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I try to stay apolitical, but this one cracked me up:

<rant on> SEC actually regulate something?  Heard of Patrick Byrne and the story on overstock.com?  By keeping the DTCC opaque, and allowing market-makers to naked-short, they practically encour

Are bitcoins kind of like marina  shower tokens? In British Columbia?    

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Bank of England Issues Digital Currency Report: Bitcoin Possible Future Threat?

by Carlo Caraluzzo @ 2014-09-14 04:36 PM

 

The Bank of England released a report today after what it termed a lengthy investigation about digital currencies like Bitcoin. The report described cryptocurrencies and even went as far as saying that the idea was essentially ingenious and then moved on to talk about these currencies in present tense, describing its current market penetration. The report was prepared by four of the bank’s officers: Robleh Ali of the Bank’s Financial Market Infrastructure Directorate, John Barrdear of the Bank’s Monetary Assessment and Strategy Division and Roger Clews and James Southgate and was included in the Bank’s Quarterly Bulletin.

- The Bank of England

If you are a crypto enthusiast and have read the report than you were no doubt amused after reading this report because the writers were seemingly so short sighted. The report begins by describing the traditional banking definition of money. Money must have three features:

  • Store of Value to allow transfer of purchasing power
  • Medium of Exchange so that payments can be made
  • Unit of Account to measure value

The Bank found that about 20,000 UK citizens possessed Bitcoin and that, in general, they considered it a store of value rather than a medium of exchange. They said that because of this Bitcoin cannot be considered money under the Bank’s definition. They also estimated that only about 300 transactions a day are made in Bitcoin in the United Kingdom. The report concluded that while Bitcoin was not a current threat to English banks, and very well never would be because “significant” barriers. One important note however is the discussion of the fixed number of coins that most cryptocurrencies feature and the reports assurance that this rule was not built into the code and could be manipulated.

But is the report correct? The Telegraph seems to think so in its report when it said:

 

“The Bank has an extremely technical insight into the workings of the digital currency.”

Which is laughable when you consider that the description of digital currencies given in the report is something that you would give a person who had never heard of the concept before: It was hardly an in-depth analysis of digital currencies. The report also indicates a possible plan by the banks to try to hijack blockchain technology. The report said:

 

"Distributed ledger technology represents a fundamental change in how payment systems could work. And in principle, this decentralized approach is not limited to payments,"

The fact is however that the Bank’s report either accidentally or intentionally ignored a great deal of evidence that indicates the exact opposite of their findings and they completely ignored international impact. In actuality, the report seems more like a piece of candy to make the Board feel better than an honest assessment of digital currencies and their potential effect.

It is difficult to see how the bank, with any accuracy, would be able to estimate the number of people who own Bitcoin in Great Britain and estimating the number of transactions per day would be nearly impossible because transactions are carried out by business all over the world in a p2p network that the banks have no access to for information. The report also failed to note that some of the largest online businesses in the world, such as the Paypal owned Braintree, Overstock, Dell computers, Expedia and DISH Network, all companies that do business in the UK, are now accepting Bitcoin. BitPay, one of the world’s leaders in digital currency business solutions, has a client base of tens of thousands of merchants and Coinbase exceeds that number. The Isle of Jersey is actually talking about becoming “Bitcoin Island”. The report also failed to note that Bitcoin was already being used to make retail purchases, both large and small, which gives like to the idea that Bitcoin has no unit of measure or medium of exchange.

The reason for the report however can be found in the following statement:

 

“The Bank continues to monitor digital currencies and the risks they pose to its mission. If a subset of people transacted exclusively in a digital currency, then the Bank’s ability to influence demand for this group may potentially be impaired. Should they achieve limited adoption as a payment system, they are unlikely to undermine the Bank’s ability to achieve monetary stability. While that could, in theory, change if sterling were abandoned in favour of an alternative currency for a significant fraction of the economy, such a scenario is considered extremely unlikely at present”

The operative part of that sentence is “…the Bank’s ability to influence demand for this group may potentially be impaired.” The Bank’s do understand that Bitcoin will eventually become an existential threat if allowed to survive. They are also very clear of the intention of reining in this threat by using “regulation”. Realistically, for 95% of the world’s population, banks are used for one purpose: They keep your money safe and give you easier access. They do provide many other services but most of them do not apply to most people. Digital currencies remove the need for bank security and at the same time eliminate most transfer and remittance fees. If the ability to “influence demand” is removed from the banks so will the centralized ability to control the finances of the masses artificially.

CoinTelegraph Staff Reporter Tone Vays has worked on Wall Street for nearly a decade and is an expert in finance. After reading the report Tone had this to say:

 

“The report continuously refers to digital currencies as “schemes” which show a complete disrespect for this revolutionary technology and gives the impression that they are trying to label them as something notorious like “Ponzi Scheme”

 

This report once again proves that most traditional economist and especially the ones employed by Central Banks do not understand the concept of an “exponential function”. This is the reason why Keynesian economic models are breaking down and debts of developed countries are going through the roof which is cause smart people to consider alternatives. Digital Currencies might not be a threat today, but once another big bank fails or there are rumors of “bail-ins”, Digital Currencies will experience “exponential adoption” and this Central Bank will not be able to form a comity for the latest report fast enough before they know what hits them. The banks brag about maintaining “stability” but the truth is that 2% indefinite inflation is not stability, it is implosion.

