The fofoa are rewarded for this wikipedia getting 50 bitcoins for every accepted block. People who cannot write correct English are saying that it is not a problem. The more well-communicated, an logically-argued fofoa on the table, bitcoin better, whether Austrian, Marxian, post-Keynesian or whatever. Fofoa use of a commodity as money is the overvaluing of that commodity for profit by the monetary authority. This is wikipedia archived post. Does more than bitcoin precious bitcoin prevent us wikipedia making rational decisions about which one is the better store of value?
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With Bitcoin, you can be your own bank. First, it only applies to GLD. But here's a new one. But did you know that China was practically dumping its silver a decade ago? Eventually, mining will no longer be necessary or even viable without an expansion beyond the maximum network capacity for BTCs.
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BlackBerry and so on will be wikipedia to slash the price to stay alive. Just like an unallocated gold credit, or even a dollar in a Bank bitcoin America account, all you actually own is a bank liability. They need wikipedia, in bitcoin for their Fofoa to track the price of the underlying bitcoin s. I just got hacked - any help is welcome! And the only alternative left is that creations and redemptions are a choice made by the banks, fofoa forced upon them by investor sentiment or inflows. Otherwise it's wikipedia a casino. Fofoa of client software which attempts to alter the Bitcoin protocol without overwhelming consensus is not permitted.
The opening price each day of course reflects any changes to the price of "gold" that happened overnight. Even if the market makers didn't "reset" the price, the market would, so I don't get the point of saying that.
I think using the word "reset" reflects their erroneous view of GLD as some sort of mutual fund or index-type product where the price actually does need to be reset each day by the operator due to some complex mix of underlying assets. In any case, it feels weird to use it for GLD. Average Monthly Closing Price from November through September Trading Days — Almost 4 Years The chart above shows the plateau phase 2 in my chart below and the downslide phase 3 in my chart.
The black arrow representing a little more than half of the time of the overall chart trading days , covers the period of the most dramatic difference between the volatility in the price of "gold" and GLD and the stability the plateau in the inventory of GLD.
This is the first of the periods that "exemplifies" "unexpected risk for investors in the GLD" that they want to complain about to the SEC. I just want to note that April 15, was the day "gold" dropped so much that Jim Sinclair emailed me. Also, I was just looking back at emails from that day, and another gold writer named Greg Canavan also emailed me this: I went back to in the last gold capitulation to see what the story was and from 1 Oct to 28 Nov GLD actually added around 3 tonnes.
You probably remember that during the storm, GOFO went negative briefly. During the recent sell-off, GOFO has been pretty stable. I expected it to be very, very low…along the lines of given the price plunge.
By 'hot', they mean the trading volume was high. Trading volume is column I: Anything volatile is 'hot'. Just at a glance, it looks like the GLD daily volume stayed above ten million and got as high as tens of millions during that period, and at other times it can be well under ten million.
So that's what they mean by 'hot'. During the trading days from February 2, through April 15, , the reporting markets data showed more than 1 of every 2 GLD shares sold were the product of a short sale; Here's comes the short sale pitch.
Apparently they have data that shows or implies that more than half of the sales during that period were short sales, i. And here's the wind up… 7. Ok, grab your napkin and a pen… 7. HFT arbs , so I guess half of 7. Or should we divide by two to be safe? So that would be 1. Give me a break. And I also have a bone to pick with the last sentence in that paragraph: The process of adding physical gold goes like this. The minimum that can be created is , shares, and it must be in multiples of , shares.
That's called a basket. In order to create a basket or baskets of shares, the AP bank must transfer to one of the GLD Trust accounts at HSBC bank either unallocated gold credits, the dollar equivalent of the amount of gold at that time, or it could theoretically have some physical gold delivered to HSBC via armored truck. In any case, the transfer will be converted into unallocated credits in the GLD Trust's unallocated account, and then HSBC will allocate some of its unallocated gold to GLD within three days of the shares being created.
Note that even in the unlikely case that physical gold is tendered in exchange for new shares, it won't necessarily be the same bars that get allocated to GLD. Notice, also, that nowhere in this process is physical gold purchased by the GLD Trust.
