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What Does Bitcoin Mean For Austrian Money Theory?

Tyler Durden's picture




 

Submitted by Logan Albright via Mises Canada,

Libertarians tend to agree with each other on most things. We all favor less government regulation, lower taxes, less involvement in international conflicts, and more personal freedom. There are a few areas, however, in which the movement remains sharply divided. One of these areas involves the nature of money.

The two schools of thought are essentially the “gold standard” crowd versus the “competing currencies” crowd. Nobel laureate F. A. Hayek argued strenuously in favor of competing currencies, pointing out that it made no sense to praise the benefits of competition in every good and service, while denying those same benefits for currency itself.

Ludwig von Mises, and his most celebrated student Murray Rothbard, on the other hand, argued that commodity money, specifically gold, was the only kind that could ever enjoy the stability needed to prevent inflation and credit busts.

Mises formulated this argument as “the regression theorem” of money in his first book, The Theory of Money and Credit, in 1912. The theorem, in brief, runs as follows:

People will only accept a medium of exchange if they observe that it has value, and can actually be exchanged for things. The only way to observe that is by looking at whether it was so used in a preceding time period. Thus, this chain of observations can be followed back until the first instance in which a particular type of money was used as a medium of exchange, and in order for those first adopters to accept it, it must have had value independent of its use as a medium of exchange, or in other words, be a commodity. Paper money, especially that with no commodity backing, is only adopted when governments force it upon people.

Mises’ theory is elegant, and for a long time it has been accepted wisdom among many Austrian economists. The only trouble is that Bitcoin is in the process of proving it wrong.

Although commodities have historically been successful, history does not prove inevitability, but merely what people have chosen in the past. Mises himself makes this point in his methodological treatise, Theory & History, in a scathing critique of statistical methods within economics.

The science of human action for which Mises coined the term praxeology, as Rothbard later pointed out, does not deal with why people choose one thing or another (psychology) or with what they should choose (ethics), but merely deals with the ramifications of the fact that they do choose and act towards goals. Economics, therefore, as a subset of praxeology, cannot predict what type of money will be chosen in the future or why. As Jörg Guido Hülsmann wrote in The Ethics of Money Production, “one cannot tell on a priori grounds what the natural money of a society is. The only way to find this out is to let people freely associate and choose the best means of exchange out of the available alternatives.”

The fact that Bitcoin, a fully digital currency with no commodity backing, is now being adopted by increasing numbers of people as an alternative currency would seem to cast doubt on the inevitability of commodity money.

When a theory, however logical, finds itself at odds with observed reality, there are only two possible courses of action for a rational thinker. The first is to discard the theory in favor of one that accurately describes the world as we observe it. The second is to find reason to doubt the reality of our observations. One explanation could be that while the regression theorem looks only at past value, it neglects to take into account the expectations of future value, which is what have driven Bitcoin. Another possibility is that only when commodities are actively prohibited as currencies by government, can a digital fiat money arise and gain popularity. AT this point, it’s too early to tell.

Bitcoin may yet fail, in which case Mises’ theorem will remain as a powerful argument in favor of the gold standard. If it ends up succeeding, however, an alternate explanation will have to be found.

 

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Fri, 08/22/2014 - 20:45 | 5132563 Slave
Slave's picture

Oh fuck, here he comes....

Fri, 08/22/2014 - 20:47 | 5132576 Publicus
Publicus's picture

Cryptocurrencies are the future.

Fri, 08/22/2014 - 20:53 | 5132598 CH1
CH1's picture

If it ends up succeeding, however, an alternate explanation will have to be found.

THAT is what someone seeking the truth is supposed to write.

Bravo!

Fri, 08/22/2014 - 21:00 | 5132628 Stackers
Stackers's picture

Bitcoin is so much more than a currency. The concept of the decentralized public ledger for the transfer of assets over a public domain network is truly ground breaking and not possible before now, with the advent of economical personal computing and the internet

Fri, 08/22/2014 - 21:04 | 5132649 Publicus
Publicus's picture

The next step is for the mining of the coin to equal a rented out computation resource, then you get decentralized cloud computing.

Fri, 08/22/2014 - 21:16 | 5132689 zaphod
zaphod's picture

Bitcoin is simply a better implementation of the gold standard than gold itself was. It implements the same 6 key properties of money as gold, and is even better on some (such as scarcity).

Bitcoin's success will demonstrate that the gold standard was right, and that gold was the best version of money given the technology available at the time.

Fri, 08/22/2014 - 21:25 | 5132728 misterb4096
misterb4096's picture

I count 8:
Medium of exchange
Store of value
Unit of account
Limited in supply
Fungible
Divisible
Portable
Durable
Use your fucking brains and you will see why BTC is better ( MUCH more easily divided or transferred) than even gold at being gold. I believe the value of bitcoin will soon detract from the monetary value of precious metals, leaving them with only industrial value. Good luck gold and silver bugs…

Fri, 08/22/2014 - 21:29 | 5132754 crazytechnician
crazytechnician's picture

Nope , gold will have new monetary value as circulating metal coins in areas where internet connectivity or trust is a problem. But PM value will be greatly reduced because hoarding will no longer be necessary by banks and individuals so the metal will enter into very widespread circulation. Just because we have aircraft does not mean we no longer use trains or bicycles...

Fri, 08/22/2014 - 21:42 | 5132809 Prisoners_dilemna
Prisoners_dilemna's picture

http://evoorhees.blogspot.com/2012/04/bitcoin-libertarian-introduction.html

 

The OG of bitcoin.

 

Anything which is sufficiently scarce and has utility will command a price. BTC is useful for its distributed functions. btc is useful as money.

The regression theorem is wrong.

Fri, 08/22/2014 - 21:54 | 5132857 ZerOhead
ZerOhead's picture

If you truly wanted to establish a currency on an asset that is scare, useful and essential then oil stored underground in salt mines etc. may be it.

At the end of the day the standard of living that you enjoy today is a direct product of oil and the energy revolution..

Fri, 08/22/2014 - 21:57 | 5132877 0b1knob
0b1knob's picture

Total value of all the bitcoin in the world is a lttle over one billion dollars.  It means nothing.   A rounding error in the US GDP.  

Fri, 08/22/2014 - 22:13 | 5132945 crazytechnician
crazytechnician's picture

Current market cap. is around 6.5 billion. It peaked last year around 14 billion. It will reach full stabilisation price matching global GDP in the year 2140. Volatility will stabilise in steps every 4 years 2017 , 2021 etc. Do some homework.

Fri, 08/22/2014 - 22:26 | 5132992 Bollixed
Bollixed's picture

If we have an EMP event, natural or manmade, and our electronic systems go down, I'll trade you for things I need, or gold or silver, but I won't trade you anything for the promise of a bitcoin once the systems come back online...