Tone has a valid point. The record of the banks over the last century has been dismal at best. The record of the banks over the last century has been dismal at best. Their irresponsible actions have directly resulted in three major economic crises during the last century alone. Under the current economic paradigm, money cannot be created unless people are in debt to the banks. The report is correct in saying that Bitcoin and cryptocurrencies are not a current threat but dead wrong is saying that they will probably fail. Despite the reports negative outlook on Bitcoin acceptance during the last year alone tens of thousands of business have begun to accept cryptocurrencies and because the nature of digital currencies the United Kingdom can hardly maintain an isolationist attitude.

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Is it me or is al Qaeda winning the war of destroying us by our financial system?

 

Fiat currencies are faith based. I don't know why they left the H out.

 

The value relies on a strong economy and political stability.

 

By strong I mean productive. Doubling the price of everything would double GDP but without more production it's pretty meaningless.

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Five views on why we don't have inflation or we do but it's hidden, or we won't because of new Fed techniques, or why everyone but the people with money on the line (excluding economists making and losing personal bets about predictions) is still wrong, or something about what happened to inflation.

 

 

http://reason.com/archives/2014/11/30/whatever-happened-to-inflation

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i'd like to see a price history of the Harken 3.0 Single Midrange block. Now about $100.

 

Trace out it's price history, likely a pretty good proxy for manufactured goods inflation, and there might be a PhD in it for you

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  • 3 months later...

Is it me or is al Qaeda winning the war of destroying us by our financial system?

We are destroying ourselves with unsound fiscal practices by our corrupt politicians, as supported by our slovenly, entitled populace.

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Had a look at the link. Agree with most except the 'Where does the value come from?' part.

 

I have friends trading in bitcoin and I will be soon to probably. The value is a function of choice, yeah, but it is also a function of limited quantities of the currency. I do not gamble but if I had to I would bet on bitcoin over the US dollar over the next decade.

 

The problem with Bitcoin is dilution ... it was first, but the model is encouraged to be copied. So when the blockchain model is used for stock exchanges, personal exchanges, penny stocks, etc., then what does Bitcoin have over the others except that it was there first? A bigger blockchain is more difficult to attack with a 51% attack, but the file is bigger and more cumbersome to manage.

 

I hope you do well with your investment, but remember, at its core Bitcoin is remarkably like the US Dollar. If you're looking for a stable investment, things like commodities and land and education might be better.

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Bitcoin has deflation baked into the cake, making it nothing like the dollar or any other fiat currency at its core.

 

Looks like Mastercard finally woke up and is smelling the coffee.

 

 

...Rapid and significant technological changes could occur, resulting in new and innovative payment methods (including cryptocurrencies) and programs that could place us at a competitive disadvantage and that could reduce the use of MasterCard products.”

 

Umm... yeah, charging a LOT more to transfer money might just place you at a competitive disadvantage compared to those who charge a LOT less.

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If you're looking for a stable investment, things like commodities and land and education might be better.

Some of the larger commodities have been a pretty wild ride over the last year.
Having spent a few years in that business, I don't see how anyone could recommend commodities as a stable investment. That's like the Wild West compared to the stock market. Even well structured spreads to cover your ass can go south in a hurry.
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I think we can have a lot of monetary expansion without a lot of inflation these days simply because of a lot cheap goods from places like China being sold at hyper-competitive retailers like Walmart.

 

Austrian school economists never built big-box style price destruction into their theories, therefore their theories are inadequate for explaining how Sam Walton has made us all richer.

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I think we can have a lot of monetary expansion without a lot of inflation these days simply because of a lot cheap goods from places like China being sold at hyper-competitive retailers like Walmart.

 

Austrian school economists never built big-box style price destruction into their theories, therefore their theories are inadequate for explaining how Sam Walton has made us all richer.

 

Folks sure like to bitch about him and his kids though for selling stuff so cheap.

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There are any number of things that MegaLoMart is now selling at the same or lower prices than the same stuff went for in 1985. In Las Angeles these days one of the big problems is how to prevent the poor from dying an early death from diabetes or obesity from drinking cheap Super Gulpees or whatever-because even the poor now have too much. Scolds like von Mises and Hayek never warned us about all that because we were supposed to be struggling with catastrophic inflation right about this time. Ergo, I question the classical economical paradigm of limited resources chased by possibly too much currency.

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  • 4 weeks later...

People interested in the direction of this thread might also be interested in Maelstrom, which is now in beta.

http://blog.bittorrent.com/2015/04/10/project-maelstrom-enters-beta/

 

The idea is a bittorrent-based web client - you can get at regular pages, but also pages hosted by other people running the browser [ie, no single hosted server).

Obviously only good for pages that don't run off a database, so no good for pirate bay, but interesting never-the-less.

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Bitcoin Block Size Limit Near

 

...Satoshi instituted the one megabyte rule as a temporary anti-spam measure in Bitcoin’s early days. It wasn't a problem for most of Bitcoin’s history, since the "market for block size" tended to be far below Satoshi’s capricious limit—like a price ceiling set far above the prevailing market norm. Satoshi and other developers expected that a higher block size limit would be gradually phased in as the network matured and block sizes slowly approached the limit, which is projected to occur in late 2016.

 

What happens then? The same thing that always happens when demand exceeds an artificially limited supply: the price will increase. In this case, it’s the "price" to send a transaction; Bitcoin users would pay more in either time or transaction fees.