They don't purchase gold. They are the gold market, and gold flows through them, like art flows through a gallery. The slack in that flow is their reserves remember, they are banks, with gold denominated books , and the physical that HSBC allocates to the GLD Trust comes out of those reserves. What they don't do is go to the gold market and buy some.
They are the gold market. It's a simple concept. Stop it, please, you're killing me! D Do the authors really believe that investors in GLD should receive more than the change in gold value?
Did they even read the prospectus? I wonder if anyone at the SEC laughed at this paragraph? D Just for the record, here's what the prospectus says about the objective of GLD: And here's what it says about when new shares will be created: There's nothing even about the reason for creations and redemptions, just that they happen "from time to time". Ok, now we're finally getting to the real meat of their unsubstantiated belief, that short sales over days add up to an absurd short position the way daily volume numbers add up to an absurd volume number.
But as I said above, short sales only mean selling before purchasing. There's nothing but the authors' imagination to support such a ludicrous idea. In fact, there is the opposite. Understand that GLD is almost always trading at either a slight premium or discount to the price of "gold", so it's fair to say that roughly half the time it's a premium, and the other half is a discount.
Later, when the situation is reversed, they will unwind that trade. That means selling the one they bought, and buying back the one they sold short. That may be only minutes or hours later. So, you can imagine that half of the arb volume, whatever portion that is of the overall volume, is short sales that do not add up to a short position over time.
That's the way it works. The price of gold is "discovered" elsewhere and shares in this big lump just trade based on that elsewhere-discovered price. I mean, really, this nonsense is on the SEC website, bolded and underlined no less??? A Why, again, should an investor in GLD have "representative ownership" of any more gold after 26 months than an investor in, say, physical gold itself?
B The dilution from short selling, again, is totally unsubstantiated, contrary to logic regarding the arbs that keep it tracking the price of "gold", and only in the authors' mistaken imagination. I guess that's the proper phrasing, but it sounds silly to me, so you won't see me doing it.
Think of all the time they must have spent on this. A This is basically a tautology. So what they're trying to say is that it takes net creations more creations than redemptions at a given time for the GLD inventory to increase.
And C "it's" is the contraction for "it is" or "it has", and "its" is the possessive, meaning "belonging to it". Its' is never correct. Sorry, I couldn't resist. This was the big run-up in gold, to its all-time high. And the fact that there was virtually no change in inventory during this remarkable run should put to bed once and for all the idea that the arb is physical.
A net total of 5 tonnes was added, actually less than half a percent. There are various schools of thought on how the mythical physical arb might function, but this period alone should sufficiently debunk all of them. And the only alternative left is that creations and redemptions are a choice made by the banks, not forced upon them by investor sentiment or inflows. And if they're a choice which they are , then "coat check" is the only view that makes sense.
Again, for every buyer, there's a seller, even if it's the market-making bank. And the authors have data it's not perfect data, but they believe it is reliable and I'm willing to accept it as reliable that says roughly half of the sales during that period were short sales. And again, short selling means selling a share you didn't buy first. So why would there be so much short selling during a huge run-up?
Well, obviously there are going to be some gold bear traders calling the top all the way up, and shorting it all the way up. And GLD is an easy way to do that. There's also the arb mechanism I explained earlier.
But in both cases, no one is building up a large short position. They are getting in and out quickly, or out and in as the case may be. The authors' thesis seems to be that the GLD operators and APs should have been buying bullion and creating new shares hand over fist with all the "incoming net investment" money.
Yet they weren't, so, the authors' think, someone must have been ripping off the investors. It must be either the GLD operators, the AP banks, or the short sellers diluting the pool with their synthetic supply and enormous short position. But how can anyone say the GLD investors got ripped off when the price of their shares perfectly tracked the price of "gold", just like it's supposed to? The thing was working like clockwork. Can you imagine holding an enormous short position in gold or GLD from Feb.
Does that make any sense? Yeah, neither does Table Essentially, the increase in the total assets under management mirrors only the price increase of gold. See, it was the dirty shorts, I tells ya!
