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Faith, Math and Circular Logic: Why Bitcoin is More Valuable Than ANY Fiat Currency Today!
In my last post titled "Come, Journey With Me On An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Worlds Most Powerful Vested Interests" I told the tale of my trip to the UK to strum up interest in Veritaseum's UltraCoin (see excerpt at end of this post). During the dinner that was arranged for the prospective investors, of which I was the keynote speaker, several of the diners questioned the value of bitcoin as a "virtual' currency. In particular, they asked why should they believe that a bitcoin is really worth $375 or 280 pound sterling. I replied, "Let's look at this way, what is the pound worth?". I got back, it is worth 1.26 euro. Then I fired back, but if you accept that the pound is worth 1.26 euro, how do you have a problem accepting that bitcoin is woth 304 euro, or 371 US dollars? It is that circular logic that is somehow permitted in the evaluation of fiat currencies that is prejudiciously lacking on the valuation of cryptocurrencies.
The crowd then went on to say, well the pound and other fiat currencies are backed by the government. I said, "Very much like the bank insurance scheme of Cypriot bank account holders, or Zimbabwe currency or Argentinian pesos? Many people oft put too much faith in the 'full faith of the government'!" As you can guess, this really sparked this room of brainy people as I dared them to start thinking outside of the fiat box! Bitcoin is backe by math! The reserve currency is backed by the biggest guns on the globe (yes, it is and it always has been, looked it up if you don't believe me). Other fiat currencies are backed by faith! Faith can be quite fleeting and ephemeral, trust me. As a matter of fact, you don't have to trust me... I'm about to show you.
Friday, the Wall Street Journal ran a piece called Bring On the Currency Wars, of which I would like to quote a few choice lines, to wit:
Central bankers struggling against weak growth and falling inflation have come up with a cunning plan: shift the problems onto someone else. Finding it hard to stimulate domestic demand through cheap credit in a world of rock bottom interest rates, the next best solution central bankers have settled on is to generate growth by boosting net exports. And the way to do that is to devalue their currencies.
Now, the US has performed this stunt like a champion, but over the last few weeks I must admit, we've been outdone!
The Bank of Japan has been the most aggressive at pursuing this policy, driving the yen down 15% against the dollar over the past year. The currency effects have been relatively slow at registering in Japanese trade numbers, but they’ve finally started to show up in the data. Japanese exports jumped 9.6% on the year in October, more than double market expectations.
Other central banks have noticed.
The European Central Bank has announced a number of policies over the past six months designed to boost its balance sheet. The more assets a central bank holds the more liquidity is available to the wider economy and thus cheaper credit–or so goes the theory. But even when interest rates are at rock bottom levels, massive central bank asset purchases by the Federal Reserve and BOJ have “led to a significant depreciation of their respective exchange rates,” noted ECB President Mario Draghi in a speech on Thursday. Implicitly, he was saying: if they can do it, so can we.
Then, on Friday morning, the People’s Bank of China launched its own measures, cutting its one year lending rate by 0.4 percentage points to 5.6% and its deposit rate by 0.25 percentage points to 2.75%. Ostensibly, the cuts were a response to domestic factors, namely falling inflation, a weakening economy and sliding house prices. But it seems clear that the underlying reason was the renminbi’s appreciation relative to the yen.
As one economy devalues, the impact is to force deflation onto its neighbors. With Japan putting downward pressure on the yen, the question now is how long can other Asian economies hold out from their own devaluations.
The currency devaluation game is relative, and its zero sum. If you devalue to increase your imports to another country, you do so at the expense of some other country. Contrary to popular Keynsian math, you really don't get something for nothing. 2 minus 1 does not equal 2, my dear friends. With this concept in mind, let's take a look at the headlines from around the world:
China ready to cut rates again on fears of deflation 11/23/13: This would be the second time in as many weeks.
(Reuters) - China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making. Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world's second-largest economy.
