar
fonestar's picture

You should.  If you get a wallet to manage fonestar will send you some Bitcoin.

Mon, 03/03/2014 - 00:48 | 4500247 DoChenRollingBearing
DoChenRollingBearing's picture

fonestar is offering to ANYONE here what was offered to me: get a wallet and someone else would send me/you some for free.

And, that act of generosity led me to hike the trail to look into it.

Brace yourself fonestar..., LOL!

Mon, 03/03/2014 - 01:45 | 4500369 shitco.in
shitco.in's picture

Sending someone $5-10 of free btc is the best way to gain their interest.  I have seen it convince many non believers to do their research and convert. 

Mon, 03/03/2014 - 04:21 | 4500596 Mike Hunt III
Mike Hunt III's picture

Mike Hunt will send you a buck.

Sun, 03/02/2014 - 20:36 | 4499170 bania
bania's picture

That's cryptographic gold knukles, cryptographic gold!

Sun, 03/02/2014 - 20:32 | 4499150 Stackers
Stackers's picture

When the "un-banked" of the world catch on. Watch out !

 

10 million households in America alone do not have a traditional bank account.

3+ billion in the world do not have access to traditional banking system and accounts

When these people figure out they can create a bank account for free, that charges no fees and can be transfered internationally at will .......

Sun, 03/02/2014 - 20:47 | 4499195 Big Corked Boots
Big Corked Boots's picture

Speaking strictly for America, 10 million households either have no reason to have a bank account (because they nothing to put in it) or have seen the light and refused to be 'banked.'

The former have EBT. The latter have silver and gold. And both understand how the barter system works.

If the former 'unbanked' were valuable customers, they would have been captured by now.

Sun, 03/02/2014 - 21:19 | 4499357 Tinky
Tinky's picture

An the former outnumber the latter by 500/1 (or more).

Sun, 03/02/2014 - 21:44 | 4499449 Stackers
Stackers's picture

"If the former 'unbanked' were valuable customers, they would have been captured by now."

 

There has been no way to capture them until now. Micro payments that are possible with bitcoin are not possible in the banking system. Things like minimum account balance, maintenance fees and so on are non-existent. To open a bank account you have to money, multiple forms of government ID, mailing address and on and on ...... with a bitcoin wallet you need a smart phone or free access to the internet at a public library. Done, there's your no fee, no minimum balance bank account that can transfer funds anywhere in the world for no or extremely low transfer fees. and much more. You're thinking very 2 dimensionally. Bitcoins potential is extreme when you really start looking at what it could do.

Sun, 03/02/2014 - 20:47 | 4499216 CrashisOptimistic
CrashisOptimistic's picture

Well done. 

When capital controls are in place, only bitcoin can be transferred internationally at will.  The other things . . . xrayed and confiscated.

Sun, 03/02/2014 - 20:54 | 4499247 Alea Iactaest
Alea Iactaest's picture

Because if it can't be traced it can't be taxed... And if you don't know how that turns out you haven't been paying attention.

Mon, 03/03/2014 - 00:29 | 4500184 MeelionDollerBogus
MeelionDollerBogus's picture

The reason most are "unbanked" is because there's no grid at all to attach a bank to, which means they can't use bitcoin either.

As for those in America who have no bank account, they have moneymart & related places to cash checks and they are cashing dollar checks and using them within minutes of being cashed. They have no need for bitcoin.

Mon, 03/03/2014 - 09:21 | 4500928 webbie
webbie's picture

Dude you are just thee dumbest I've seen... Stop making comments on a subject you evidently don't understand! Bitcoin and actually other cryptocurrencies (dogecoin) already allow people to use SMS to transmit, and many of these villages have small solar panels for charging their phones....therefore not needing "the grid"

Wed, 03/05/2014 - 22:50 | 4505602 MeelionDollerBogus
MeelionDollerBogus's picture

I clearly understand this entire system better than you do by orders of magnitude.

Cell phones = grid

Sun, 03/02/2014 - 20:28 | 4499139 graneros
graneros's picture

I'm loggin' out.

Sun, 03/02/2014 - 20:31 | 4499152 Rock On Roger
Rock On Roger's picture

Don't feed the troll.

Stack On

Sun, 03/02/2014 - 21:32 | 4499415 Dick Buttkiss
Dick Buttkiss's picture

medium giraffe writes: "Aw god, you just know how this comments section is going to turn out.  I'm leaving before he shows up."

It ain't just fonestar, mg, so get used to it.

Better yet, join the revolution while it's in its infancy, i.e., cheap.

That's right, BTFD.

