Patrick Byrne: Why Cryptocurrencies Matter

Tyler Durden's picture

Authored by Adam Taggart via PeakProsperity.com,

This week we talk with Patrick Byrne, CEO of Overstock.com, and rare courageous voice within corporate America raising concern that powerful interests on Wall Street are destroying US companies for profit, robbing investors and destabilizing our financial system in the process. 

Byrne has been an early advocate for digital currencies and their potential to protect financial wealth from the massive policy missteps being undertaken by the Federal Reserve. (In 2014, Overstock.com became the first major retailer to accept Bitcoin payments.) 

In this week's podcast, Byrne details out the promising potential of cryptocurrencies and the blockchain, as well as his thoughts as to whether they will be able or not to evade subversion by the world central authorities:

In the 1980s, I was a graduate student at Stanford in philosophy, but with a heavy quantitative and logic approach. I studied the mathematics that underlies cryptography. It’s called computation theory. It was a fascinating field, probably the only religious experience I’ve ever had in my life. I felt like I was seeing the face of God -- I loved it.

 

So, in about 2012, I was reading Fast Company or Wired, and I saw this blurb about this new form of money that no government was behind, based on cryptography. And, I realized, Gee, this is like an application of that math I’d studied 30 years earlier. Someday I want Overstock.com to be one of the first companies to take it.

 

So, on December 19th, 2013, a journalist interviewed me. Near the end of the interview, she asked, “Are you ever going to accept Bitcoin?” And, at the time I thought in maybe a year and a half I’d get around to doing it, so I said, “Yeah, I hope someday that we'll do that.” She put that in her article, and I started getting Google alerts from newspapers in Thailand, in South Korea, in Africa. I mean, that little mention got picked up all over the world. And I realized, Geez, there’s a subculture around the world who is waiting for this.

 

So on January 1st, 2014, we started working on it. We put 40 guys in a room, sliding pizzas under the door so they could work day and night. And, by January 9th, we got Bitcoin up. As soon as we announced it, it became global news. At that point I realized that the world was ready for this earlier than I had expected it to be.

 

Bitcoin and other cryptocurrencies are a form of money that's a stable field that the government can’t destroy and can’t distort. Because its creation is governed by the laws of mathematics. It can’t happen any faster or slower than a certain rate, and it all sort of self-adjusts. What that means is -- unlike Janet Yellen, who can sign something and whisk 85 billion new U.S. dollars into existence -- there’s nothing she can sign that will whisk new Bitcoin into existence. So, cryptocurrencies in general give us a stable medium through which we can communicate our information about values and prices in a way that no government mandarin can distort or usurp.

 

For the predators who have used our central institutions to predate on the rest of humanity, it’s a very bad development. 

Special note: at the end of the podcast, Patrick extends an offer to listeners. Those interested in taking him up on it can click here to do so.

Click the play button below to listen to Chris' interview with Patrick Byrne (46m:35s).

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Raffie's picture

HELL YA CRYPTOS MATTER!!!

PM & Cryptos are against big gooberment.

 

Mercury's picture

Bitcoin and other cryptocurrencies are a form of money that's a stable field that the government can’t destroy and can’t distort. Because its creation is governed by the laws of mathematics. It can’t happen any faster or slower than a certain rate, and it all sort of self-adjusts. 

 

Not sure that's true...

BaBaBouy's picture

They Will be gotten "under control" soon enough by CBers' ...

runningman18's picture

There are plenty of people out there with the knowledge to launch any number of cryptocurrencies, set aside the fact that all the international banks are building their own blockchain based system.  That's why cryptocurrencies are inherently worthless.  Anyone can make one, so what makes one worth more than another?  Answer:  Fad and the enticement of the mob.  Problem is, the mob is fickle, and while a cryptocurrency might be worth thousands of fed notes today, it can crash to dust in an instant tomorrow.  The banksters plan to back their crypto with capital and coercion, and the masses will buy in because of this, leaving all other crypto by the wayside.   

