The New Economy

[Brant Gaede]

GS Finally someone else gets it! No Weimar republic style runaway printing with this currency. A finite number will only EVER be made, making it inflation proof. Also now that more an more businesses are ACCEPTING it as valid currency means it is here to STAY. The only thing that could throw a wrench into it is if the Internet itself is destroyed in which case we are all fuxored anyway and so will all currencies which mostly move electronically now as well.. If it gets to the point where your gold or silver will actually be needed to buy stuff there will at that point be a far more valuable commodity.

Bullets, food and water.

And a woman.

--Brant

[dldelancey]

GS Finally someone else gets it! No Weimar republic style runaway printing with this currency. A finite number will only EVER be made, making it inflation proof. Also now that more an more businesses are ACCEPTING it as valid currency means it is here to STAY. The only thing that could throw a wrench into it is if the Internet itself is destroyed in which case we are all fuxored anyway and so will all currencies which mostly move electronically now as well.. If it gets to the point where your gold or silver will actually be needed to buy stuff there will at that point be a far more valuable commodity.

Bullets, food and water.

And a woman.

--Brant

Or a man, as the case may be.

[dldelancey]

Deanna,

The original Bitcoin ledger is generated via the original Bitcoin algorithm that only makes 21 million bitcoins. If you follow the original algorithm and original ledger, then there can only be 21 million. If you use a different ledger, or a different algorithm, then the limits are different.

So the limit is only maintained by each individual who uses it. Its up to you to decide whether you will accept a payment that you verify to be one of the original bitcoin ledger, or some other ledger. You limit it for yourself. Each participant in the free market limits currencies for themselves on whether they accept Bitcoins or whatever currency as payment.

USD could be limited in a similar way: Say people said "We are only going to accept dollars that have been printed before the year 2010". Now USD is much more easily counterfeited because its just paper... so that is a problem.

Baal Chatzaf is right in that there is the potential that there might be a fundamental flaw with the encryption technology that might allow people to one day double spend or steal bitcoins that we haven't discovered yet. He seems so confident in this that he'd not even try using bitcoins himself?

Thank you, Dean.

[tjohnson]

Every currency has fraud problems and crytocurrencies would probably be no exception. At this point it looks much more difficult than with ordinary currencies.

Double-spending is the result of successfully spending some money more than once. Bitcoin protects against double spending by verifying each transaction added to the block chain to ensure that the inputs for the transaction had not previously already been spent.

Other electronic systems prevent double-spending by having a master authoritative source that follows business rules for authorizing each transaction. Bitcoin uses a decentralized system, where a consensus among nodes following the same protocol is substituted for a central authority.

Bitcoin has some exposure to fraudulent double-spending when a transaction is first made, with less and less risk as a transaction gains confirmations.

Also;

A block chain is a transaction database shared by all nodes participating in a system based on the Bitcoin protocol. A full copy of a currency's block chain contains every transaction ever executed in the currency. With this information, one can find out how much value belonged to each address at any point in history.

Every block contains a hash of the previous block. This has the effect of creating a chain of blocks from the genesis block to the current block. Each block is guaranteed to come after the previous block chronologically because the previous block's hash would otherwise not be known. Each block is also computationally impractical to modify once it has been in the chain for a while because every block after it would also have to be regenerated. These properties are what make double-spending of bitcoins very difficult. The block chain is the main innovation of Bitcoin.

See https://en.bitcoin.it/wiki/Main_Page

[moralist]

GS Finally someone else gets it! No Weimar republic style runaway printing with this currency. A finite number will only EVER be made, making it inflation proof. Also now that more an more businesses are ACCEPTING it as valid currency means it is here to STAY. The only thing that could throw a wrench into it is if the Internet itself is destroyed in which case we are all fuxored anyway and so will all currencies which mostly move electronically now as well.

While what you said holds true for most all people it's not true for me. I remained financially untouched by the debt collapse of 2008 and the following recession because I have no exposure to the debt system. An internet disruption is quite likely because it is so fragile, and a lot of people are fully exposed to its fate.

While all of the unproductive something for nothing gamblers are fixated on placing their speculating bets on Red and Black... along comes a Green Double Zero Event and wipes them out. People have already quickly forgotten 2008, and are hanging like ripe fruit to be picked off by the next Green Double Zero Event.

If it gets to the point where your gold or silver will actually be needed to buy stuff there will at that point be a far more valuable commodity.

Bullets, food and water.

I live like that all the time.