Fri, 08/22/2014 - 22:39 | 5133034 crazytechnician
crazytechnician's picture

EMP , Yawn, FFS.....

Fri, 08/22/2014 - 23:25 | 5133174 Bollixed
Bollixed's picture

I used EMP as an example for the sake of illustration. I could have just as easily used another situation where a 3rd party risk is involved where you don't have absolute control over your possesion of an exchange medium. Some people probably understand the risk.

Fri, 08/22/2014 - 23:54 | 5133247 Elvis the Pelvis
Elvis the Pelvis's picture

I hate to burst your bubble.  But the future is still the American dollar.  The empire's not dead yet.  Bitchez.

Sat, 08/23/2014 - 00:04 | 5133262 Bollixed
Bollixed's picture

No bubble to burst. Vast sums worldwide are still held as dollar denominated assets that can't easily be moved to other currencies crypto or not without creating massive disruption. I'd have given you a greeny if you hadn't ended your post by spamming your website.

Sat, 08/23/2014 - 02:00 | 5133437 Zero Debt
Zero Debt's picture

Mises theory still holds. Bitcoin is absolutely backed by a commodity: computational power. Even though this particular commodity did not exist when Mises wrote this, it holds well in this regard.

Sat, 08/23/2014 - 06:25 | 5133635 ombudsmanrules
ombudsmanrules's picture

No IMHO it's quite the opposite.  Bitcoin is created through exponentially more computation, but you could say it's directly related to the amount of energy spent solving the hashing algorithm.  

If I could trade that quite significant amount of computational resources to another entity,  say in the cloud, or if I could reuse the energy expended to solve the crypto, then BTC would be backed.  

As it is, it's an interesting concept, but my expectation is that governments will ban it, or tax BTC transactions out of existence. 

 

Sat, 08/23/2014 - 07:58 | 5133733 orez65
orez65's picture

If Bitcoin could be used as "electronic coin" to operate an orgasmatron then it would be money.

Sat, 08/23/2014 - 08:13 | 5133761 economics9698
economics9698's picture

The Austrian perspective is simple, what is valueless eventually returns to zero.

 

If people want to use bitcoin go for it.  Hope it works out well for you.  

Sat, 08/23/2014 - 09:45 | 5133921 crazytechnician
crazytechnician's picture

Yeah , Fiat currency actually has a negative value because it exists as debt. That is what Von Mises was talking about. Bitcoin has value , it is backed not only by the entire global internet system - itself worth trillions , but also by the combined computational power of the exponentially growing mining hardware and transaction network , to say that has no intrinsic value is just plain stupid.

Sat, 08/23/2014 - 10:04 | 5133951 economics9698
economics9698's picture

It is worth what people want to pay.  That will at some time in the future be zero.  10 years, 20 years?  I do not know.  Best of luck.

Sat, 08/23/2014 - 10:44 | 5134046 Sashko89
Sashko89's picture

When major commodities like wheat, oil start getting priced in bitcoins than bitcoin will be a major currency until then, its just a wet dream for the tech people)  Right now, I feel people just buy them in hopes that the dollar will depreciate and the value of their bitcoins will go up...  but if the dollar crashes and you're holding all these bitcoins how do you determine their value then? in gold?

Sat, 08/23/2014 - 10:57 | 5134076 TheHound73
Sat, 08/23/2014 - 11:52 | 5134215 Sashko89
Sashko89's picture

ounce.me website is still all in terms of dollar value)

Sat, 08/23/2014 - 13:15 | 5134415 Dr Hackenbush
Dr Hackenbush's picture

the very nature of the gold standard is de-commotization by pegging its price 

Sat, 08/23/2014 - 14:05 | 5134538 Sashko89
Sashko89's picture

not true... not if you have the gold coin standard :) 

Sat, 08/23/2014 - 14:31 | 5134615 7.62x54r
7.62x54r's picture

Anything can be a currency, as long as it is rare, and cannot be spammed out by counterfeiters/governments.

The Yapese did just fine with gigantic multi-ton stone coins. They didn't mov e them, they just remembered who owned what coin. And historical provenance of the coin added to its value.

Sat, 08/23/2014 - 15:29 | 5134794 Sashko89
Sashko89's picture

Anything can be currency but not everything can be money. Bitcoin can be a great currency, but gold and silver are money.

Sat, 08/23/2014 - 15:31 | 5134807 Pseudonymous
Pseudonymous's picture

Do you want to have your mind blown away? Check this:

https://www.amagimetals.com/info/no-dollars-after-2016/

Sat, 08/23/2014 - 08:11 | 5133754 shouldvekilledthem
shouldvekilledthem's picture

As it is, it's an interesting concept, but my expectation is that governments will ban it, or tax BTC transactions out of existence. 

 

They can ban it but how could they enforce it? They cannot affect torrent, banning bitcoin is futile.

They can impose taxes, but how could they enforce it? Bitcoin is global.

If politicians impose dracionian laws against bitcoin, they will just render it underground in that jurisdiction and it will thrive elsewhere.

Bitcoin is the first independent money. Bitcoin = freedom. 

Sat, 08/23/2014 - 13:22 | 5134430 centipede
centipede's picture

I think you are too optimistic. First of all, anybody can create simmilar cryptocurrency using simmilar (or the same) technology. Acctually anybody can create ten, hundred or thousands of such currencies. What will be the value of Bitcoin then? Competition could be countless even though number of specific bitcoins is limited by an algorithm.

What will happen, when people start to use their bitcoins in everyday commerce? Their overblown value as an investment hype will go down to that of a common currency. And there is no bottom, because there is no intrinsic value in them. At first nobody will want them for an investment anymore and then their unstable price in other currencies will make them difficult to use.

Sat, 08/23/2014 - 15:22 | 5134739 Pseudonymous
Pseudonymous's picture

There is one and only one clearly distinguishable and recognizable cryptocurrency called 'bitcoin' and I don't think its scarcity is in question today.

Creating more cryptocurrencies does not affect bitcoin's value or the combined cryptocurrency market value any more than founding Google Inc. and issuing GOOG stocks affects IBM stocks' value or the whole stock market; or discovering the precious metal platinum affects the value of gold and silver. I have never heard of a famous artist being deterred from painting any more paintings lest he or she negatively affects the value of the previous paintings, either.

What will happen, when people start to use their bitcoins in everyday commerce?

That has already happened years ago. Some people bid for bitcoins just to buy certain goods or services. Even if they spend it immediately, it is still a net demand. Unstable prices have not stopped this demand.