Mon, 03/03/2014 - 00:28 | 4500179 MeelionDollerBogus
MeelionDollerBogus's picture

like $6 cheap? http://flic.kr/p/kyKgtF Bitcoin was $6 on Feb 28. Should I hold out for $0.50 by 2014 March 18th?

Mon, 03/03/2014 - 00:35 | 4500202 TheHound73
TheHound73's picture

Oh look an arrow and with a random number pulled out of your ass.

Tue, 03/04/2014 - 03:14 | 4505620 MeelionDollerBogus
MeelionDollerBogus's picture

It's a real price quote and it will remain visible in the URL noted on http://bitcoincharts.com/charts/

Tue, 03/04/2014 - 07:20 | 4505858 TheHound73
TheHound73's picture

You're pointing at the volume bar, retard.

Tue, 03/04/2014 - 23:52 | 4510430 MeelionDollerBogus
MeelionDollerBogus's picture

Retard: the volume bar is OVERLAID with the prices. The very thin black like sharply poking down from the price candle body is a price, not volume. The volume is rising up from the bottom only and is always red for a price drop into the close, green for a price rise into the close, never a black thin line which is the price.

On the web site itself one is free to choose daily ticks or weekly & in doing so will see the volume change sharply to adjust to the new time window but that black line spike down to 5.76 will remain.

And when you do that the information bar showing open, hi, lo & close will also indicate 5.76 provided you now pick weekly or monthly so the lowest price is in the most recent price-candle.

Go on, try it.

It's the facts, plain as day.

Click here to see.

Mon, 03/03/2014 - 01:47 | 4500374 digi
digi's picture

LocalBitcoins is not an exchange in the traditional sense. It's more like craigslist for bitcoins. There are no market orders, stop losses, limit orders, or anything of that sort. I could log onto localbitcoins right now and exchange a bitcoin for 1$ to my friend and pay the fee to localbitcoins if I wanted to troll. That's the main difference, you get to choose who you buy from and sell to and at what price. Perhaps if you spent a little less time hating and some more time doing legit research into the topic you would be able to see why many on this forum are starting to come around to the idea of bitcoin.

Tue, 03/04/2014 - 03:02 | 4505599 MeelionDollerBogus
MeelionDollerBogus's picture

in-person trade is the most valid meaning this price is the most valid price.

People are coming around to the idea that bitcoin is fail.

Your delusion that people are concluding otherwise is nothing more than a delusion.

Sun, 03/02/2014 - 22:38 | 4499699 fonestar
fonestar's picture

Aw god, you just know how this comments section is going to turn out.  I'm leaving before he shows up.

Who?  Bitbrother fonestar?

Sun, 03/02/2014 - 20:26 | 4499131 Dear Infinity
Dear Infinity's picture

Bernanke, Yellen, it's all the same

Sun, 03/02/2014 - 20:30 | 4499144 Deathstar
Deathstar's picture

Queue ASSphoneystar.

 

Yoo hooo!   assphonystar, please chime in with your cacophony of lunacy....

Where's your shitcoins son...  Have you counted them today?

 

 

GOLD! - Everywhere you want to be. (TM)

Sun, 03/02/2014 - 21:50 | 4499501 tmosley
tmosley's picture

If you don't have anything to say, you really should shut up.

Sun, 03/02/2014 - 23:23 | 4499880 Deathstar
Deathstar's picture

No, really you should.  OOPS, I see from your avatar that someone already gave you a black eye.  That saves me work...

Sun, 03/02/2014 - 20:30 | 4499145 dogbreath
dogbreath's picture

tl:dr     

Fonestar has been absent this weekend. 

Sun, 03/02/2014 - 20:38 | 4499174 Ralph Spoilsport
Ralph Spoilsport's picture

His PAL is down for maintenance.

Sun, 03/02/2014 - 20:49 | 4499226 booboo
booboo's picture

Fonestar likes bitcoin.

Fonestar likes grandma's cooking.

Fonestar makes grandma bring his food to the basement.

Fonestar mines bitcoin all day and makes his granny hold his shit bucket.

http://www.youtube.com/watch?v=PsYJfUvszq4

Sun, 03/02/2014 - 21:13 | 4499330 Suisse
Suisse's picture

Fonestar said he lives in an attic, not a basement. 

Sun, 03/02/2014 - 21:38 | 4499443 lickspitler
lickspitler's picture

Fonestar has passion and at the moment big profits.  Cool .  Winners are grinners .

Mon, 03/03/2014 - 00:25 | 4500175 MeelionDollerBogus
MeelionDollerBogus's picture

Fonestar can hear the heavenly song of bitcoins because he has robot ears.