Draghi Urgency for ECB Action Gets Final Reality Check: Economy
Mario Draghi is about to find out just how urgent his call for action has become. One week after the European Central Bank president vowed to revive inflation “as fast as possible,” policy makers will receive a glimpse on just how feeble cost pressures are now. Economists forecast euro area data on Nov. 28 will show price growth matching the weakest since 2009, which would add to the drumroll for a stimulus debate at the Dec. 4 meeting. Bond yields from Spain and Italy fell to record lows and stocks gained today on speculation the ECB will buy sovereign debt. Draghi has stoked pressure toward purchases as panels of officials study possible new measures and prepare to cut their economic outlook.
What is the result of all of this devaluing? Well, the next time someone asks you how much is bitcoin worth, you should just say, "In a Currency War, more than the yen, yuan, pound sterling, and euro!"
The lasting message from the highly Centralized, Centrally Planned, Central Banks of the World? "We think, so you don't have to!"
As exceprted from "Come, Journey With Me On An Adventure of Fundraising, Massive Disintermediation and the Confrontation of the Worlds Most Powerful Vested Interests""
After a couple of more meetings I headed over to the Cavalry & Guards Club on Piccadilly for the dinner. An interesting, old money club that is steeped in English military history.
The dinner began with quick tutorial on the history of the club and its importance re: the battle of Waterloo, etc. The dinner included over 40 extremely interesting people. Here's the place setting before we got started - each and everyone of the invtees placed at the table appeared. Standing room only - and all to hear what yours truly had to say about Bitcoin's investment potential.
The room was packed with brainpower - packed! Since they are big on privacy, I will not reveal names, but I can reveal statistics. Over $35 Billion dollars of assets under management directly controlled by the people sitting in those seats. Over $1.2 Trillion controlled by the corporate entities that they represented. Industries included banking, asset management, insurance, real estate, telecomm, energy, commodities trading and medical. Nearly half were successful serial entrepeneurs in their own right, with several having had their own multiple liquidity events. Even a member from the Bitcoin foundation was present. The vast majority were bitcoin skeptical. As for my presentation??? Let's say there's some big money, some olde money, and some money that many thought would never flow into this space any time soon that is quite anxious to investigate crashing the party.
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Regualtory arbitrage should prevent draconian legislation towards Bitcoin there are 200 competing soverign states and at some point one of them is going to pull the trigger on Bitcoin in a big way.
The reason for this is that all other fiat is going to shit in one big currency war, and trust is breaking down between all major world economies.In addition Bitcoin offers one of the only growing industries in the world today whih means huge potetnial for jobs, new businesses.
Bitcoin is essentially a programed monetary system with fundamentals that cant be changed ad-hoc every 24 hours by 8 guys with beards sitting at the federal reseve just by uttering a few words.
It provides a reliable , predictable monetary system that has the potential to provide all the users of the ecosystem a clear sign of how that ecosystem will progress.
Regualtory arbitrage should prevent draconian legislation towards Bitcoin there are 200 competing soverign states and at some point one of them is going to pull the trigger on Bitcoin in a big way.
The reason for this is that all other fiat is going to shit in one big currency war, and trust is breaking down between all major world economies.In addition Bitcoin offers one of the only growing industries in the world today whih means huge potetnial for jobs, new businesses.
Bitcoin is essentially a programed monetary system with fundamentals that cant be changed ad-hoc every 24 hours by 8 guys with beards sitting at the federal reseve just by uttering a few words.
It provides a reliable , predictable monetary system that has the potential to provide all the users of the ecosystem a clear sign of how that ecosystem will progress.
i read reggies articles whenever i can, hes one of the brightest people, i think, on the financial workings of the world economy.
i think hes honest, and trustworthy, it's not him i worry about, it's the field hes forced to play on i don't trust.
7+ billions of humans on earth are being used to fullill the nwo, ie pan-america, immagration, (s. america, latain america, n. america, and canada), collectively it's very self-substainable, divided it's uncontroled valueable assets.
how do you tell 3+ billion humans their being used for the nwo selective sanitization, and placements of the worlds population the nwo is herding whole ethnic groups towards their final spot they want you.
how do you tell 3+ billion humans that their not in the final solution.
if you have that much control, power over the system, it's hard to trust anything.