And there is no bottom

I don't see why you would say this, since it is clearly fallacious. Even Weimar marks have a bottom. You can buy a ton of it and sell it for recycling or burning. The difference between 1 ton of trash paper and a bitcoin is in their convenience for direct exchange and storage. That difference, of course, couldn't be greater.

Sun, 08/24/2014 - 01:57 | 5136347 centipede
centipede's picture

I think you are wrong. Companies on stock exchange are able to earn income, which allows them to pay dividends or increase their asset values. Stocks have intrinsic values. Gold, silver, platinum have intrinsic values. Every painting is different and people buy it only if they like it. They can not become currencies. Bitcoin price fluctuates only because of speculation. It doesn't have any intristic value. If I buy the same technology I can create X exactly identical copies of cryptocurrencies with the same features as bitcoins. What will be different except of the name of the currency? I am not sure about platinum, but huge new discoveries of silver in the time of gold standard would have had significant influence on prices of goods in gold, because both gold and silver were currencies determining monetary base and money supply. So if bitcoin and all its numerous clones become currencies and part of money supply it will most certainly have a significant impact on their price in other currencies and prices of goods.

Is the set of those "certain goods" growing? Can you imagine buying every day groceries with bitcoins? People are not doing it even with e-gold. Right now they are buying bitcoins as an appreciating asset.

Acctually, what I ment that there is no bottom, was that the bitcoin has no intrinsic value - the bottom, where could its price drop. The bottom in this case is zero. So you are right, there is a bottom. It is of course only a theoretical bottom. Weimar marks did drop to their theoretical bottom - their intristic value of trash paper. I see no big difference in the convenience for exchange and storage of bitcoin and existing currencies stored electronically. On the international level maybe, but I can buy groceries definitely easier with local currencies.

So I am trying to find a good reason to buy few bitcoins, but honestly I can't find any so far. There is always something not insignificant which leaves me in doubts.

Sat, 08/23/2014 - 08:12 | 5133756 hairInTheSoup
hairInTheSoup's picture

there have been an emp in xix century strong enough to wipe out all our current grid; it's not a fantasy.

at that time societies were not depending on the electric grid, so it didn't create the chaos it would now, as we'd be pulled back to the stone age more or less (no economic sector would survive save some coconut plantation on some remote tropical islands).

it's short -sighted & ignorant to deny the reality of the possibility even if the odds are weaks.

Sat, 08/23/2014 - 09:44 | 5133917 zerocash
zerocash's picture

An EMP is certainly possible but it would affect much more than Bitcoin. It would kill the internet, destroy the world financial system, kill all equipment with microchips in them (including modern cars). It would throw us back into the 19th century without the infrastructure that existed back then and with too many people. There will be massive social unrest and hundreds of millions of people will die.

After an EMP gold and silver are pretty much useless too. People will want stuff that can help them survive. Not some shiny metal that has no use in a Mad Max type situation.

I get tired of this lame argument that is being kept repeated even though it has no merit. Nothing can withstand the most extreme possibilities.

You might as well say about any activity of man "why bother because you will die eventually?"

Sat, 08/23/2014 - 08:42 | 5133807 Bendromeda Strain
Bendromeda Strain's picture

EMP , Yawn, FFS.....

You mendacious BTC clowns crack me up. How many cities have been bombed around the world since electrification? If you yawn at the possibility of grid loss you are a fool and will eat your phone sobbing when it comes time to play "everyone's hungry - whatcha got?"

Sat, 08/23/2014 - 09:48 | 5133924 crazytechnician
crazytechnician's picture

Question is - what have you got ? Because if you think there will be some kind of Mad Max future then you will be sorely shocked to find out that gold and silver would be just as useless as bitcoin in the scenario, grow a brain , the internet and grid ain't going down any time soon. It would mean the end of life as we know it.

Sat, 08/23/2014 - 10:37 | 5134017 Sashko89
Sashko89's picture

Not true, humans will still need to trade and gold and silver are the most markeatable commodities known to man, and they will be used as money again)

Sat, 08/23/2014 - 11:46 | 5134201 TheHound73
TheHound73's picture

Then sink value into gold in preparation of a madmax scenario. Lord knows you won't be using that gold in the here and now. But make sure to keep using YellenBux in the here and now because you are a good citezen.

Sun, 08/24/2014 - 19:11 | 5134260 crazytechnician
crazytechnician's picture

Erm  , no ac power grid means no more cooling of the spent fuel pools at the planets hundreds of nuclear plants , good luck with surviving that scenario , think Fukishima x Chernobyl x 1000 . The end of complex life within a few months. The elites surely are fully aware of this fact and dispite Obama's 'internet kill switch' - which must surely be a hoax , the powers that be should really be working diligently on hardening the power grid and the internet from any form of attack whether it be political , technical or extra terrestrial (EMP / Solar Flare / Carrington Event etc).

Sat, 08/23/2014 - 14:24 | 5134600 Pseudonymous
Pseudonymous's picture

You wouldn't need any more electrical energy to send or receive bitcoin than you would need to check a gold coin or a bar for tungsten. And that is not a lot of electrical energy. Backup energy sources for such modest needs (small and portable solar panels, wind turbines, generators, etc.) are dime-a-dozen nowadays.

Fri, 08/22/2014 - 22:40 | 5133040 TheHound73
TheHound73's picture

Probably true. But what do you use between now and the start of the MadMax era? YellenBux?

Fri, 08/22/2014 - 23:16 | 5133152 Bollixed
Bollixed's picture

Whatever others will accept in trade for what I need. YellenBuks are in fashion now so they work.

Years ago people thought Beanie Babies were a good investment.

Sat, 08/23/2014 - 02:56 | 5133484 TheHound73
TheHound73's picture

No thanks. I'll not use YellenBux whenever possible. With bitcoin that is becoming easier and easier for me.

Sat, 08/23/2014 - 14:12 | 5134560 Pseudonymous
Pseudonymous's picture

Actually, bitcoins are in fashion now. You would be amazed at how many places accept them now.

Fri, 08/22/2014 - 22:40 | 5133041 gold-is-not-dead
gold-is-not-dead's picture

one should always have some gold, but one can't handle one mllion in gold. internet will go away just as water pipelines went away.

Sat, 08/23/2014 - 09:42 | 5133911 Citxmech
Citxmech's picture

Oh, I think I could handle 1 million in gold just fine, thank you.

Fri, 08/22/2014 - 21:44 | 5132823 Sashko89
Sashko89's picture

New Austrian School of Economics, towards the bottom, the discussion on bitcoin gets interesting... 

 

Bitcoins can be a competing currency all they want, but there will never be a bitcoin standard like a gold standard... gold is still the most markeatable commodity known to man--- that is my own opinion... but check out the article below from the New  Austrian School of Economics

 

http://newaustrian.org/content/cows-money-and-bitcoins-domestic-conversa...

