Bitcoin

[inscribed]

Do you know about Bitcoin?

I was going to make a thread about this a couple months ago, but between the forum being down and real life, I forgot to.

From Wikipedia:

Bitcoin (sign: ; code: BTC) is a cryptocurrency first described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system.[1][7][8] Bitcoin creation and transfer is based on an open source cryptographic protocol and is not managed by any central authority. Each bitcoin is subdivided down to eight decimal places, forming 100 million smaller units called satoshis.[4] Bitcoins can be transferred through a computer or smartphone without an intermediate financial institution.

The most bitcoins that will ever exist is 21 million, after which it will be impossible to create new ones. This hard limit protects the currency from inflationary forces, a significant fault of current physical fiat currency. The last bitcoin is expected to be minted sometime next century.

The value of a single bitcoin skyrocketed from ~$30 to $266 USD/BTC back in April, then crashed back down to around $60, and has since been fluctuated around $100 USD/BTC. I initially started investing around $45/BTC. Long term, though, (20+ years), many expect the value of a single bitcoin to reach into five, six, or even seven digits.

From falkvinge.net:

The total size of the transactional currency market is hard to estimate, but has been pegged at about $60 trillion (the amount of money in circulation worldwide). Seeing how this number is roughly on par with the world’s GDP, it is a reasonable enough number to be in the right ballpark. Based on my four earlier estimates (one, two, three, four), I think it is reasonable that bitcoin captures a 1% to 10% market share of this market.

...

This leads us to a target market cap of 600 billion to 6 trillion USD, to be fulfilled by about 6 million bitcoin, which makes for easy calculations. That means that each bitcoin would be worth $100,000 at the low market cap and $1,000,000 at the high market cap.

So why would you want to use a digital cryptocurrency over a traditional physical fiat currency? For starters, lie I mentioned earlier, a bitcoin, like gold or silver, is a finite resource. There is only so much that will ever exist, meaning inflationary forces won't have any effect. Deflationary forces, on the other hand, will have an effect, and a source of criticism from some opponents. However, a single bitcoin can be subdivided infinitely man times, meaning that an entire economy could still be driven by it. Deflationary forces mean that long term, the value will only increase, in much the same way that precious metals have traditionally been such a safe long term investment.

Next, bitcoins are pseudoanonymous. Every transaction is recorded in the blockchain, but the identifying information of that transaction is anonymous. This is why it is currently so popular for funding illegal goods and services. Anonymity is still valuable for non-criminals, though. No bank, court, government, tax agency, etc, have any way of knowing how much wealth you have, or have access to freeze or otherwise seize your assets. This is why the Cyprus incident caused such a surge in value, with Cypriots and other european nationals pulling their money from banks and looking for other wealth stores to keep their assets from being stolen.

The pros are endless. For merchants, you can accept digital payments without having to deal with Paypal and without having to pay 3-5% fees to Visa/Mastercard/etc. Chargebacks are impossible (a significant problem especially on Ebay). For travelers, you can access your money from anywhere without having to deal with border agents, currency fees, documentation, etc. You can send anyone in the world money without going through Western Union or other wire services. The list goes on.

Obviously, Bitcoin is still in it's infancy. Getting into it can be difficult and requires some knowledge and education. It's the equivalent of trying to use the internet in it's infancy, when you had to deal with phone lines, TCP/IP, HTTP, etc. Nowadays, it's all handled automatically with software, and the average user of the internet knows next to nothing about why it works the way it does. In 20 years, Bitcoin will be as ubiquitous as the internet.

Anyone else here a Bitcoin user? Many have already become millionaires by investing at the truly early stages, when you could get bitcoins for pennies. It's definitely still in it's infancy though, and even jumping in now at $100/BTC would make you an 'early adopter'.

[inscribed]

Edan Yago discusses The World's First Cryptocurrency-based Political Zone at the Bitcoin 2013 Conference in San Jose, CA.

Powerful video.

Bitcoin/cryptocurrency is going to do for money what the internet did for information.

[Dale]

Man... Mario must be stupid rich.

http://gamingobsessed.files.wordpress.com/2011/05/photo1697.jpg

[inscribed]

Not quite the same thing.