Audios terdnuggets!

Sun, 03/02/2014 - 22:40 | 4499704 fonestar
fonestar's picture

No, his PAL's jeep is down for maintenance.

Sun, 03/02/2014 - 20:32 | 4499153 Seasmoke
Seasmoke's picture

Why put money in Bitcoin when you can just buy more physical Gold....I actually have come to think that Bitcoins help keep the price of Gold down .....I have since sold all my Bitcoins (and thankfully well before the Mt.Gox drama)

Sun, 03/02/2014 - 20:50 | 4499232 magnumpk
magnumpk's picture

I am coming to a similar conclusion.  Occurs to me that Bitcoin could be backed by gold, but not the other way around.  Ultimately, there can be only one true money.  That isn't to say that Bitcoin won't survive - it will just be another currency - although with several sound money qualities that fiat lacks.

Sun, 03/02/2014 - 20:55 | 4499251 negative rates
negative rates's picture

Good luck getting the gold back, it's mine now.

Sun, 03/02/2014 - 21:08 | 4499303 XenoFrog
XenoFrog's picture

Bingo was his name-o

 

Gold and Silver for the win. Bitcoin for the distraction.

Sun, 03/02/2014 - 23:11 | 4499830 Dick Buttkiss
Dick Buttkiss's picture

XF, you, like so many on ZH and elsewhere, continue to put precious metals and cryptocurrencies in an adversarial relationship, when in fact they are complementary.

They are friends, in other words.

Government fiat is the enemy.

Sun, 03/02/2014 - 23:21 | 4499863 TheHound73
TheHound73's picture

Stop shilling your shiny rocks.

Mon, 03/03/2014 - 00:01 | 4500070 itchy166
itchy166's picture

Two years ago investor X put $100,000 into gold

Two years ago investor Y put $100,00 into Bitcoin

.....

 

Mon, 03/03/2014 - 02:52 | 4500487 aminorex
aminorex's picture

X has lost 25% exchange value.
Y has gained 1770% exchange value.

 

Sun, 03/02/2014 - 20:48 | 4499156 Tasty Sandwich
Tasty Sandwich's picture

~

Sun, 03/02/2014 - 20:35 | 4499159 kchrisc
kchrisc's picture

I will have to settle for my non-cryptographic gold and silver. And unfortunately my lead is of the non-cryptographic type as well.

I guess that I missed that boat. Maybe next time.

Sun, 03/02/2014 - 20:36 | 4499168 buzzsaw99
buzzsaw99's picture

if forced to choose between capital one or bitcoin i'm going to have to side with the establishment. sorry guys, but there it is.

Mon, 03/03/2014 - 02:10 | 4500410 digi
digi's picture

Computer protocols like TCP/IP and bittorrent have shown much more resiliance than many financial institutions. With bitcoin you are trusting everyone else who owns bitcoin to have the desire to protect the value of their asset, with a bank you are trusting a group of bankers to not have to resort to fucking you. What's the ZH mantra again... on a long enough timeline.

Mon, 03/03/2014 - 03:14 | 4500528 MEAN BUSINESS
MEAN BUSINESS's picture

 LMAO! The camp with a difference, never mind the WETTHHAA, when you come to Tommy's(Tyler's), the holiday's for EVVAH! 

+1 99

Sun, 03/02/2014 - 20:44 | 4499169 GoinFawr
GoinFawr's picture
Fri, 12/06/2013 - 22:58 | GoinFawr

BTC: the gold you can't hold

...I'm coining that bit

 

Hey! That was MY line!  So where's my damned biscuit!? When does the fricking TPP kick in anyway?

Sun, 03/02/2014 - 20:44 | 4499203 CrashisOptimistic
CrashisOptimistic's picture

If you can't hold it, neither can TSA at the airport.

Sun, 03/02/2014 - 20:52 | 4499241 GoinFawr
GoinFawr's picture

Oh I agree.

Sun, 03/02/2014 - 20:57 | 4499259 Alea Iactaest
Alea Iactaest's picture

BitCoin. Fiat 2.0.

New and improved.

Still in beta, unfortunately.

Sun, 03/02/2014 - 20:36 | 4499171 fijisailor
fijisailor's picture

"The supply of gold, silver and Bitcoin, is not under the control of any issuing authority. It is money of no authority – and this is precisely why such assets were chosen as money for thousands of years. "

Yeah.  Even the Romans used bitcoin.