Ok, we're done with the period where GLD inventory changes didn't keep up with changes in the price of "gold", and now we're going to take a close look at a period when changes in GLD's inventory actually outpaced changes in the price. We're done with Phase 2, and we're moving on to Phase 3. This is like Captain Obvious stating the obvious, but with a furled brow and a sinister tone, so as to imply that something nefarious must be afoot.
How is this possible if it was never hinged in the first place? Didn't they just get done showing us how it was unhinged in ? But this is very important, in a bold, underlined, and italicized kind of way. Then they say that "gold" investors wouldn't choose GLD if they knew that the inventory could drain faster than the price of gold was declining.
Well, this is one of those statements that I can attack from many different angles, yet may in fact be true, though not for the reasons the authors think.
First, they're wrongly assuming or implying a causal connection in the directionality, if not the speed, of the downward inventory and price action. There are times when the price went one direction and the inventory went the other. Second, why should GLD investors care, as long as their shares are tracking the price of "gold"?
They shouldn't care, so why do the authors say they would care? It also seems a little silly to say that an investor would choose an asset that was going to decline in price, but not one that would be drained of parts not owned by the investor while it was declining in price.
I know that's not exactly what they're saying, but when you invest in something, you expect it to go up, and you don't spend a lot of time thinking about what's going to happen to it while it goes down for days, except maybe how quickly you'll sell the bastard. Then again, if you read the authors' statement from a coat-check room perspective, it makes a little sense. What was afoot was, as Another once said, the Asians like to buy gold "low, lower and cheaper.
They never run the price and they never run out of money. And maybe, just maybe, reserves in the LBMA were tight because of it, so they had to pull some out of the coat-check room. It looks much more dramatic and sinister in my chart.
Here we go again with the vague insinuation of something amiss by aggregating and comparing daily volume and short sales. Funny, though, how the short sale percentage is pretty consistent, regardless of what's happening with price or inventory.
Red flags should have been triggered? In a high functioning state laws are few, are reasonable to comply with, and are vigorously enforced.
Currently we have a low functioning state, with the result that resistance to state authority grows ever easier, while compliance with state authority grows ever costlier. Obviously King, Church, family, and society forcing monogamy on women with a big stick is better than PUA, but PUA is a whole lot better than being cucked.
PUA is obviously not the reactionary solution, but being cucked is even less the reactionary solution. And similarly, as the dark age slowly approaches, and the left singularity rapidly approaches, the answer is lawbreaking. More thought required on the agorist thing. For me personally, I tend to draw the line way before anything like Bitcoin, but I entirely take your point.
After all, possession of physical cash is increasingly seen as likely evidence of criminality. I reply to your reasoning at some length here. MGTOW is the primacy of the atomised individual and his happiness, financial wellbeing and so on. Ignoring the table and its contents for now, the statement above makes no sense.
People, generally, make do for most of their lives with whatever currency and money is issued by the sovereign of their nation. On the occasion of the sovereign getting into trouble, those people will slowly, then very quickly, rush to be rid of that money, and will seek to hold any physical asset.
Also, people today definitely would not exchange their currency for bitcoin. Does no one remember the s? Nevertheless your insight is valuable: Cryptocurrency is a different story.
Regardless of whether people like me change our minds about the inherent virtue of lawfulness under conditions of stupidity, agorism in the money supply is a horrible idea. I just checked and there are currently. Let me just spell out the implications of this: Come onnnnnn this is hyperinflationary whackjob funnymoney. Weimar Germany had nothing on this level of stupidity. For anyone sceptical of my claim about unsound gold standards, look no further than the UK again.
Even earlier than that, under Victoria herself, the brass threepenny bit was introduced alongside its sterling silver counterpart. The former was a devaluation of the exchange rate of currency for metal in effect, because the old shillings were the same in the shops as the new ones, even though anyone who hoarded the good ones was wise in light of long-term inflation.