SethPoor's picture

Bitcoin Fanboys are always falling back on their whole “Bitcoin is decentralized” argument.  Well, technically speaking, no duh.  Currency in someone’s pocket is always literally decentralized?  In all actuality, Bitcoin is heavily centralized.  In fact, the centralization of Bitcoin is one of the supporting pillars in the Cult of Bitcoin, even though they call it the exact opposite of what it is, or in this case, what it is not.  Just like Orwell wrote in the oft-quoted novel, 1984, we all understood what is meant by the Party slogans of  “War is Peace”, “Freedom is Slavery”, and “Ignorance is Strength”.  Too bad there was no block-chain when he was writing his dystopian novel, or perhaps he would have put “Bitcoin is Decentralized” as the Party’s fourth slogan.   People who say that Bitcoin is ideal because it is decentralized do not understand that it is the exact opposite that is of decentralized.

We can start with a few fundamental ways that Bitcoin is more heavily centralized than we are often asked to believe.  First and foremost Many people just turn on their phones and expect them to be connected.  You see, from the decentralization argument, ask yourself how many places accept, exchange, trade, and transact for their businesses in and with Bitcoin?  Oh yeah, a handful.  Yes Bitcoin is the hottest thing out there since stuffed-crust pizza, but in the grand scheme of financial and market things, it is a Windows Phone getting crushed by the competition.  There are not 8,000,000,000 people all using Bitcoin, and each individually verifying the ledger, rather, there are like 10,000,000 people trading Bitcoin in a few places like Coinbase or Bitfinex.  The latter of which was hacked in 2016, and forced members to take a 30% haircut to on their crypto to “share” and cover the losses.  Decentralized currency?  OK.  Centralized losses? Oh yeah.

Further decentralized claims that just don’t pass the sniff test have to do with ease of use, convenience, and inability to be tracked.  Well, we all should know, especially our community, that anything can be tracked with enough time, resources, and attention, so we won’t go there.  Luckily, most people are not at the top of the list for scrutiny yet, though technology could quickly solve the “privacy” benefits the Bitcoin Fanboys cheer so often about, and it would be a safe bet that governments of the world are actively trying eliminate any privacy and actively trying to scale up tracking to real-time tracking, on-demand data queries and other extractive digital forensic techniques that the average person is not privy to.

So let’s finish the decentralized theme of 1000 cuts with a word on ease of use and convenience.  Ever been in a Wal-mart with a full cart, the ice-cream melting and the computer payment system is down?  You see, Bitcoin requires electricity (fail), and no, random people and strangers are not meeting up Craigslist style exchanging physical virtual-bitcoin addresses printed on little pieces of paper in back alleys or in the back Starbucks.  The “My Bitcoin is offline” is all hype and no substance.  Good luck with your offline USB wallet falling out of your pocket and into a lake or the ocean, cause circuit boards don’t like water, and good luck with the “offline” wallet that accidentally gets washed in the back pocket of a pair of jeans that also had some Kleenex.  Offline works about as well as a pen with no ink trying to write on a wet 3×5” index card.  

In addition to the 1000 cuts already mentioned, Bitcoin requires connection to internet (fail), connection to the exchange server, (fail), access to ledger (fail), and since it takes two to tango, the person on the sending or receiving end also must have electricity, a medium of storing the Bitcoin, properly configured wallet, connected to the internet, connected to the specific servers or exchanges to conduct the transaction, and also have access to the ledger.  If it indeed takes two to tango, points of failure are therefore multiplied by two, and soon it is clear that Bitcoin has very, very serious flaws with the decentralization theme .

