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He Lived Through Hyperinflation, Devaluation And Confiscation: This Is His Advice

Tyler Durden's picture




 

Nearly four months ago, when bitcoin was still languishing in the low $200s, we explained why in the post-Yuan devaluation regime, where all Chinese capital outflows are now scrutizined through a microscope, bitcoin will inevitably see substantial appreciation as the local population scrambles to transfer funds out of China and into more traditional end markets, such as the US, Canada and western Europe, using such still largely unregulated mediums as bitcoin and other digital currencies.

Why not gold?

This is what we said in the beginning of September: "China's propensity for gold is well-known. We would not be surprised to see a surge of gold imports into China, only instead of going to the traditional Commodity Financing Deals we have written extensively about before, where gold is merely a commodity used to fund domestic carry trades, it ends up in domestic households. However, while gold has historically been the best store of value in history and has outlasted every currency known to man, it is problematic when it comes to transferring funds in and out of a nation - it tends to show up quite distinctly on X-rays."

Which is why we would not be surprised to see another push higher in the value of bitcoin: it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped (in no small part as a result of the previously documented "forking" with Bitcoin XT), however if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits.

Two months after we wrote this, bitcoin more than doubled to $500 before retracing some of its recent gains, and has resumed its rise again.

Why? This time the answer is Argentina, where as we reported two days ago, the new president admitted that "there are no more dollars in rhe central bank" which means that the days of the country's capital controls are numbered, and because as Citi said president-elect Macri wants to unify the official and parallel exchange rates (~9.60 and 15.50 ARS/USD, respectively) that will entail a substantial devaluation. Just how overvalued is the peso, you ask? "Grossly."

In other words, another major currency collapse is in store for Argentina, its fourth major one in recent decades.

It also means that as yet another country is about to take currency warfare to the next level, bitcoin is posed for another sharp move higher (even as Chinese demand for the fiat alternative continues to grow).

And since the topic is Argentina's upcoming latest currency collapse, courtesy of Raoul Pal's RealVision, here is an interview by Dan Morehead, Ex-Head of Macro Trading at Tiger Management and now CEO of Bitcoin investment firm Pantera with Wences Casares, an Argentinian Founder of Xapo and one of the pioneers of bitcoin.

Wences, an Argentinian, has seen his family's wealth evaporate not once, not twice but three times due to hyperinflation, devalulation and confiscation and that has led him to bitcoin. His driving philosophy: "There are more people in the world who need a currency they can trust, than there are people in the world who can trust their currency."

More from the person who knows all about currency destruction in the excerpt below...

... and as usual, the full interview can be seen on the RealVision website (which boasts dozens of other interviews with financial luminaries) and where a bitcoin subscription discount is available.

 

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Fri, 11/27/2015 - 23:28 | 6848477 tmosley
tmosley's picture

"If people want bitcoin to be succesful dont compare it to gold, its not even close."

I don't think you know a fucking thing. Cryptocurrency is emprically a better form of currency and wealth preservation than gold, which is used in industry. If something is useful in industry, that makes if bad money. That is why silver would be TERRIBLE money today. It's all flow and no stock.  Gold is better since is is mostly stock, but there remains some flow.  Bitcoin is 100.000000000000000000% stock. THAT makes for good money.

Fri, 11/27/2015 - 23:58 | 6848487 Wow72
Wow72's picture

Bitcoin may work well as a currency, but as far a being money... Gold = Work = Money  Silver = work = Money  Nothing else even comes close.. To understand gold and silver alls you need to know is that someone works to dig it out of the ground and it is hard evidence of work performed... the best way to get work is to trade work because people who know what work is demand it as payment.

If the power goes out or the internet goes down your fucked? Cash would be better in that case.. It has its flaws.. Digital coin is a contradiction in terms.

 

And really I dont even want to argue silver is money because its running out so fast it would not make a good currency,  its value will come from its rarity.  Its why its current value should be higher.

Sat, 11/28/2015 - 00:21 | 6848592 BadLibertarian
BadLibertarian's picture

If the power or the Internet go out for a while, then you use other assets to get along while it's down. When it comes back up - your bitcoin will still be there. If the power/Internet go out and don't come back - guns, clean water, food, and a remote place to hide will be the only things with value for a good long while.

And if things get better and the power/Internet come back up eventually - your bitcoin will still be there.

Sat, 11/28/2015 - 01:18 | 6848676 tmosley
tmosley's picture

Gold does NOT = work. ENERGY = work. Gold = the PRODUCT of work, same as silver, and SAME AS BITCOIN, which has to be mined very much like gold.

As to silver being valuable because of rarity, you are exactly correct, which is why I am so incredibly, stupidly over weight with it, and have been for nearly 8 years now.

Sat, 11/28/2015 - 09:05 | 6849043 Wow72
Wow72's picture

Gold is the direct result of energy being exerted... so it is the physical representation of work? DUH? If you have gold in your hand you can easily prove someone worked for it? There is no question for thousands of years     gold = stored work or stored energy?  Same fucking thing?  For a dollar alls someone needs is some paper and a printing press.   I understand bitcoin is digitally mined, my thought is why cant every geek create their own form of bitcoin...Are they really unique? Not if you mine more of them? Its a long run, we will see.

 

Gold = work/energy = money      Corn = work/energy = money      Rice = work/energy = money      Does that work for ya? GET IT?   Why would you pay for something that is not work? When you work for your money?