 

Menger, Fekete, > Mises

 

Sashko)

Fri, 08/22/2014 - 22:44 | 5133050 gold-is-not-dead
gold-is-not-dead's picture

btc makes government money standards obsolete and outdated.

Fri, 08/22/2014 - 22:48 | 5133069 Sashko89
Sashko89's picture

if you live in anarchy.,... in a world without government... i guess....

Fri, 08/22/2014 - 22:53 | 5133083 gold-is-not-dead
gold-is-not-dead's picture

 in a world with limited government power...

Fri, 08/22/2014 - 22:54 | 5133088 gold-is-not-dead
gold-is-not-dead's picture

time is money, everyone has a right to fair time in life.

Sat, 08/23/2014 - 10:51 | 5134060 Sashko89
Sashko89's picture

You, know people are very brave to speak out against governement on here, but when they roll out their heavily militarized police to enforce their neofasicst rule on you... you will prolly piss your pants and run away, I doubt governements are going anywwhere and the sheeple are too stupid to make a government with limited rule, because eventually smart people realize how easy it is to manipulate the massess.. sorry I wish we had limited government too(, however the only way to do that is to put the gold coin back into circulation, because only through the power of the gold coin purse can the society regulate how their government behaves...

 

Professor Antal Fekete (Video Series)

https://www.youtube.com/channel/UCCDv-0hwC1k042DF8gyqivA

 

Sat, 08/23/2014 - 09:30 | 5133887 tmosley
tmosley's picture

That is where we are headed.  Cryptoanarchy will enable anarcho-capitalism, and world overnments will simply fade away, like a bad dream upon waking.  Obsolete.

Sat, 08/23/2014 - 15:44 | 5134851 Pseudonymous
Pseudonymous's picture

 

 

if you live in anarchy.,...

I do. It is a matter of personal choice. There are still governments out there but it is precisely things such as Bitcoin that help me live very independently from governments.

Fri, 08/22/2014 - 22:52 | 5133080 gold-is-not-dead
gold-is-not-dead's picture

and it can also coexist with the alredy established systems. regression theorem falls because there are many altcoins now in the game, so price can go up as much as it wants and the protocol will still be usable.

Fri, 08/22/2014 - 23:30 | 5133189 Oscar Mayer
Oscar Mayer's picture

Tally Sticks 729 year run as currency.

Sat, 08/23/2014 - 08:45 | 5133813 Bendromeda Strain
Bendromeda Strain's picture

Is that you, Still?

Sat, 08/23/2014 - 09:30 | 5133889 tmosley
tmosley's picture

Tally sticks were non-circulating.  More like deeds or titles than money or currency.

Sat, 08/23/2014 - 22:47 | 5135943 nofluer
nofluer's picture

Sashko89 - Frank van Dun did a fantastic job with the subject! Kudos to him.

Sat, 08/23/2014 - 11:26 | 5134153 magnumpk
magnumpk's picture

I agree that Bitcoin has these properties of money.  One critique of bitcoin though is that it has no intrinsic value while gold does.  Also, bitcoin is dependent upon electricity.  If the grid is down, even if just for a matter of days, you don't have access to bitcoin when you need it most.  Nobody can electronically hack your physical gold.  Add the old "NSA" worries and the fact that many early adopters of bitcoin are unwittingly violating U.S. tax law for failing to report gains on bitcoin transactions, and you've got a few problems that gold avoids.  Thus, in the final analysis, I choose gold (and silver).

Sat, 08/23/2014 - 13:42 | 5134480 Dr. Everett V. Scott
Dr. Everett V. Scott's picture

magnumpk,

Gold has no intrinsic value. It is scarce, that's all. If gold was as common as lead, it would be no more valuable.

Scarcity is the common denominator with both gold and bitcoins. You can't print more of either. Bitcoins are as honest as gold. They can buy things. More things all the time. They can buy gold. They can buy a Lamborghini. And lots of other stuff. Someone just bought a house in the Bay Area with bitcoins. The realtor said the transaction was easier than a cash deal. Thus, people will use them. If the governhment accepts bitcoins as tax payments, they are here to stay.

Sat, 08/23/2014 - 12:23 | 5134281 orez65
orez65's picture

"Unit of account
Limited in supply
Fungible
Divisible
Portable
Durable"

Dear misterb4096:

You forgot the most important characteristic of money: intrinsic value.

Bitcoin is a fu..ing computer note, just like the US Dollar is a fu..ing paper note. Every US Dollar denomination says it: "Federal Reserve Note".

It doesn't say Federal Reserve Money!

You are full of s..t! 

Sun, 08/24/2014 - 19:20 | 5138410 crazytechnician
crazytechnician's picture

So the bitcoin mining / transaction verification hardware , the bitcoin transmission network - the global internet it's is using as it's transport layer have no intrinsic value ? I suppose using your logic google has no 'intrinsic value' either because it's just a bunch of 1's and 0's in a computer memory , like bitcoin right ?

Sat, 08/23/2014 - 13:06 | 5134393 bh2
bh2's picture

Agree with all that. However, "limited in supply" defines money only when demand for it always exceeds that supply. If it isn't persistently scarce and readily accepted for all other goods in supply, then it isn't money (though it may be a barterable commodity). Whether relative scarcity of bitcoins will endure remains the unanswered question.

Sat, 08/23/2014 - 06:30 | 5133543 constantine
constantine's picture

Agreed, Bitcoin or something like it, represents the best aspects of gold and modern currency.  There may be some flaws in Bitcoin that render its demise but the cat is out of the bag.  Theorectically, it's genius.  The fact is that most people don't think at all for themselves regarding theories as the article seems to suggest.  The powers that control the thought process (media) could have people falling over themselves to get bitcoin right now if it favored their agenda.  People would buy bitcoin if it were promoted anywhere near to the extent of the iphone, etc.  However, we hear that it is used for criminal transactions and tax evaders instead.  People don't think... but if they saw Batman and Spiderman being played by Brad Bitt and/or Orlando Bloom using bitcoin in their movies, they'd be trampling over themselves to get them like it were an xmas eve flat screen TV sale.

Sat, 08/23/2014 - 12:35 | 5134292 orez65
orez65's picture

"There may be some flaws in Bitcoin ..."

No s..t!

Primarily, that it is not money, it's a fuc..ng computer note!

What is it that these people can't comprehend?

If you want to speculate and earn a profit with Bitcoin, good for you. Just don't call Bitcoin money because it isn't. It is a fuc..ng COMPUTER NOTE!!!!!!!!!!!!!!!!!