Bitcoin can be taken down sniper style, Assassin’s Creed style, and even with the nuclear option (Internet Kill Switch).  Bitcoin is big and slow and requires tons of  CPU processing power, fast, beefy ram, and commercial grade graphics cards, not like the one some Youtuber runs on his Minecraft rig, but rather, think Hollywood Visual Digital Effects caliber graphics cards.  These are very, very high-end rigs, so high-end that it is really only companies with serious money or investors who can afford them, and then afford the electricity to run them 24/7, not just to mine the Bitcoins (no way a $299 3-year old back-to-school bundle laptop with a printer and USB flash drive could do anything bitcoin intensive.  It would be like hand-painting bar codes on the products for an entire grocery store.  That just won’t happen.  It is also resource intensive to compile and maintain the ledger.  This is not even like bringing a knife to a gunfight.  It is more like being blindfolded, hands tied behind the back, and throwing water balloons in a gunfight.  Some of the assumptions needed for Bitcoin Fanboys to state their case are downright hyperbole, which is fitting, seeing as how the move has been parabolic.

 

We are all told the Bitcoin is the block-chain.  No. Bitcoin is not the block-chain, but rather, Bitcoin just uses a network-based data verification protocol generically referred to as “the block-chain” by people who actually understand network data protocols.  Remember when the World Wide Web was considered the Internet, only to find out that it was just one protocol using the Internet?  To say that Bitcoin is the blockchain is to say that Ford is the car.  Ford is a car that serves the purpose of transportation, among many different types of cars and means of transportation, and as such, Bitcoin is a digital fiat (by fellow Bitcoin Fanboys) currency that uses the block-chain to transact, and it is only one of the many different ways to transact.

Lots of things can use the block-chain, and those things don’t even have to be tech related, although Bitcoin Fanboys are heavy on the marketing hype, but short on real-world block chain usage.  Think about how many times a group of college students go out to eat, or out to the club, and they split the bill.  When the bill arrives, each person verifies what they owe, they pay their part, and (hopefully) give a tip (the cost beyond the food, drinks and entertainment consumed).  That’s the block-chain folks.  It is me, you, and our three other friends splitting a tab up five ways, and making sure everything zeros out.  It is as simple as that.  So the next time you find yourself under a hypnotic “Bitcoin is the blockchain” trance, you know immediately how to snap out of it.

Proper nouns use capital letters.  Those are names of people, names of countries, or names of brands.  Dollars?  Don’t be fooled.  There are US dollars, Australian dollars, and Zimbabwean dollars, so, “dollar” is spelled with a lowercase “d” .  There are also Argentine pesos, Cuban pesos, and Mexican pesos, But what is Bitcoin?  There is no such thing as US Bitcoin, Australian Bitcoin or Zimbabwean Bitcoin, It’s just Bitcoin.  Bitcoin is a product, kind of like Pokemon, and I mean no disrespect to Pokemon, because Pokemon are all defined with names, specific qualities, and other distinct features that properly distinguish one Pokemon from another.   But what is exactly one Bitcoin?  Sure, we know that Bitcoin is an answer to a math problem, but that’s like saying “b” is a letter in the alphabet.  Sooner or later we know that.  At best, Bitcoin could be defined as an operating system, like Ubuntu Linux, Mac OS X, Android 6.0, and Leap Frog.  Yes, the computers for babies.  There is an operating system there.  There are literally 1000’s of computer operating systems, just like there can be thousands upon thousands of cryptocurrencies, and they all share one common feature: Sooner rather than later operating systems become obsolete.  I mean, I haven’t seen anybody walking around using a Motorola Razr lately, but I could be wrong.   Products are not money.  Products are are fads.

 


MayIMommaDogFace2theBananaPatch's picture

If there's no internet or no electricity, BTC will be the least of people's worries -- even people holding a lot of BTC.

3LockBox's picture

Those are some deep pockets paying the pumpers to push the propaganda.

I can't even keep up....

Hmmmm wonder who has deep infinite pockets?

Implied Violins's picture

Yeah, I've noticed on every crypto article there are lots of pro-crypto spam-bots in these threads, more than we can keep up with.

As I've said before, I hope these trolls are getting paid in gold so they actually have something to take home for their efforts. There are just TOO many such posters here for this not to be an organized campaign, and crypto is the #1 choice for a world-wide currency in a "Multi-Polar World" (e.g. NWO).

As always: Who Benefits?