Fri, 11/27/2015 - 23:42 | 6848504 Spiritof42
Spiritof42's picture

Unless bitcoin gets legal sanction, it will never become money. I just don't see that happening. 

If or when the federales come out with their own version of bitcoin in a cashless society, bitcoin is toast.

Silver and gold as a tangible asset is good enough for me. They always have cash value however cash is defined.

Fri, 11/27/2015 - 23:48 | 6848515 BadLibertarian
BadLibertarian's picture

Because people trust the federales so much? I don't think so. The entire point of Bitcoin is that you don't need anyone's permission to use it, and no central authority can ever debase it. Think you can get that guarantee from "FedCoin?"

There's been some talk lately about governments trying to cripple or get rid of encryption. That's not going to work either. The crypto genies are out of the bottle, and there's no way to put them back in short of putting every person on the planet under surveilance at the point of a gun.

But that would be a heck of a lot of trouble vs. just accepting the future and going with it.

Sat, 11/28/2015 - 07:13 | 6848960 overmedicatedun...
overmedicatedundersexed's picture

are these bitcoin guys the same ones that guaranteed the honesty of online poker?? if you cannot hold it in your hands, see it smell it taste it..it is illusion. fiat is also illusion, but back by .gov guns.

sorry bitcoin may be a great invention, but the input to my computer is controlled by NSA. they can take anything they want or change it's value to 0, think about it.

Sat, 11/28/2015 - 08:52 | 6849050 Benjamin123
Benjamin123's picture

But you need their permission to get out of the torture chamber where bitcoin users get sent to.

Fri, 11/27/2015 - 23:42 | 6848491 BadLibertarian
BadLibertarian's picture

In some ways, Bitcoin is better than gold. Tomorrow, someone could discover a 100 ton nugget. Is it likely? No. But is it possible? Yep. There won't ever be more than 21 million bitcoin in circulation. Could the coders change the rules at some point? Yes. But since everyone who mines or uses bitcoin would be negatively impacted by that, that change would never achieve consensus.

Need to transport your net worth across borders? With bitcoin you can restore the balance of a wallet just by writing down (or better yet, remembering) a sequence of 12 or 24 words, depending on how much pass phrase entropy you're comfortable with.

Need to pay for something inexpensive? Good luck shaving off the price of a cup of coffee from your krugerrand. Bitcoin is easily divisible.

Worried about tungsten filled gold bars or coins? Bitcoin is nearly impossible to counterfeit or double-spend.

Can you create a self-executing contract with gold? Nope. But you can with bitcoin and other cyrpto's like Ether, because they're programmable money.

What gold has going for it is history and emotion, and I'm sure people were emotional about giving up their horse-driven carriages too. But they eventually did because the newer technology was just better.

Bitcoin vs. fiat or gold or silver is going to work out the same way - some people will just realize it later than others.

Fri, 11/27/2015 - 23:49 | 6848519 Wow72
Wow72's picture

I understand what your saying but think about all the gold they have been announcing but then you never hear about it again. The Nazi gold train, Havent heard anything else? The gold that buried deep beneath China?  Its way too far down to even get it at this point?  I took as they are desperately trying to locate more gold, why else would they look so deep? The simple fact is starting to be that most of the easy gold is gone or in banks/individuals hands, we live on a finite planet? It should be obvious things have to run out eventually? Im getting close to being done explaining it to people, either you get it.. Or you dont? People who understand the differences between money, fiat currency, debt, tend to get it others just dont.

Sat, 11/28/2015 - 00:02 | 6848532 BadLibertarian
BadLibertarian's picture

I'm not saying gold isn't scarce or won't become more scarce, but what I am saying is that there's no way to verify that scarcity with mathematical certainty. And even if you could, eventually we'll be mining asteroids and there's lots more gold out there (trillions of kilos are estimated to be just on Eros - one large asteroid).

And while asteroid mining isn't profitable today, it does put an upper cap on the price of gold and other precious metals, because their price can only increase to the point where asteroid mining is profitable, and those projected costs come down over time.

But beyond scarcity, look at all of the other ways I listed that bitcoin is better than gold. You can move 10,000 BTC from one place on the planet to another in less than an hour, with no need for physical security, no government paperwork, and once it's there, you can use a tiny fraction of it to buy a coffee from the shop whose Internet you used to receive it.

And you just can't do that with several thousand ounces of gold or silver or with any government backed fiat.

Sat, 11/28/2015 - 00:03 | 6848553 Wow72
Wow72's picture

I totally agree the only real threat is space mining... and Bezo's just made quite a step forward.  They arent there yet and prices would probably be higher than current levels. They really have to be able to obtain bulk to destroy the price. Its possible but a ways off still. 

Sat, 11/28/2015 - 00:13 | 6848567 BadLibertarian
BadLibertarian's picture

Space mining and alchemy. I'm being sort of sarcastic about the alchemy, but I think there's a company now growing diamonds which are indistinguishable from the real thing, so I wouldn't completely rule out some future technology that can process other elements into Au or Ag at cost effective prices. Particle accelerators can do it today, so we know it's allowable within the rules of physics - it's just hiddeously expensive with the current state of the art.