Sat, 08/23/2014 - 15:48 | 5134837 constantine
constantine's picture

Seems to me that computers have been managing the price of gold rather handily over the last few years.  I own and believe in gold but let's be honest...  We're not going back to a barter system that uses physical gold... ever... and ask yourself this... would you really want to?  Think about what that means.  How completely inefficient would international commerce become if every payment on the planet involved the physical haul of gold to the various reaches of the globe.  Is that what you desire?  The current system is corrupt but to beileve that replacing it with gold should be desired is ridiculous.  

So, let me guess.  You think that we should go back to gold-backed notes; every instance of this in history has resulted in the severing of the gold backing and back to corrupt centrally controlled fiat garbage.  Really the only resolution is freedom and truely free-floating money that is not taxed.  Governments could issue their fiat currencies and people could have the freedom to use things like gold or bitcoin if they so choose, untaxed because they are classified as monetary assets.  This would force governments to manage their currencies honestly rather than to the extreme benefit of a few parasitic, rent-seeking global elites.  My guess is that, over the course of time and if allowed to flourish without subterfuge and sabotage, something like bitcoin would become the preferred method of commerce... which is precisely why it will be fought with the full force of our bubble-headed media.

Sat, 08/23/2014 - 13:34 | 5134469 Dr. Everett V. Scott
Dr. Everett V. Scott's picture

zaphod:

Correctomundo. What intrinsic quality do bitcoins and gold have in common?

Answer: scarcity. That's all it takes. You can't print gold, and you can't print more bitcoins. Everyone is aware of both.

If bitcoins could be subdivided with one simple click into 'bitcents' equal to one one-thousandth of a bitcoin, and a thousand bitcents could be re-combined back into one bitcoin with another click, even more folks would use them. At $500 a bitcoin is unweildy. At $5 it is very handy.

Next, bitcoins should be able to be washed; anonymized, so that no one, including the gov't, could trace any single bitcoin.

Finally, after, say twenty or thirty years of zero transactions, a bitcoin should be re-buried so it can be mined again. That way if bitcoins are lost, the total number would not be whittled down over time.

That's it. The perfect currency.

Sat, 08/23/2014 - 15:04 | 5134713 Dr Hackenbush
Dr Hackenbush's picture

"Scarcity" is a bullshitter's parameter.  Please quantify, and demonstrate how it keeps pace with economic growth, innovation, birth rate, etc.

Sat, 08/23/2014 - 15:30 | 5134786 Dr. Everett V. Scott
Dr. Everett V. Scott's picture

As one doctor to another, allow me to explain:

Bitcoin is intrinsically scarce. There can never be more than the upper limit, just under 30 million. Thus, it is not BS, it is a fact.

 

Bitcoin keeps pace with economic growth by rising in price over the long term. Further, if it is easy [one click] to split a bitcoin into a bitcent [one one-thousandth of a bitcoin], and back again, then the initial float does not matter at all. As the price rises, a bitcent rises, too. Right now a bitcoin is $500. A bitcent would be $5.00; a useful denomination. If the price rises much higher, a bitcent could be split into a bitmil; one one-thousandth of a bitcent. And so on, ad infinitum.

 

Any more questions, just ax.

Sat, 08/23/2014 - 16:26 | 5134924 Dr Hackenbush
Dr Hackenbush's picture

Thanks, good sir!  You've demonstrated how the currency itself would fare.  Now please demonstrate how 'civil' society would fare, once the "scarcity" is hoarded and then glutted.   

*hoarded 

Sat, 08/23/2014 - 04:06 | 5133535 shouldvekilledthem
shouldvekilledthem's picture

Cloudmining should die. It's like keeping your bitcoins at a 3rd party.

Bitcoin is (should be) all about control.

Sat, 08/23/2014 - 11:44 | 5134194 Kirk2NCC1701
Kirk2NCC1701's picture

As I've said many times before, one of the intended or unintended consequences is that the increasing demand for a certain type of computing power leads to a crowd-sourced funding for the evolution of Video Cards and video processing.

If you take this (astute) observation to the next level and ask yourself "Who Benefits?", then a number of players come to mind. Besides the boringly obvious benefit to the Video Card makers and its Supply & Distribution Chain, a more hidden party benefits: Intelligence agencies, who can leverage the amazing video processing power for "Real-Time Facial Recognition" (RTFR).

RTFR is the wet dream of all LEAs and Central Planners. Bitchez.

You're welcome. Kirk out.

Sat, 08/23/2014 - 05:44 | 5133603 LordEffingtonTh...
LordEffingtonThreeSticks's picture

Ground breaking is what they have in New Mexico.  A big crack.  Or did I just describe Hillary and Obama at the same time.

Fri, 08/22/2014 - 22:09 | 5132938 Payne
Payne's picture

Cryptocurrency already exists and is in the end stages of success The Federal Reserve Note exists in both paper and electronic form.  It has the same problem as any currency it is up to the vagaries of those who control issuance.

Fri, 08/22/2014 - 22:42 | 5133051 TheHound73
TheHound73's picture

What problems do you have with bitcoin issuance?

Sat, 08/23/2014 - 13:03 | 5134383 Dr Hackenbush
Dr Hackenbush's picture

for starts - as long as crypto currency is purchased by bank money, it will take on the same "debt" based characteristics as the underlying currency. 

Sat, 08/23/2014 - 13:25 | 5134436 painlord-2k
painlord-2k's picture

Why a cryptocurrency should take the characteristic of debt based currencies and a commodity based currency (say gold) should not?

Sat, 08/23/2014 - 14:25 | 5134596 Dr Hackenbush
Dr Hackenbush's picture

Fair enough.  I'll re-state and exclude any bias. 'ALL commodities', that rely on 'bank money' to exist, are subject to the same inflationary forces as the underlying currency. 

Sat, 08/23/2014 - 22:16 | 5135844 TheHound73
TheHound73's picture

That is not "currency issuance".  That is exchange of one asset for another.

Sun, 08/24/2014 - 00:22 | 5136187 Dr Hackenbush
Dr Hackenbush's picture

I see nothing that indicates that bitcoins are anything but derivatives of plain old 'cash-ola'.  Its "issuance "is purely created by the demand for 'debt based' cash. 

Sun, 08/24/2014 - 05:15 | 5136281 TheHound73
TheHound73's picture

Bitcoin currency issuance is currently as follows: 25 bitcoins approximately every 10 minutes are awarded to whomever applies resources to secure the network and is lucky enough to solve the next block.  

https://en.bitcoin.it/wiki/Controlled_supply related: https://en.bitcoin.it/wiki/Mining

The bitcoin mining network has always been and will always be open to anybody anywhere to participate with any amount of hash power anytime without asking anybody's permission. 