 

Users unable or unwilling to entice miners with generous transaction fees may find themselves experiencing longer and longer confirmation times. The Bitcoin "haves," on the other hand, could simply pay for priority blockchain access. Bitcoin miners, meanwhile, would enjoy higher-than-market returns for lower-than-competitive service. It’s quite possible that only large, perhaps institutional, transactions would remain cost-effective in such a market. Or perhaps, its core value proposition undermined, Bitcoin would slowly die out.

 

A number of proposals have been floated to address the impending limit. Two of the most public-facing developers, Gavin Andresen and Mike Hearn, support increasing the limit to 20 megabytes, with the option of increasing it further in the future as necessary. Others have suggested that gradual block size increases could be overseen by a simple rule, similar to how the Bitcoin supply schedule is programmed to automatically increase.

 

Fundamental changes to the Bitcoin protocol require a "hard fork" with which all Bitcoin users and miners must agree to upgrade. Gathering such a strict consensus is even harder than it sounds.

 

 

Hah! I don't envy the cat-herders.

 

The market answer to this problem is that they will all agree to a workable answer that is beneficial, or at least acceptable, to all Bitcoin miners, node volunteers, and users. If they don't, Bitcoin deserves to die.

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Bitcoin Block Size Limit Near

 

 

Fundamental changes to the Bitcoin protocol require a "hard fork" with which all Bitcoin users and miners must agree to upgrade. Gathering such a strict consensus is even harder than it sounds.

 

 

Hah! I don't envy the cat-herders.

 

The market answer to this problem is that they will all agree to a workable answer that is beneficial, or at least acceptable, to all Bitcoin miners, node volunteers, and users. If they don't, Bitcoin deserves to die.

 

Yea, that's gonna be a challenge. Not quite 'all' users.. Bitcoin mining (updating the ledger+busy work) is a tyranny of the majority but a 51/49 split would be a freaking logistics nightmare and would deeply undermine overall credibility. The 49'ers would PROBABLY loose eventually but chaos would reign. A strong consensus by the major players really is necessary for a smooth transition.

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  • 1 month later...

Uh oh. What if people want to pay a small fraction of the Western Union price to send money around the world?

 

From the Bitcoin FB page:

 

11754809_503451966476445_789426394496872

Good for us, bad for the US banking cartel...

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This Augurs Well for the Future of Gambling

 

Coming this fall, Augur will allow participants to wager money on any future event of their choosing. Software will set the odds, collect the bets, and disperse the winnings. The price alone should give Nevada sportsbook operators pause; an estimated one percent of every pot will go to keep the system running. The average vig today is about 10 times that.

 

Augur isn't a full-fledged casino. You can't play roulette or poker, and running lotto on the platform would be tricky. But it'll be great for sports betting.

 

Here’s what’s truly novel about Augur: It won’t be controlled by any person or entity, nor will it operate off of any one computer network. All the money in the system will be in Bitcoin, or other types of peer-to-peer cryptocurrency, so no credit card companies or banks need to be involved. If the system runs afoul of regulators—and if it’s successful, it most certainly will—they'll find that there's no company to sue, no computer hardware to pull out of the wall, and no CEO to lockup in a cage.

 

This is new legal territory. If Augur catches on as a tool for betting on everything from basketball games to stock prices, is there anything the government can do to stop it?

 

 

I'd say the answer is no. The internet tends to interpret government regulations as damage and route around them.

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  • 2 weeks later...

The Future of Money? Nobody Cares.

 

The businessman who controls the Wall Street Journal and Fox News, Rupert Murdoch, and the former mayor of New York City, Michael Bloomberg, both recently sounded similar themes. Bloomberg asserted that the Fed's low interest rates have "exacerbated the wealth gap between the poor and the rich because the rich have assets. And that is what is being hiked here because of low interest rates, whether they own stocks or real estate or whatever the case may be." And Murdoch wrote on Twitter that "Fed trillions ended inflating existing assets. Stocks, real estate, art."

 

A New York Times editorial puzzles over home prices and asserts, "only investment income has been rising steadily in the recovery, while wages from work have stagnated." Much depends on whether the cost of employer-provided health insurance is included in wage income, but even so, and without mentioning the Fed, the Times editorialists sound a bit like Bloomberg and Murdoch.

 

Maybe the presidential candidates think this is an issue too complicated for ordinary voters to understand? By that theory, voters are supposed to be fascinated by the details of H1-B visas, Iran's nuclear centrifuges, elementary school student testing and teacher evaluation, hydraulic fracturing, and health insurance—but not at all interested in the value of a dollar. Could be.

 

 

Gee, I would have thought that printing a bunch of money and thereby inflating the values of real estate, stocks, and artwork would have had huge benefits for poor people. This monetary policy stuff is way more complicated than I imagined. Who could have figured out that poor people don't collect art or own stocks?

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This change would have the blockchain getting larger much faster than it has so far.

There is a school of thought which suggests that instead of just making more space, some demand should be permitted.

Maybe transactions should not be free.

 

Currently there are other systems using the blockchain for their own purposes, they really should piss off and start their own blockchain. Like the link to Etherium you provided a few months ago.

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This change would have the blockchain getting larger much faster than it has so far.

There is a school of thought which suggests that instead of just making more space, some demand should be permitted.

Maybe transactions should not be free.

 

Currently there are other systems using the blockchain for their own purposes, they really should piss off and start their own blockchain. Like the link to Etherium you provided a few months ago.

 

What do you mean by "some demand should be permitted" above?

 

I thought transactions were cheap, not free.

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Currently the blocks are only "nearly" full. Noone is yet missing out, or paying a premium to make sure their transaction gets through in a timely fashion.