Sat, 11/28/2015 - 00:28 | 6848590 Wow72
Wow72's picture

Its interesting maybe.. maybe not, I wouldn’t be surprised if they have a hard time reproducing the anti-bacterial, anti-fungal, and anti-viral properties of silver.  I would be surprised if they could reproduce silver, I wouldn’t be as surprised about gold.  Silver has lots of unique and relatively rare properties

Sat, 11/28/2015 - 00:58 | 6848638 BadLibertarian
BadLibertarian's picture

That's not me downvoting you, btw. There are actually nano-materials that already have anti-bacterial properties. If you can make a smooth surface which is 'spikey' at the right scale, that's all it takes to kill bacteria.

Here's one example: http://www.nanowerk.com/nanotechnology-news/newsid=39121.php

 

Sat, 11/28/2015 - 01:06 | 6848655 harleyjohn45
harleyjohn45's picture

When did walmart start accepting bitcoin?

Sat, 11/28/2015 - 03:03 | 6848785 dhengineer
dhengineer's picture

If it is "programmable money" it can be hacked. 

If somebody like Goldman Sachs decides to front-run you they can step in the way of your transaction and siphon off as much as they want. Don't tell me they can't.  Bitcoin is just 1's and 0's. 

If the gummint scum want to screw over cryptocurrencies, they can prevent access to your wallet or your access to the bitcoin minimg algos.  They don't have to attack the site itself, they just have to deny access.

Bitcoin may have its uses, but a solid coin in your hand will NEVER be obsolete.

I hold silver in all denominations from dimes to 100 oz bars.

I also hold gold in several denominations: swiss 20-francs, british sovereign, half sovereigns, eagles and kruggerrands (1/10 oz, 1/4oz, 1/2 oz and 1 oz), and bars (5 gram, 10 gram, 20 gram, and 1 oz).  I can buy anything from a cup of coffee up to a house using my PM's with no shaving or clipping necessary.  There is no paper trail.

 

Sat, 11/28/2015 - 03:33 | 6848813 BadLibertarian
BadLibertarian's picture

Governments can do all sorts of things if they want to. The US government once outlawed the private possession of gold, right? So if they did that with silver (which is something I also keep a bit of), and you didn't turn it in, you'd have it in your hand, but you'd be at risk of discovery every time you tried to use it, or if the government searched your home (or nearby lake bottom).

So I sort of see that as a wash. I hope we never face that situation, but if we did, I think I'd probably want to get out from under the control of a government like that as quickly as possible, and that's the point where being able to hold something in my hand would seem like more of a risk than a benefit. In that position where you need to do something that's ethically okay (move your money), but legally prohibitted, virtual currencies seem like they'd be much less risky to move. But again, I really hope that we never come to that point.

Since people don't write error free software, of course anything can be hacked. However, good encryption is a pretty tough hacking target, and distributing trust over a network of independent nodes using a public transaction record, is also fairly hack resistant. Nothing's perfect, but I'd be very surprised if someone could just insert themselves into your transaction to intercepts funds without having access to the encryption keys which are very much not trivial to hack, even if you are Goldman Sachs or the NSA. 

Sat, 11/28/2015 - 08:21 | 6849007 Wow72
Wow72's picture

They outlawed it, but they never got most of it.  The point and the reason they want everyone in bitcoin and not gold is so they get it ALL because they are not satisfied with just a little.

Sat, 11/28/2015 - 16:50 | 6850417 BadLibertarian
BadLibertarian's picture

Maybe, but I think they'll have a tough time collecting it since it can be hidden so much more easily. There's a public record of the creation and subsequent transactional history of every bitcoin that exists, but tying that to specific people isn't so simple, and just like PM owners can claim 'boating accidents,' bitcoin "hodlers" can claim password forgetfulness, which in many cases might actually be true. 

Sat, 11/28/2015 - 19:05 | 6850879 BadLibertarian
BadLibertarian's picture

And one other thing - the people who want all of it, have a much easier time doing that with debt-based fiat, because they control the issuance. That's what QE has been about - creating more money and placing the vast bulk of it in the hands of the people whose hunger for power and control can't ever be satisfied.

Bitcoin is a lousy option for them to implement that scheme, compared with what they already have, because in order to get enough to matter, they have to pay market prices for it, and there's a significant portion that won't be for sale until the value of a bitcoin reaches prices that you probably don't believe are possible at this point.

Sat, 11/28/2015 - 08:51 | 6849045 Benjamin123
Benjamin123's picture

What is the best currency to escape an underground torture chamber?

Sat, 11/28/2015 - 11:58 | 6849448 Anopheles
Anopheles's picture

Lead, delivered at high velocity. 

Sat, 11/28/2015 - 01:03 | 6848649 harleyjohn45
harleyjohn45's picture

@Kirk>  If you don't hold it you don't own it.  With bitcoin you hold nothing.

Sat, 11/28/2015 - 03:44 | 6848665 BadLibertarian
BadLibertarian's picture

I hold some bitcoin in my mind (technically the keys to the bitcoin - but effectively it's the same thing). Literally. With the right sequence of words, that currency can be loaded into a wallet anywhere in the world, and you can drag every lake bottom around my home and never find it, because as far as anyone else is concerned, it doesn't really exist until I move it from brain to wallet. To me, holding something of value in my mind is in some ways superior to holding something of value in my hand.