Sun, 08/24/2014 - 14:01 | 5137381 Dr Hackenbush
Dr Hackenbush's picture

and the only reason bitcoins are mined, is because they are immediately redeemable as cash.  Thus, debt money is the collateral behind the curtain. 

Mon, 08/25/2014 - 03:11 | 5139492 TheHound73
TheHound73's picture

I find arguments such as these childish:  Silver can be exchanged for dollars with which one can buy chickens.  Therefore silver, chickens, and literally everything else is tainted by USD.  Deal with it.  The USD exchange rate is the quckest, easiest yard stick with which the world measures current demand for BTC.  It won't always be this way but it is what it is... today.  Actually, there is more trade volume between the BTC and Chinese Yuan pair than with dollars.

Sat, 08/23/2014 - 12:18 | 5134270 BolanosGhost
BolanosGhost's picture

Interestingly, the regression theorem of money is probably still valid. Rather than tossing it out, we may just have to become more open minded about the way aspects of the theorem are defined. The theorem can be considered in a more abstract sense than just reference to commodity money.

http://konradsgraf.com/blog1/2013/2/27/in-depth-bitcoins-the-regression-...

The short version of that article is that bitcoin seems to have followed the regression theorem to the point of becoming a medium of exchange. When comparing bitcoin to commodity monies, the important aspect is scarcity. While gold and silver, and other physical commodities exhibit scarcity in the physical world, bitcoin has mimiced that scarcity in the digital world. Bitcoin takes a space which has traditionaly eliminated scarcity of information and transformed it to suit a purpose which benefits from scarcity.

The question of whether or not bitcoin can then become money as defined by being the most saleable good in an economy, is speculated on in this article:

http://konradsgraf.squarespace.com/blog1/2013/9/14/bitcoin-as-medium-of-...

Fri, 08/22/2014 - 20:53 | 5132600 tmosley
tmosley's picture

Cryptocoins are a commodity, same as seashells or wampum.  They have value as trade tokens, the same as gold.

The first trade of goods for gold wasn't so someone could get a metal that doesn't corrode.

Fri, 08/22/2014 - 20:57 | 5132616 Publicus
Publicus's picture

Exactly, and you can use cryptocoins for transactions a hell of a lot easier than gold coins. Plus, no need to worry about fake gold nor storage.

Fri, 08/22/2014 - 21:12 | 5132672 Aaaarghh
Aaaarghh's picture

i am concerned at the need for functioning high technology for cryptocurrencies to be used, not so much the benefits they bestow. I would be jittery to say the least holding all savings in any cryptocurrency, and considerably less so in sought after commodities (anyone who thinks gold isnt sought after needs to read more) oil, metals or any other easily tradeable goods. I suppose the fiat will have to do atm for its liquidity, and the stack of coins are for a day much bleaker than now - not as an alternative to what we have atm or cryptocurrencies, which will continue to serve their purpose whilst everything is dandy.

Fri, 08/22/2014 - 21:48 | 5132836 Sashko89
Sashko89's picture

a mathametical algorithm is not a commodity.... 

Fri, 08/22/2014 - 22:09 | 5132932 crazytechnician
crazytechnician's picture

Gold and silver atoms are constructed of a clearly defined mathematical structure / atomic algorithm . What gives you the authority of deciding what is or is not a commodity ?

Fri, 08/22/2014 - 22:31 | 5132990 Urban Roman
Urban Roman's picture

Sashk said "mathametical algorithm", so I'm not sure what he was talking about, but it was neither gold nor bitcoin.

 

Fri, 08/22/2014 - 23:43 | 5133200 Dr Hackenbush
Dr Hackenbush's picture

Why would you want currency defined as a commodity? 

http://en.wikipedia.org/wiki/Black_Friday_(1869)

Sun, 08/24/2014 - 01:23 | 5136285 TheHound73
TheHound73's picture

Historically currencies have usually also been commodities.

What alternatives do you suggest? 

Sun, 08/24/2014 - 13:50 | 5137352 Dr Hackenbush
Dr Hackenbush's picture

I challenge this premise. Again, the very nature of the gold standard is de-commotization by pegging gold's price.  Why would you want currency that creates, or, is subject to business cycles, unless, it provides and opportunity (for some) to game the system? 

"What alternatives do you suggest?"  

What are your goals?  To get rich, or, to further civil society?  The answer to this continues to cloud many minds.  

 

Sat, 08/23/2014 - 09:02 | 5133841 tradewithdave
tradewithdave's picture

@Sashko89

Not to put too fine a point on it... but isn't there an argument that satisfying the double coincidence of needs and wants is informational in nature rather than a commodity in nature?  The matching process I mean.  The match is not the same as the satisfaction of the match.  True, in the absence of the commodity there is no satisfaction, however in the absence of the match there is no velocity. 

In a ZIRP environment is it fair to say that the only thing that matters (in regard to the value creation process) is velocity or the convenience yield that it... uh... yields?

 

Sat, 08/23/2014 - 09:32 | 5133890 tmosley
tmosley's picture

ANYTHING can be a commodity, so long as it is fungible.

Sat, 08/23/2014 - 18:35 | 5135294 nofluer
nofluer's picture

"Plus, no need to worry about fake gold nor storage."

"Fake gold" can be a problem... some say that you can't have inflation with a gold currency. WRONG!!! One of the last Emperors of Rome inflated the heck out of gold currency by the simple expedient of using a tungsten filler in the gold coins. (I understand this practice is still being done in some circles.)

Ummm... storage of electronic "money" is also potentially a very real problem because when you talk about storage of electronic media, you run full tilt into the "persistence of media" problem. A cheap CD will last maybe 2 or 3 years. A really GOOD CD will last maybe 15 years before the aluminum media surface begins to oxidize. Paper can last a LONG time (up to thousands of years) if properly stored. Magnetic tape can last about 130 years, tops. So... what kind of bit coin wallet will YOU use? Gold/silver, stone, ... ooops... no media compatibility.

Sat, 08/23/2014 - 12:39 | 5134327 orez65
orez65's picture

"The first trade of goods for gold wasn't so someone could get a metal that doesn't corrode."

Yes it was.

Once that first transaction was done it was complete. No third party risk. Something was traded for gold. Period, end of the story.

That is what money is.

Sat, 08/23/2014 - 02:16 | 5133457 svoboda59
svoboda59's picture

"Cryptocurrencies are the future."

As long as you have energy backing them! No energy no mining no transfer of bit ! On the other hand gold is energy saved and stored!!

Sat, 08/23/2014 - 07:54 | 5133727 orez65
orez65's picture

"Cryptocurrencies are the future."