Sun, 03/02/2014 - 20:37 | 4499173 Cash-NonCash
Cash-NonCash's picture

I have a story that could have turned out poorly- but turned out well instead.  I talked with a guy about investing in his company which intended to bring bitcoin to a bank near you...  turns out my relatively big investment offer was trumped by million-dollar offers; I was refused.

Yay!

 

The End

Sun, 03/02/2014 - 20:39 | 4499176 blindman
blindman's picture

the problem with crypto currencies is there is no limit
to the number of them, this can only be corrected by
some form of coercion and consensus. so there ya' go,
very different than silver, gold or any "money". please,
someone, educate me on the fallacy in my thinking. once/if the
cryptology is perfected there will be no market value
difference between the value of any "coin" and there will
be no limit to the possible number, even if each particular
one has a limit to the length of the chain. no?

Sun, 03/02/2014 - 21:21 | 4499362 blindman
blindman's picture

a down arrow on this comment without
an answer to the question is as valuable
as a "bitcoin". ahhh... now i get it!

Sun, 03/02/2014 - 21:27 | 4499395 Ralph Spoilsport
Ralph Spoilsport's picture

You bring up a valid point. The down arrows are automatic because you're scrutinizing BTC instead of being a cheerleader for it.

Sun, 03/02/2014 - 21:39 | 4499448 blindman
blindman's picture

the "spooky" part is the n.s.a. is,
along with the established global "money" syndicate,
the beneficiary of the crypto "revolution".
that particular conjecture sketches the connection
of some very concerning dots.

Sun, 03/02/2014 - 23:23 | 4499864 Bindar Dundat
Bindar Dundat's picture

The VALUE is in the  NETWORK.   Over 1000 nodes with more  computational power than a 300-400 super computers. Did I tell you the transactions costs are just about free?  

Sun, 03/02/2014 - 23:27 | 4499894 blindman
blindman's picture

how are 1000 nodes with all that power connected and maintained
over the entire globe for "free"? one word, netflix.

Sun, 03/02/2014 - 21:49 | 4499497 aphlaque_duck
aphlaque_duck's picture

Bitcoin is a currency, a protocol, and a *payment network*.

Bitcoin is the first but not the only crypto. There are others, and there will be more, even better ones to come as the technology advances. 

But there will not be infinitely many, because there is economic cost to run the payment network (hashing), and the more nodes you have, the more fast and secure your payment system is. Thus, network effects will create affitinity towards whichever one works the best, and/or has the widest acceptance. A newcomer will only overtake it if there is a big difference - a compelling advantage for useability - not because their INCOMPATIBLE coins are "cheaper".

So if you're going to hold crypto as an investment, you should keep an eye on the competitors and balance into them if any look attractive. For example zerocoin proposes true anonymity (no trail through the blockchain). Originally the technology was proposed as an add-on to bitcoin but there wasn't enough popular suport to make the change, so they're launching it as a new coin. Might be a good one to acquire if/when it launches, but also keep an eye on any other competitors which offer a compelling advantage over bitcoin. I'm not excited about the others today, but that may change - others may specialize in rapid micropayments for example. 

Sun, 03/02/2014 - 22:44 | 4499721 blindman
blindman's picture

thank you for expanding the description of the topic but
i am still not interested in the product. seems to me
at its core it screams, "trust no system, trust me!".
that is like life itself in a way, granted, but life
at least feels real. i suppose i don't spend enough
time online though i seem to spend every waking hour here?
do you see the problem, or is madness its own virtual reward?

Mon, 03/03/2014 - 00:21 | 4500164 MeelionDollerBogus
MeelionDollerBogus's picture

Incorrect. Hashing & blockchains aren't needed at all if GPG were used for a cryptocurrency. None of the overhead would exist at all.

Mon, 03/03/2014 - 05:06 | 4500213 TheHound73
TheHound73's picture

How would I as a merchant protect myself from double-spends using just GPG?  Customer fancy-dancy GPG signs a transaction over to me for some goods he can just walk next door and fancy-dancy sign the same funds at SuzieQs Donuts.  Oh how quaint, you've got yourself a little web of trust.  Well this may come as a shock but you might as well be exchanging matchsticks.  GPG adds nothing special to a web of trust.

Tue, 03/04/2014 - 03:04 | 4505603 MeelionDollerBogus
MeelionDollerBogus's picture

Double-spends are impossible because once the goods are received the person receiving issues a message saying so, which is signed. Simple as that. Just as with normal credit creation: that which is created for a transaction's purpose is destroyed when the transaction is complete.

Completely flexible.

Your inflexible mind fails, you are glued to the concept of credit vouchers that can't be destroyed, shoudn't be, when in fact they should be destroyed once used because creation of new ones is zero cost.