If I lost my job and everything I own in a fire on the same day, the education and experience that I have in my mind would allow me to start over - at least until my job is automated! And I sort of think of those 'brain' coins as a more immediate and liquid version of that. Something I hope I never *have* to access in an emergency, but sort of nice to know it's there. 

But if I ever need that feeling of a concrete asset, I can also print out a representation of that currency on paper and use it much like I would a silver coin or a $20 bill.

Sat, 11/28/2015 - 08:47 | 6849042 Benjamin123
Benjamin123's picture

Bitcoin is illegal in many countries, that is what ultimately prevents it from taking off. Illegal, if the authorities catch you dealing with it you go to jail. 

Oh i see we have to deal in secret, slipping brown envelopes under the table, holding meetings at the pier, exchanging identical suitcases... Just like with drugs, and always wondering if the other guy is an undercover agent.

You might be able to send bitcoins online in a secure way, but you cannot buy physical assets without showing up in the flesh to take delivery, and thats when they nab you.

In Russia, reputed bastion of liberty and humanity's last hope, it is illegal to buy gold with bitcoin, so this debate about the merits of fiat vs bitcoin vs gold is moot, the state will force you to use fiat.

Sat, 11/28/2015 - 11:45 | 6849405 crazytechnician
crazytechnician's picture

"reputed bastion of liberty and humanity's last hope, it is illegal to buy gold with bitcoin"

Perhaps your smart enough to realise that statement is in direct contradiction with itself ? Make your mind up FFS.

Sat, 11/28/2015 - 12:47 | 6849575 Benjamin123
Benjamin123's picture

Please be so kind to point at the contradiction, even my intelligence has a limit. Im so over myself.

Sun, 11/29/2015 - 12:15 | 6852645 crazytechnician
crazytechnician's picture

Think about the freedom to use whatever you decide to use as money , and then the State telling you that is illegal . What do you call that exactly ?

Sat, 11/28/2015 - 16:57 | 6850440 BadLibertarian
BadLibertarian's picture

People under repressive regimes have three choices - obey the regime, find ways to work around it, or find a way to get out. That reality has nothing to do with crypto - it's the reality of repressive regimes. Crypto makes the getting around it and getting out of it part easier, imo.

Sat, 11/28/2015 - 01:19 | 6848678 tmosley
tmosley's picture

When coinbase issues a bitcoin debit card.

Sat, 11/28/2015 - 16:58 | 6850446 BadLibertarian
BadLibertarian's picture

That's more or less already happened. Shift card.

Sat, 11/28/2015 - 05:41 | 6848885 atthelake
atthelake's picture

Bitcoin is one more Fiat currency. It's new, different and digital. That makes it a digital Fiat currency. You could wake up one morning and find your Bitcoin has gone up in a puff of smoke.

Sat, 11/28/2015 - 17:00 | 6850451 BadLibertarian
BadLibertarian's picture

Only if you printed your private key on paper that burned and don't have a backup. The nice thing is, it's really easy to make backups, including backups that you can just remember as a sequence of words in a randomly generated pass phrase.

Fri, 11/27/2015 - 22:49 | 6848340 lasvegaspersona
lasvegaspersona's picture

So a medium of exchange that sees it dollar price vary by more than any national currency is your recommendation?

Sure it is nice when it rises but a good medium of exchange is one that can be trusted to hold it's value over time.

Bitcoin may prove to be an excellent medium of exchange but in today's world it is just another big gamble...and gambling is not what savers need.

I'd stay with gold...and..it is on sale this Black Friday!!

Fri, 11/27/2015 - 23:30 | 6848483 tmosley
tmosley's picture

I guess you haven't seen what has happened to PMs since 2011.

No, volatility doesn't matter in the long term.  Only the long term trend matters in the long term. We haven't even begun to see the long term yet.

Fri, 11/27/2015 - 23:57 | 6848542 hooligan2009
hooligan2009's picture

no such thing as a certain trend, just a constant medium of exchange that other people have wanted over centuries that will more likely than bitcoin be a medium of exchange for all time (although perhaps not in the time and place of incans who had so much of it they thought it was worth the same as a pretty pebble).

take the inflation adjustment off this chart

http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

arguably there is not trend

put the inflation adjustment back on (government measured or the price of a good quality suit at ay time over the lat 200 years) a trend is even less clear.

i suspect that if the bitcoin chart over its all time history was compared to gold over its history here:

http://bitcoincharts.com/charts/bitstampUSD#tgSzm1g10zm2g25zv

comparisons culd be made either way. but really..its gold ffs

Sat, 11/28/2015 - 01:22 | 6848680 tmosley
tmosley's picture

no such thing as a certain trend

I disagree. Fiat always goes to zero (within 60 years!), and market manipulations always reverse violently (no hard limit on that, but probably less than 60 years).

arguably there is not trend

That is the dumbest fucking thing I have read in the last two minutes. In this thread, that is saying a lot.

Sat, 11/28/2015 - 01:24 | 6848686 hooligan2009
hooligan2009's picture

i wa referring to value, not price.., value cant be measure in monetary terms...just saying

Sat, 11/28/2015 - 01:08 | 6848646 Wow72
Wow72's picture

US MINT SELLS OUT of that  OLD RELIC GOLD! 1 oz gold coins. Because no one wants it? If that were iphones sales Apples stock would be through the roof!  The proof is all around US???