[f0xx]

There are huge threads in the local hardware forums I visit about Bitcion and mining. I investigated the topic intensively when I was researching for parts for my new gaming rig, since a lot of people are mining for bitcions and I've heard stories about them paying (multiple times too) for their high end GPUs they bought with bitcoins.

I know people that run a few rigs with high end crossfire/SLI cards in their basements just to mine.

I think the problem with Bitcoin is the fact that people with large piles of the currency can hugely influence the market. The founder of bitcion himself holds like 60% of all the bitcoins. Also, its limited nature means that the price will be increasing and nothing can stop it, therefore there will be no stimulation for people to use their bitcoins for trading, because it's certain that after few months they will cost much more than they currently do.

[Oni]

Very similar to egold. Even if you take for granted the whole set up is legit, which is extremely questionable, there's still always going to be the distinct possibility the feds step in and shut it down. Which leaves you with a digital wealth of bitcoins that are worth less than a sawed in half penny.

Like foxx pointed out too, your essentially stepping into a market that by the very nature of it's creation has already been cornered by it's creator. He can fluctuate and manipulate the value of bitcoins in any way he wishes to maximize his own profits. Which, make no doubts about it, is his purpose. He can manipulate the market so the bitcoin value rises and once it's reached an expected peak sell off a load of the available coins and crash the price, then turn around and repurchase whatever amount he wishes. Also should things begin to look bleak from a legal standpoint he's likely the first to know about any impending legal action and in a position to dump what bitcoins he has, again crashing the bitcoin market.

That's not to say I don't think there's a real future for some alternative currency system or even a future and use in bitcoins. Just don't sell your house and buy bitcoins expecting you've latched onto the next big thing.

[inscribed]

Video card mining isn't profitable any more. You really need to buy an ASIC at this point. Mining is a different beast though. It's more about predicting rises in hashing difficulty than predicting bitcoin value. You have to evaluate the cost of an ASIC, predict the difficulty by the time you actually get it in your hands and set up to mine, and evaluate what kind of ROI you'll get, if you can even expect to get one. Difficulty is volatile right now... there's no telling how severe the impact of widespread ASIC mining will be.

I actually just made the leap into mining myself. I managed to snag a preorder for a 400 GHash machine from KnC. If I had it in my hands today, I'd be making roughly $1000 USD a day worth of BTC. But, thats the gamble. It's a matter of predicting what the difficulty will be by the time it's actually built and shipped, and how fast I get it running. The longer it takes, the less profitable it will be.

As far as your other points.... No one owns 60% of all bitcoins. The largest estimated hoard is held by the Winklevoss twins, who own like 1%. Price manipulation might of been possible before, but it's a more mature system now (despite still being in it's infancy).

Your second point... of course the price will only go up. It's a deflationary currency by nature. But this won't have any effect on trading. You have to spend money to get by, regardless of if you own bitcoin or USD. Think of it this way:

You have two people, one has 1000$ in USD, one has 1000$ worth of BTC. You assume that in one month, USD will have the same value, and BTC will have increased in value by 10%. It's the end of the month, and you have to pay $400 in rent. Your belief is that the person holding BTC will be worse off. Well, a month goes by, and the person with $1000 USD now has $600 after his rent payment. The person that had $1000 worth of BTC now has $660 worth of BTC. $660>$600.

The point is, if you take it as fact that the value of bitcoin will only go up, why would you even both hold any other type of currency? You still have the pay for bills and day to day things... but by your very logic, the more of your currency you have in BTC, the better of you'd be.

[inscribed]

Very similar to egold. Even if you take for granted the whole set up is legit, which is extremely questionable, there's still always going to be the distinct possibility the feds step in and shut it down. Which leaves you with a digital wealth of bitcoins that are worth less than a sawed in half penny.

Like foxx pointed out too, your essentially stepping into a market that by the very nature of it's creation has already been cornered by it's creator. He can fluctuate and manipulate the value of bitcoins in any way he wishes to maximize his own profits. Which, make no doubts about it, is his purpose. He can manipulate the market so the bitcoin value rises and once it's reached an expected peak sell off a load of the available coins and crash the price, then turn around and repurchase whatever amount he wishes. Also should things begin to look bleak from a legal standpoint he's likely the first to know about any impending legal action and in a position to dump what bitcoins he has, again crashing the bitcoin market.