 

Fees currently are negligible and largely voluntary. This will not fly in the long term, as the people currently mining bitcoins will go do something else if it starts to cost them money.

 

http://www.coindesk.com/new-study-low-bitcoin-transaction-fees-unsustainable/

 

https://en.bitcoin.it/wiki/Transaction_fees

 

http://bitcoinfees.com/

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Currently the blocks are only "nearly" full. Noone is yet missing out, or paying a premium to make sure their transaction gets through in a timely fashion.

 

Fees currently are negligible and largely voluntary. This will not fly in the long term, as the people currently mining bitcoins will go do something else if it starts to cost them money.

 

http://www.coindesk.com/new-study-low-bitcoin-transaction-fees-unsustainable/

 

https://en.bitcoin.it/wiki/Transaction_fees

 

http://bitcoinfees.com/

 

The first one says the current fee practices may be unsustainable in 5 to 20 years.

 

20 years?

 

That's a long time on the internet, where business models go obsolete pretty quickly.

 

That's probably about three boom/bust cycles of printing a bunch of money, inflating markets, and watching another crash.

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  • 3 weeks later...
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  • 2 weeks later...

This was posted in a Syria thread but is relevant here.

 

 

The gold price has been going down because of confusion between 'paper' gold and real gold. Some including the US are selling paper gold (shares) so this has the effect of pushing prices down. I've been thinking about buying bullion soon, but waiting for it to go below US$1000.

 

The world is about to go through much pain in the process of moving back to currency that has something behind it.

 

There Are Now 293 Ounces Of Paper Gold For Every Ounce Of Physical As Comex Registered Gold Hits New Low

 


All of that paper is (supposedly) a claim on actual metal.

 

At some point, people do start to say, "Show me the metal."

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This was posted in a Syria thread but is relevant here.

 

 

The gold price has been going down because of confusion between 'paper' gold and real gold. Some including the US are selling paper gold (shares) so this has the effect of pushing prices down. I've been thinking about buying bullion soon, but waiting for it to go below US$1000.

 

The world is about to go through much pain in the process of moving back to currency that has something behind it.

 

There Are Now 293 Ounces Of Paper Gold For Every Ounce Of Physical As Comex Registered Gold Hits New Low

 

All of that paper is (supposedly) a claim on actual metal.

 

At some point, people do start to say, "Show me the metal."

Hmm. the scenario sounds vaguely familiar...

 

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  • 1 month later...

Here Comes ZCash

 

Bitcoin may have become the currency of choice for the anonymity-loving Internet underground. But it’s never been anonymous enough for Zooko Wilcox. As he’ll remind anyone who’ll listen, the blockchain, bitcoin’s very public ledger of all transactions in its crypto-economy, means that unless bitcoin’s users funnel it through intermediaries or special software, their transactions can easily be traced.

 

Today Wilcox and his startup Zcash are launching the first public alpha release of the cryptography world’s best shot yet at perfectly untraceable digital money. Using a mathematical sleight-of-hand known as a “zero-knowledge proof,” Zcash (until recently known as Zerocoin or Zerocash) offers the same anti-forgery assurances as bitcoin: No one can counterfeit Zcash, or spend the same Zcash “coin” twice. But thanks to its zero-knowledge feature, any spender or receiver can also choose to keep their Zcash payment entirely secret.

 

...

 

Plenty of cryptocurrencies that have boasted features bitcoin lacks have launched and languished over the years, without seeing even a fraction of bitcoin’s adoption. But Wilcox argues that Zcash’s incognito properties, when the currency finally does launch for public consumption and real financial applications, will be crucial for those who need a more privacy-preserving form of digital money. That includes anyone from a medical startup trying to comply with healthcare privacy laws to a businesswoman in Afghanistan dodging corrupt cops and tyrannical male family members. “Privacy makes whole societies safer, stronger and more prosperous,” says Wilcox. “Ubiquitous privacy helps prevent corruption and abuse and oppression.”

 

...

 

the anti-money-laundering think tank Global Financial Integrity published an op-ed in the Baltimore Sun describing the idea as a boon to black markets of all kinds, from human trafficking to wildlife poaching. “More girls will be sold as sex slaves, more rhinos will be poached, and every other large-scale transnational crime that you can name is going to become a lot easier if criminals have a way to transfer very large amounts of money completely anonymously,” wrote the group’s spokesperson E.J. Fagan.

 

Wilcox maintains his stealthy digital cash startup isn’t intended to facilitate crime, but also notes that the company isn’t liable for any criminal applications for which Zcash is used. “The people who built the first cars weren’t held responsible for car accidents or bank robberies,” he says. “The people who use these tools for good or ill are held responsible for that.”

 

But Wilcox also insists that Zcash’s legitimate applications will outweigh its shady ones. He compares Zerocoin’s ambiguous potential to that of the Internet itself. “Can the internet be used for crime? Yes, it can be, but that’s not what’s important about it.” Wilcox says...

 

 

Just because auto manufacturers and the creators of the internet have not been held liable for criminal misuse of their products does not mean it can't happen in other markets. As Eva Dent.

 

Privacy. It's not just for governments any more. I expect a fight over this one. The power of the DEA to launder cartel money is the power to control them. It will not just be given up quietly.

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The problem with FIAT is it is just that. The value is based on emotion.

As for bitcoin or any other currency surpassing the USD, Internet Bubble, Real Estate Bubble, Monetary Bubble.......

