Have you been hearing, or reading, a lot about Bitcoin lately?

[4est_4est_Gump]

I see a lot of opinion about it at Mises and Reason, here is just another take on it:

The Mind-Boggling Implications of a Bitcoin Economy
Robert Berry, American Thinker
July 21, 2013

Just when we thought we had seen the last great innovation of our age, something new appears. Like the internet that came before, an obscure open-source computer protocol is poised to create and destroy whole industries and has already become a source of agita for government types the world over.

While much has been said and written about the nascent crypto-currency's underlying technology and recent volatility, one nagging question remains: what if Bitcoin emerges as a viable and sound currency, just as the world's central banks reduce their notes to confetti?

If this simple question doesn't inspire chills, perhaps it should, given Bitcoin's potential to overwrite the matrix of the world's ailing currency system even faster than the internet went mainstream. This will be among the topics of discussion this October at an unusual gathering of libertarians, economists, and computer scientists in Atlanta for the first ever Crypto-Currency Conference.

For the uninitiated, it might be helpful to think of Bitcoin as a numbered Swiss bank account living on your smartphone. By swiping your phone's camera over a special barcode, retail and online purchases can be made with virtually no transaction fees. It's the ultimate bank debit card, except there's no card -- or bank for that matter.

One last thing: there aren't any dollars, either.

Instead, your Bitcoin (BTC) balance is displayed alongside its equivalent in the currency of your choice. So, if you're based in the States, you would set your smartphone to display the funds as USD. Just like other currencies, BTC floats against the dollar, but unlike the so-called fiat currencies of the world, it is finite and can't be inflated by a central bank -- which is to say that BTC can't be destroyed by a central bank. Bitcoin are readily convertible to even the most unpronounceable of world currencies, making the currency a sort of financial Rosetta Stone.

This very day, some 50 million BTC transactions will be validated by the largest distributed computing infrastructure ever assembled, and no company or government controls it -- or can control it. The system went online in January of 2009 and is now growing at a rate resembling the internet's growth curve of the 1990s.

Though often referred to as a virtual currency because Bitcoin live in the ether, they are as real as the funds we access every time we reach for our debit cards. But, as no company or government backs the system, the asset is more like gold and silver in that its value is set by a worldwide market of buyers and sellers. The fact that there is no corresponding physical commodity establishing its value means that it derives its worth solely on the market's assessment of its usefulness as a store of value, a means of exchange, a universally fungible and astonishingly transportable currency. The peer-to-peer nature of the Bitcoin protocol obviates the need to have any repositories -- read: banks -- eliminating the possibility that funds could ever be seized or frozen.

The value of Bitcoin's unique attributes became apparent recently, when Cyprus began raiding bank accounts and imposing capital controls where withdrawals were capped, and then restricted from leaving the country. The reaction was a wholesale evacuation out of euros into every kind of alternative, with many disappearing into the ether as Bitcoin, sending the currency's value soaring. Interestingly, this occurred throughout Europe's banking trouble spots, but not in Cyprus, since the currency was almost completely unknown there and the Cypriots were caught a day late and a euro short.

Confronted with the need to "smuggle" one's own money out of a country, a Bitcoin fortune can be moved by simply toting an iPhone. This realization will not be lost on those living in other troubled regions, so it is reasonable to think that much more wealth will disappear into the ether, setting the foundation for the Bitcoin Economy, which knows no borders.

Slow-Motion Theft

Ominously, and for perhaps the first time in history, the central banks of America, Japan, Europe, and the U.K. are acting in concert as they print aggressively, creating an illusion of stability -- one currency relative to the other -- while consumers wonder where their purchasing power has gone. This, we are told, is how moribund economies are resuscitated.

Indeed, the central bankers may have set themselves up for a rude shock. How could they possibly have imagined something so arcane as a crypto-currency acting as an opt-out vehicle for those who would otherwise have remained trapped within their system?