That's not to say I don't think there's a real future for some alternative currency system or even a future and use in bitcoins. Just don't sell your house and buy bitcoins expecting you've latched onto the next big thing.

The creator of Bitcoin is unknown, and probably not even a single person. It can't be manipulated and it definitely can't be shut down by the feds... it's completely decentralized. The entire Bitcoin protocol is completely open source, and the blockchain (the ledger of every single bitcoin transaction) is completely open. If someone had a large accumulation of bitcoins, it would be very easy to see. Comparing it to e-gold completely undermines exactly what a cryptocurrency is.

edit: Let me clarify the manipulation statement. Like any market, a series of small buys or sells or false bids can force weak hands into traps. As the market matures, though, it'll be much less likely. There was a period of about a month where every Sunday, a few investors would initiate some a large number of very small sells to try and drive the price down, then once the banks opened Monday morning, they would buy back in at lower prices. This didn't stay profitable beyond that month though, as the market caught on to the scheme.

[inscribed]

The idea that there is someone 'running' bitcoin is one of the biggest misconceptions. The blockchain is open, everyone has a copy, making it completely decentralized. There are no shadowy forces going on in the background, since no aspect of Bitcoin isn't completely open. That's the feature that has made it as resilient as it is.

[Pali]

The European Central Bank compares it to a Ponzi scheme.

On the one hand, the Bitcoin scheme is a decentralised system where – at least in theory – there

is no central organiser that can undermine the system and disappear with its funds. Bitcoin users

buy and sell the currency among themselves without any kind of intermediation and therefore, it

seems that nobody benefits from the system, apart from those who benefit from the exchange rate

evolution (just as in any other currency trade) or those who are hard-working “miners” and are

therefore rewarded for their contribution to the security and confidence in the system as a whole.

Moreover, the scheme does not promise high returnsto anybody. Although someBitcoin users may

try to profit from exchange rate fluctuations, Bitcoins are not intended to be an investment vehicle,

just a medium of exchange. On the contrary, Gavin Andresen, Lead Developer of the Bitcoin

virtual currency project, does not hesitate to say that “Bitcoin is an experiment. Treat it like you

would treat a promising internetstart-up company: maybe it will change the world, but realise that

investing your money or time in new ideasis alwaysrisky”.15 In addition, Bitcoin supporters claim

that it is an open-source system whose code is available to any interested party.

However, it is also true that the system demonstrates a clear case of information asymmetry. It is

complex and therefore not easy for all potential users to understand. At the same time, however,

users can easily download the application and start using it even if they do not actually know how

the systemworks andwhich risksthey are actually taking.Thisfact, in a contextwhere there is clear

legal uncertainty and lack of close oversight, leadsto a high-risk situation. Therefore, although the

current knowledge base does not make it easy to assess whether or not the Bitcoin system actually

workslike a pyramid or Ponzischeme, it can justifiably be stated that Bitcoin is a high-risk system

for its users from a financial perspective, and that it could collapse if people try to get out of the

system and are not able to do so because of its illiquidity. The fact that the founder of Bitcoin uses

a pseudonym – Satoshi Nakamoto – and is surrounded by mystery does nothing to help promote

transparency and credibility in the scheme.

My apologies for the spacing issues with the above, but they're a symptom of the copy-paste process and I don't care to fix them all - it's still legible. Bold is mine, as it's a direct quote from someone directly involved with Bitcoin, and it seems to summarize most of the opinions regarding it I'm finding in ten minutes of Google searching - the most in depth of research techniques.

The Atlantic this April had this editorial arguing that Bitcoin shares more features with an IPO than a currency, citing rapid price fluctuations both up and down. NBC three days ago posted this report of troubles Bitcoin and users of it have been having. This Wall Street Journal article examines small businesses that have been embracing Bitcoin, noting the advantages it brings to them over traditional credit card transactions, largely the lesser transaction fees, while again pointing out the risks involved: "A key drawback for merchants using Bitcoin is the risk that the virtual currency could become worthless if it doesn't catch on. A Bitcoin unit rose in value from roughly $5 last June to a high of $266 in April and was down to about $103 Wednesday afternoon, according to data from Tokyo-based Mt. Gox Co., the largest Bitcoin online exchange." I've found a number of articles from various sites regarding current potential legal problems for Bitcoin exchanges, but as they are problems shared by cash transactions (theft, black market use, etc.), I don't consider them relevant.

