They won't make a sound no matter how many of them you try to toss in a bucket, and you can't pitch them in a fountain and wish for good luck. But make no mistake, bitcoins are getting big.CNBC NetNet
Bitcoin Bonanza: Cyprus Crisis Boosts Digital Dollars
John Carney | Senior Editor
Is Bitcoin a "safe asset"?
"Is Bitcoin a "safe asset"?"
ReplyDeleteUnless your have someway of preventing a government or any other entity from forcibly removing assets from your possession there is no such thing!
A tiny little digital bubble. Sad for the suckers.
ReplyDeleteMore digital gold than digital dollars.
ReplyDeleteYou can't pay your taxes in bitcoin.
But it gets the Freetards all excited, and stops them bothering the rest of us in the real world.
"You can't pay your taxes in bitcoin."
ReplyDeleteProbably true Neil, but on the other hand maybe you can avoid paying taxes altogether?
I suspect that if bitcoin was being used for large-scale tax evasion, governments would come down on it like a ton of bricks.
ReplyDeleteGovernment cares what you do and want to track you. They don't really care about tracking the money in our current system. They care if you support terrorism or if you buy a book on amazon about guns or bombs. They want you to pay taxes. They don't care which specific dollar you pay with. It is you they want to watch. Not the money.
ReplyDeleteBitcoins are highly trackable, far more than dollars, each has an ID. The distributed transaction system is smart and surprisingly secure because it is open and every bitcoin is accounted for by every interested peer. Everybody on the network knows about all transactions and no one can hide where their bitcoin came from or who they gave it to. Every peer keeps track. Compare that to US dollars, no one knows how you got it, there are no serial numbers on bank reserves and it is a giant mess -- except banks attach your name/id to every transaction.
So what is different, what scares the government is that the money is trackable instead of people. To fix that, each payment provider in the system could be required to keep records and attach a name to the transaction. It is a regulatory issue, government simply has to enforce record keeping laws already on the books.
Once they have done that, a bitcoin is a bigger threat to ACH, Visa, AMEX, FED WIRE, SWIFT and payment systems. There is no central monopoly or oligopoly keeping prices high and taxing each transaction so the cost is really, really low for the banking services. If currency conversion costs are sufficiently low, it should be much, much cheaper in the long run.
There used to be an upper limit on the number of bitcoins that could be created; Each represents a solution to a single math problem. Fortunately, the system was designed so that is can use solutions to different problems -- so they can plug in a new algorithm and create more bitcoins as needed to infinity and beyond.
"Each represents a solution to a single math problem"
ReplyDeleteDo the "math problems" have any purpose (i.e. are they processing something), or are they just random pointless exercises?
No purpose, They simply look for values that hash to a specific pattern. No real magic to it, other than it takes alot of computer cycles to find the solutions which constrains the growth of the money supply and prevents a flood of coins to worthlessness.
ReplyDeletecould an organization with a supercomputer just gobble up all the bitcoins?
ReplyDeleteNo computer in existence, that I'm aware of is that powerful. Maybe in 30-50 years given moores law.
ReplyDeleteEach bitcoin can be sliced down to small pieces, much smaller than one-cent to dollar. It is to like 8 digits out so mining even one bitcoin solution actually represents alot of potential future value if bitcoins remain in use.
I suspect that if bitcoin was being used for large-scale tax evasion, governments would come down on it like a ton of bricks.
ReplyDeleteLike barter clubs before the Big Bust.
Now everyone using barter club money knows that they have to pay their taxes including gains in barter money reported in accurately in the govt's unit of account.
So what is different, what scares the government is that the money is trackable instead of people. To fix that, each payment provider in the system could be required to keep records and attach a name to the transaction. It is a regulatory issue, government simply has to enforce record keeping laws already on the books.
ReplyDeleteThis seems to be the import of the guidance just provided to Bitcoin exchanges.
Govts will either regulate it to get their vig, or else outlaw it, and then use of will be like dealing drugs. Oh joy, another war of choice.
when was the barter club 'big bust'?
ReplyDeleteAs I recall it was in the early 80's. I had a friend who was big into barter and he told me about around then. When I way big, I mean that the transactions were in multiple of a grand. A lot value was being exchanged below the eyes of the tax man — land for airplanes, etc.
ReplyDeleteBitcoin fractional reserve banking:
ReplyDeletehttps://en.bitcoin.it/wiki/Fractional_Reserve_Banking_and_Bitcoin
To me the whole concept of bitcoin is flawed. Is just like gold: why the hell would you waste limited real resources (energy) to create money. Is very inefficient and dumb.
ReplyDeleteI bought some bitcoins, I sold them, made some profit trading. But never bothered to use them as a real mean of exchange, so are quite useless to me.
I don't think there is a real productive economy behind the 'value' of the currency. When I seek to buy stuff in bitcoins and didn't find anything interesting to buy. So it's just an other volatile financial instrument which will be subject to violent boom's and crashes. Just like the experience tell us until now.
I love how some people talk about inflation and price stability, how the "governments steal your money", etc., yet bitcoin fails to deliver big time in that front. As it stands, it's unusable as a real currency, holding deposits and operations over time is suicidal. Hence any real business will cash out and operate in more stable national currencies. Bitcoin right now adds no value, period.
There are other alternative currencies, based in different principles and created in different ways (more smart). But we don't hear much about these, because these are not subject to extreme market instability, speculation and in the end, profit potential by unproductive endeavours.