 

http://schiffgold.com/key-gold-news/2015-gold-eagles-sell-out-as-demand-remains-strong/     1oz, 1/4oz and 1/10th oz. Imagine it, thats a sell out!

 

From Schiff article:

"Total American Gold Eagle sales as of Nov. 26 stood at 1,838,500 ounces. That compares with 1,144,500 in all of 2014."

 

Wow positive demand and reduced priced? Isnt that what investors are supposed to like.. deals on valueable things?

Sat, 11/28/2015 - 03:20 | 6848801 Jorgen
Jorgen's picture

At this very moment, APMEX has 3815 2015 1 oz gold American Eagles. They also have quite a bit of gold buffalos, Canadian, Australian, Mexican and other gold coins. The numbers you quoted indeed indicate higher demand in 2015 over 2014 but the supply seems to be high enough as well.

Sat, 11/28/2015 - 12:42 | 6849027 Wow72
Wow72's picture

Thats where Im looking...Not many places left... APMEX is cheaper than gainesvillecoins on lots of things, which seems to be telling, they also have 100oz silver bars which gainesville only has one brand left in stock..   It depends on where you look an what the premiums are?  Premiums are going higher while price goes down and demand goes up...Makes perfect sense?  Its something else to watch something that is not functioning as a "Free" trade....Gold is currently not trading freely with the paper albatross it has around its neck. China wants all the gold and has been hoarding a ton of it? Each month they take more?

Sat, 11/28/2015 - 08:34 | 6849017 Anopheles
Anopheles's picture

Wow, that's 55 tonnes of gold,  about one week of worldwide gold mining output.   /sarc

 

Sat, 11/28/2015 - 00:01 | 6848549 KingOfMilwaukee
KingOfMilwaukee's picture

I might find this more interesting if not for the one frame of subliminal messaging at 2:27. 

Sat, 11/28/2015 - 00:35 | 6848610 argennco
argennco's picture

There really is only one concept one needs to appreciate:

 

The United States dollar is the reserve currency of the fiat world.

Bitcoin is the reserve currency of the cryptocurrency world.

 

Once you can appreciate the above, re-evaluate your thinking and attempt to peer into the future.

Sat, 11/28/2015 - 02:15 | 6848741 pachanguero
pachanguero's picture

Bitgold is not fiat and you can redeem your physical gold and have it DHL'ed right to your door.  Or take in in local currency or even Bitcoin or Mastercard credit.

 I have it and I love it.  It is also a transfer payment platform.  

Am I the only one here who uses it?

Sat, 11/28/2015 - 03:19 | 6848799 BadLibertarian
BadLibertarian's picture

I think you should invest in what you're comfortable with. I don't personally see the need to back a cryptocurrency with something else, but if you do, then I can see why that would be a more attractive option for you. And the same goes for people who don't feel comfortable with the digital aspect at all. I doubt that gold and silver are going away any time soon, but I do think that over time, some form of cryptocurrency, be that Bitcoin or something that improves upon it, will gain popularity strictly based on features and convenience, just like other things that we once thought of exclusively as physical commodities, but which now exist primarily in a virtual/digital form.

Sat, 11/28/2015 - 02:19 | 6848745 PGR88
PGR88's picture

At 2:27, why does the screen flash "wise up?"

Sat, 11/28/2015 - 06:10 | 6848906 JPMorgan
JPMorgan's picture

Bitcoin plays right into the government and bankers wet dream of a cashless society.

I'd be far more conformable with Bitgold which isn't a crypto currency, it's a hybrid system linked back to a physical asset.

It does not help on the cashless society part, but at least it's attached to something real when and if the shit hits the fan.  

 

Sat, 11/28/2015 - 09:45 | 6849105 Weirdly
Weirdly's picture

Bitgold has a vault.  Psychopaths have armies.  I love the idea of a crypto backed by gold.  It just has vunerabilities that bitcoin does not.  Bitcoin  is decentralized for a reason.  

Sat, 11/28/2015 - 06:49 | 6848937 Peter Pan
Peter Pan's picture

I think all of the arguments for and against Bitcoin and gold are unnecessary. 

 

I am of the the view that each man should have the freedom to choose his own  currency and therefore be responsible for the consequences of holding that currency. This is not disimilar to acquiring and holding an asset.

 

If someone wants to transact with Bitcoin then let them. If someone is happy to use fiat or gold coin, then let them.

The major stumbling block to free choice is government and that is the greater issue rather than the pluses or minuses of  bitcoin or gold.

Sat, 11/28/2015 - 17:10 | 6850479 BadLibertarian
BadLibertarian's picture

I agree with you. However, what I see a lot of is people who are hostile towards cryptocurrencies largely because they don't understand them very well. And that's not a knock on them - it's a big conceptual leap to make, and the Bitcoin community has done an okay, but not great job thus far of making things easy to understand.

If someone understands Bitcoin as well as I do or better than I do, and they're still really negative about it, that's someone whose views I would be really interested in hearing and thinking hard about. I've yet to find that person though. There are plenty of people who understand Bitcoin better than I do, but to a person, they're enthusiastic about it.

What I run into all of the time are people who are negative towards Bitcoin for reasons they believe are true, but which actually aren't true. I have no desire to change anyone's mind about Bitcoin, but I would like to make sure that if they're going to hate it, that they're hating it for legitimate reasons that they can articulate clearly, because those are the kinds of objections that might change my opinion.