The main thing that supports the value of a fiat currency is taxation by the soveron. Effective taxation creates demand and demand supports value. In the case of Bitcoin there is no taxation due in bitcoins and it is missing this essential driver of demand.

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  • 3 months later...

It seems that the big banks and tech companies have at last realized that they can get aboard the blockchain train or get run over by it.

 

So they want to make it a private train. Which pretty well misses the point.

 

"If you look at the Bitcoin/blockchain industry today, are most of them libertarians, I don't know," said Voorhees. "Mostly it's just business people, but that's fine. Business people will grow the system and to me it doesn't matter because the freedom that the asset brings to people happens on the back of the technology."

 

But the buzzword at this year's conference was blockchain, not bitcoin, a distinction that's indicative of mainstream misgivings about working with a system that's open for anyone to use. Many banks are partnering with companies building so-called private blockchains that mimic some aspects of Bitcoin's architecture except they're designed to be closed off and accessible only to chosen parties.

 

"The big companies want to improve themselves [but] they don't want to disrupt themselves," said William Mougayar, an investor and author of a new business guide to the blockchain industry that draws analogies to the early days of the internet, when open access drove rapid innovation.

 

"Big companies like to talk about using the blockchain without Bitcoin and using maybe 10 percent of the capabilities that Bitcoin has given us," says Mougayar. "And I think it is a mistake."

But Voorhees is confident that open and permission less blockchains will ultimately prevail even in the banking sector simply because they're more efficient....

 

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The problem with FIAT is it is just that. The value is based on emotion.

As for bitcoin or any other currency surpassing the USD, Internet Bubble, Real Estate Bubble, Monetary Bubble.......

The main thing that supports the value of a fiat currency is taxation by the soveron. Effective taxation creates demand and demand supports value. In the case of Bitcoin there is no taxation due in bitcoins and it is missing this essential driver of demand.

 

 

How does taxation create value?

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The problem with FIAT is it is just that. The value is based on emotion.

As for bitcoin or any other currency surpassing the USD, Internet Bubble, Real Estate Bubble, Monetary Bubble.......

The main thing that supports the value of a fiat currency is taxation by the soveron. Effective taxation creates demand and demand supports value. In the case of Bitcoin there is no taxation due in bitcoins and it is missing this essential driver of demand.

 

 

How does taxation create value?

 

 

Correction: "taxation by the soveron" :huh: Oh boy, this should be good.... :D:D:D

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Which Soveron are you talking about?

 

I tried looking it up, but don't know if you're talking about Pablo Soveron Nizoli, Enrique Soveron, Sandra Soveron de Luizalga, or some Soveron who doesn't appear at the top of Google.

 

What do he/she/they do with this tax money that's do wonderful?

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Had a look at the link. Agree with most except the 'Where does the value come from?' part.

 

I have friends trading in bitcoin and I will be soon to probably. The value is a function of choice, yeah, but it is also a function of limited quantities of the currency. I do not gamble but if I had to I would bet on bitcoin over the US dollar over the next decade.

What set of prejudices do you base that opinion on? Or are you some kind of credentialed expert on money theory?

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The problem with FIAT is it is just that. The value is based on emotion.

As for bitcoin or any other currency surpassing the USD, Internet Bubble, Real Estate Bubble, Monetary Bubble.......

The main thing that supports the value of a fiat currency is taxation by the soveron. Effective taxation creates demand and demand supports value. In the case of Bitcoin there is no taxation due in bitcoins and it is missing this essential driver of demand.

 

 

How does taxation create value?

 

As it relates to money, taxation does not create value as such, it creates demand for the currency. People need to acquire the currency in order to pay their taxes.

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The problem with FIAT is it is just that. The value is based on emotion.

As for bitcoin or any other currency surpassing the USD, Internet Bubble, Real Estate Bubble, Monetary Bubble.......

The main thing that supports the value of a fiat currency is taxation by the soveron. Effective taxation creates demand and demand supports value. In the case of Bitcoin there is no taxation due in bitcoins and it is missing this essential driver of demand.

 

 

How does taxation create value?

 

As it relates to money, taxation does not create value as such, it creates demand for the currency. People need to acquire the currency in order to pay their taxes.

 

this is correct. taxation creates demand.

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  • 3 months later...

Fed Planning For Negative Interest Rates

 

What better way to learn the NIRP ropes than from fellow central bankers who have actually done it? The Fed’s recent Jackson Hole retreat was an opportunity. And sure enough, they had a session on Negative Nominal Interest Rates.

The lead presenter, Marvin Goodfriend of Carnegie Mellon University, is an unabashed NIRP proponent. His paper “makes the case for unencumbering interest rate policy so that negative nominal interest rates can be made freely available and fully effective as a realistic policy option in a future crisis.”

Janet Yellen didn’t bring in Goodfriend for entertainment. She wanted to learn how to implement NIRP. Yellen’s own Jackson Hole speech had a footnote describing a monetary policy rule (to replace the Taylor Rule) that would have sent rates down to -9% in late 2008. It is clearly on her mind.

I believe the Fed wants to have NIRP as a policy option when the next recession begins. Having NIRP in the toolbox does not mean they will actually use it, but it does mean they haven’t ruled it out. The previously unthinkable is now fully thinkable.

 

Having trouble pushing a wet string up a hill? Push harder!

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Fed Planning For Negative Interest Rates

 

 

What better way to learn the NIRP ropes than from fellow central bankers who have actually done it? The Fed’s recent Jackson Hole retreat was an opportunity. And sure enough, they had a session on Negative Nominal Interest Rates.