King of Ruperts Land's picture

You are funny troll. I know about gold. Its great. The problem is that you know nothing about crypto. If you had any experience with cryptos you would know that getting paid in them is no problem. You could even buy gold with them if you wanted to.

Implied Violins's picture

At least I troll for FREE. How much are YOU getting paid?

I know enough about how computers and programming work to know that ANYTHING can be hacked and controlled. Anyone using cryptos has to worry about that *and* the entire infrastructure put in place to mine and trade them. That's just far too many agencies involved crossing too many state and country lines for my comfort level. Too many areas that can be controlled/taxed/eliminated/corrupted at a moment's notice.

Better stay out of the sun, pal. I hear it turns dudes like you into stone.

King of Ruperts Land's picture

Exactly. Before we think of Bitcoin we will be scrounging for diesel for generators and splicing fiber to get our mining node back online. All the time we will be crossing our fingers that our nukes wiped out most of the Chinese mining farms so that we will make a killing when we get to mining again. This and ensuring every female we come across in the post Apocalypse is impregnated to ensure survival of the species.

Theta_Burn's picture

Holy crap man...well said.

King of Ruperts Land's picture

Anyone who knows how bitcoin works will see that you are a long winded simpleton spreding manure, and calling it rose petals.

I won't even waste time on you. Every one of your points is BS and dead wrong upside down.

"At best, Bitcoin could be defined as an operating system"
everything this person says is as ludicrous as this.

OK not wasting time.

Golden Phoenix's picture

You used lots of words and boldy stuff. Therefore you must be right.

mrtoad's picture

Then make one. And they're not all currency. Look into blockchain technology. JP Morgan have a patent on their own crypto, but who will use it? no-one has to use it. Its not about it being priced in US dollars. In the future you may be able to buy a house with 1 bitcoin based on its own purchasing value.

King of Ruperts Land's picture

Banks working on blockchain because its the latest greatest thing is like the US army working on Improvised Explosive Devices because the enemy peasants that they are fighting are having so much success with them.

Block chain technology can only be used to defeat the banks. It doesn't help the banks one bit. They already have us by the throat. Blockchain is something that makes us free. It won't be of any use to the banks.

SILVERGEDDON's picture

The number of crypto currency cheerleader articles and hype in the market is disturbing, to say the least. 

Last time there was a marketing campaign like this, it was a close tie between HELOCS, and zero apr credit cards for stripping money out of muppet pockets.

BUT - THIS TIME, IT IS DIFFERENT.

Yeah, sure. 

MayIMommaDogFace2theBananaPatch's picture

Never received a solitcitation for Bitcoin in the snail mal -- still receive them all of the time for CCs...

AE911Truth's picture

They will try. They will fail. Too many are aware of the CB crimes.

MEFOBILLS's picture

Bitcoin and other cryptocurrencies are a form of money that's a stable field that the government can’t destroy and can’t distort. Because its creation is governed by the laws of mathematics. It can’t happen any faster or slower than a certain rate, and it all sort of self-adjusts.  

Not sure that's true...

____________

 

You are right, it's not true.  Mathematics devoid of morality is the underlying principle of bank credit and neo-liberal monetary orthodoxy.  Adam Smith also considered markets "magic" and self regulating due to some sort of wonderful  self adjusting force, as if he was Isaac Newton defining motions of the universe.  

E. Michael Jones describes difference between this sort of mathematical bent that English/Jewish monetary theorists have been proposing as science.  Our ((friends)) always hide behind a mask for usury.  German economists like Frederick List have stood in stark contrast to this English/Supposed Scientific/Mathematic approach to money. List's economy in Germany proved the English/Jewish Finance Capital theories  wrong.  ((The primary reason for attacking Germany in WW1 and WW2 was this very reason, as it struck at the heart of Jewish monetary method)).

The Central Banks are a private cartel, promoted and funded into existence by banking corporations.  

Bitcoin is mined into existence, therefore it is scarce relative to goods and services, hence its market value.  Bitcoin also has value as an escape valve due to incredible mismanagement done by "for profit" corporate banking.  