Fine, but a currency is not money

Sat, 08/23/2014 - 11:00 | 5134081 TheHound73
TheHound73's picture

Money (n): That stuff you bury in the yard.  See also Zombie Apocalypse.

Mon, 09/15/2014 - 12:43 | 5218975 THEENumber1Quee...
THEENumber1QueenAmidalaFAN's picture

I agree with Publicus ( http://www.zerohedge.com/users/publicus )! I think BitCoin has one strength that gold DOES NOT have is a quantitative and qualitative HARD ceiling of 21 Million BitCoins! Gold only has a qualitative HARD ceiling (the only theoretical threat to this qualitative ceiling that Gold has is nuclear fusion), Christopher Columbus destroyed the quantitative ceiling of Gold when he discovered the American Continents! I am a history buff and I looked into the economic impact that the New World's discovery was and for the macroeconomic impact was positive but for the Gold markets it was awful because of the simple logic that more land equaled more Gold! NO ONE ON EARTH can tell me EXACTLY how much Gold is on PLANET EARTH, I challenge anybody to tell me EXACTLY how many ounces (for the metric people I ask them to answer this in grams) of Gold exist on our PLANET EARTH (the time limit for this answer is between five to ten years from now because I have found out from several reliable news sources that the before mentioned time frame is based on the fact that Gold mining on asteroids OR on the moon will be a reality)!!!

Fri, 08/22/2014 - 20:49 | 5132579 Bollixed
Bollixed's picture

Goat porker in 3.2.1...

Fri, 08/22/2014 - 21:34 | 5132786 Bindar Dundat
Bindar Dundat's picture

Big change in the tone of this site on Bitcoin over the last two months.  I like it that the cynics are being replaced with the more thoughful -- it used to be just the phonz and I talking about this . You don't even see him any more.  

Fri, 08/22/2014 - 21:41 | 5132817 Bollixed
Bollixed's picture

He was banned and came back as Ghoatster or some other moniker that still refers to himself in the third person.

Nothing's changed.

Fri, 08/22/2014 - 22:43 | 5133055 r00t61
r00t61's picture

He used to be "fonestar."

During the fonestar period, he wrote in the 1st-person.  I will give him credit for being willing to debate and slug it out with other posters in the Fight Club that disagreed with him on the nature of bitcoin, whether it is secure, whether it is really a new money or just a different kind of currency, etc.

Towards the end of the fonestar period, he got banned for repeatedly threadjacking non-Bitcoin related posts.

He is now back as "gh0atrider."  This reincarnation of fonestar seems to write exclusively in the 3rd person, in strange non-sequiturs that repeatedly refer to the creator of bitcoin as some kind of deity. 

Fri, 08/22/2014 - 22:00 | 5132901 MalteseFalcon
MalteseFalcon's picture

No change in tone.  People who don't believe in bitcoin are tired of talking about it.  Dead horse, etc.

Sat, 08/23/2014 - 03:17 | 5133497 stacking12321
stacking12321's picture

believe in?

lol.

it's a currency, not a religion.

it's real, it gets used every day.

what about people who don't believe in evolution, are they tired of talking about it as well?

Sat, 08/23/2014 - 07:45 | 5133707 MalteseFalcon
MalteseFalcon's picture

Ever hear of "full faith and credit"?  People have to believe in your currency or it doesn't get used.

Evolution is a theory that is why it's called the theory of evolution.  So the truth is that theory or the bible and nothing else?  The argument is a phoney construct and I'm very tired of hearing about it.

And, again, people are tired of hearing from bitcoin snake oil salesmen such as yourself.

 

 

 

 

Sat, 08/23/2014 - 08:31 | 5133788 TheHound73
TheHound73's picture

Hehehe, and yet you can't resist clicking the story. muahahaha.  And commenting ;)  Oh I feel special.

Sat, 08/23/2014 - 17:09 | 5135112 Bollixed
Bollixed's picture

What's even worse is some people don't know the difference between a scientific theory and a scientific hypothesis.

A scientific theory summarizes a hypothesis or group of hypotheses that have been supported with repeated testing. If enough evidence accumulates to support a hypothesis, it moves to the next step—known as a theory—in the scientific method and becomes accepted as a valid explanation of a phenomenon.

The word theory has a completely different meaning in the disciplines of economics versus science, as examples. A scientific theory is absolute as opposed to an econominc theory which is hyperbola.


Fri, 08/22/2014 - 22:42 | 5133049 crazytechnician
crazytechnician's picture

Hopefully Fonestar will make an appearance soon. The gh0at is probably well sick of trying to educate the ZH Flat Earth Society ....

Sat, 08/23/2014 - 09:56 | 5133928 snr-moment
snr-moment's picture

So, how are all the other cryptocurrencies doing?  How many are we up to now?

 

Wow.  Would my bitcoin be easily traded for, say, Isiscoin?  Excellent.  Good times.

Fri, 08/22/2014 - 20:56 | 5132610 CharlieMike
CharlieMike's picture

Are you referring to fukmeister?

Fri, 08/22/2014 - 21:21 | 5132725 Majestic12
Majestic12's picture

...and here I thought the two camps were fighting over "great taste"..."less filling"...DOH!

Sat, 08/23/2014 - 00:35 | 5133311 Seek_Truth
Seek_Truth's picture

"Bitcoin may yet fail, in which case Mises’ theorem will remain as a powerful argument in favor of the gold standard. If it ends up succeeding, however, an alternate explanation will have to be found."

Q: Even IF, for how long?

A: Not likely, and not very long.

Sun, 08/31/2014 - 19:32 | 5165917 EconomicGuru
EconomicGuru's picture

This article is void of any insight. Bitcoin is for all intents and purposes commodity money. There are multiple sources for the demand, and thus value, of money. The US dollar is valuable purely because of exchange value, there are more markets that except USD than any other form of money. Bitcoin's recent rise in value has had nothing to do with exchange value, or 'money'-related concepts. The current demand for Bitcoin is speculative demand much more than exchange value demand.

Fri, 08/22/2014 - 20:48 | 5132578 philosophers bone
philosophers bone's picture

"Bitcoin may yet fail."  Correct.  Whereas gold, by its nature, cannot.

Fri, 08/22/2014 - 20:54 | 5132606 tmosley
tmosley's picture

It can and will fail, one day in the distant future, when man finds a method for transmuting matter easily.  When that day comes, crypto will be all that is left.  Well, that and non-transmutable latinum.

Sat, 08/23/2014 - 09:57 | 5133941 snr-moment
snr-moment's picture

Transmutting matter.  Yeah, the energy required should make THAT ubiquitous.

