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Bitcoin Breaks Out Higher After China Announces Crackdown On UnionPay POS Devices
When we first detailed the link between a devaluing currency, increasing restrictions on outflows of China capital, and Bitcoin, the virtual currency soared (driven by Chinese flows, just as predicted). The last few days, as China has once again started devaluing its currency, authorities once again moved to tighten capital outflows - this time through caps on credit-card withdrawals (as warned here) - and sure enough, Bitcoin has been soaring recently. Specifically, a nationwide crackdown on illegal UnionPay point-of-sale devices, has sparked capital flight (on heavy volume) through the vurtual currrency.
Having previously documented Beijing’s mad dash to tighten up capital controls in China in order to stem outflows in the wake of the PBoC’s move to transition towards a new FX regime; increasing expectations that a (much) deeper devaluation is on the horizon (blessed by The IMF) coupled with China’s efforts to manage the fallout from those expectations by liquidating hundreds of billions in FX reserves to support the onshore and offshore spots have understandably put authorities on edge, leading directly to efforts to stop the bleeding.
As we put it a few weeks ago, “while China may succeed in maintaining an orderly pace of FX depreciation, if the local population is concerned it will lose substantial purchasing power in the coming months and years, it will accelerate the capital flight from the country, forcing even greater reserve liquidation as the government finds itself defending not only the capital but also the current account, not to mention the sheer capital flight panic resulting from the crashing stock market.”
However, as we detailed here, one of the more straightforward ways of circumventing China’s official capital controls has been by “abusing” UnionPay cards. Roughly speaking, the process works like this (via Reuters):
Growing numbers of Chinese are using the country's state-backed bankcards to illegally spirit billions of dollars abroad, a Reuters examination has found.
This underground money is flowing across the border into the gambling hub of Macau, a former Portuguese colony that like Hong Kong is an autonomous region of China. And the conduit for the cash is the Chinese government-supported payment card network, China UnionPay.
In a warren of gritty streets around Macau's ritzy casino resorts, hundreds of neon-lit jewellery, watch and pawn shops are doing a brisk business giving mainland Chinese customers cash by allowing them to use UnionPay cards to make fake purchases - a way of evading China's strict currency-export controls.
On a recent day at the Choi Seng Jewellery and Watches company, a middle-aged woman strode to the counter past dusty shelves of watches. She handed the clerk her UnionPay card and received HK$300,000 ($50,000) in cash. She signed a credit card receipt describing the transaction as a "general sale", stuffed the cash into her handbag and strolled over to the Ponte 16 casino next door.
The withdrawal far exceeded the daily limit of 20,000 yuan, or $3,200, in cash that individual Chinese can legally move out of the mainland. "Don't worry," said a store clerk when asked about the legality of the transaction. "Everyone does this."
Yes, “everyone does this,” but not for long because now that the yuan deval debacle has served to accelerate the capital outflows, Beijing is set to double down on efforts to curb the degree to which capital controls are openly subverted and as WSJ reported, China “put a new annual cap on overseas cash withdrawals using UnionPay.”
Which leads us to the past week, where, as Bloomberg reports, China is now cracking down on illegal use and manipulation of UnionPay point-of-sale devices to cirumvent the limits...
A nationwide crackdown targets use of illegal UnionPay “point of service” devices used by retailers which have been altered to mask cash transactions to circumvent China’s strict currency control, South China Morning Post reports, citing a UnionPay internal memo.
Illegal use involves customers purchase goods, only to return them to retailer and receive cash, minus retailer’s commission: report
New measures require mobile POS transaction devices across China to be properly registered.
We note this is a mainland version of the previous 'tricks' that the ultra-wealthy used in Macau and these newly reported UnionPay measures may prompt greater scrutiny on Macau pawnshop business model in which cash transactions are recorded as goods purchases, analysts led by Vitaly Umansky write in Dec. 10 note. Use of illegal POS devices in Macau pawnshops, and on some casino floors, have occurred in the past, but represent only "a minuscule fraction" of dealings in Macau’s pawnshops.
Will this help to reverse the momentum? No, probably not.