But, one bad does not make another bad correct.  Both corporate banking and "scarce bitcoins" are poor "money" for running an economy.  Neither are law based, neither flux in proportion to goods and services, neither can be channeled into the commons.  

A real problem is that legal function of money has not been made moral.  Money itself has not been put into its proper domain - it has been usurped.  Instead we have quants and economists who are usury funded shills.  So, people have no where to turn.

Barren Metal

https://www.youtube.com/watch?v=zT0Yp28WN18

 

Herd Redirection Committee's picture

Say you find out the market is manipulated (not today, but back in the 80s, for the sake of argument).

Do you: partake in market manipulation

or

expose the manipulation.

Well, I will tell you right now that one will have a much greater pay-off than the other.  I see Bitcoin having the same problem.  Are people that REALLY do their research going to find out how to honestly make a few bucks from it, from encouraging widespread adoption, or are they going to look for the (immoral) quick way to make a lot of cash?  Say setting up an exchange and then one day the exchange gets 'hacked', and you force everyone to take a 30% haircut?  

Run an ICO, but it gets 'hacked' first day, and the ICO is cancelled?  Use an online wallet, and your ISP gets 'social engineered' to reset your password, and you are 'hacked' again...

It just seems to me that it is a lot easier (currently) to find a way to scam people out of a few million, in a very short period of time, than it is to provide an actual, honest service and make a few thousand at  a time, eventually equalling a few million? 

 

esum's picture

can someone explain to me with 1 aug there will be bitcoin cash AND bitcoin... and supposedly a holder of bitcoin will "receive" or "have" an equql number of each.... and ??can actually spend both??... what am i missing here

 Aside form that i understand they are doing something to "speed up processing" with bitcoin cash and speeding up the mining or creation of bitcoin cash... why?

And intrigue in the crypto world says that people can put pressure to devalue bitcoin because some of the big holders want to switch to bitcoin cash... so they will dump the botcoin and buy botcoin cash... isnt that shooting oneself in the foot... or should i say wallet..? 

And then after 1 Aug there is talk of segwit2... wtf is a segwit.... 

and that is the problem i have with any of the crypto currencies.... there are "geniuses" holding large amounts and apparently can hammer one to benefit the other..?? 

and lastly who the fuck is satoshi whatever his last name is... and hwo do we know its not a government entity.... of course ... our government would never do anything to ahrm its citizens.... right? like spy and violate our rights... 

of course we know that NSA / CIA / FBI just gather every fucking electronic transmission and store them to keep us safe from jihadis... right? and future reference...

Mercury's picture

Bitcoin and other cryptocurrencies are a form of money that's a stable field that the government can’t destroy and can’t distort. Because its creation is governed by the laws of mathematics. It can’t happen any faster or slower than a certain rate, and it all sort of self-adjusts. 

 

Not sure that's true, especially after the BTC-e takedown.

All media of exchange and stores of value are, at some level, based on TRUST.

dasein211's picture

That's why you have an option to hold it in cold storage on your person and not in An exchange. Anyone who had all their crypto on an exchange is a retard.

Mercury's picture

Well then it's sort of a lightweight version of gold except only as robust as the media it's stored on. 

A different collection of trade-offs but not exactly a miracle...

GoldVu's picture

Very true - Fort Knox is empty & Comex / LBMA / GLD are full of paper.

Any system of money/currency is only as strong as its system of internal controls, checks & balances. No-one is allowed to check Fort Knox or the custodian's vaults for the GLD, hence why they are empty.

Even if it's all in place, it doesn't mean that the system is unbreakable, which is why we have Classic Ethereum. 

Even so, I'd rather take my chances with a fully gold & silver backed digital currency that I can have physically delivered from the vault to my home when ever I want.

With a choice of taking a risk spending $2000 on a Bitcoin that I can't use in the off-line world, or spend $2000 on a 100% pm backed digital currency like BullionCoin that I can use both on-line and off-line as I see fit - I'd take my chances on BullionCoin http://www.goldvu.com/bullioncoin.html.