Sat, 11/28/2015 - 08:20 | 6849005 Wahooo
Wahooo's picture

So many people think fiat is cash. 90% of fiat is digital. Think about that. Cash is relatively scarce. A little cash, a little bitcoin, a little gold, diversification. No digital fiat.

Sat, 11/28/2015 - 09:02 | 6849062 Alvin Fernald
Alvin Fernald's picture

Bitcoin coincides with TPTB's war on cash rather nicely. No bitcoin for me.

Sat, 11/28/2015 - 09:36 | 6849096 Weirdly
Weirdly's picture

The dollar is created by TPTB. 

Sat, 11/28/2015 - 17:12 | 6850493 BadLibertarian
BadLibertarian's picture

And the price of PM's are manipulated by them as well.

Sat, 11/28/2015 - 09:36 | 6849094 conraddobler
conraddobler's picture

Electronic is NOT REAL not in a world where the technical savy to prove something's existence is orders of magnitude beyond any normal mortals capability.

When they own the infrastructure and everything BUT the medium then they still own the medium by default.

I can get gold tested heck I can even test it myself if I want but I can't verify that even the mechanisms that authenticate a bitcoin are not compromised themselves.

Sat, 11/28/2015 - 09:48 | 6849112 Weirdly
Weirdly's picture

Kahn Academy.

Sat, 11/28/2015 - 09:46 | 6849109 quietdude
quietdude's picture

A guy who has been through several hyperinflations wants you to store value in Bitcoin. Is it a good idea to store value in something that 99.9 percent of people do not recognize as money? What I really want to know is how did his family eat and provide shelter for themselves during these times? What will be the better investment, 10 grand worth of Bitcoin or 10 grand worth of good whiskey in glass bottles?

Sat, 11/28/2015 - 09:54 | 6849123 Weirdly
Weirdly's picture

They had wealth stored in the 8 forms of capital (google it).  It wasn't a basement full of whisky.   Although a Charles 803 still would be worthwhile.  

Sun, 11/29/2015 - 12:02 | 6852589 withglee
withglee's picture

They had wealth stored in the 8 forms of capital (google it).

I googled it. The key to the storage of anything is "preservation". Look at the so-called 8 forms through the lens of preservation:

  • Experiential (expert in buggy whips)
  • Intellectual (thinks deep thoughts to support Al Gore's global warming industry)
  • Cultural (born into tribe that controls everything)
  • Living (beats the alternative)
  • Financial (function of score keeping mechanism)
  • Material (function of utility ... platinum soars with catalytic converters)
  • Social (David Carnegie ;-) )
  • Spiritual (smoke and mirrors)

So without even looking at how someone else wants to define this (exhaustive?) enumeration of capital forms, I can easily add another ... "location" ... and I'm sure others can add more, thus making a list so long as to be useless.

Everything is about trading. Trading is having something someone else wants more than you do. And wanting something more than the trader who has it. Money allows these simple barter transactions to take place over time and space. And time and space are in-exhaustable. So money (from a properly managed process delivering zero inflation; universal acceptance; zero interest load to responsible traders; free creation by traders; and perfect supply/demand balance) is the only real store of value.

But for money to succeed as a store of value, you must know what it is (a promise to complete a trade); you must know how it is created (by traders getting trading promises certified); how it is destroyed (by traders delivering on their promises); and obtains perfect perpetual balance between supply and demand for it (interest collections equal defaults experienced yielding zero inflation).

Wealth is about "preservation" of trading surpluses. Capitalism claims one must "risk" these surpluses for "rewards" to counteract inherent "leaks" capitalism brings to the party.

Sat, 11/28/2015 - 10:28 | 6849197 withglee
withglee's picture

Is it a good idea to store value in something that 99.9 percent of people do not recognize as money?

Bitcoins and gold are both pitiful stores of money. Gold today will purchase less than 1/2 what it would purchase 4 years ago. Bitcoins will purchase 1/4 what it would purchase 2 years ago, but near infinitely more than it would purchase 4 years ago. A properly managed medium of exchange (MOE) will purchase exactly the same over all time and space.

The solution to these obvious facts of failure is to recognize money for what it is, always has been, and always will be.

Money is a promise to complete a trade.

Money is created by traders getting their trading promises certified. It is destroyed by traders returning and destroying those certificates as promised. Money allows simple direct barter to take place over time and space.

It's just that simple.

 

 

Sat, 11/28/2015 - 10:41 | 6849226 RonArgent
RonArgent's picture

More abject stupidity. Why not cherry pick ten years ago, or twenty or 50 years? How about 200 years? Becuase it makes you look like you are stupid and/or a liar, that's why!

 

An ounce of gold buys almost exactly what it did 100 years ago. Your dollar is worth 5 cents now compared to 100 years ago.

Sat, 11/28/2015 - 11:55 | 6849431 Anopheles
Anopheles's picture

Typical fake rationale by a true believer in the religion of glitter.    

A dollar is a medium of exchange.   It's irrelevant what a dollar is "worth" and that it's worth less than 100 years ago.  It would ONLY matter if your income was the same as 100 years ago.

 

 

Sat, 11/28/2015 - 13:22 | 6849655 TRM
TRM's picture

because all salaries are tied to inflation and they always calculate inflation accurately and honestly????

https://www.youtube.com/watch?v=SyybS-Vh2Dg

Sat, 11/28/2015 - 17:19 | 6850514 BadLibertarian
BadLibertarian's picture

What's relevant is how the debasement of the dollar was redistributed. It matters if your income hasn't grown enough to compensate for the debasement, and it matters even more to people who no longer have an income due to retirement.