The problem here - and this is something that quite a few people are still struggling to understand - is that Beijing has telegraphed a much larger devaluation, which means the pressure on the yuan will likely continue.
So yes, as difficult as this is to come to terms with, this is a scenario where China played the deval card and is looking to ever-so-gradually move from a 3% deval to an export-boosting double-digit deval, but in the meantime, Beijing must manage the pace, which means supporting the yuan via direct interventions. But the last week it appears that The IMF's decision to include the Yuan in the SDR basket has green lit another round of devaluation...
* * *
And the result is obvious, virtual currencies are surging once again as the Chinese find another route to get their savings out of the country...
It appears the moves are becoming increasingly aggressive among those wishing to get their capital out, as we detailed here, it is starting to directly correlate with Yuan movements...
And most clearly on increasingly heavy volume... Notice the surge in October and again now as capital controls increase once again...
So, evidently, the last week or two suggest, perhaps more importantly, that China easing (and outflows implict from further devaluation) now appears to go straight to Bitcoin.
As Overstock's Chairman noted previously: gold is great, but tough to transport; thus, forcing Chinese into Bitcoin as we previously explained:
As we concluded previously, while China is doing everything in its power to not give the impression that it is panicking, the truth is that it is one viral capital outflow report away from an outright scramble to enforce the most draconian capital controls in its history, which - as every Cypriot and Greek knows by now - is a self-defeating exercise and assures an ever accelerating decline in the currency, which authorities are trying to both keep stable while also devaluing at a pace of their choosing. Said pace never quite works out.
So what happens then: well, 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 in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print.
Charts: Bloomberg
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smart people will have at least 1% in bitcoin
DIVERSIFY
no. thank. you.
lets see....
if you bought lower 200s where bitcoin ranged for most of the year you would be already up +250 usd per bitcoin
and its just starting haha
i mean really, you could have just sold half of your bitcoins now, and keep the rest because it would be essentially FREE.
Bitcoin is trying to make a run on gold... almost down to 2 bitcoins per ounce of au probably not sustainable
Gold and Bitcoin do not move in tandem, and so both are appropriate for diversification. Both are probably good for a medium or longer term.
Have to keep an eye on the BTC though. And learning it is not all that easy unless you have some help.
1% - 2% in BTC for those so inclined seems reasonable to me. And 5% - 20% in gold.
* * *
Your ounce.me site is very nice, I check it at least twice per day.
Learning it is easy, if you can copy and paste your sending address and copy and paste your recueving address you can do it. And if you have the time you csn play the alt coins and make a few bucks. Ive been playing with BTC and alt coins for two years now and am still up overall. I recently recieved a debit card tied to my bitcoin account which i fund every payday.
Bitcoin is legit..
I use electrum for my wallet. So much faster than the original method. Always use a password on your wallet and back it up kids!
So it's like trading stocks.
Pretty much, except for moar cliquish and really kewl!!!
Oy vey goyim. How dare you. HOW DARE YOU transact in any form of currency not controlled by us, God's chosen people! This is like a thousand holocausts every second!
HOW. DAY. YOU!!!!
Did everyone miss the article on how the kid who downloaded a bootleg of Fallout 4 got all his bitcoins stolen via malware?
Bitcoin is not safe because it is an electronic currency. Once the right virus gets on your computer it's hasta lav vista baby. Good luck getting it back (as that kid has).
Precious metals are a little harder to steal.
Bitcoin is the perfect currency for criminals. For everyone else, I'm not so sure (most can't even understand how it works).
I actually have a debit card tied to my bitcoin, i fund it every payday. Works for me.
Always scan your downloads, idiot. Bitcoin is perfectly safe, you can print out paper certificates for your coins and keep em in your safe. Or keep them on a thumbdrive away from all your malware.
There are solutions to this already. There are little hardware wallets that hold your private keys in such a way that they can not be stolen, even if connected to malicious hardware. You can keep backup copies that are meaningless and unnoticeable to anyone but the owner in case your hardware wallet is stolen. They are now simple enough for even grandma to use.