Greg

[Backlighting]

GS Finally someone else gets it! No Weimar republic style runaway printing with this currency. A finite number will only EVER be made, making it inflation proof. Also now that more an more businesses are ACCEPTING it as valid currency means it is here to STAY. The only thing that could throw a wrench into it is if the Internet itself is destroyed in which case we are all fuxored anyway and so will all currencies which mostly move electronically now as well.. If it gets to the point where your gold or silver will actually be needed to buy stuff there will at that point be a far more valuable commodity.

Bullets, food and water.

Jules,

I'd include medical supplies to the 3 you listed.

-Joe (aka Luigi Vegasi)

[Jules Troy]

Yes medical supplies too!

[moralist]

...and toilet paper.

Greg

[BaalChatzaf]

...and toilet paper.

Greg

Federal Fiat Currency will do for the above.

Ba'al Chataf

[moralist]

...and toilet paper.

Greg

Federal Fiat Currency will do for the above.

Ba'al Chataf

Butt it's not sanitary.

[Selene]

Isn't that what money laundering is for?

[moralist]

http://3.bp.blogspot.com/-QJbdx6YbAHg/UVOAn22QtkI/AAAAAAAAAek/TW4rq-RGZKY/s1600/rimshot.jpeg

[Selene]

http://3.bp.blogspot.com/-QJbdx6YbAHg/UVOAn22QtkI/AAAAAAAAAek/TW4rq-RGZKY/s1600/rimshot.jpeg

l

[Selene]

FYI:

Bitcoins are a type of virtual, digital or crypto-currency; online-only money not backed or regulated by any government. Virtual currencies are popular with libertarians and fans of privacy because they are exchanged directly between individuals, just like cash, but usable online like credit cards. Bitcoins are the most widespread virtual currency, but also the most notorious; Bitcoins were the payment method of choice for Silk Road, the website shut down last year for trading in drugs and other illegal items.

Fair statement.

And for prosecution purposes, the panel agreed that U.S. Attorneys are free to use existing statutes, such as mail and wire fraud, to prosecute alleged virtual currency crimes. It’s less clear, however, whether virtual currencies should be treated as currencies—even though they’re not fiat currencies backed by a government—or as securities.

Not good.

At the end, an audience member asked Neiman if he would take payment for his services in Bitcoins.

“Do I have to file an 8300?” he asked, referring to an IRS form required when businesses take more than $10,000 in cash. Though the answer provoked a laugh, Neiman was making a serious point.

“What regulations do I subject myself to if I take it?” he said. “That’s where my hesitation would be.”

I would highly reccomend caution in all virtual currencies.

http://www.abajournal.com/news/article/should_virtual_currencies_be_subjected_to_real-life_regulation/?utm_source=maestro&utm_medium=email&utm_campaign=daily_email

[moralist]

FYI:

Bitcoins are a type of virtual, digital or crypto-currency; online-only money not backed or regulated by any government. Virtual currencies are popular with libertarians and fans of privacy because they are exchanged directly between individuals, just like cash, but usable online like credit cards. Bitcoins are the most widespread virtual currency, but also the most notorious; Bitcoins were the payment method of choice for Silk Road, the website shut down last year for trading in drugs and other illegal items.

Fair statement.

And for prosecution purposes, the panel agreed that U.S. Attorneys are free to use existing statutes, such as mail and wire fraud, to prosecute alleged virtual currency crimes. It’s less clear, however, whether virtual currencies should be treated as currencies—even though they’re not fiat currencies backed by a government—or as securities.

Not good.

At the end, an audience member asked Neiman if he would take payment for his services in Bitcoins.

“Do I have to file an 8300?” he asked, referring to an IRS form required when businesses take more than $10,000 in cash. Though the answer provoked a laugh, Neiman was making a serious point.

“What regulations do I subject myself to if I take it?” he said. “That’s where my hesitation would be.”

I would highly reccomend caution in all virtual currencies.

http://www.abajournal.com/news/article/should_virtual_currencies_be_subjected_to_real-life_regulation/?utm_source=maestro&utm_medium=email&utm_campaign=daily_email

One side effect of government regulation is legitimizing it as a means of exchange. I have nothing against bitcoin itself, only the pyramid method by which its value is determined.

Trying to get something for nothing without useful production is unethical because it can only be gotten through someone else's loss. That's anti-Capitalism because it is zero sum and does not create wealth by useful production. And ironically, that makes it Marxist.

Greg

[PDS]

Isn't that what money laundering is for?

This is why they say you have a "rapist wit."

[Backlighting]

This may be of interest to the bitcoin advocates:

http://finance.yahoo.com/blogs/the-exchange/third-bitcoin-crash-in-three-months-reveals-cryptocurrency-flaws-161929360.html

[moralist]

Just another typical zero sum Ponzi sucker chart...

There's a neat feature built into this chart. It stays current by updating itself every day.