To be sure, other alternatives like gold and silver exist, but Bitcoin seem to have an advantage since they can move as freely as e-mail. Commodity-based currencies require a depository and the issuance of chits, either physical or virtual, which act as money substitutes when used in transactions. Such systems impose a burden on the currency and the taking of counter-party risk, the loss of privacy, and the certainty of being under one government thumb or another. They lead inevitably to rackets like fractional reserve banking, credit expansion, and inflation.

Since the monetary base of the Bitcoin system is finite, the value of individual Bitcoin are likely to increase as wealth leaves one mortally wounded fiat currency after another. Bitcoin's emergence as an appreciating safe haven may well drive its status not as the world's new reserve currency, but as the default one.

In the ether is a kind of freedom that none of us could have imagined. Beyond simply opting out of depreciating government currencies, each with its attendant ties to taxation and regulation, Bitcoin provides a means of escape into a free and largely anonymous parallel economy.

As real wealth migrates into the ether, so too will the prospect of earning there. The resulting capital formation will spawn unimaginable new industries with stocks, debentures, and payrolls, all denominated in BTC and held anonymously.

The new currency will be impossible for any government on earth to regulate, though they can be counted upon to try. Reluctant to legitimize the notion of a crypto-currency, the U.S. government has been slow to announce a regulatory regime, even while they have begun targeting so-called money transmitters, or exchanges which convert large-scale funds from USD to BTC. But transactions of smaller amounts are routinely done in person at spontaneous meet-ups of regular folk wanting to trade in and out of USD and BTC. In the end, the bureaucrats would have a better chance at regulating the next version of "World of Warcraft."

The world's political class would do well to make a virtue out of necessity and leave the Bitcoin economy alone. By allowing it to flourish, citizens will have somewhere to run should, or when, state currencies hyper-inflate. A ready alternative like Bitcoin could provide for a much needed soft landing.

What are your thoughts (about Bitcoin, not me or the source)?

 

[RobDownSouth]

I see a lot of opinion about it at Mises and Reason, here is just another take on it:

The Mind-Boggling Implications of a Bitcoin Economy
Robert Berry, American Thinker
July 21, 2013



What are your thoughts (about Bitcoin, not me or the source)?

One good cut-n-paste deserves another!

Funny Money: Why Bitcoin Is a Scam

Bitcoin isn’t just a currency, it’s a massive experiment in group trust. It’s also a hint of the financial system to come and, ultimately, a scam.

You probably heard of the digital cash after it was rocked by sudden changes in value. A few weeks ago the value of the bitcoin briefly plunged to negative eight cents to the dollar as hackers crashed exchanges and digitally ransacked electronic wallets to the tune of $9 million. A single victim claims that hackers absconded with some 25,000 of his bitcoins, worth, absurdly, approximately $375,000 at present dollar-to-bitcoin exchange rates.

That’s a crazy amount of money to have stolen by someone essentially copying a file from your hard drive. And that’s just the beginning of what’s happening in the world of Bitcoin, which combines enough hackers, monetary policy cranks, and mysterious Japanese corporations to populate a Neal Stephenson novel.

Bitcoin is a libertarian’s dream come true: a steadily expanding money supply without the state getting in the way of the sweet mechanics of the market. The money changes hands without transaction fees to corporations or government tracking. That’s why Bitcoin’s most ardent supporters are folks like gold-standard advocates and hard-core Wikileaks partisans. As interest in the currency grows, tech-savvy investors have jumped into the mix, speculating with bitcoins and profiting as demand increases; early adopters reaped returns as large as 1,000 or 2,000 percent.

There are nearly 7 million bitcoins sloshing around the Internet, worth over $100 million. Should you jump in the pool? I wouldn’t recommend it.

So far, you can’t buy anything with bitcoins that you couldn’t purchase more easily with cash or a credit card. Despite rumors that Bitcoin was creating an online Hamsterdam where anonymous users could sell drugs and lord knows what else, Bitcoin isn’t truly anonymous unless you’re already taking some relatively advanced anonymity steps. Even then, Internet forensics could likely track you down.