Here are some examples you can google:
Trezor bitcoin wallet
Ledger bitcoin wallet
Case bitcoin wallet
Piper wallet
Etc
This is similar to buying a safe to hold precious physical objects, except these safes allow you to also teleport a portion of their contents to/from anywhere in the world in mere seconds.
I own both a Trezor and a Ledger Nano. I like and use them both.
Safer than online wallets...
EDIT: for more privacy, there are also services like bitmixer.io
Ignorance is bliss, untill it isn't.
If fiat is the agreed anti-position, all opposition is good.
Gold, BTC, barter, whatever.
Just because you cant get your head around it,
does not mean it is 'bad'.
I heard that people get mugged on streets.
I better not leave my house. Ever again.
I mean, not only you don't understand how bitcoin wallets work, you are also using the most retarded example to point out how Bitcoin 'is not safe'.
Sigh.
Right. Not a store of value. Just another game at the casino. Don't forget that most of the people who gamble at a casino LOSE. That's who pays for all those buildings.
Until the depth of adoption breaks 5% of all transactions, then it becomes money people use everywhere. Then all the old worthless government fiat goes in the archives and collectors cases to be laughed at by future generations. Because that's the magic number to break a currency or make a social trend happen. 5%. Over 1% now, with continued organic adoption from other actors fuckups and the by product of technology developments that are improving chips design. 5% is a cake walk. Here's a story how this works and how it's always worked.
An old bull and a young bull are standing at the top of the hill overlooking a paddock of many gorgeous heifers. The young bull said, "Let's charge down the hill, knock over that fence and fuck one of those heifers!!!". The old bull wisely replied, "Why don't we saunter down the hill, open the gate, take a sip at the water, pause to admire the day and then fuck ALL of those heifers?"
lol...incredible.
It's a coin! No, it's ethereal. No, it's ethereal money! No, it has no real tangible value. No, it's a digital investment! So so so...buy BitStawks now from your computer screen dammit!...lmao!!!
It's a pyramid scheme that rewards early investors and miners at the expense of latecomers who'll never get their money back. That's why there are countless trolls screaming on top of their lungs to buy bitcoin. They got in at the peak and unless they dump, they're stuck with a loss. Foney's the perfect example. He goes by many avatars and ZH isn't the only forum he visits. He got in shortly prior to the peak - that's what his copy-paste messages date back to.
An interesting bitcoin fact is that 25 bitcoin reward for each discovered blockchain element will go down to 12.5 roughly in October 2016. Up until now it was possible to mine bitcoins at 50% profit, based solely on electric consumption, with mining ISIC's being extra. In 1 year, the cost of mining will be nearly 0%. See then how many people will stick around promoting this penny stock equivalent, when the only pepople stuck with it will be the closed pool investors.
Bitcoin was a fun experiment while it lasted.
I've never invested a penny, but I've followed the technology religiously since 2008. From a mathematician's standpoint the crypto-currency is a fascinating subject, but not to someone who also knows a good deal about economics.
"bitcoin is nearly opposite of a pyramid scheme in a mathematical sense. because bitcoins are algorithmically made scarce, no exponential benefit is derived from introducing new users to use of it. there is a quantitative benefit in having additional interest or demand, but this is in no way exponential"
subsidy halving will occur in june and directly affects supply/demand equation from which the price is derived
and arguing about early adopters being rewarded, really?
early adopters are rewarded for taking much higher risk with their time and money
or do you have also problems with early adopters in, lets say, google?
+1
I have bought gold with Bitcoin. providentmetals.com has been my favorite to spend BTC, though I keep a "stock" of BTC as a speculation/investment/lotto ticket.
Nonetheless you do raise valid points. BTC ain't for everyone. You have to spend time and mental energy to understand how it works. It is volatile. There may be risks we don't know about.
The math is extremely complicated, but apparently is OK as my understanding is the code is all open-source, and many BTC people (hah, not all) are very smart.
"Bitcoin was a fun experiment while it lasted."
You Flat Earthers crack me.
You know next to nothing about economics.