Sun, 11/29/2015 - 11:35 | 6852519 withglee
withglee's picture

What's relevant is how the debasement of the dollar was redistributed.

The proper level of inflation is zero ... all the time and everywhere. At zero, no redistribution is necessary (or possible).

Sat, 11/28/2015 - 12:26 | 6849514 KUDIN
KUDIN's picture

I just wonder , why bitcoin bugs put  a smug face and always compare the price of gold now to the price of gold four years ago . How about six , eigth , ten or more years ago . Do the gold bugs have to compare the bitcoin price now and its peak some time ago . Just silly . I do not even see the point of arguing what is the best store of value . For some it is gold , for some bitcoin , timber or life saving medicine . It is a personal choice , it is good to have different choices and it is good we still have chance to choose . Let's do not attack one another and better work together   

Sat, 11/28/2015 - 17:24 | 6850501 BadLibertarian
BadLibertarian's picture

I'm reasonably confident Usain Bolt couldn't set Olympic records when he was six. But I'll also bet that good track coaches could see the record-breaking potential in Usain long before others could.

When the market cap of Bitcoin grows into the trillions, you can start making valid volatility comparisons with currencies of a similar size. Until then, you're just complaining that a talented six year old can't do the things he/it may be capable of doing in the future.

Sun, 11/29/2015 - 11:26 | 6852489 withglee
withglee's picture

When the market cap of Bitcoin grows into the trillions, you can start making valid volatility comparisons with currencies of a similar size.

BitCoins, like gold, have no way of adjusting supply to meet demand. Therefore, the value of the Medium of Exchange (MOE) based on gold or mathematical wheel spinning can vary independently of the objects it is being exchanged for.

With a properly managed MOE the balance between supply and demand is perpetually (and necessarily) always perfect.

Gold and BitCoins, by their very attribute of scarcity, will "always" exhibit a tendency to be deflationary.

The proper level of inflation (deflation) is zero.

Sun, 11/29/2015 - 19:15 | 6854050 BadLibertarian
BadLibertarian's picture

I don't really see a problem with deflation as long as the medium of exchange can be subdivided easily and infinitely. Deflation encourages capital accumulation and discourages wasteful consumerism, both of which are good things for a healthy and sustainable economy. 

The problem I see with trying to balance supply and demand of a currency via issuance is that you create a central point of attack for regulatory capture, unless the balancing mechanism can be automated in some way. I think there's the potential for a future cryptocurrency platform that registers assets to be capable of doing that, but we aren't there yet.

Sat, 11/28/2015 - 09:50 | 6849115 GreatUncle
GreatUncle's picture

Bitcoin has a kewl concept though as you trade in and out of dollars.

As the dollar measures bitcoin so the the value of bitcoin measures the dollar.

Unless ... bitcoin ETF's or as mentioned you start creating other bitcoin currencies.

Within a decade there will be forced legislation to control virtual currencies with the NIRP and bail in concepts.

Sat, 11/28/2015 - 10:16 | 6849165 withglee
withglee's picture

However, while gold has historically been the best store of value in history and has outlasted every currency known to man,

I submit that raw timber easily surpasses gold as a historic store of value. Gold value is a fiction. Timber value is real. A log 2,000 years ago was worth just as much in HUL's (Hours of Unskilled Labor) as it is today. And HUL's are a non-inflatable measure. A HUL today is worth exactly what it was worth 2,000 ... or 6,000 ... years ago..

Sat, 11/28/2015 - 10:37 | 6849216 RonArgent
RonArgent's picture

Raw Timber? Now that's just plain stupid. Can "gold boring insects" destroy the value of an ingot of gold?

 

Think about the 5 things that make REAL money money before making such an absurd statement.

Sat, 11/28/2015 - 10:50 | 6849246 withglee
withglee's picture

Think about the 5 things that make REAL money money before making such an absurd statement.

I don't care if you enumerate 15 things that make up real money. Starting with a false premise will bring you to a false conclusion. Gold has not served as a medium of exchange or a store of value in my 70+ year lifetime. To see it as an MOE I must go back to my grandfather's day.

The risk to an ingot of gold laying out in a forest is no less than the risk to the trees making up that forest. The risk is just different. If your premise that gold's value comes from it's being impervious to destruction, that's a false premise. It's value comes from its ability to exchange for other things ... and right now that's less than 1/2 what it was four years ago.

To think that's a store of value "is just plain stupid"! A log is worth more today (exchanges for more other stuff) than it was four years ago. Gold is not.

 

Sat, 11/28/2015 - 11:26 | 6849352 btdt
btdt's picture

fire

disease

environmental regulation upping cost

 

on the other hand trees grow all by themselves

Sat, 11/28/2015 - 11:50 | 6849407 withglee
withglee's picture

 

 

Gold:

  • Storage cost
  • Refining cost
  • Certification cost
  • Mining cost
  • Theft
  • Loss (ex. shipwreck)
  • Use in industry (almost none)
  • Misvalued through manipulation (perceived ... contrived ... value)
  • Failure in direct trade for anything
  • Counterfeit by plating tungsten

an inexhaustive list of gold risks.