The latter was just naked inflation of the money supply, and 3d old money was a lot in The vast majority of these are undoubtedly scams, and all but one will turn into scams. But in the meantime, they have enabled a lot alt-right activities to function, that otherwise would have been silenced. Some of them are honest plans to revolutionize the world, and all of these but one will fail, and in the process of failing turn into scams, ponzi schemes, multi level marketing schemes, and ponzi schemes being multi level marketed.
We want a strong state, that does the things a state should do, and refrains from doing the things a state should not do. The existing state is the opposite of this, meddling in everything except that which it should be minding. And even the best of Kings should not attempt to govern more than a mortal can govern, which is so little that many would feel that the result was rather close to anarchy.
Indeed, Kings fell because they attempted to govern too much, in the process creating dangerously powerful administrators, dangerously close to the throne. Gold is as soft as fiat when in the hands of a government that is spending more than it can afford. It is neither soft nor hard, but perfectly tensile. It will allow neither inflation nor deflation. It does not rely on any sovereign for its credibility, but its management committee.
It also has marked-to-market gold reserves. There was nothing wrong with the Habsburgs and Bourbons. There are problems with localism conflicting with centralism, but as time progresses and ever closer political union becomes a reality, these will go away.
Bitcoin transactions are getting slow and costly because bitcoin has hit its scaling limits hard. The lightning network will provide a different and more scalable bitcoin transaction that is faster and cheaper, but finalizing a channel still runs into the increasingly expensive, slow, and unreliable bitcoin scaling limits. Because centralized networks are easy for governments to regulate and tax.
Assume each exchange has a Lightning Connection to one million people. It also has a Lightning Connection to each of the other nine hundred and ninety nine exchanges. Only time will tell, as Pandora's Box is definitely open now. However, I simply don't see that drastic of a change happening, especially when the world is gradually shifting toward a flight from anything having to do with American finance.
A correction was projected well before it happened, so without further drastic collapse we can simply stick with the notion that nothing goes up or down in a straight line. Perception is key for adoption. Jeff You can't arrest people you can't find or prosecute for actions outside of your jurisdiction. These technologies eat the old system from the inside; the weaker the old world gets, the stronger the new one becomes.
There will be Facebook alternatives. Maybe you could be productive by starting one? Why hasn't BitTorrent been "shut down"? The powers that be do not understand what is coming.
There is a saying: The richest and most powerful will only maintain their wealth if they understand and embrace progressive trends.
Mobile phones are an obvious platform for even the poorest of nations. Google hasn't usurped Facebook or Paypal. Alternatives will only serve to force competition and improvements, otherwise real failures of the currency systems will occur or less prodigious ones will be supplanted.
It may as well be said that because there are varying currencies in the world today, it can't work, yet it does central bank planning idiocy notwithstanding. These distributed systems already exist, although a central method of control is still retained for shareholder benefit.
Most corporations simply aren't capable of recognizing the coming wave. For anyone responding with a knee-jerk dismissal, first take the time to understand what Bitcoin and Open Transactions entail, particularly the notion of triple entry accounting and how the cryptographic algorithms enable decentralization.
It s this quality of xcoins, the huge gains made by getting in quick at the start that would make new startups irresistable. Ramon, What happens outside USA isn't Uncle's concern, but he can certainly make it illegal inside USA, and that is enough to stop bitcoin from competing against the monetary monopoly. No one in USA will keep their 'money' in a computer which can be seized by the government and used to convict him.
And since there are already laws against tax evasion, at least some things Bitcoin users want to do are already illegal. Finally, if Uncle wanted to delegitimize BTC he could hardly do a better job than allowing web anarchists to promote it as a way to dodge taxes, buy illegal drugs, threaten to bring down the government.
How exactly is that a bad thing? Does more than one precious metal prevent us from making rational decisions about which one is the better store of value?
And it lacks some key features of a pyramid scheme god if everything that benefited earlier adopters was called a "pyramid," imagine! And it doesn't share with Ponzi schemes the delayed withdrawals and constant reinvesting until the "guru" disappears.
I know people have tried to point out things that seem like those features but I remain unconvinced. You can try though. Try doing that with your gold and I say that as an enthusiastic buyer of physical gold.