You will be one of the last to get into bitcoin , and that won't be your choice either. It will be because by that point the bitcoin protocol will underpin the entire global economy , every transaction you make will be routed over the network and you won't even realise your using it. It's going to disintermediate every single thing you know about money , finance and economics.
"No choice...(BitCoin) will underpin the entire global economy...every transaction you make...flat earthers...you know next to nothing about economics..."
Wow, I see words like this and it makes me want to get off the grid not run towards it.
You do realize how the internet works right? Well, apparently not. And you're sittin around thinkin governments are just going to embrace BitCoin AND if they do, why would they? What's in it for them even as they proclaim openly they want to do away with gold, silver even their own fiat cash systems so they can better unleash more of their their "economic muricles" on the world?
What, pray tell, could it all possibly mean?!
Yes, "flat earthers" know next to nothing about "economics" or ponzis or communications/commercial power infrastructure or servers or the crazy schemes of men both large & small, clealy only little dweebish IT techs do...lol.
And you may very well get your wish to have government subsidize some poor dirt farmer in the sticks of Honduras with a new i-shit gadget or a new laptop running Billy Gates the IV's Windows version 1,002 specifically to enrich Apple & Microsoft stawk holders, after cutting through the forests to string power up and dropping cell towers all over the place of course, in order to make it work but it will be long after I'm moldering in my grave.
Dig me up out of the flat earth some time (if you are even still alive by then) and we can share a laugh about what you did to make the world more free, more energy and financially efficient ;-)
This protocol is going to destroy the criminal fiat ponzi system. That's good enough for me. BTW , the future of energy is green solar , off grid systems. Eventually the grid will become obsolete due to de-centralised microgeneration. Agreed we may not all be around to see it but that is the future. Technology always trends toward the most efficient systems , without exception - it may take decades or even a century or two , but realise it or not we have the largest free energy source - the sun. That will be the future of our electricity source. Cell towers and cables will also be a thing of the past - these will be disintermediated by de-centralised mesh networks where the devices themselfs become the communications network infrastructure , where the network infrastructure itself will simply become another 'app' running in the background of the device.
I fail to see how centralizing on BitCoin as a currency (we both know its not "money") while relying on centralized power & communications is going to do anything but enhance the governments ability to control it in our lifetimes and I'm not the least byte (lol) interested in passing that down to the next generation as a currency for that reason.
Again, governments and it's "economists" are already saying they don't like cash or coin "under mattresses" they think it belongs to them, they think it's theirs, not ours. THEY WANT IT DIGITIZED.
I don't know how many times I have to say that, they want ALL currency digitized.
Why?
However I have no problem with solar (or whatever) if somebody wants to unplug. Its their choice, I just don't want to pay for it FOR THEM, that involves the tax code/tax credits and using government force (or incentive) to accomplish what it wants.
People are arguing the point that they want to centralise instead on PM's as money / currency. What's the difference ? I see no probem with the digitisation of money / currency , as long as it's a choice the free market is making , which it is. There is no dictator in bitcoin , it's efficient , it's fast , transparent , fraud is impossible due to the open ledger that anybody can see. Nobody is being forced to use it. It will clean up the banking system and fuck plenty of crooked bankers and finaciers along the way. It will enable 6 billion more people currently living in poverty to get access to the global financial grid which they currently do not have any access to which is actually helping to keep them down in poverty. And until somebody puts a better alternative on the table , so far nobody has stepped upto the plate , and I see no reason why this system is so bad as you make out , it's democratic and free for anybody to use and build applications onto.
Well PM's are in fact money. They rely on nothing to be money...no i-shit, no power, no internet, no servers, no accounts, no passwords, no laws, no faith...nothing but itself.
And I hope you're not sittin around thinking the bankers have no BitCoin in their wallets or can buy up all the BitCoin in the BitUniverse whenever they want to or are in fact doing that now in exchange for paper fiat. Also, greed is a universal thing unconfined to just bankers, you see it on every BitThread where traders descend from the BitCloud on the very hill you've chosen to die on, this should give you pause, if not...carry on the good fight I suppose.
Democracy without restraint is mob rule and a Republic without steadfastness to the rule of law is a dictatorship.
But...what would a flat earther know about any of these things?