One question to Reggie on an old topic :
Your take on EZ banks at the beginning of EZ crisis (2011) seems not to have panned out as you predicted ever since Draghi did what he did !
In the current slowdown now visible with Oil prices skidding towards 70 how do you see those EZ banks surviving the 2015 crunch?
Especially the French ones you had so vividly targeted who are still standing on their feet!
Like when he reco'd shorting MS, then it tripled.
If you wanna take a look at a crypto that can really flip the world on it's head, take a look @ Gridcoin. Instead of the hashing being used for blockchain maintenance, the work is pointed towards Boinc distributed science projects! Gridcoin is currently #50 in the entire world on daily Boinc work beating the U.S Air Force, IBM and many others!
Twitter: https://twitter.com/GridcoinNetwork
Boinc statistics: http://boincstats.com/en/stats/-1/team/list/16/0#47
Gridcoin Explainer Vid: http://www.youtube.com/watch?v=ofMJ-bOre9o
The bitcoin bubble has burst. Game over.
Everyone said that when it went from $32 to $2 too.
Keep preaching it, Reggie. I tried to give some BTC away on this site when it was at about $20. Only a couple of takers.
You're correct: the value of digital currencies is in the blockchain technology. That's the revolutionary aspect of Bitcoin that most people will have a hard time grasping.
For those skeptics that wonder what happens if the crypto is broken, it would also mean the end of online banking, and banking in general, as they use the same crypto that Bitcoin does.
And if the internet goes down? We're all screwed anyway if the net is broken. The value of much of the market today is based on networks, not on physical commodities. Should the net go down, we'll all have bigger problems than the fact that we can't get to our bitcoins.
Keep doing what ya do, Reggie. You're ahead of the curve.
Many thanks my friend. It is truly amazing how difficult it is for many to conceive of teh value proposition eventhough it may be laid plainly in front of them. I still think it is the media representation of bitcoin as a currency.
One more time, for the ZH naysayers. Bitcoin is a distributed trust value transfer ecosystem. Currency is an application that was written for the ecosystem just like gmail was an application written for the Internet. You can not value the Internet by harping ad nauseum on email just like you cannot value Bticoin by harping ad nauseum on currency prices and hoarding.
BTC is a decentralized system of notarization.
The "third party" is override by a public ledger.
It can be used as a currency, or as a public register of gold holdings, or as a contract for a wedding, a notarization (P2P contract) of transfer of rice against potatoes, etc.
BTC is a mechanism (protocol + a specific virtual implementation on the TCP/IP, the latter is circumstancial) to redefine the state institution (without need of a third party, that is, redefine the state or the IURIS-PRUDENTIA as a network, not as a central command).
Gold is money (another network institution).
Languajes and moral codes are other network institutions (predefined and stable rules freely chosen and binding ONLY between implicated parts).
The price of BTC (for currency uses) in $ is as irrelevant as the price of gold in ¥.
Speculation is one activity among others in the price discovery process.
Stop talking sense jarana, this is ZeroHedge.
Bitcoin is to value transfer what the internal combustion engine was to transportation. You couldn't understand the internal combustion engine in 1870 unless you also understood physics, mechanics, hydraulics, etc. and all of the other underpinnings of tech that went into engines.
Likewise today, most people won't understand Bitcoin because they lack the underpinnings of public-key crypto, P2P networks and the like.
Thus it's always been: if you don't educate yourself, you get left in the dust when the rocket takes off.
Bitcoin is an engine around which many vehicles will be built. Fiat is the horse and buggy that too many will keep faith in until it's no longer viable.
"The room was packed with brainpower - packed! Since they are big on privacy, I will not reveal names,"
In this article you have a picture of an UltraCoin that was designed to look just like a gold coin, in size, shape, color, everything. No one forms their gold to look like an UltraCoin or Bitcoin, however.
The Achilles heal of crypto currencies is that one must be connected to a network of thousands of other crypto currency users before they can make a single transaction with just one transaction partner. That network can VERY easily be shutdown. The crypto algorithms only hide the content of the data. They cannot ensure you have a data path to verify Bitcoin transactions in the network. Gold does not have that problem. I don't need to exchange data with thousands of other gold holders to verify that the gold I received in a transaction is the real thing.