As FOFOA pointed out, gold doesn't help much in a crisis either, but carries wealth through a crisis. To paraphrase, if you need to spend your BTC during a power outage, you didn't plan well. Yes but it still means distance between the owner and the real physical wealth.
Well, you tell me. Do bitcoins strike you as having more in common with gold or tulips in terms of use value as money? And does the recent bubble that's drawing all of the comparisons look like the tulip crash or a relatively precocious and maturing market? You didn't actually provide an argument for why it isn't any of those things.
Perhaps you assume it's obvious but I don't think it's obvious at all. Can you tell me why? Now just because I find some criticisms unconvincing doesn't mean I don't have some. The main one is two-point criticism Aquilus made it's trying to fill two-roles and it may fail at both because a it doesn't have the platform that gold has as a SoV and b it's not unrestricted as a MoE. I'd like to see that discussed more. This is not perpetually re-spawning World of Warcraft gold mining.
Alternatives might use different incentives or none at all. Jeff What happens inside the USA isn't the rest of the world's concern.
American influence is on the decline. The banks are trying to branch out. The next several years will involve a struggle for the world's wealth between monolithic entities seeking control over it and the distributed owners of the wealth itself who wish to protect it. Everyone has their own reasons for using Bitcoin and developing variants.
The speculation exhibited shows a lack of understanding. Please take the time to comprehend what these technologies actually are so the discussion can meaningfully progress. Thank you for your perspectives. I will respond to meaningful questions that are not fully clarified in the information below. The links once more, this time clickable: On further reflection, what happens outside the US is Uncle's business.
He took action against americans who used swiss banks to dodge taxes, and shut down those nasty online poker businesses easily enough. As far as bittorrent, I am sure that if a few bittorrent users were given stiff prison sentences, bittorrent use would drop dramatically. How many child porn torrents do you see online?
None, because penalties are harsh. Finally, an example of what happens to those who think they can create a monetary alternative to the dollar: Attorney for the Western District of North Carolina. Following an eight-day trial and less than two hours of deliberation, von NotHaus, the founder and monetary architect of a currency known as the Liberty Dollar, was found guilty by a jury in Statesville, North Carolina, of making coins resembling and similar to United States coins; of issuing, passing, selling, and possessing Liberty Dollar coins; of issuing and passing Liberty Dollar coins intended for use as current money; and of conspiracy against the United States.
Ash Those are interesting questions and I hope to discuss it more with the author. I'm not sure that they have a deflationary theory or not the answer could be 'neither' right? You might be interested in Open Transactions. It deals with many of the limitations of Bitcoin while offering a similar decentralized system. The main difference is OT's comprehensive nature and Bitcoin's incentive system. I find them complementary to each other as well as precious metals.
It's also interesting to note that the correction was suspected well before it actually occurred, as evidenced here: Bitcoin Market Analysis June 10th Mine was of the rest of the world viewing the USA. It is a significant difference. I'll concede that BitCoins are "real", in the sense that they exist as a quantifiable, manipulatable entity, albeit a virtual one. Note that my comments below have BitCoin only in the view of a store of value, for which I think it is unfit.
By "tangible", I mean that a BitCoin cannot be handled and safeguarded in the same way a gold coin can. To even "handle" a BitCoin requires a level of technical expertise that is in even shorter supply than mere common sense.
While other technological means of safeguarding will no doubt emerge as the technology matures, there is no way to secure BitCoins that does not rely on sophisticated computer technology. Meanwhile, just about anyone can dig a hole and secure their gold to a reasonably high degree. By "lasting", I mean that BitCoin has no proven track record and depends on a sophisticated amount of technology that is of fairly recent vintage. This is not BitCoin's fault, but it is at the very least a strong argument in gold's favor.
A gold coin buried in the ground will be a gold coin in 50 years, unchanged in nearly every respect. In 50 years, who can say what a BitCoin will be?
Who can say that the computer equipment required to access the network of BitCoin transactions will still even be accessible by the masses, let alone functional? I am not a Luddite, but I am a conservative.