Seeeya round and good luck with it, I do think your heart is in the right place though maybe a little misguided on what you think it is and it's weaknesses, just my opinion.
In my opinion money is what people and the free market decide it is. Whether that is rare shells , metals or bitcoin.
If enough people decide to use something as money then that is what it will become.
Exponential Debt cannot be money because it has a mathematical certainty of failure.
And don't trump up the old argument of 'intrinsic value' , that is a myth. If anything at all truly has 'intrinsic value' that would be air water food and shelter. All are tradeable with money
And don't trump up the old argument of 'cannot hold it in your hand'. That's bullshit as well - you cannot hold a web site , computer software , your bank account , or pure energy in your hand. All of these things have value.
But atleast you put up a good argument - I respect you for that instead of some dumb a$$ arguments we usually get on here.
Could you please explain:
"In 1 year, the cost of mining will be nearly 0%." ?
I only made a cursroy review:
https://bitcoinwisdom.com/bitcoin/difficulty
https://en.bitcoin.it/wiki/Difficulty
https://en.bitcoin.it/wiki/Mining
It appears to me, the diffuculty of mining a bitcoin increases, while the reward decreases. I would think that would make the cost of mining increase ...perhaps, I have made an erroneous assumption,
Interesting comments in this thread:
https://www.reddit.com/r/Bitcoin/comments/32ct8t/what_will_happen_to_bit...
from a 2013 article:
But right now, as with most gold rushes throughout history, it’s those who are supplying the miners that are finding the real riches.
If you invested a month ago, you would be up 100%. Newcomers?
It's a fucking gamble, just like anything else. Stop being scared of it if you don't understand how it works. No need to spread the ignorance.
No, I don't invest in Bitcoin. Yes, I love the technology behind it.
This is bearish news, but the market is responding irrationally. This news demonstrates that China will crack down on any technology that competes with its currency. Surprise, they've done it before. Next up, Bitcoin cracks down on Chinese Bitcoin exchanges. This all happened a few years ago. Here we go again.
You people lack any logic in where the value lies of Bitcoin.
You really should list all the crap you sell to convince the shoeshine boys to get in.
It's nothing real, nobody has a clue what you can do with it, it's totally not popular. It's your typical OTC investment en you call that smart?
The only people pushing it are the bitcoin farmers who need to unload them to cover their ever increasing costs to keep the computers running.
Now all you guys have proven is that you're to dumb to listen to sound facts what it's not a investment tool.
"It's nothing real, nobody has a clue what you can do with it"
Ever buy a house? Currently, a lot of the contracts are passed around online and use digital signatures involving 3rd parties...
Ever do any database programming? Do you understand how authentication works online?
IMO, many, many, many people understand what the blockchain technology can be used for
Is there a way to short bitcoin through an ETF or something? Doesn't matter if they make the 15th fastest supercomputer to protect the blockchain. It's the 15th.
blockchain is protected by a decentralized network
and as the network grows, it becomes harder and harder for a single entity to take over. networks computing power is already quite ahead of the world's fastest supercomputers (all put together).
even if someone decided to attack the network, what an attacker can do once the network is taken over is quite limited, attacker cannot create counterfeit coins, cannot fake transactions, cannot take anybody elses bitcoins
If you trust the other nodes. How many nodes of centerlized power do you think are out there? How many of the nodes in the chain have been already under the control from some other source since they were probably on to it from the beginning? Are lots of nodes university related? If so, guess who university systems are linked up with. Not buying it. You can obviously. It's a free world so to speak.
Or you can run your own node - and only trust yourself.
I'm not saying there'll be an attack. But there may be a mass sell. Who knows. It's a novel thought and a great idea.
Sure, there will be violent ups and downs.
Just like stocks. Good luck. Seriously
Nothing for the faint hearted.
Definitely not. EDIT: I mean definitely so. I mean, agreed. Double negatives screw me up. :)
-divide by zero- almost
https://youtu.be/GJbwSxMYHlQ
What Dr Craig Wright said made perfect sense; it's most powerful as a way to preserve truth by protecting history/documents/truth. But it's being used as money. That's dangerous. Who cares if someone sells a billion unrelated documents. But lots of people are going to care if billions of bitcoins are sold/redeemed. Think about it. Being used as money generalizes it by making any secure document equal to another. That's not the purpose.