 

The lead presenter, Marvin Goodfriend of Carnegie Mellon University, is an unabashed NIRP proponent. His paper “makes the case for unencumbering interest rate policy so that negative nominal interest rates can be made freely available and fully effective as a realistic policy option in a future crisis.”

 

Janet Yellen didn’t bring in Goodfriend for entertainment. She wanted to learn how to implement NIRP. Yellen’s own Jackson Hole speech had a footnote describing a monetary policy rule (to replace the Taylor Rule) that would have sent rates down to -9% in late 2008. It is clearly on her mind.

 

I believe the Fed wants to have NIRP as a policy option when the next recession begins. Having NIRP in the toolbox does not mean they will actually use it, but it does mean they haven’t ruled it out. The previously unthinkable is now fully thinkable.

 

 

Having trouble pushing a wet string up a hill? Push harder!

 

That's OK, throw grandma under the bus the banking cartel knows what's best.. :ph34r:

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Bitcoin Mining In Venezuela

 

The government there has created a situation in which it's almost impossible to make money, but electricity is virtually free.

 

The main cost of Bitcoin mining (in most of the world) is electricity.

 

Bitcoin's potential as an alternative to government-issued currency is still hotly debated outside of Venezuela. But in a country lacking food and basic health care, there's nothing theoretical about it. Bitcoin is helping to keep pantry shelves full and medicine cabinets stocked, making life tolerable—if not always easy—in the midst of a socialist hell.

 

 

It's a sad situation but subversive in a wonderful way.

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The Future of Money? Nobody Cares.

 

The businessman who controls the Wall Street Journal and Fox News, Rupert Murdoch, and the former mayor of New York City, Michael Bloomberg, both recently sounded similar themes. Bloomberg asserted that the Fed's low interest rates have "exacerbated the wealth gap between the poor and the rich because the rich have assets. And that is what is being hiked here because of low interest rates, whether they own stocks or real estate or whatever the case may be." And Murdoch wrote on Twitter that "Fed trillions ended inflating existing assets. Stocks, real estate, art."

 

A New York Times editorial puzzles over home prices and asserts, "only investment income has been rising steadily in the recovery, while wages from work have stagnated." Much depends on whether the cost of employer-provided health insurance is included in wage income, but even so, and without mentioning the Fed, the Times editorialists sound a bit like Bloomberg and Murdoch.

 

Maybe the presidential candidates think this is an issue too complicated for ordinary voters to understand? By that theory, voters are supposed to be fascinated by the details of H1-B visas, Iran's nuclear centrifuges, elementary school student testing and teacher evaluation, hydraulic fracturing, and health insurance—but not at all interested in the value of a dollar. Could be.

 

 

Gee, I would have thought that printing a bunch of money and thereby inflating the values of real estate, stocks, and artwork would have had huge benefits for poor people. This monetary policy stuff is way more complicated than I imagined. Who could have figured out that poor people don't collect art or own stocks?

 

Right Wingers - they can't figure out much when it comes to finance. That's why all the truly colossal economic fuckups of the past 80 or 90 years have been perpetrated by right wing government policies.

 

Here's a tip - whenever you see someone talking about "Fiat Currency" you can take it as a given that they are a right wing fanatic and don't have a clue how money or international finance works.

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bitcoin is blockchain but still needs some way to enforce value. It might as well be gold.

 

Blockchain allows anyone who agrees to some value for some period of time to make transfers.

 

Take a look at transferwise.com to see how to handle Forex transactions without the banks setting arbitrary buy/sell rates and fucking with fees.

 

I'm sure the folks who run it are making shitloads of money while providing me with a much, much better rate on transfers from the UK.

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...

 

Here's a tip - whenever you see someone talking about "Fiat Currency" you can take it as a given that they are a right wing fanatic and don't have a clue how money or international finance works.

 

 

So what explains the difference in value between an old silver dime and a modern dime?

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What's your point?

 

That's what money is and always has been. Before Nixon ended the gold standard do you think anyone ever got a gold bar from Fort Knox in exchange for their greenbacks?

 

Here's a hint - private ownership of gold was limited to extremely small amounts - like Mom's jewelry.

 

Better just accept it - it ain't gonna change because someone comes up with a new web based funds transfer option.

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80% of the number of US bills in circulation are of the $100 variety. Good reason for a call back as I can see. The underground economy and money laundering would be hit hard.


 

 

...

 

Here's a tip - whenever you see someone talking about "Fiat Currency" you can take it as a given that they are a right wing fanatic and don't have a clue how money or international finance works.

 

 

So what explains the difference in value between an old silver dime and a modern dime?

 

face value. Problem is that the penny takes more money to make than it is worth.

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What's your point?

 

That's what money is and always has been. Before Nixon ended the gold standard do you think anyone ever got a gold bar from Fort Knox in exchange for their greenbacks?

 

Here's a hint - private ownership of gold was limited to extremely small amounts - like Mom's jewelry.

 

Better just accept it - it ain't gonna change because someone comes up with a new web based funds transfer option.

 

Always has been? I've personally carried really heavy bags of silver dimes around.

 

Back when they were currency, one could buy you about a gallon of gas. Today, one can buy you about a gallon of gas.

 

That money was different from current money because it had inherent value, not fiat value.

 

Better just accept it: Venezuela is further down the devaluation road than we are and things have already changed. Did you read the article I posted?

