The Future Of Money

[Pertinacious Tom]

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.

 

[Steam Flyer]

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

 

[SloopJonB]

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.

 

[Pertinacious Tom]

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.

 

[Pertinacious Tom]

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.

 

[BeSafe]

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.

 

[Pertinacious Tom]

Motion filed to quash IRS subpoena of Coinbase customers

More than 40 years ago, the Supreme Court stated that the duty of the District Court with respect to an IRS summons was "to see that a legitimate investigation was being conducted and that the summons was no broader than necessary to achieve its purpose." United States v. Bisceglia....

The Supreme Court expounded on the District Court's role by stating, "[o]nce a summons is challenged it must be scrutinized by a court to determine whether it seeks information relevant to a legitimate investigative purpose and is not meant 'to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation.'"

The summons at issue here was not sought by the IRS with respect to any "particular investigation," and the IRS has made no attempt to narrow the information covered by the summons to reflect its stated goal of confirming compliance with the tax laws. Instead, based on three isolated incidents and scant other facts, the IRS seeks that Coinbase identify over 1 million American citizens that have transacted in virtual currency and to provide data on every single transaction by those 1 million clients over a 3-year period.

 

[Pertinacious Tom]

Update on the Coinbase Case

More broadly, the IRS action against Coinbase is concerning for the digital privacy of all Americans. As Brito pointed out at American Banker, the legal reasoning behind the IRS attack on Coinbase could easily be applied to all kinds of private data stored in the cloud. Government agencies would surely jump at the opportunity to compel platforms to turn over the data of all of their customers so that they can comb through after the fact to find violators. The battle against Coinbase is therefore another battle for the future of online privacy.

It's not just about cryptocurrencies and tax evaders. Guns.

 

[BeSafe]

Update on the Coinbase Case

More broadly, the IRS action against Coinbase is concerning for the digital privacy of all Americans. As Brito pointed out at American Banker, the legal reasoning behind the IRS attack on Coinbase could easily be applied to all kinds of private data stored in the cloud. Government agencies would surely jump at the opportunity to compel platforms to turn over the data of all of their customers so that they can comb through after the fact to find violators. The battle against Coinbase is therefore another battle for the future of online privacy.

It's not just about cryptocurrencies and tax evaders. Guns.

Maybe it'll get more attention now that Trump is actually in charge of the hammer, and not Obama.

 

[Amati]

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.

Here's a cheery piece!

https://www.google.com/amp/www.forbes.com/sites/danielfisher/2013/08/08/gold-not-much-of-a-hedge-for-anything-unless-youre-a-centurion/?client=safari

 

[Amati]

Trump has settled on scarcity to create value.

Kind of works- ever looked st the price of Stradivarius instruments over time?

Or tulip bulbs?

It's all a psychological event, Eternal value are too boring.

 

[Pertinacious Tom]

The Future of Euro's

BRUSSELS (Reuters) - European Union states are considering measures which would allow them to temporarily stop people withdrawing money from their accounts to prevent bank runs, an EU document reviewed by Reuters revealed.

The move is aimed at helping rescue lenders that are deemed failing or likely to fail, but critics say it could hit confidence and might even hasten withdrawals at the first rumors of a bank being in trouble.

The proposal, which has been in the works since the beginning of this year, comes less than two months after a run on deposits at Banco Popular contributed to the collapse of the Spanish lender.

It also come amid a bitter wrangle among European countries over how to deal with troubled banks, roughly a decade after a financial crash that required the European Central Bank to print billions of euros to prevent a prolonged economic slump.

Giving supervisors the power to temporarily block bank accounts at ailing lenders is "a feasible option," a paper prepared by the Estonian presidency of the EU said, acknowledging that member states were divided on the issue.

EU countries which already allow a moratorium on bank payouts in insolvency procedures at national level, like Germany, support the measure, officials said.

Didn't "Banco Popular" have a cool oceangoing trimaran?

Always cool to watch but I question the advertising value.

The article goes on to say:

Many states supported a suspension of payouts only during the so-called resolution of a failing bank - the process which imposes losses on lenders' investors and possibly also uninsured depositors, while preserving the continuity of the banking activities, the document said.

Losses for investors? The horror.