Reggie is chasing fool's gold.
I'm discussing zero trust transactions, you're discussing gold, where trust is mandated in order to do a transaction. These are two different arguments. The value of bitcoin is in the programmable, distributed trust architecture of the blockchain. Comparing bitcoin to gold is like comparing an airliner to a dinner table. Yeah... Exactly! I think the ZH crowd needs to understand that they were done a disservice by the media in being presented bitcoin as a currency, versus bitcoin as an ecosystem of trustless value transactions.
If you find yourself making comparisons to gold or having an ongoing conversation about currency (which is simply one application built upon the ecosystem, like gmail built upon the internent) then you are probably not aware of what bitcoin actually is. Imagine if we were debating the value of the Internet to society, but one debater cannot leave the topic of email!
"That network can VERY easily be shutdown."
Prove it in your next comment.
Could you discuss your absolutely disasterous call to short RCL?...your words were "RCL equity is going to Zero"
How could you be so wrong, and not admit it, then expect people to take you seriously.
Somebody be a bit too close to the flag pole. Kinda Fuks with your perspective. ;-)
I will use the numbers of misspellings and grammatical errors as an indication of how close Reggie's ideas are getting to hockey stick land. At some point, some players will force that level of maturity.
What did he actually say? That fiat currencies are bad? No surprise there.
But what is the chief attrribute of a fiat currency? That it has no value in and of itself but merely represents value.
Which leads me to wonder what is the value of bitcoin in and of itself?
Here come some more facts, figures and numbers....
Below is and example of programming actual bitcoins through value transfer technology embedded into the blockchain itself. That's righ! We can program the money to act like your local bank or brokerage and guess what? It looks just like your e-Trade screen except at half the price and 4x the inventory, unfortunately at just THREE times the safety! It, in a nutshell, totally and absolutely disintermediates banks, brokerages and exchanges through the use of these programmable "unbreakable promises"...
Most with just slight modicum of imagination and insight would be hard pressed not to be exicted, or at the very least, extremely curious about these new technologies, products and services. This is particularly true since the financial services sector is so ripe for disintermediation - reference BitLicense Part 4: Fact- Bank Product Prices Rise Faster Than Income & ALL Other Expenses, Fact- UltraCoin Can Drop Bank Product Prices Dramatically.
So, what's the value of Bitcoin again?????????????????????????????????????
"Here come some more facts, figures and numbers...."
"Here comes a change of subject, and more baffling BS and pretty charts to try to keep you from noticing......."
courtesy of The Reggie Ministry of Truth
Well, let's do some comparisons, then some education. First, let's compare the growth of nascent Bitcoin to that of nascent Internet. From http://ultra-coin.com/index.php/homes/item/68-come-journey-with-me-on-an...
Veritaseum is the company behind my brainchild, "UltraCoin". For those who don't know, UltraCoin utilizes the technology behind the Bitcoin blockchain to create unbreachable contracts and unbreakable promises which can then be programmed to mimic the functions of practically any business that entails the transfer of value... Essentially any business. it does so with more trust, more safety, more flexibility and less cost than any legacy situation that makes heavy use of middlemen that extract rents in exchange for questionable value add.
I believe that this "invention" is likely the economic and paradigm shredding equivalent of the advent of the Internet, simply on larger scale. First, there's the sheet potential of scale for Bitcoin, and the precedent of its predecessor and compatriot in protocol-based disintermediation, the Internet...
Ack! Reggie, Bitcoin is only 5 years old. It isn't the Internet - it is its twice removed second cousin's brother's son's Labrador.
Bitcoin gives me a black tulips/South Seas vibe and gut feeling, math notwhithstanding.
"Veritaseum is the company behind my brainchild, "UltraCoin"."
But, but, but......which Verataseum Reggie?
Can't be this one, since it focuses on truthiness: http://www.youtube.com/user/1veritasium
Not this one. It is about Harry Potter. Go figure: https://www.facebook.com/vtmcom
This one is funny, but it's a game site: http://veritaserum.newgrounds.com/
There are many, many more. Pretty confusing.