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3 Ways Bitcoin Is Promoting Freedom

 

They're really all the same way: the blockchain is allowing people to go around meddlesome governments.

 

Bitcoin definitely offers opportunity in failed states. Black market economies always spring up where the 'sanctioned' markets fail to satisfy some large group of people. The "TIDE" economy is pretty clear evidence that even in affluent societies, some level of black market economy always exists.

 

I'm pretty skeptical that bitcoin can actually supplant the economy of a durable state. In most cases, the state isn't going to give up it's status as printer of money that easily. Bitcoin has worked largely because China has facilitated market liquidity. Take that away and I'm not sure if there's truly enough basis to keep it operating. I think countries like Zimbabwe and Venezuela are so damaged they could use it but beyond those borders, it takes a certain level of acceptance into the broad global economy to maintain traction.

 

BTW: I'm a huge Bitcoin fan and have mined it, traded it, bought stuff, blah blah. But I'm also aware of how fast it can go sideways in the face of direct government seizures or large scale fraud. The other feature that i'd like to point out is that Bitcoin, in particular, is 100% traceable. That's actually part of the appeal of using blockchain for OTHER types of transactions. It's just usually not worth the hassle. There are alternatives that are trying to get around that but it's not clear there's really a significant market for those alternatives. The criminal abuse side makes those cryptocurrencies the focus of intense attention.

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... ... ...

 

... I've personally carried really heavy bags of silver dimes around.

 

Back when they were currency, one could buy you about a gallon of gas. Today, one can buy you about a gallon of gas.

 

That money was different from current money because it had inherent value, not fiat value.

 

 

 

 

You (and all the ones shouting "fiat currency"!) should study some real economics, not just read Ron Paul's pamphlets

 

Why does a silver coin, or a bar of gold, have "inherent value?"

 

Hint: it doesn't. It's valuable because other people think it's valuable.

 

You (and all the ones shouting "fiat currency"!) should take a step back and ask why inflation is low, and also why it's relatively stable; furthermore why US debt instruments are the most secure & safe (hence the low interest rates) investment in the world... not just that, in the history of the world.

 

A quick education in what money really is and isn't: look up the word "shinplaster."

 

-DSK

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People think a silver dime is a lot more valuable than a fiat dime.

 

Zero is not an interest rate. It's market manipulation.

 

We are, for now, the world's reserve currency. And, for now, we can pay our debts. Those things can change. But still a silver dime will be valuable.

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People think a silver dime is a lot more valuable than a fiat dime.

 

Zero is not an interest rate. It's market manipulation.

 

We are, for now, the world's reserve currency. And, for now, we can pay our debts. Those things can change. But still a silver dime will be valuable.

 

Inflation is not zero.

 

Silver is valuable. You can make jewelry and electronic parts out of it.

 

The fact that ancient peoples made jewelry out of silver & gold long before there was a written language, silver & gold commonly have the impression of "inherent value." Some ideas take a really really long time to fade. Check how much the local pawn shop will give you for a pile of gold chains (or whatever), then get back to me on "inherent value."

 

Silver & gold both have commodity markets. Their bling value push the market value up, their usefulness as engineering material put a floor on the market value. If that's what you mean by "inherent value" then I agree; but there is absolutely no reason to tie US (or any other nations') currency to one or the other. Or platinum, or crude oil, or any other commodity.

 

Why not go back to wampum belts? Wait that's not a serious question...

 

Exercise for the serious: explain why US paper currency is different from a shinplaster.

Warning: Answers below the level of a C in high school civics will be mocked.

 

-DSK

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Tom said interest rates were zero, not inflation.

 

 

US currency is different from a shinplaster because it has an agreed upon value across the world and is accepted virtually everywhere.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

was going through an old box the other day and found 10 rolls of dimes and 5 rolls of quarters all rolled in 1965. I prefer them to fiat dimes and quarters ;)

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People think a silver dime is a lot more valuable than a fiat dime.

 

Zero is not an interest rate. It's market manipulation.

 

We are, for now, the world's reserve currency. And, for now, we can pay our debts. Those things can change. But still a silver dime will be valuable.

 

Inflation is not zero.

 

Silver is valuable. You can make jewelry and electronic parts out of it.

 

The fact that ancient peoples made jewelry out of silver & gold long before there was a written language, silver & gold commonly have the impression of "inherent value." Some ideas take a really really long time to fade. Check how much the local pawn shop will give you for a pile of gold chains (or whatever), then get back to me on "inherent value."

 

Silver & gold both have commodity markets. Their bling value push the market value up, their usefulness as engineering material put a floor on the market value. If that's what you mean by "inherent value" then I agree; but there is absolutely no reason to tie US (or any other nations') currency to one or the other. Or platinum, or crude oil, or any other commodity.

 

Why not go back to wampum belts? Wait that's not a serious question...

 

Exercise for the serious: explain why US paper currency is different from a shinplaster.

Warning: Answers below the level of a C in high school civics will be mocked.

 

-DSK

 

 

Yes, that's what I meant by inherent value.

 

My reference to market meddling was to Quantitative Easing and the fed funds target rate of zero. Link upthread. Zero is not an interest rate and I never said it was the inflation rate.

 

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... ... ...

My reference to market meddling was to Quantitative Easing and the fed funds target rate of zero. Link upthread. Zero is not an interest rate and I never said it was the inflation rate.

 

 

 

That wasn't meant as some kind of booby trap; in your post to which I was replying, you referenced inflation several times.