Risk is a part of every snowflake's life no matter how much they wish to disbelieve - it's impossible to account for it all, so it's about mitigating that risk as well as we can. Champions Box clever, think ahead and aren't afraid to look for better yielding lower risk strategies.

Raffie's picture

Why would you own a gold backed crypto?

We all know PM prices are being man handled by the powers that be. So instead of just buying gold to have in hand you want to complicate your life? Ok....

Also would own silver over gold for many reasons....

Just saying.

Herd Redirection Committee's picture

If it helps me get my PMs over a border....  That would be reason enough, wouldn't it?

Same reason BTC is popular in China...

Placerville's picture

Sprott has the physical, he should give everyone in his trust finds the ability to convert their shares into new PM backed crypto coins.

Thoresen's picture

As an infinite number of crypto currencies can be created, ultimately they will be of no value. In the short term the early adopters, if they sell at the right time, get a Ponzi scheme profit.

dasein211's picture

Just like the infinite number of paper currencies. Let the free market decide which cryptos get used and which ones are junk. Then it will ACTUALLY be a free market in action.

CorporateCongress's picture

I think the limit is actually quite close to 1 per country . 

Thoresen's picture

Paper currencies go to zero too.

dussasr's picture

Re: As an infinite number of crypto currencies can be created, ultimately they will be of no value.

 

That's like saying if you make your own coin it will hurt the value of the USD.  Or that the existence of the Venezuelan Bolivar hurts the value of the Euro.  Anyone can create a crypto coin, but that doesn't mean the market will give it any value.  

Only one crypto can be ranked number one in market cap, thus it is scarce despite the existence of its competitors.

mtl4's picture

Argument doesn't hold because it is illegal to create your own coinage in most countries (just look at history, plenty of examples).......I just think the governments haven't figured out how to deal with the peer-to-peer issue any more than they did with file sharing (ie who can they go after to scare people straight again).  If that never comes then I suspect they are positioning for the endgame, they won't allow private money without a fight (assets yes, money no). 

SeuMadruga's picture

One suffices to bankrupt someone who've made the wrong cc choice...  :-(

tmosley's picture

Your argument does not match the facts. If you could destroy the value of one fiat currency, stock, or even element by introducing more fiat currencies, stocks, or artifical elements, then the world would look a lot different than it does today.

The mantra would have been "Crash JPM, open publically traded corporations!"

But of course, that is ridiculous. You guys are just grasping at straws.

Jay's picture

Did US dollars become of no value when Zimbabwe inflated their currency to oblivion? How about the Swiss Franc? Similarly, a badly managed crypto currency doesn't affect the values of other crypto currencies. Having multiple crypto currencies to choose from doesn't cause inflation either as one currency must be traded to obtain the other.

yogibear's picture

US dollar is in a free-fall. look at the recent chart.

Rick Cerone's picture

Patrick is another phag salesman for central decentralization.

Surging Chaos's picture

Just wait until offshore wealth makes its way into Monero, the king of privacy.

Once that happens, game over.

 

GOSPLAN HERO's picture

Cryptos will be controlled by gubment.  Da gubment wants to oversee-monitor-control-stop-take-tax-deny - ALL financial transactions. It's 666, comrades.

GlassHouse101's picture

Don't you think they would have done it by now?? lol . . they can't do anything!

aloha_snakbar's picture

Crypto groupies be trolling like a $2.00 Mexican hooker. If it was such a good/cool deal... people would not be talking about it so much...

tmosley's picture

Not an argument.

People talk about good ideas.

Herd Redirection Committee's picture

Honestly, though, T, if I found a great deal wouldn't I want it all for myself?  Why would I need to publicize the deal?  Unless I was looking for a buyer.

GOSPLAN HERO's picture

Can I buy a sixpack of beer with shitcoin?

Rick Cerone's picture

No, the developers want to turn it into XRP.

NoBillsOfCredit's picture

Yes, I'll sell you a whole case for a Bitcoin!

Whisky Zero's picture

If you have the price of a six pack in your wallet.