More problematically, the economics don’t quite work. Currencies are most valuable when lots of people trust and use them frequently. But PayPal has refused to convert bitcoins to cash, and major exchanges like MtGox have fallen to hackers. A currency that you can’t convert into anything else isn’t worth, well, anything.

LINK

Bottom line: Bitcoin is a glibertarian wet dream that doesn't work.

 

[4est_4est_Gump]

Another big change coming over us, this one in publishing:

Blowing Past the Publishing Gatekeepers
Frederick J. Chiaventone, American Thinker
July 21, 2013

Toward the end of a full career as an Army officer I was asked to assist in a test-run of a new course at the US Army's Command and General Staff College. We were going to take senior officers on a new version of the 'staff ride' an established method of examining the actions of commanders on the actual sites of momentous battles. We had done this successfully at Gettysburg, Chickamauga, even Verdun but this time we were going to try it at the site of the disastrous fight at Little Bighorn. The idea was for combat commanders to learn from past mistakes. Well, this exercise was a real eye-opener for all of us. I have addressed the issue of the significance of the staff ride in other forums but in this case the subject of 'lessons learned' has relevance to an entirely different field of endeavor - writing and getting published.

After retiring from the Army it became quickly evident that I should have to find something else to occupy my time. I had done a bit of scribbling for various professional publications but the staff ride experience at Little Bighorn stuck in my mind and so decided to try my hand at reconstructing that fight in the form of historical fiction. The results exceeded my expectations when publishing great Michael Korda called me from Simon & Schuster and said, "Fred, I want to publish your book." As a result my novel A Road We Do Not Know was published by Simon & Schuster, went on to win the Ambassador William Colby Award for Literature, and remains in print. My second work of historical fiction Moon of Bitter Cold (about the Fetterman fight) won the Western Heritage Wrangler and the William Rockhill Nelson awards for literature. It too remains in print to this day.

Not a bad second career one might think. Ah, but the world of publishing was changing. Shifting focus slightly I decided to take a similar approach with historical fiction to an under-appreciated aspect of the American Civil War - the brutal guerrilla conflict along the Kansas-Missouri border, a theater which was the training ground for such people as Frank and Jesse James, the Younger brothers, "Wild Bill" Hickok, and "Buffalo Bill." A fascinating subject so I thought. I was supported in my delusions by two old friends who read the first draft - General Dave Petraeus and Ambassador Karl Eikenberry - both of them serving in Afghanistan at the time. Karl, Dave and I go back many years to when we were all commanders together in the fledgling Rapid Deployment Force. Both Dave and Karl loved the novel saying "This is great stuff, Fred. It's just what we have had to contend with in Iraq and now here in Afghanistan...the technology has evolved but human motivations and behavior remain essentially unchanged." Well then, thought I, this is a great subject and perfect timing for this book.

Perhaps not. For the publishing industry had changed since my first two, successful books. Agents complained that they were unable to place a manuscript which editors refused to even look at. "No one's interested in the Civil War!" they snorted. After a few years, and three different agents, things were looking a little bleak. There was some small comfort when one considered that the same publishing houses we had approached had all turned away a young woman, a novice writer, telling her that the public had no interest in an aspiring young wizard. "Utter nonsense," they had declared. Fortunately for J.K. Rowling, Harry Potter, and millions of young readers they were quite wrong. Unfortunately for many aspiring writers, most of those individuals who rejected the first Harry Potter novel are still figures of power in the great publishing houses of New York. The question then became, well, how does one get around the gatekeepers of publishing?