Trees:

  • Minimal storage costs
  • Minimal refining (milling) costs
  • Near non-existent certification (grading) cost
  • Minimal mining (lumbering) cost
  • Minimal theft risk
  • Very wide industry usage
  • Close to pure market valuation
  • Directly traded for money or services (sawing) at sawmills everywhere
  • Difficult (impossible) to counterfeit

An inexhaustive list of timber resiliency.

 

Sat, 11/28/2015 - 11:09 | 6849307 Stud Duck
Stud Duck's picture

Hey asshole, I am making a shitload of money on oak.hardwood lumber and don;t appreciate you letting the cat out of the bag. I have bought up enough hardwood timber to make a living for my children,, grandchildren and great grandchildren.

Asshole like you letting the cat out of the bag are endangering my operation. Where do you live??? I may have to have a friend visit you and explain further!

Sat, 11/28/2015 - 11:34 | 6849374 withglee
withglee's picture

Where do you live???

In the forest.

Sat, 11/28/2015 - 10:33 | 6849206 RonArgent
RonArgent's picture

WHY do they "mine" BITCOIN? To make stupid people think it's like real money like gold and silver.

Why do 99% of graphic representations show BITCOIN as a GOLD coin? See Above if you are still too stupid to figure it out.

Sat, 11/28/2015 - 11:45 | 6849404 Anopheles
Anopheles's picture

And that "mining" effort is FAKE.  They arbitrarily make it more and more difficult to mine coins.  A simple PC can easily mine coins and keep the ledgers safe and updated, just like when Bitcoin started.  

But noooooo, they have to keep increasing valueless computations so it  now takes $250 to $400 worth of electricty to mine one coin.....

 

Sat, 11/28/2015 - 17:38 | 6850566 BadLibertarian
BadLibertarian's picture

The "mining" is done to create a competative reward that's based on proof of work. The reason the difficulty increases with network hashpower is to prevent any one mining interest from accumulating too much power over the network, which could allow them to double-spend coins.

If mining difficulty were still set at 2010 or 2011 levels, today's blocks would be mined much too quickly to be propagated to the rest of the network, so you'd end up with tons of orphaned blocks, and you'd be causing inflation at a much faster rate, since the block rewards would be awarded every few seconds instead of about every ten minutes.

The network needs time to propagate blocks and security from the newly added hashpower which might seek to compromise the network. Difficulty scaling addresses both of those issues.

Sat, 11/28/2015 - 12:38 | 6849548 hangemhigh77
hangemhigh77's picture

If the right people are hanged for treason we could have gum wrappers for money it wouldn't matter. If the guy in charge commits treason we fucking hang his ass. It's that easy.

Sat, 11/28/2015 - 13:03 | 6849617 TRM
TRM's picture

What was that subliminal flash of green there? "Wise Up"?

Hmmm.

Sat, 11/28/2015 - 13:08 | 6849637 moneybots
moneybots's picture

"However, while gold has historically been the best store of value in history"

 

Gold went from 850 to 255 over 20 years.  During that time, the rate of inflation declined, but the price of things went up over that same 20 years.

Sat, 11/28/2015 - 13:30 | 6849727 the grateful un...
the grateful unemployed's picture

you can't prepare for these things unless you know what your government will do. in Argentina they slaughtered the bond holders, fifty cents on the dollar, they were mostly Italian widows and orphans. the Merval was just about done when Slim Carlos of Mexico stepped in and bought it up. the same thing has happened in this country, only the Fed buys the stock market and the bond holders, at least so far, have never lost their principle, although the Chinese might disagree, if you lose value in the currency exchange over a period of time what's the difference?
there are only two rules you need to keep in mind, first you have to make the right investment or bet, and secondly you have to get out of the casino with the money (see LTCM Russian bonds paying double digit rates, they hedged the ruble, they were making different bets with the same casino, and the casino stiffed them)
if you bought 20yr bonds at 5% interest in 1999 before the market crashed you have done very nicely. some would say if you bought the stock market at the lows you have done pretty well too, but i have reservations about that relationship holding up again. the L shaped bottom may fool a lot of people. if the market crashes and remains flat for a long time that will hurt you as well, since there may not be enough liquidity in that kind of market to close any kind of position.
you may get orphaned in the bond market. gold at least has some transactional value, but it will lose that value along with the deflationary crash.the best situation is to be in the position of Carlos Slim, in a safe place with lots of available capital that you can use to buy up cheap assets in a selloff.

Sat, 11/28/2015 - 14:13 | 6849858 OutaTime43
OutaTime43's picture

Any collapse will be deflationary. VERY deflationary.  Oil is already collapsing. Gold will be under 1000 per ounce by Christmas.

Sat, 11/28/2015 - 16:32 | 6850367 Weirdly
Weirdly's picture

Paper gold or physical gold?

Sat, 11/28/2015 - 19:38 | 6850967 withglee
withglee's picture

Why?

Sat, 11/28/2015 - 14:52 | 6850002 Occupy Wall Street
Occupy Wall Street's picture

No, no, no........ Cryptocurrency won't work.

Yes, yes, yes.....Cryptocurrency will work.

Meanwhile, the Financial Terrorists continue destroying absolutely everything Financial.

No, no, no........ Cryptocurrency won't work.

Yes, yes, yes.....Cryptocurrency will work.

 

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