Tue, 03/04/2014 - 03:08 | 4505609 TheHound73
TheHound73's picture

You're almost getting it.  I can sense a couple neurons firing there.  How do you ensure the payer had funds to begin with, i.e., not counterfeited?

Tue, 03/04/2014 - 23:44 | 4510422 MeelionDollerBogus
MeelionDollerBogus's picture

physical evidence like video or live feeds also encrypted & signed, which PGP can easily be modularly attached to other code to do this, while bitcoin can't do this.

That's bitcoin's epic fail: no person can be sure at any time any minimum value of good or service is available for any amount of btc, ever, and one can 100% be assured that if btc are sent it is irreversible which means a 100% loss of all wasted input-cost to holding any btc.

PGP wouldn't have this problem. Pretty much the only weakness would be 3rd party robbery of the goods during the transaction while the voucher itself would be invalidated only for the recognition after the robbery that no goods were received since both parties have no reason to hide they were robbed by a 3rd party.

If for any reason those parties did want to conceal the robbery it wouldn't matter: the instant-credit-voucher currency was between the 2 of them only, no one else.

This allows maximum security, maximum flexibility.

"just getting it"

I'm light years ahead of you, comprehending an entire universe of code & mathematics that to you is inconceivable.

Sun, 03/02/2014 - 21:51 | 4499506 Lamarth
Lamarth's picture

You provide very little in concrete terms to counter.  The words are too slippery and vague.  Let's convert your paragraph:

 

the problem with precious metals is there is no limit
to the number of them, this can only be corrected by
some form of coercion and consensus. so there ya' go,
very different than LTC, BTC or any "money". please,
someone, educate me on the fallacy in my thinking. once/if the
mining engineering is perfected there will be no market value
difference between the value of any "coin" and there will
be no limit to the possible number, even if each particular
one has a limit to the size of the drill. no?

 

Yep, I still have no idea how to counter that with a reason based argument, because it really doesn't make much sense.

Sun, 03/02/2014 - 22:35 | 4499693 blindman
blindman's picture

perhaps i used too many words and you substituted
others to make the question incoherent?
you know there is a limit to the amount of gold
on this planet, correct? that is generally accepted
as a fact and logical necessity in the realm of
"quality and quantity" related studies, and not an
insignificant fact in the estimation of value and
price discovery. the basis of a form of science ...
anyway....
the essential question is what will limit the number
of various crypto currencies as technology progresses
and the nsa builds super computing cities in the deserts
of the world? and how does any of that solve anything
in the real world?
there, i expanded the question to the point you
are probably regretting you ever bothered to comment
here in the first place. perhaps that is all for
the best or worst, i can live with that.

Mon, 03/03/2014 - 06:29 | 4500683 TheHound73
TheHound73's picture

The question is, what will the market bear?  I will not buy DoggieCoins or ConyeWestCoins.  Will you?  I do buy Bitcoins (rather, I earn them as salary).  I believe more goods and services can be acquired with Bitcoin, I believe the mining network is strongest, I believe there are more people who would want my Bitcoins in the future compared to other cryptos.  That's the current state of affairs, no gaurantee it won't change in the future.

The mining network doesn't discriminate.  If the gov't wants to mine bitcoins they can compete with every other miner on the planet to acquire the 42% of bitcoins that remain to be created.  However, like gold, they can't print additional Bitcoins out of thin air.

Bitcoins can be sent and received anywhere on the planet without asking permission from any bank or government.  There is no paperwork to set up a wallet, there are no fees due for having a wallet.  

Sun, 03/02/2014 - 23:32 | 4499922 blindman
blindman's picture

you think my words are slippery yet you trust
1 and 0 on the internet networks in the trillions
of trillions,
of which you have no knowledge or control in "real
time",
good luck with that bias.

Mon, 03/03/2014 - 02:20 | 4500423 digi
digi's picture

As others have pointed out a lot of the value lies in the infrastructure that has been put in place so far. Any altcoin has a lot of catching up to do to even attempt to be on the same level of network speed and security. Secondly there is the human psychology aspect of it. Don't forget that bitcoin is just an asset ledger that people must agree on to be of any use. If little timmy shows up with his altcoin that no one has ever heard of and only he and his group of friends have any stake in it, no one is going to care. Sure you can transfer timmycoin just like you can bitcoin, but it would be much like making up your own bank and filling up your account balance with your own new made up currency. You should try making your own paper currency and see if your local grocery store accepts it, tell them you can make change and transact just like with dollars.

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