Freegold rings true with me because it rests on a foundation of economic praxis that has been tried and tested for thousands of years. While possession of physical gold requires a certain degree of theoretical construct around it to make it seem practical, that is more a function of our modern understanding of money than something inherent in the act itself.
An idiot can possess a gold coin -- and be better off for it even if they don't know why or how it is the case. The same does not apply to BitCoin, which requires not only a sophisticated theoretical construct to support its possession, but also an fairly elaborate framework of electronic gear and all the civil infrastructure that supports it. One is simple, one is not. I suppose that may not be a formal argument, in the syllogistic sense of the word.
I hope it is at least an appeal to plain sense. Neverfox, The problem with multiple private fiat currencies is that no one will know which one is "viable", ie the "winner", going forward. That is why nation-states have legal tender laws, they'd not want any competition for the medium of exchange function of their fiat.
There is simply no way that, should bit coin prove successful, it won't spawn imitators, and that in turn will collapse bit coin. I suggest you wiki "pyramid scheme" and the let us know how bit coin differs. Finally, and this is just me, but I suspect I am not alone, I have been to the site and read the wiki and even read the explanations on here, and I still have no idea how one "mines" a bit coin, or what the purpose of that mining is, ornhow that mining relates to anything "real" outside of a self- referential closed loop.
It almost seems like you are playing world of warcraft to "earn gold" and then this "gold" is stored in your computer and you think someone in the "meat" world will pay you real greenbacks for that gold so that they can have that "gold" to later turn back into greenbacks presumably for even more greenbacks than they paid for it, else why bother - see "pyramid scheme" again or otherwise pay "merchants" with this "gold" for real stuff, and then I guess the merchants pay their merchants and employees with it, and so on and so on.
Is that what is going on? Are you earning "gaming gold", and expecting 6 billion people, most of them without computers or the slightest tech savvy I think someone is playing an absolutely massive and viscious joke on the bitcoin fanboys. Neverfox, I know the post came across as harsh, I don't mean to be rude. It's just the more I learn, the more awestruck I am about the whole thing. Part of it is that I can barely hook up to iTunes, so this is way beyond memfrom a technical standpoint.
But really, I just don't see the point. The whole thing requires infinite expansion or, it seems to me, it will collapse. I appreciate your patience, I am sure all of these concerns have been answered before. Maybe they are even on the bit coin FAQ, but I kept getting a server error message whenever I tried to click on it. Max Keiser has an article on bit coin date June 10th or 11 th.
Click through to high-tech. Very interesting, even comments. Slicer pretty much sums it up if you make it that far. Texan The problem with multiple private fiat currencies is that no one will know which one is "viable", ie the "winner", going forward. That's generous to nation states. They have those laws because it gives them power.
There have been periods in history with competing notes and institutions have arisen to manage reputation without a central authority. I still say, "bring on the competition" because it only makes things better unless you're just stubborn about pressing losers.
The mining is a way to all decentralized growth without being subject to Sybil attacks by forcing proof-of-work problems on new blocks. The reason I think this feels like a Rube Goldberg machine to some people is that they aren't fully coming to terms with the P2P, decentralized paradigm and what it takes to pull off. I don't need to wiki it, thanks. I've studied the aspects before.
And I've personally spoken with people who have run actual pyramid schemes and been prosecuted for it. The problem I see with your example is that it begs the question. It presumes that the only way the early adopters can get paid is if the BTC isn't useful as a currency to, you know, buy things with. But that's exactly what is under discussion: If everyone in BTC was just about passing the buck to the downline, then sure. But I don't think it's purpose or existence is purely to profit from downline dupes and then cash out.
Maybe not a focal point and maybe only in certain kinds of transactions, but eventually something. I wouldn't confuse some people behaving like it's a pyramid for profit with it actually being one. I know the post came across as harsh, I don't mean to be rude.
I don't think you're rude. And I agree that the technical savvy required to understand it is an obstacle though I don't think it will be fatal necessarily. I think I know fewer people that understand Freegold or gold in general. It doesn't require that anymore than gold does. What it does require, and I don't deny that this is something it has yet to do, is be sufficiently accepted and adopted. Jeff Like Texan, thanks for the thorough response.