Fri, 08/22/2014 - 21:00 | 5132627 misterb4096
misterb4096's picture

"Bitcoin may yet fail". Not really. How could it? If people stopped accepting it? Could gold not also fail in a similar fashion?

Sat, 08/23/2014 - 03:23 | 5133506 stacking12321
stacking12321's picture

the phrase "bitcoin may fail" is a meaningless one without clear definition.

what is "failure"? what is "success"?

 

Fri, 08/22/2014 - 21:12 | 5132681 crazytechnician
crazytechnician's picture

Gold can fail easily. Just ask any metal detector or airport security. Or Chinese gold bar tungsten gold plated fakester, or any naked short seller , the LBMA , the London Gold Pool , Fort Knox , the list is endless.

Fri, 08/22/2014 - 21:17 | 5132711 Aaaarghh
Aaaarghh's picture

gold at the moment isnt important, as the current system with fiat grinds onward. If/when fiat fails, then an alternative store of value will be sought, be it bitcoin or whatever or the PMs. I see no problem holding a small amount of anything tangible as insurance.

Fri, 08/22/2014 - 22:02 | 5132904 crazytechnician
crazytechnician's picture

It will be both Crypto bitcoin and PM's. These are complementary to each other and are not in direct competition.

Fri, 08/22/2014 - 21:50 | 5132845 Sashko89
Sashko89's picture

well if you are going in that route... have you ever heard of emps? and other tech gadgets that can wipe your digital pocessions out)

Sat, 08/23/2014 - 09:37 | 5133898 tmosley
tmosley's picture

It would have to wipe out literally every copy of the blockchain in the entire universe.  Something that does THAT also kills humanity.

Like worrying about supernovas transmuting your gold into uranium.

Fri, 08/22/2014 - 21:49 | 5132846 Sashko89
Sashko89's picture

well if you are going in that route... have you ever heard of emps? and other tech gadgets that can wipe your digital pocessions out)

Fri, 08/22/2014 - 22:04 | 5132912 crazytechnician
crazytechnician's picture

EMP's .,, Yawn. If the power grid and internet go down simultaneously then you will have much bigger problems on your hands than worrying about the difference between PM's and Crypto...

Sat, 08/23/2014 - 00:38 | 5133321 Seek_Truth
Seek_Truth's picture

Gold WILL fail:

'They will fling their silver into the streets and their gold will become an abhorrent thing; their silver and their gold will not be able to deliver them in the day of the wrath of the LORD. They cannot satisfy their appetite nor can they fill their stomachs, for their iniquity has become an occasion of stumbling. They transformed the beauty of His ornaments into pride, and they made the images of their abominations and their detestable things with it; therefore I will make it an abhorrent thing to them.…" - Ezekiel 7:19,20

Fri, 08/22/2014 - 20:50 | 5132591 Catullus
Catullus's picture

I'll wait for the day when someone tells me they'll only accept bitcoins before I declare it a "success".

Otherwise, it's not a totally inconvenient way of transferring dollars to someone without using the banking system.

Fri, 08/22/2014 - 21:05 | 5132620 misterb4096
misterb4096's picture

Has anyone ever told you that they "only accept" gold?

Sat, 08/23/2014 - 07:20 | 5133164 TheHound73
TheHound73's picture

Amagi Metals announced they'll soon only take bitcoin for bullion.

https://www.amagimetals.com/info/no-dollars-after-2016/

Fri, 08/22/2014 - 20:51 | 5132593 KrugerrandFan
KrugerrandFan's picture

It's funny how this polarises peorple :-)  I see glod and bitcoin on the same side?  Discuss:....

 

Fri, 08/22/2014 - 20:54 | 5132604 CH1
CH1's picture

Agreed... why not both?

The arguing voices, best I can tell, are merely defending their dogma.

Fri, 08/22/2014 - 21:14 | 5132693 crazytechnician
crazytechnician's picture

Agreed , they are complementary ....... Once crypto takes off proper gold & silver will go back into monetary circulation in places where there is no internet access.

Fri, 08/22/2014 - 20:52 | 5132595 The_Prisoner
The_Prisoner's picture

Australian Taxation Office rules Bitcoin is an asset. GST and capital gains taxes to be paid.

https://www.ato.gov.au/Media-centre/Media-releases/ATO-delivers-guidance...

Did anyone think the government would let an alternative currency outside of its control?

 

 

 

 

Fri, 08/22/2014 - 20:55 | 5132607 CH1
CH1's picture

Did anyone think the government would let an alternative currency outside of its control?

Yeah, just like they controlled the marijuana market.

Fri, 08/22/2014 - 20:58 | 5132619 The_Prisoner
The_Prisoner's picture

Here in Australia the marijuana market is taxed at "jail". Unless at the Capital Territory where consumption is decriminalised up to a certain amount. In other words, the federal bureaucrats are allowed to get high.

 

Fri, 08/22/2014 - 21:11 | 5132684 CH1
CH1's picture

There are pot-sellers currently operating in every Aussie city, and have been for decades.

Fri, 08/22/2014 - 21:54 | 5132868 Bunga Bunga
Bunga Bunga's picture

As there were distillers during the prohibition, Dollars in the Soviet Union or hookers in DC.

Sat, 08/23/2014 - 13:10 | 5134408 painlord-2k
painlord-2k's picture

or hookers in DC.

Working in and outside the Houses

Fri, 08/22/2014 - 21:07 | 5132638 misterb4096
misterb4096's picture

They can only tax it if they know you have it. It is not even close to being "within their control"...

Fri, 08/22/2014 - 20:57 | 5132615 Moccasin
Moccasin's picture

BitCoin I like very little, so I own a very little BTC. I am not opposed to BTC, just not sure I like it yet. Silver and gold are solid, BTC is ummmmm... bits and bytes, digital ether or digital tiddly winks??? On the other hand I like gold and silver very much, enough said.

Fri, 08/22/2014 - 21:03 | 5132650 misterb4096
misterb4096's picture

We are getting tired of carrying you guys here. If you still don't like it, you simply don't understand it…

Fri, 08/22/2014 - 22:14 | 5132943 Moccasin
Moccasin's picture

I am trying to understand it! I like the fact I can transfer BTC cheaply and with some anonymity. I don't like the fact it needs to reside on a solid state electronic device that occasionally needs to be internet connected to allow the transaction to work. It makes sense to me only as a limited use currency. Face it, BTC is needy. I like the idea of a mix of currencies in my portfolio and I do hold a few BTC, it is still an experiment to me.

Fri, 08/22/2014 - 22:46 | 5133063 crazytechnician
crazytechnician's picture

Very nice to hear that comment , somebody who does not fully understand it but is actually doing their homework and due diligence - such a shame not more of the ZH possee have that attitude ....

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