 

[slug zitski]

Blockchain....digital currency ....is the only way that the industrialized world can eliminate its  gigantic debt .  Inflation is simply not fast enough and is impossible to control  unless all countries adopt the same inflation target

. Individual country Default would be catastrophic for the entire global trade system 

digital currency solves all this in one shot.   When you hand over your wedge of  dollars for a blockchain currency your national government will decide how much you will get.

 It will be impossible to arbitrage the system by shopping an advantagous  Foriegn currency because your bit coin  or whatever account will have your national ID and taxpayer number.

Even gold wont work...your national government will decide how many bit coins you get for your goldbar. 

 

[Saorsa]

How do you Californians manage to pay your Mexicans in bitcoins? 

If you are paying the CA minimum wage of $15 that's about .005 bitcoins or 5 mils in dollars.

How do you get change for 1 bitcoin?

 

[BeSafe]

I'm not sure if that post is rhetorical but bitcoins are divisible to 10 ppb.  So 0.005 bitcoins is a perfectly reasonable transaction.

https://en.bitcoin.it/wiki/Satoshi_(unit)

 

[Saorsa]

I'm not sure if that post is rhetorical but bitcoins are divisible to 10 ppb.  So 0.005 bitcoins is a perfectly reasonable transaction.

https://en.bitcoin.it/wiki/Satoshi_(unit)

It was kind of rhetorical.  My question really is how do you manage a virtual currency until there is universal net access with a great deal of security.  Who pays for that and manages it.  How do you trust them?

 

[BeSafe]

That's a serious concern.  The strength and weakness of bitcoin is that's its essentially a democratic system so there's actually a fair amount of security but does open up the threat of the tyranny of the majority.

People talk about the 'anonymousness' but that's actually a red herring - the transactions themselves are completely open in most cryptocurrency models.  That is one of the two things that makes Bitcoins 'matter'.  What's anonymous is who owns the particular wallet to receive the coins since joining the bitcoin network requires no authentication and the processing is completely decentralized.  But the fact that transactions are going into or out of a particular wallet is 100% traceable which is actually part of the appeal. 

The other major weakness that has been revealed is that the framework is essentially static.  If the particular ledger construction ("a coin") contains and error or flaw or simply needs to be updated, that same 'tyranny of the majority' is required for changes or corrections to be proliferated.  Bitcoins are not 'quick and agile'.

Electronic tokens that represent money isn't new.  Integrated motivations for decentralized processing (the "Tom Sawyer" implementation) and transparent 'authenticated' electronic transactions are what makes it matter.

There is a little bit of a foundational concern that people are being a bit cavalier about.  The idea that the cryptocurrencies are 'immune' to government authority and couldn't be shut down in a heartbeat is simply not true.   The authentication itself is vulnerable to a tyranny of the majority type attack - if an individual user could amass 50% of all the processing algorithms then THEIR transaction is the one that matters.  if someone like the Chinese or the US government decided that bitcoins were bad and needed to go away, they could in an instant fire up enough horsepower to overwhelm the current miner base and simply start creating false transactions causing a split. Even the threat of that kind of attack would cause faith in the currencies to collapse.

I think bitcoins are a totally cool idea and have been on board for a long time but i'm not starry eyed about what it really is - a cool experiment in decentralized computing that may someday form the foundation for a universal currency / contract system.  

 

[Raz'r]

Blockchain....digital currency ....is the only way that the industrialized world can eliminate its  gigantic debt .  Inflation is simply not fast enough and is impossible to control  unless all countries adopt the same inflation target

. Individual country Default would be catastrophic for the entire global trade system 

digital currency solves all this in one shot.   When you hand over your wedge of  dollars for a blockchain currency your national government will decide how much you will get.

 It will be impossible to arbitrage the system by shopping an advantagous  Foriegn currency because your bit coin  or whatever account will have your national ID and taxpayer number.

Even gold wont work...your national government will decide how many bit coins you get for your goldbar. 