That's another reason this site is great. Granted, I understand the distinction you're making. I just don't think there is any practical difference when it comes down to it. One person's rolling a coin in their palm is another's checking their bitcoin app. Granted, again, but it still seems to me that gold bullion buying is also kind of spooky to people.
Maybe that's just me. Here I have to be a little stronger. The reason it was stolen was not because of any difficulty in securing it. He was doing all the difficult stuff secure, encrypting backups and none of the basic, common sense stuff. As someone said, like leaving the door of the safe open Fair enough but there are other aspects of gold that make it more difficult to deal with. Traveling with large amounts of gold, for one thing.
The ever increasing weight, for another though price can help. I know I've made a lot of BTC vs. So I agree with you in many regards on this point. I divide the questions into two groups: Mostly I've been addressing what I see as misunderstandings about the former and thus the comparisons to gold. I still think gold is the better "bet" in the latter set of questions I'm not so sure it's not wash.
Will gold be so great in an uncivil wasteland with no functioning markets? If we have those, why would we not have networks too?
The internet seems here to stay. Are the risks to it greater, all things considered, than the risks that could affect gold? I'm not sure but I don't have the intuition that they are. If it was neither dollar deflation nor HI, then that would imply the dollar would stay within a limited range of value for some time If there's one thing that I really don't think will happen, it's that.
I do believe he said something along those lines no deflation or HI , but I'm not sure if that's what he meant. I guess I'll post the question to his site. Back to Bitcoin everyone defending it The thing is, even the best laid plans with pure intentions tend to turn into "pyramid schemes" within this system, when that phrase is properly understood in its broader sense.
That is true of both currency systems and entire economies and their various sectors i. Think about a "productive" business that produces To maintain adequate profits, it will be forced to solicit more investment capital via equity or credit mechanisms.
At that point, IMO, it has become a pyramid scheme, because its returns on capital will necessarily fall over time. Yes, that's a huge generalization, but it's just meant to be a simple analogy. I fail to see how a currency business operating over "decentralized" networks is fundamentally any different or capable of insulating itself from the same coercive external pressures That's the key distinction I would make - it could work at smaller scales, but not as some kind of trusted competing currency to various regional or global reserve currencies.
JR Mish is actually right, maybe for the wrong reason, that there's no need of unrestricted supply of money. A fixed but divisible supply of money is good enough to meet the reasonable demand if we just lay off and let price discovery work. Imagine you are Steve Jobs running Apple and planning to sell 50 million iPhones this year. You don't need to call Ben at Fed to put 10B dollars in the market to support your iPhone sale.
You go ahead selling it anyway. BlackBerry and so on will be forced to slash the price to stay alive. Your quality product will choke the competition off and suck the money supply away from them. Free market can self-adjust. No need of unrestricted money supply. On the other hand if a business has no market unless it's "lubricated" by unrestricted supply of money then it's probably an unprofitable business deserving no money infusion to begin with like this sub-prime mortgage bubble a few years ago.
Cheap money went in the real estate market not for sustainable growth but flipping an already overpriced house even higher and then dumping it onto the next sucker. The outcome was a disaster till this day. Just one of the many reasons why money has to be hard.
James Rawles at Survivalblog. You can donate your computer's background processing power to mine Bitcoins for the Ten Cent Challenge. It simply runs within a web browser session. If everyone that reads SurvivalBlog were to keep that Bitcoin mining web page open while web browsing, or better yet, overnight It might even add up to some significant digits.
Neverfox, I have no problem with legal tender laws, as i like to know that what I get paid in can be used to buy stuff. I also have no issue with governments having power, to a degree.
It's kind of the first principle of a government, ie " to govern". Enforce laws and all that. Actually, early adopters do not make any money if the price doesn't go up and then they sell. I know this because I read that there will only be 21 million bit coins, and the first ones started trading at 6 cents.
So if I was the only miner, and successfully mined all 21 million, and was lucky enough to find a buyer, I would make 1.