So far as I can tell, this has not yet become a stable currency - it seems prone to the same sorts of fluctuations and risks that many stocks do, and should be treated similarly, as in the bolded part of the quote above one of its own developers states. However, that certainly doesn't mean it couldn't be a fine investment.

[f0xx]

@inscribed

A month ago FBI took legal actions against Bitcoin's biggest exchange - Mt. Gox. I haven't been following the case close: http://www.theverge.com/2013/5/15/4332698/dwolla-payments-mtgox-halted-by-homeland-security-seizure-warrant

As for the creator or Bitcoin, it's very well known who he is (at least his pseudonym) and you mentioned it yourself in your first post.

And lastly:

Satoshi appeared seemingly out of nowhere in 2008 when he released a research paper on the Cryptography Mailing List, which laid the foundation for the Bitcoin protocol. He claimed to have been working on the idea for about two years, which, given the robustness of what was produced, implied an exhaustive amount of effort dedicated toward his work.

In January of 2009, he started mining, creating what is known as the “genesis block.” Bitcoin v0.1 was released six days later. By year-end, over 32,000 blocks had been added to this original block, producing a total of 1,624,250 bitcoins. Since all transactions are public on the blockchain, we know that only a quarter of those bitcoins have ever changed hands...

Source

Also, the number of new bitcoins created in each update is halved every 4 years until the year 2140 when this number will round down to zero. At that time no more bitcoins will be added into circulation and the total number of bitcoins will have reached a maximum of 21 million bitcoins (quote from wiki), not just that, but the difficulty is adjusted as well, to cope with the growing mining power, so you can imagine how many bitcoins he has mined during the time bitcoin was not very popular and he was mining alone (or with few other people).

[Kyzarius]

this is a very interesting concept. Though I understand the market value is very very volatile. Sometimes halving.

[inscribed]

re: Pali

Of course a bank is going to compare it to a Ponzi scheme. Banks are quite afraid of cryptocurrency, as it threatens to kill off their power. Who will need banks tyrannically guarding the gates of currency once Bitcoin is available? It's most definitely not a Ponzi scheme, by any definition. It's a currency.

The other articles you posted are the result of journalists or the people they interview simply not understanding Bitcoin (I hate the Atlantic). For instance, the NBC article mentions California's Department of Financial Institutions going after the Bitcoin Foundation because they think it "runs" bitcoin, which just simply isn't true. No one runs bitcoin. Gavin Anderson is correct though, it's an experiment. Just like the Internet was an experiment, cryptography was an experiment, bittorrents were an experiment, etc. It has it's risks, but so far this experiment is going very well.

This was a good quote though:

Gallippi, too, sees optimism with the maturing of the system. "Today, when you use the Internet, do you talk about IP addresses? Do you talk about HTTP, TCP/IP?" asked Gallippi. The nitty-gritty details of Bitcoin "mining," day-to-day price fluctuations, and yes, the occasional scam, shouldn't matter to users. For illustration, he alluded to the dollar: Do you worry about its strength versus the yen, or about the effect of counterfeiting and minting?

Like I said, even though it's been around since 2008, Bitcoin is very much still in it's infancy. The price can be fairly volatile (though it's been sitting steady around $100 for a few weeks now). There are certainly some growing pains in it's widespread adoption as a currency. But keep in mind, the long term outcome of Bitcoin is binary... either it will become worthless, or the price will hit 10k, 100k, and higher. There won't be any in-between. Given what I've seen and know, and the resilience Bitcoin in particular has shown so far, I'm completely confident that it's here to stay.

[inscribed]

@inscribed

A month ago FBI took legal actions against Bitcoin's biggest exchange - Mt. Gox. I haven't been following the case close: http://www.theverge.com/2013/5/15/4332698/dwolla-payments-mtgox-halted-by-homeland-security-seizure-warrant

Old news. Mt Gox is very much still alive and still the largest exchange, though more and more are switching to other exchanges (which is a good thing and stablizes the price).

You have to understand that cryptocurrency is not something that governments or banks like or want. They can't control it like other fiat currency. They can pull little stunts like this, but there is no way they can completely shut it down. Otherwise, they would of by now.