"Being used as money generalizes it by making any secure document equal to another. That's not the purpose." <-- just wanted to restate that. It's like saying your gold coin is equal to mine because they are both gold. My coin though has the schematics to anti-gravity. I won't sell that one and you don't know the code, so no, your coin isn't equal. It's a level deeper than you think. And I'm not smart enough to point that out explicitly or to see the fallacy in my thoughts about it.
We'll see.
Bitfinex and OKCoin will let you both Margin (long/short) Bitcoin and Litecoin with associated risk as well as Lend Margin without risk.
:)
Gold gets capped, but not Bitcoin (or less so) so it seems to be the current go-to wealth reserve asset.
Gold is manipulated to silence the canary. Not wise to kill the messenger, but make its message a lie to unknowledgable folks.
let's put it this way... If Goldman Sachs hasn't even bothered to create a paper derivative market on BITCOIN, it means that it's about an important market as your grandmothers undergarments (& less liquid).
I wouldn't even consider bringing up your Granny's undies in debate, even if victory were certain.
"Taste, decency, geometry & theology." -- Ignatius J. Reilly, Mongoloid Esquire
OKCoin, Bitfinex and others are running electronic derivatives (paper is so last millenia) markets for Bitcoin and Litecoin with cumulative daily volumes over $500M. So GS is a bit late to the game.
Not my grammy. She's very liquid...knowwhatimean?
Untill somebody tries to sell again and it will plummet.
But for most chinese buying gold and silver is pretty hard and the azians have a gambling spirit.
Yeah .... that never happens with good investments... like gold or silver ....
Bitcoin is just a penny stock. of course it can be pushed up a lot.
but its only a penny stock, with a few traders long, and trying to pump their stock in forums to dump it a much higher prices.
mkt cap is ~5bn $ (and growing), and volumes are tiny, and its mostly churning.
theres plenty of 5bn stocks on the Nasdaq. but they don't get the kind of PR Bitcoin does.
so why not x10 ? or x20 ? but its not a currency.
because nobody uses it to buy a beer (you can do so only in a few places). and it can crash as fast as it rises, its not a store of value neither.
the kindest thing we could say about it , is its a social experiment.
one word: blockchain
trust engine behind bitcoin
its the internet of financial world
(a lot of fintech already moved in, tons more lining up or getting ready)
if you had the chance to get gold for 1 usd/oz you would load up to your eyeballs (thats where bitcoin is right now)
debtfiat is dead, long live bitcoin :)
Meets all the definitions of a "security", the SEC lawyers just haven't gotten there yet:
https://www.youtube.com/watch?v=vLU4B8L-ROc
Global payments system? That's a laugh, 2.4 tps (Visa does 50,000 tps). No, there are not technical fixes to get it anywhere close.
the beauty of this technology is it can be and is improved/updated as necessary (bitcoins blockchain being a secure and resilient backbone, you can build on that and add layers upon layers, like lightning network, segregated witness, and so on)
You, like all the other coinboys, confuse the technology with the underlying "value", and "backing" or in the case of Bitcoin, the lack of anything backing it.
Gold is perceived as a stable storage of value and exchange, in part because it is durable, divisible verifiable, scarce, and above all, has a very large stock relative to the ability. Of all the miners in the world to move the overall quantity more than a few percentage points in a year.
It is the perception of value in the consumers mind, and the perception that others see similar value and thus are willing to accept it in exchange for other goods and service.
Bit coin has been shown to be of strictly limited supply, Similar to gold, the quantity is fixed in the short run, but even better than gold , the rate of increase is definite, and has a fixed end.
the coins have shown themselves to be durable for six years now. The network for the bitcoins has tremendous first mover advantage, first , because of the large user base, but even more so , because of the immense ,worldwide distributed computer power , concentrated twenty four seven in keeping the network functioning and secure. No other block chain has the installed user base and the massive functioning computer network behind it.