These guys are just trying to see if somehow they can use Bitcoin to hide their money now the Switzerland is fucked. Tell me I'm wrong Reggie.
Speaking of circular logic. Fiat is backed by nothing but faith in the issuing entity. Bitcoin is backed by faith in the honest coding of internet nerds. Reggie says - trade your faith backed crap for my faith backed crap. How has that worked out so far Reggie? How much did your crowd funding effort raise before you gave up? Wasn't it the impressive sum of like $150? You are beating a dead horse in reponse to your raging self absorption. Good luck with that.
Bitcoin is based by math, tool! I'm not ready to announce the results of my funding efforts just yet since they have not closed but if and when I do I wouldn't be shocked if they were in the $16-$25M range. Just a heads up.
Ummmm....yeah. I was talking about your crowd funding. When did you become a member in good standing at The Ministry of Truth?
Is Erin Ade a man?
Good to see RM back though I was right and he was wrong: Apple vs Google.
Anyway, in this case I am with Reggie on BitCoin. More importantly I am very bullish on the block chain concept.
Cheers.
Reggie, good to see you.
Litecoin did a faceplant in just the last 6 months; can't mine it economically and value -60%.
NOTHING that uses the Internet is safe and secure, and ANYTHING that relies on the Internet can be gone in the blink of an eye. Yes, those are absolutes.
I'm with you in spirit, just not body. I had hopes for crypto-currencies but they appear to be just another boondoggle.
The value of bitcoin is in the blockchain, not the price of the individual units of value. This is something that I preach ad nauseum, yet many have a problem grasping. Think of trying to value the internet by the price of a website.
Litecoin is not the topic of the post, hence I have not opinion on it.
If you denounce all things internet related, then you denounce the USD, EUR, CNY, GBP and YEN, since they are all digital currencies transmitted and stored though and on the web.
Yes, I denounce all those fiat currencies, and FX gambling, and digital binary intangibles.
The value of Litecoin and other crypto-currency derivatives are tied to Bitcoin.
The People's Bank of China outlawed Bitcoin transactions (and websites).
"Silk Road" was just the beginning; the more money that goes into Bitcoin, the bigger the bulls-eye Governments will paint on it. The plan of attack will be that it is a tool for drug dealers and money launderers and if you use it you are a dangerous criminal. It won't take many raids and prosecutions of servers and network node transaction handlers to further cripple Bitcoin's value, utility, and legitimacy.
Since crypto-currencies compete with the money-laundering and other skullduggery of the banking cabal, they will be quashed. The banks own the Central Banks and Government agencies; they will not allow their hegemony to be challenged.
Like I said I am with you in spirit 100%. What I see is a trap being laid for anyone who puts their assets and faith into Bitcoin.
Use paper wallets. Use hardware multisig. Use anything that keeps your keys off line. And get over your fears.
I didn't thumbs you down. My rejoinder would be:
Paper wallets: if I have to store something physically, I may as well store Gold and Silver.
Hardware multi-signature: more Internet based dependency. If the IRS can get into Swiss bank vaults, do we really believe they won't get "into" crypto-currency vaults? Who controls the Internet? Why, .gov and the banks of course (military included in .gov). If TPTB want to, they will crush coin exchanges and ethernet traffic that has anything to do with crypto-currencies.
I am with you all in spirit, the Central Banks are mad, corrupt, and evil. However, I do not trust that assets reliant upon government owned infrastructure in league with corrupt banks and corporations will not be STOLEN with extreme prejudice.
Well RM is back and promoting Bitcoin after Google.
Wonders never cease. But hello anyways.
Reggie's promoting math, my friend. Basic, simple math.
"Reggie's promoting math, my friend. Basic, simple math."
"Reggie's promoting Reggie, my friend. Wonderful, special Reggie."
FIFY
There was a time when Reggie actually contributed to ZH reader's knowledge of financial workings. He WAS a brilliant analyst. Now he only appears to pimp his badly conceived ultracoin nonsense. How many ultracoins are there now Reggie? When you started this crap, your ultracoin made at least 3 in existence simultaneously. A number of your other frequently used marketing "terms" are also widely in use by other businesses of varying sorts. Good job!