 

-DSK

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People think a silver dime is a lot more valuable than a fiat dime.

 

Zero is not an interest rate. It's market manipulation.

 

We are, for now, the world's reserve currency. And, for now, we can pay our debts. Those things can change. But still a silver dime will be valuable.

 

Inflation is not zero.

 

You OK, Doug? My post to which you replied does not contain the word inflation at all.

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People think a silver dime is a lot more valuable than a fiat dime.

 

Zero is not an interest rate. It's market manipulation.

 

We are, for now, the world's reserve currency. And, for now, we can pay our debts. Those things can change. But still a silver dime will be valuable.

 

Inflation is not zero.

 

You OK, Doug? My post to which you replied does not contain the word inflation at all.

 

 

???

 

#79

 

-DSK

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What's your point?

 

That's what money is and always has been. Before Nixon ended the gold standard do you think anyone ever got a gold bar from Fort Knox in exchange for their greenbacks?

 

Here's a hint - private ownership of gold was limited to extremely small amounts - like Mom's jewelry.

 

Better just accept it - it ain't gonna change because someone comes up with a new web based funds transfer option.

 

Always has been? I've personally carried really heavy bags of silver dimes around.

 

Back when they were currency, one could buy you about a gallon of gas. Today, one can buy you about a gallon of gas.

 

That money was different from current money because it had inherent value, not fiat value.

 

Better just accept it: Venezuela is further down the devaluation road than we are and things have already changed. Did you read the article I posted?

 

 

I guess you never heard about Roman emperors adulterating the gold and silver in their coinage.

 

As I said, it has always been thus.

 

Pining for "inherent value" in currency is hopelessly retrograde - the worlds entire supply of gold & silver could only support a tiny fraction of the current economy - that's why Nixon ended the gold standard.

 

Currency has always been about "agreed value" - they just used gold & silver to create the illusion it was something special and to make counterfeiting harder.

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Doug, I still don't know where you got the idea I was talking about a zero inflation rate when I pointed out that zero is not an interest rate. But just to clarify, when I mention an interest rate, I'm talking about an interest rate, not an inflation rate. Yes, I'm barely bright and educated enough to know the difference.

 

 

 

 

What's your point?

 

That's what money is and always has been. Before Nixon ended the gold standard do you think anyone ever got a gold bar from Fort Knox in exchange for their greenbacks?

 

Here's a hint - private ownership of gold was limited to extremely small amounts - like Mom's jewelry.

 

Better just accept it - it ain't gonna change because someone comes up with a new web based funds transfer option.

 

Always has been? I've personally carried really heavy bags of silver dimes around.

 

Back when they were currency, one could buy you about a gallon of gas. Today, one can buy you about a gallon of gas.

 

That money was different from current money because it had inherent value, not fiat value.

 

Better just accept it: Venezuela is further down the devaluation road than we are and things have already changed. Did you read the article I posted?

 

 

I guess you never heard about Roman emperors adulterating the gold and silver in their coinage.

 

As I said, it has always been thus.

 

Pining for "inherent value" in currency is hopelessly retrograde - the worlds entire supply of gold & silver could only support a tiny fraction of the current economy - that's why Nixon ended the gold standard.

 

Currency has always been about "agreed value" - they just used gold & silver to create the illusion it was something special and to make counterfeiting harder.

 

 

To me, the bags of dimes prove that our currency hasn't always been nearly worthless metal. It was once valuable metal. Whatever the Romans may have done doesn't change my perception. I know what I've carried and I know what's in the little tray in my car and they're different.

 

It's amazing how the illusion persists. Those silver dimes are still worth about what they were when minted in terms of purchasing power.

 

I think that the inherent value prevented one of the favorite tricks of politicians: borrowing, devaluing, then paying back with devalued currency. That's why Nixon ended the gold standard. You can't devalue gold prior to paying back a debt.

 

I think a better inherent value on which to base our currency would be kilowatt hours of energy. Really, any actual basis for the value beyond the promises of politicians would be an improvement.

 

I'm no Trump fan but he caught a ration of shit for saying that we might devalue our currency in order to manage our unfunded liabilities.

 

Might? We will. It's one of the few true things the man said in the campaign.

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Uh Oh.

 

The IRS has apparently asked for all Bitcoin customer data from Coinbase.

 

The company is objecting to the breadth of the summons. Seems to me they have a point.

 

They do. Talk about a fishing expedition.

 

"Equally shocking is the weak foundation for making this demand. In a declaration submitted to the court, an IRS agent recounts having learned of tax evasion on the part of one Bitcoin user and two companies. On this basis, he and the IRS claim "a reasonable basis for believing" that all U.S. Coinbase users "may fail or may have failed to comply" with the internal revenue laws."

 

So.. ONE guy affecting TWO businesses means Coinbase is required to turn over detailed information on MILLIONS of accounts :

 

"Account/wallet/vault registration records for each account/wallet/vault owned or controlled by the user during the period stated above including, but not limited to, complete user profile, history of changes to user profile from account inception, complete user preferences, complete user security settings and history (including confirmed devices and account activity), complete user payment methods, and any other information related to the funding sources for the account/wallet/vault, regardless of date."

 

 

And people think Libertarians are paranoid? By metaphor, the IRS is basically saying that "because ONE employee of the federal government came to work drunk, EVERY employee of the federal government needs to be randomly drug tested for any drug ever made for the foreseeable future." Think that would go over? I can't believe any judge approved their request in the first place. Freaking nuts.