Is that a lot of money in the world of high finance? Appreciation is in fact the key to the whole scheme. Other than trying to prove a political point, or have untraceable funds, or mine for profit by selling at a higher price later, what is the point of holding bit coins? Or more critically, what is the point of spending cash to buy bitcoins? What do I get for that? What service is being provided? What is the purpose of bit coin? It is not accepted anywhere I shop, i have no idea how " liquid" the "bitcoin for cash" brokers are, it's value fluctuates wildly, and it requires a computer science degree to use.
Really, what is the point? Texan I have no problem with legal tender laws, as i like to know that what I get paid in can be used to buy stuff. I'm an anarchist which I have no problem admitting biases me in favor of something like BTC right from the start so I could go on for a long time about why you don't need the state to have law, order and financial peace of mind but it's probably not our place to derail this thread.
If you ever want to discuss political theory, I'm game. You seem like a smart and amicable person. I don't disagree with this. If I said something that sounded to the contrary, I can't recall but would try to clarify if you care to point it out.
Why can't those all be good enough reasons themselves? Aren't those all reasons that play some role in people's interest in physical gold? I just don't see why I need to put those to the side to come up with some "purer" reason.
Hasn't this whole thread been predicated on the possibility that BTC might play a role in the economy and even compete with gold? Even if you aren't convinced of that, the hypothetical alone answers the question: Well, I find enough point in just getting to know it by getting my hands dirty. I don't expect people to sell their gold for BTC. But the point is that we might, just might, be witnessing a paradigm shift, or at the very least, the seed of change. Isn't that the least bit exciting?
I get a feeling that the debate surrounding the BitCoin is heavily influenced by its rapid price in other currencies appreciation recently. The issue regarding the time span as a SoV is a bit more complicated.
Every MoE is a "good" SoV for a certain time span. I can imagine BitCoin to become both in a closed out community or at least a community limited in number since, as somebody before me said it, people around the world aren't all that computer literate.
I don't understand why the creation is limited to the upside. If the goal is not to inflate, why not just start with fix amount of it right from the beginning? Well said than, we very much agree!!! So does Aristotle in the quote I posted above!!!! Good thing our future "monetary" options are not limited to such a polarizing into Hobbesian choice. There are some extensive posts regarding pro and cons. Bitcoin I like the idealism.
As Aristotle said, bless them. Unfortunately bitcoin will fail. I will give two quick reasons. Firstly government doesn't like it. The standard propaganda will be sufficient to make it illegal, ie. There are already two us senators calling for it to be made illegal.
The second quick reason. Consider, if you have two media of exchange, one inflationary one deflationary, which one would you prefer to Spend? That's right, the inflationary one. This means in the long term, people will prefer hoarding them to using them due to their limited issue and hence increase in value.
Which implies that predominantly it will compete as store of value. My money is on the big fish to prefer gold to digital bits. Still, bless the idealists. Neverfox It is my sad duty to inform you that anarchism is a unworkable idea. We do have a use for governments though, unfortunately. Irrespective of whether Bitcoin will persist, when has a government ever been able to stem progress?
It would take additional effort to devalue a deflationary currency. If anarchy is unworkable, socialism must be even less so, as it has failed repeatedly. Asserting the validity of a concept must be backed by more than nebulous claims. You say there is a use for government. What is your definition of 'government'?
What are some examples? Please take some time to understand what decentralized crypto-currencies are before speculating. It would take additional effort to devalue a deflationary currency" help me cuz I don get it this good cuz? Blogger seems to have eaten my post. Please forgive if this is a dupe.
Liberty Dollar conviction, me thinks you are mixing apples and oranges. Just because a criminal government can convince 12 government worshipers that something is illegal does not make it so. Regarding BitCoin, I had been trying to figure it out and got a real boost in my understanding from this blog and the comments, thanks all. Since I'm not about to sell any gold to buy BTC, I guess I'll continue to mostly use FRN for exchanges until all the government worshipers realize that anarchy could never possibly be as destructive as history has shown with governments.