Greg

[deanwins]

I have strong suspicion that Mt Gox (the first really popular bitcoin exchange) is defaulting. They unnecessarily blocked bitcoin withdraws from their exchange wallet (which acts as an escrow for people who use the exchange). They came up with some lame excuse about a flaw in bitcoin that was really a flaw in their software, and furthermore didn't warrant completely blocking all withdraws. Even after announcing the bug in their software, they still had plenty of time to fix it and they still haven't resumed withdraws.

Here's a different exchange (BitStamp):

[Brant Gaede]

If you own securities held by your broker you don't really own them--just a claim. To actually own the security you must take delivery of the stock certificate. The equities in the supposed custody of your broker aren't really held by your broker. The broker only has claims against the clearance house which is the real owner. This means that when push comes to shove your equities might be as ephemeral as the Bitcoin. We can say the same about wealth held only as electronic digits in your bank account called "dollars." Just reasons for owning some hard, physical assets.

--Brant

[deanwins]

Brant,

You started off well. I totally agree that people should deposit minimal value in institutions of which they have no control over. For example I think people who have invested in the gold market in unallocated and even allocated accounts are going to feel a lot of pain once the futures market and bullion banks at last default. And people who deposited a lot of their bitcoins at MtGox may very well feel this pain if MtGox actually is defaulting as I suspect.

But then you added in an unrelated and debatable claim:

"This means that when push comes to shove your equities might be as ephemeral as the Bitcoin"

People who kept bitcoins in their own wallets rather than signing them over to MtGox haven't lost any bitcoins. People who have their bitcoins deposited at 3rd parties haven't lost their bitcoins... this is just one suspected 3rd party. Bitcoin is a computer program and a public ledger. Whether Bitcoin is ephemeral is debatable speculation. Surely it is more ephemeral than gold. More ephemeral than USD or any other fiat (government enforced monopoly money)... debatable speculation.

[moralist]

I have strong suspicion that Mt Gox (the first really popular bitcoin exchange) is defaulting. They unnecessarily blocked bitcoin withdraws from their exchange wallet (which acts as an escrow for people who use the exchange). They came up with some lame excuse about a flaw in bitcoin that was really a flaw in their software, and furthermore didn't warrant completely blocking all withdraws. Even after announcing the bug in their software, they still had plenty of time to fix it and they still haven't resumed withdraws.

Here's a different exchange (BitStamp):

The intervals on your chart are skewed in a log fashion to make the actual reversal appear less than it actually is. The graph below is a more honest linear representation.

There is a reason you chose one chart over the other. And you know what it is.

It's interesting to note the similar profiles of activity in the first reversal and the second. There could be another leg up and another reversal pattern like the first two.

Nobody can win unless somebody else loses.

Greg

[moralist]

People who kept bitcoins in their own wallets rather than signing them over to MtGox haven't lost any bitcoins...

...just Dollars.

[Jules Troy]

Greg that is definately a "holy crap I should short this kind of chart. If one could short it that is!

[Brant Gaede]

Brant,

You started off well. I totally agree that people should deposit minimal value in institutions of which they have no control over. For example I think people who have invested in the gold market in unallocated and even allocated accounts are going to feel a lot of pain once the futures market and bullion banks at last default. And people who deposited a lot of their bitcoins at MtGox may very well feel this pain if MtGox actually is defaulting as I suspect.

But then you added in an unrelated and debatable claim:

"This means that when push comes to shove your equities might be as ephemeral as the Bitcoin"

People who kept bitcoins in their own wallets rather than signing them over to MtGox haven't lost any bitcoins. People who have their bitcoins deposited at 3rd parties haven't lost their bitcoins... this is just one suspected 3rd party. Bitcoin is a computer program and a public ledger. Whether Bitcoin is ephemeral is debatable speculation. Surely it is more ephemeral than gold. More ephemeral than USD or any other fiat (government enforced monopoly money)... debatable speculation.

I was generalizing beyond Bitcoins which has been momentum mania hitting a brick wall. Look, if you were going away for a hunfdred years and wanted some wealth available upon your return you might bury gold but you'd unlikely trust the staying power of Bitcoins. That said, the value of both is not objective. You could come back and all the people were gone--extinct!--and you'd find no value to speak of in gold. Value is in your head. Or, you might come back to one surviving human community of a thousand souls and find gold was so common to be worthless as a currency so families are trading their virginal daughters around. That's frequently done today, by the way, but it's camoflauged. The bride herself is part of the dowry. If she's the whole enchilada then it's love for sure(?) unless it's a shotgun wedding.

--Brant

"Will you love me tomorrow?"--"Let me sleep on it, and I'll give you my answer in the morning!"