With a six billion market cap after a two year consolidation, and a wobbling worldwide fiat system, bit coin is an excellent diversification , to balance fiat risk, or a good speculation, if one is the gambling type.
And what exactly 'backs' gold ? A Shovel ? A pan ? Because when push comes to shove that's all you really need to get some.
Nothing backs gold. It's a luxury and I expect in a global meltdown, that the price/value of gold will plummet.
Wow bitcoin is only a buck? News to me and that means it must have crashed massively! Gold at a buck has never happened ever. Ridiculous comparison. Might as well say, "It's like buying a 300,000 square foot mansion on 20,000,000 acres for a $!" Just an absurd statement on so many levels.
I find bitcoin interesting, but that line is utter garbage.
The British pound (sterling) used to be redeemable to a pound of Silver. Today, not so much.
I beg to differ. Not a huge proponent of investing in solely one thing at all, and I have a few btc here and there, nothing major at all. I used it the other day at the Bronx Deli in Michigan for pizza and a beer. Happened to even see an advertisement for a lady of the night on Craigslist accepting btc. I mean, if a hooker is cool with it, why not right?
Now that's value that readers of ZH understand! LOL.
A Shift debit card allows you to pay for one beer or two in most places.
Actually i buy everything with bitcoin as my Shift visa debit card is tied direckly to my bitcoin account. Less than 10 seconds after i swipe i recieve confirmation of transaction via an android app tied to the card. Very convenient for keeping track of my expenses during the week
Bitcoin
I have a friend who "dumped" his coins early on to all these "suckers" for a mere $4 per Bitcoin. He never got back in because his shit-head brother / financial-genius told him it was a total scam...
He cries now when the other guys talk about their new Teslas and stuff paid with a small fraction of the bitcoin they own. I've been saying that these Teslas are gonna have cost them a fortune in retrospect. HODL!
For me bitcoin is present and hopefully future money used to buy stuff with. Some people use money as a speculative object or a store of value, I don't. At its core function bitcoin is money, specie money, thats easily kept secretly and easily transferred, get used to it cause its not going away.
I'm not opposed to Bitcoin but wouldn't it also crash if Chi-coms decided to crack down on Bitcoin?
There certainly is a case to be made for that outcome. My suspicion is that happens after TPTB in China use BTC or some other cryptocurrency to get their cash out.
They have been cracking down on MJ, H, C, etc. for almost one hundred years. They can't even keep it out of prisons. How they gonna stop a number in someone' head., hidden on some paper somewhere ,or buried in a maze of gobbledygook.
If they continue down the negative interest road, or the QE road, BC will prosper.
IMHO , the world fiat system is very fragile, and there is a chance that BC could take the whole enchilada.Having just one BC could make life much more fungible.
Any monetary object is as fragile as an idea in peoples heads. Change the idea and you change what becomes money. Satoshi for man of the century.
Uh, yeah, foreplay into the next coming of Satoshi.
BTC, BTChez
Bit coin keeps looking better every day. Until it doesn't. Have they started waterboarding Satoshi yet? I hope it truly does work out for BC. If the setup really works I will join in and avoid the fiat shit entirely and so what if I am late to the party. The freedom is what I want. Which is why TPTB will move heaven and earth to kill it when it gets big enough to be a threat to the status quo.
Waterboarding Satoshi (if they ever find her) would only be useful for getting her Bitcoins. The Bitcoin software is open source...viewable by anyone.
Did you miss the memo?
The one about the latest Satoshi discovery? Got it. Did you get the memo that it was probably a hoax? Google "Satoshi hoax".
The only ones here I see who hate Bitcoin are those who dont understand how it works and those 10 year Gold holders that are more threatened now then ever as they lose their asses. Guess what gold people, you cant spend it if the person isnt standing right next to you. That really works in 2015. This isnt 1930 John-Boy. Learn to change with the times or die.
You sound like the guy hawking dot.com stocks back in 2001. Telling everyone that they "DON'T UNDERSTAND INTERNET COMPANIES".