As for the creator or Bitcoin' date=' it's very well known who he is (at least his pseudonym) and you mentioned it yourself in your first post.[/quote']

Yes, its a pseudonym. That mean's no one knows who it is, or even if it's a single person, like I said. It's the equivalent of waking up to see presents under the tree, and saying "Santa is real! He must have so many presents if he gave me these!". No doubt whoever did originally create the blockchain has made himself or themselves wealthy, but a 60% figure is ludicrously impossible now.

Source

Also, the number of new bitcoins created in each update is halved every 4 years until the year 2140 when this number will round down to zero. At that time no more bitcoins will be added into circulation and the total number of bitcoins will have reached a maximum of 21 million bitcoins (quote from wiki), not just that, but the difficulty is adjusted as well, to cope with the growing mining power, so you can imagine how many bitcoins he has mined during the time bitcoin was not very popular and he was mining alone (or with few other people).

How many bitcoins can be mined at any one time is set in stone. That's why we can say with certainty that the final bitcoin will be minted sometime around 2140, regardless of how many people mine them, or how powerful mining computers become. No doubt the original miners accumulated a healthy pot of them, mining in those first few months of existence, but even those would pale in comparison to the amount that has been mined since.

But let's say someone out there did have 60% of all bitcoins... as impossible as that is. So what? Why would someone who has his entire wealth tied into bitcoins try to destroy the market? You can't just dump a sum that large in the exchange and expect to convert it straight to USD. You would be essentially flushing your own money down the drain.

Once bitcoin becomes it's own unit of accounting, the value vs the USD will become far less meaningless anyways. Like the quote above... do you ever give any thought to your own currencies value vs the yen or euro on any given day?

[inscribed]

Here is a news report from 1981 discussing the Internet. The Internet at that time would have been as old as Bitcoin is now.

http://www.wimp.com/theinternet/

Most then hadn't even heard of the internet yet, or if they had, they didn't think much of it. Look what it's become now. Bitcoin will become just as ubiquitous. Of course, by then, I'll be very wealthy.

[Mali]

Everyone please buy more bitcoin so the value of Inscribed's bitcoins will increase

[f0xx]

Everyone please buy more bitcoin so the value of Inscribed's bitcoins will increase

I LOLed

[Celerity]

I taught about BitCoin not too long. Sure, it has serious problems...but then again, current fiat currency has greater problems.

Personally, I wouldn't invest into it...in the emerging world of competing electronic currencies, BitCoin is a fair test, but it won't be the best. Getting into it now would be like investing into AOL during its prime.

Inscribed: Most banks don't guard the gates of currency--that is a state power, and only a state bank (central bank) can do that. Most banks are happy to deal with as much currency as possible, in or out, as that makes their profits.

The real reason banks aren't into BitCoin is that it hasn't gained legitimacy yet. Most banks are extremely risk-adverse, especially concerning online actions. Banks typically aren't in the business of venture capital projects such as BitCoin. With interest rates being as low as they have for so long, banks have shifted much of their income from bonds to riskier loans. Some banks haven't even connected to the Internet yet, for instance.

Cryptocurrency doesn't really threaten the existence of banks. People had the same fear of fiat currency ruining the business of banks (and electronic currency is the ultimate fiat currency), and banks became even more useful. Most people don't put their money into banks for physical security reasons. There will always be a need for reputable lenders. People will also always need customer services such as ACH, verification of funds, and managing money on a scale above the individual. When you think in terms of business and public accounts, the bank's need becomes clearer.

[inscribed]

Everyone please buy more bitcoin so the value of Inscribed's bitcoins will increase

The total Bitcoin market now is worth over a billion. I doubt anyone here is balling enough to make a big enough splash in that to rock the price.

I'm just trying to spread a little education around.

[inscribed]

I taught about BitCoin not too long. Sure, it has serious problems...but then again, current fiat currency has greater problems.

Personally, I wouldn't invest into it...in the emerging world of competing electronic currencies, BitCoin is a fair test, but it won't be the best. Getting into it now would be like investing into AOL during its prime.