Who wants the debt to go away? In a modern economy debt = assets.(equity is just used to invest for a return. ie. Debt) You can't have asset value without debt.  Go back and read Hamilton..,

 

[Pertinacious Tom]

There is a little bit of a foundational concern that people are being a bit cavalier about.  The idea that the cryptocurrencies are 'immune' to government authority and couldn't be shut down in a heartbeat is simply not true.   The authentication itself is vulnerable to a tyranny of the majority type attack - if an individual user could amass 50% of all the processing algorithms then THEIR transaction is the one that matters.  if someone like the Chinese or the US government decided that bitcoins were bad and needed to go away, they could in an instant fire up enough horsepower to overwhelm the current miner base and simply start creating false transactions causing a split. Even the threat of that kind of attack would cause faith in the currencies to collapse.

A response to that is here.
 

Bitcoin is also free speech. And though other countries could ban it, it can't be made illegal in the U.S. thanks to the First Amendment. That's because bitcoin is just code, and code is just speech, which is based on legal precedent established during the so-called crypto wars of the early 90s.

In 1993, Phil Zimmerman faced possible criminal charges for writing the encryption software PGP. The government said that it was as dangerous as guns and bombs. To make the point that PGP's source code is protected speech, MIT Press printed it in a book, sold it abroad, and Zimmerman was never indicted.

Then in 1995, with help from the Electronic Frontier Foundation, mathematician Daniel Bernstein sued the U.S. government on First Amendment grounds for blocking publication of his encryption program.

"Computer language is just that, language," wrote Judge Marilyn Hall Patel. Ultimately, the Ninth Circuit Court affirmed Patel's ruling that code has the same constitutional protections as a poem or newspaper article.

What Phil Zimmerman did was probably the single most subversive and Uncooperative act of the electronic age. As if the book were not enough, one of my brothers got a t-shirt with the digital code for PGP printed on the front. On the back it said THIS SHIRT IS A MUNITION! Which was true at the time.

Daniel Bernstein comes in a close second, getting first amendment protection for code. Which, by the way, applies to any code to 3D print naughty things just as it does to Bitcoin code.

Could governments really overwhelm the Uncooperative masses? An attempt would be more likely to make me start using Bitcoin than to make me flee. But I just have a few computers. There are other Uncooperative people like Jeremy Kauffman who have more.

 

[BeSafe]

A response to that is here.
 

What Phil Zimmerman did was probably the single most subversive and Uncooperative act of the electronic age. As if the book were not enough, one of my brothers got a t-shirt with the digital code for PGP printed on the front. On the back it said THIS SHIRT IS A MUNITION! Which was true at the time.

Daniel Bernstein comes in a close second, getting first amendment protection for code. Which, by the way, applies to any code to 3D print naughty things just as it does to Bitcoin code.

Could governments really overwhelm the Uncooperative masses? An attempt would be more likely to make me start using Bitcoin than to make me flee. But I just have a few computers. There are other Uncooperative people like Jeremy Kauffman who have more.

Although true, it misses the point.

The issue becomes confidence.  I don't need to 'ban' bitcoin if I'm the NSA.  All I have to do is turn my massive computing power to the task and rewrite the ledger.  I can't rewrite every book in existence because there's too many books and too few means of reproduction.  But a digital file?  Damn straight I could rewrite all the copies of that.

At their core, the 'cryptocurrency' is a ledger file.  It has value because it's open - meaning everyone can see what's written therein - and it's democratized - meaning that individual entries are valid when the majority agrees their valid.  It serves the purpose of money because it becomes a complete digital record of individual transactions.

The ledger, though, is maintained through the miners - a collection of computers dedicated to updating the ledger.  The miners spend their computer power updating the ledger in exchange essentially for a new ledger space created every 3 minutes (depends on the 'coin') which they sell.  Brilliant and elegant.  No disagreement.

But again, both the strength and weakness of bitcoin is through democracy.  If enough horsepower is dedicated to the task, one person can receive virtually all the 'coins' - the payment for mining and further, once you've establish that level of horsepower, you can WRITE WHATEVER YOU WANT INTO THE LEDGER.  Every book in existence says what YOU want it to say moving forward.

Sure, everyone and their brother can tell you're rewriting it but they have no ability to stop the rewriting unless they have majority control or they chose to break access.  But again, to restart the coin would they create 'public access' again - that's fundamental and would then be subject to the same rewriting.  How long could a cryptocurrency truly survive under a concerted attack on it's credibility?

I like bitcoins.  Totally cool  And I do believe that eventually this technology will be part of the standard world of "money".  But it's not infinite.