100% dependency on electricity is one thing, but then there is dependency on free transfer of electronic information and dependency on non-emergence of exploitable vulnerabilities in various aspects of bitcoin.
While the first-mentioned can probably be assumed to be acceptable, the latter vectors or dependency make a blind reliance to BTC seem like an apex of foolishness.
It's not really the dependency on electricity or the "grid" or anything technical.
Bitcoin is a pure ponzi scheme. It's not being viewed primarily as a medium of exchange, but as an "investment" A credit card, debit card, and Paypal are mediums of exchange. But Bitcoin is being treated as an investment with the EXPECTATION it will increase and people will cash out.
But like all ponzi schemes, cashing out depends entirely on selling your coins to someone else who will buy them at a higher price. Bitcoin has no other liquidity.
Bitcoin is not a store of value, it is only a good transfer medium. It only goes up when people use it, like those Chinese using it to transfer money. When the transfer is done, it will fall back to where it was. Bitcoin price is correlated to amount of transactions.
Also, Bitcoin goes up when there are a lot of speculators, when those speculators go away, Bitcoin will fall back. I can't believe people are so stupid to use Bitcoin as a store of value. If the Fed prints money and people don't buy Bitcoin with that printed money, the Bitcoin price won't go up. And they won't buy it, because it isn't a store of value. You can buy some pizza with it on the internet and that's it.
A lot of what you say is true, about any kind of monetary object in general. But its not the whole story, keep searching.
Bitcoin trades about 1% to 2% of it's market cap per day. So, that means that the vast majority of people are holding bitcoin, not trading it.
And those 95% of people holding it, are ALL EXPECTING a RETURN on their "INVESTMENT". Just look at all the comments from coinheads on here. ALL of them expect a PROFIT. The vast majority of people aren't treating bitcoin as a transactional medium, but are speculating.
So, consider bitcoin the same as a stock. Tell me, how many people would invest in a stock where the company only has a good idea, but that idea isn't even proprietary. And the company has zero assets, zero backing, zero cash flow, and near zero liquidtiy. and will NEVER have anything and will never produce anything. And yet this company has a $3 billion market cap?
Who thinks a company like that is a good "investment"? People confuse the technology (blockchain) with the "company" bitcoin. They are not the same.
The ONLY way those 95% of people holding coins can get their money out, is by selling their coins to some sucker who want to pay more for them.
For all the bitcoin speculators, answer this question. How many bitcoins will you BUY when the price is $500? $1000? Becasue if you aren't willing to buy, then who is willing? Becaue you need buyers if you want to be a seller.
It's going to get very interesting when a sovereign puts Bitcoin in its FX reserves. You haven't seen anything yet...
Yeah, they'll put bitcoin into their FX reserves, right after they include Zimbabwe dollars, penny stocks and unicorn shit.
The idiot brigrades get real fired up at the mention of BTC....
You don't even know what bitcoin is, do you? Ca'mon admit it.
There is no scenario in which Bitcoin is allowed to thrive and governments voluntarily allow it to continue, and subsequently lose control of their tax bases as people eject from the existing financial systems around the world.
Honestly, fuck with their tax base and see how fast the shit really does hit the fan. And no, it's really not that complicated to screw you. Shut down a few powerplants and repeat the northeast blackout of 2003, but do it in a few more cities along the entire east coast this time and leave the lights off for a while longer as you not so tactfully remind peoople that the electricity can simply be shut off. See what happens to the value of Bitcoin then, and good luck buying food and water with BTC.
I can hear the conversations now, "Listen, I promise that when the electricity comes back on, I will electronically transfer you .0235 of my Bitcoin for that roast and these potatos-- No man, I'm serious! I'm gonna do it. Look, I can write you an IOU if you want... Do you have a pen and a piece of paper I can borrow?"
P.S. You don't have to look any further than what they just did to the guy who 'might' 'possibly' be the creator of Bitcoin in Australia. They certainly didn't call him and invite him over for brandy and a cigar. Sure, details are still emerging and it might not even be the right guy, but you get the point as to how governments feel about this. This will not end well for the holders of BTC.
Place your bets.
So ingenious it's time to create a BTC2, BTC3...