Is this your ultracoin? http://ultracoin.net/fusion/index.php?/Core/Default/Index
What about this one? http://ultracointalk.org/ This one has a different logo than the first one, or yours............
Then there is this new fangled ultracoin 2 announced by Nitro.org, but the page is blank in my browser - http://ultra2.nitro.org/ - must be super top secret!!!
You may want to get some professional marketing advice.
for what Reggie said last time, Ultracoin concept from Reggie , has nothing to do with alt-coins, is just software for trading, it will run on bitcoin or any other alt and accept many currencies, stocks even futures etc.
ive slammed reggie for promoting himself
Aside from "math", how does one combat the easy in which bitcoin could (I submit it already is) be completely cornered by any major individual and even easier for a sovereign (with or without printing press)?
Total valuation of bitcoin used to be measured in millions. At 500USD per bitcoin and 21 million bitcoins, you get ~10.5 billion. Not fucking much at all.
Go back in time and you could buy it WAY cheaper (it = the majority of all bitcoins). Now some sovereign or CIA or Bill Gates or whatever buys up a ton of bitcoin (now for printed bux or before for peanuts). They do this with VPNs and person management software to make it look like it is many people all over the world.
(something like http://www.theguardian.com/technology/2011/mar/17/us-spy-operation-socia...
The company that makes the software - https://en.wikipedia.org/wiki/Ntrepid
"Some of Abraxas' former employees left to form Ntrepid ...")
Then they trade amongst themself and generate buzz. Eventually the media push bitcoin, everybody goes beanie babies, and bingo it goes to the moon in dollar terms.
Now, this does seem odd with the whole PIN-only in Europe and "cashless" catching on. How great would an "uncrackable" system be unless the same cocksuckers who own everything now secretly own it?
No matter who owns bitcoin, or how may they own. The immutable properties of the blockchain are still revolutionary. Think about the Internet. Google owns the most trafficked sites, then Facebook, Company C,D,E, and F. Does that somehow invalidated the value of the ecosystem that is the Internet and the World Wide Web?
This is the solution, stop thinking about the oversimplified (but first) application written on the Bitcoin architecture (that application was a currency system) and start thinking about what Bitcoin is (a programmable value transfer mechanism) and all of the things that can be done with a complete ecosystem that can transfer nearly any kind of value over any distance for almost free, nearly instantesoulsy without having to trust any party.
Once you wrap your head around, that you're likely off to the races!
current problem with crypto
its slow to fund accounts
unless its changing hands directly, you will be getting skimmed
it can take upwards of an hour for transfers to appear in the blockchain.
gov pressure can ruin your investment at anytime...
other than that its great. you can buy guns and drugs online with the shit
lol, never belittle a man who promotes math!
But seriously how do you get round the Political power of the fiat lobby which holds the world by its nuts?
The same way the Internet got round the media lobby which many thought held the world by its nuts. Technology progresses, my friend, whether banks, newspapers or radio stations want it to or not. Margin compression is coming to the financial industry, and in a nasty way at that. Look at the charts that I posted below.
I sincerely hope your are right!
Newsflash Reg, "media" owns the internet. To most the internet = facebook, twits, youtube. Look at the whole "packet equality" and you'll notice all the new legislation talks explicitly about "legal and lawful content" and the need to inspect every packet to ensure no "illegal" content is transmitted.
The FCC will regulate the internet, or what is left of it by 2020.
Back to my question: how do you stop an ultra rich entity from cornering the market with bots?
Let me help you out with those facts, my friend...
Which is exactly why there is new legislation to make sure they get their stranglehold on the internet...
Not to mention SPDY where all http traffic (i am not even exaggerating) is routed through Google's "safe and secure" servers to be scanned for "threats". Good thing this is already part of most of our applications: firefox, IE, chrome, safari.
https://en.wikipedia.org/wiki/SPDY
And again my question: how do you stop a bot takeover of any blockchain?