Bitcoin is far from hitting it's prime. It'd be like investing in AOL when it was still a small startup, if anything. Bitcoin has been around for 5 years now... what has managed to challenge it so far? Litecoin? Terracoin? So far, Bitcoin is far more sophisticated than any other cryptocurrency. And even if a competitor starts to rise up... what's stopping you from just converting currency? Ride the Bitcoin train in the meantime.

Inscribed: Most banks don't guard the gates of currency--that is a state power, and only a state bank (central bank) can do that. Most banks are happy to deal with as much currency as possible, in or out, as that makes their profits.

The real reason banks aren't into BitCoin is that it hasn't gained legitimacy yet. Most banks are extremely risk-adverse, especially concerning online actions. Banks typically aren't in the business of venture capital projects such as BitCoin. With interest rates being as low as they have for so long, banks have shifted much of their income from bonds to riskier loans. Some banks haven't even connected to the Internet yet, for instance.

Cryptocurrency doesn't really threaten the existence of banks. People had the same fear of fiat currency ruining the business of banks (and electronic currency is the ultimate fiat currency), and banks became even more useful. Most people don't put their money into banks for physical security reasons. There will always be a need for reputable lenders. People will also always need customer services such as ACH, verification of funds, and managing money on a scale above the individual. When you think in terms of business and public accounts, the bank's need becomes clearer.

If banks weren't worried about cryptocurrency, then why are many of the biggest banks now freezing accounts of people who transfer money to bitcoin exchanges, or blocking the transfer altogether? Banks currently have a monopoly on all forms of financial services. You have to apply for a checking or savings account, deal with hundreds of different kinds of possible fees, all so the bank can make a profit by using your money to invest. And even then, your account is nothing but an "IOU" which the bank is free to cancel at any time, as seen in Cyprus.

A bank can only make money off of bitcoin if you choose to deposit it with them... but why would anyone do that? Banks would still have a role to play, sure, but it would be in a heavily diminished capacity making a lot less money.

[inscribed]

For those of us who deal with USD, an important thing to consider isn't whether or not you'll make money or lose money with Bitcoin, but how much money you're about to lose with USD.

http://www.moneynews.com/Outbrain/billionaires-dump-economist-stock/2012/08/29/id/450265?PROMO_CODE=FE8A-1

So why are these billionaires dumping their shares of U.S. companies?

After all, the stock market is still in the midst of its historic rally. Real estate prices have finally leveled off, and for the first time in five years are actually rising in many locations. And the unemployment rate seems to have stabilized.

It’s very likely that these professional investors are aware of specific research that points toward a massive market correction, as much as 90%.

Now is definitely the time to start considering pull out of any USD holdings and investing in precious metals or other currencies, if not Bitcoin. Unless you're a Paul Krugman fan, in which case, disregard, everything will be dandy!

[Celerity]

I don't think any US bank will freeze the accounts of those who transfer money in or out for personal reasons without cause. How would the bank know what you are planning to do with your money after you take it out? I'd like to see where you got that info from.

Banks certainly don't have a monopoly on financial services. Want to open a savings account? Go to a credit union. Want to get a small, quick loan? Go to a pawn shop. Need tax advice? Hire a tax consultant. Need investment advice? Seek a different consultant. Banks offer reputable, legally-backed services..that is why people do business with them rather than many of the alternatives.

Like I said before, banks don't make a lot of money reinvesting deposits these days...banks can only legally reinvest it into bonds at other banks, which hasn't been yielding the last few years. They make their money by lending money..that is..doing the reverse of what you said. People give banks IOUs for loans and the bank relies on their payments to survive. This is far riskier for the bank than the customer, as seen by bankruptcy due to too many bad loans.

Banks can't cancel your account and steal your money at any time. What you are referring to in Cyprus is the GOVERNMENT canceling and garnishing money from deposit accounts--a completely different issue. The banks had no say in the matter.

Banks certainly aren't required to accept BitCoin as legal tender if they don't want to.

How can a bank make money off of an economy based around BitCoin? The same way they do with dollars. Loaning or reinvesting money (bitcoins) to people who don't have them in hopes of collecting interest. I don't see how the name of the currency or the modality (paper to electronic) will make a huge difference to the banks. It may make a huge difference to GOVERNMENT REGULATORS who then may make laws to restrict banks...but again, you are blaming banks for the misdeeds of the government. Just like the Occupy movement blaming Wall Street for Washington's policies.

As for the initial bit about the future of BitCoin specifically. I have no doubt they will continue to have value. I severely doubt that it will emerge as the fiat of choice in the near future. What stops you from just converting currency or changing your income model? Costs do...

About the commodities market...as long as the Fed's interests rates are low, commodities will profit. We are about to enter into a decade or so of slowly rising interest rates which will adversely affect the commodities markets. The last five years have been gold for gold, but it won't last forever and I'll repeat my previous statement about it being a bit late to invest in metals. And I'm just as much of an Austrian as you

I'd certainly pull out of any Japanese holdings however..what they are doing is just crazy...QE^2.

p.s. Krugman is full of the same stuffing as Bernanke, hehe.

p.s.s. I also don't really understand why many of the libertarian gold-standard crowd support its opposite: pure fiat (e.g. BitCoin). It seems they favor it for anarchic political reasons more than for Austrian economic reasons. Investing in both gold and BitCoin seems to be contradictory

[inscribed]

Here are a couple of quick links:

http://www.reddit.com/r/BitSpend/comments/1go95b/updatenews_why_we_have_been_slow_and_taking/

http://www.reddit.com/r/Bitcoin/comments/1h0fmb/citibank_will_no_longer_process_any_transfers_to/

But there are numerous others.

BRB with longer response.

[Demiterracotta]

If I could fill a sock with these bitcoins and hit someone over the head with it, I would be more inclined to buy them.

In the meantime I will keep hiding quarters in my sock drawer.

If the economy collapses at least I can whack someone over the head for a loaf of bread.

[inscribed]

See above for some proof about banks being bad, without government influence.

As for the initial bit about the future of BitCoin specifically. I have no doubt they will continue to have value. I severely doubt that it will emerge as the fiat of choice in the near future. What stops you from just converting currency or changing your income model? Costs do...

I think Bitcoin can't help but be the currency of choice. Granted, it won't be anytime soon. The internet took 30 years to really be ubiquitous, I give Bitcoin a similar time frame. Early adopters are obviously going to profit the most, though. Additionally, I can swap back and forth between currencies on any of the Bitcoin exchanges for next to nothing.

About the commodities market...as long as the Fed's interests rates are low' date=' commodities will profit. We are about to enter into a decade or so of slowly rising interest rates which will adversely affect the commodities markets. The last five years have been gold for gold, but it won't last forever and I'll repeat my previous statement about it being a bit late to invest in metals. And I'm just as much of an Austrian as you [/quote']

Oh I believe you. I just think we have different opinions on the future of Bitcoin.

Gold definitely won't be as profitable of an investment, especially compared to how it's done recently, but I see the USD losing a lot of value over the next year, and holding gold will still beat having dollars tied up in the stock market. Obviously, I think Bitcoin is the best place to currently have wealth stored. Every day there's less and less reason to bother converting back to USD (there are now even houses being sold in the US for bitcoin).

p.s.s. I also don't really understand why many of the libertarian gold-standard crowd support its opposite: pure fiat (e.g. BitCoin). It seems they favor it for anarchic political reasons more than for Austrian economic reasons. Investing in both gold and BitCoin seems to be contradictory

This is the point I wanted to specifically address, because it's the most interesting. Why do many libertarians support returning to the gold standard? There's probably multiple answers, depending on who you ask, but for me, it'd be to fight the hyperinflationary tendencies that all physical fiat currencies eventually experience (print, print, print!). Gold is a valuable, limited resource, and by using it to back USD, we keep the value supported. Without the gold backing, it's only a matter of time until we're using dollars to wipe our asses because toilet paper is worth more.

Bitcoin skips the middle man. It's a fiat currency that is inherently limited by nature. You can't just print or create more of it. There's no need to back it with another limited resource.

Additionally, it takes the concept of a fiat currency, and creates the most idealogically perfect example of it. Anonymous transactions. Complete security. Worldwide transactions for fractions of a penny. Access from anywhere. Immune to inflation. Any possible feature you could want, the protocol is capable of handling. Hell, there is even built in measures for handling escrow transactions.

Of course, the "anarchic political" reasoning is important to me too. Governments are going to be in for a rude awakening when they start discovering they are unable to collect taxes from bitcoin users, or force banks to freeze/seize assets or provide purchasing history.