The answer, I strongly suspect, is within easy reach of most would-be authors. Technology. Over the past few years we have seen a phenomenal growth in the reach of computer and internet technology. Now, being a bit of a dinosaur myself, I was quite accustomed to using typewriters (and then computers) to write the material and then embark on a laborious and ofttimes rather expensive round of printing out manuscripts, sending out query letters, mailing out both, with return postage, of course, and then waiting endlessly for a response. Agents too were expected to adhere to these time honored and ultimately fruitless methods. And all too often the publishing houses were hopelessly cavalier in their response, if they responded at all. Thus, when a fellow author suggested another route I thought, "Why not? It's certainly worth a shot." Thus I took the manuscript of my new novel Gone To Kingdom, and turned to another route. This other route was to take advantage of the opportunities provided by the internet. With a completed and carefully edited manuscript ready to go it was a relatively simple task to upload the entire volume to the powerhouse which has become Amazon.com (link here)and wait to see what transpired.

The results were rather surprising. Within days enthusiastic notes started to come in from readers in Ireland, Great Britain, Germany, Belgium and even South Africa and Swaziland (this last stunned me) as well as all over the United States. The reach of the Kindle technology is fairly amazing and readership numbers are going up continually. Well, there were over 100,000 people at Gettysburg alone for the commemoration, which I suspect gives one an idea of the level of interest in the subject matter.

 

[rosco rathbone]

There was no way bitcoin was going to be allowed to survive.

 

[4est_4est_Gump]

There was no way bitcoin was going to be allowed to survive.

I was not of the impression that it was dead...

"This very day, some 50 million BTC transactions will be validated by the largest distributed computing infrastructure ever assembled, and no company or government controls it -- or can control it. The system went online in January of 2009 and is now growing at a rate resembling the internet's growth curve of the 1990s."

 

[rosco rathbone]

Got my tenses mixed up.

 

[4est_4est_Gump]

You just might be unstuck in time or caught up in a chrono-synclastic infundibulum...

 

[rosco rathbone]

They'll be taken out by Federal crackdown on money laundering, gambling, terrorism funding or telecom regs. I give them no more than 5 years.

 

[John Doe]

[...]glibertarian[...]

I'm stealing that.

 

[Ishmael]

There was no way bitcoin was going to be allowed to survive.

What is going to be interesting is the extent to which those nations with failing currencies will go to try to destroy it.

Ishmael

 

[4est_4est_Gump]

They'll be taken out by Federal crackdown on money laundering, gambling, terrorism funding or telecom regs. I give them no more than 5 years.

What is going to be interesting is the extent to which those nations with failing currencies will go to try to destroy it.

Ishmael

Yes, nobody gets out alive...

 

[Ishmael]

Yes, nobody gets out alive...

There's always a way in spite of the efforts of government or special interests to engage in 'rent seeking.' Up to and including the individual physically putting themselves beyond the reach of the laws of the nations engaged in such behavior. Bitcoin is just the most recent, and up to this point in time, the easiest method of moving liquidity across borders.

That does not mean that the governments in question won't start enacting extreme laws to prevent capital flight.

Ishmael

 

[eyer]

The true promise and worth of every inalienable capitalist venture...

...is equal to the extent the state acts to control and/or oppress it.

 

[Tmmldr]

They'll be taken out by Federal crackdown on money laundering, gambling, terrorism funding or telecom regs. I give them no more than 5 years.

But who is the THEY?

Can we find the THEY?

Can we stop the THEY?

 

[rosco rathbone]

But who is the THEY?

Can we find the THEY?

Can we stop the THEY?

wat the blood claat

 

[4est_4est_Gump]

There's always a way in spite of the efforts of government or special interests to engage in 'rent seeking.' Up to and including the individual physically putting themselves beyond the reach of the laws of the nations engaged in such behavior. Bitcoin is just the most recent, and up to this point in time, the easiest method of moving liquidity across borders.

That does not mean that the governments in question won't start enacting extreme laws to prevent capital flight.

Ishmael

Will they morph their currency into Bitcoin and take it into the realm of Fiat?

If they do to it what they have done with their own currencies, who would want to use it?

 

[oggbashan]

I would be very wary of using Bitcoin.

Because it is uncontrolled, it is also unregulated. If the system is hacked there will be no recompense for anyone who loses out.

The potential for theft is greater than in other currencies.

If the Bitcoin bubble bursts - real people will be hurt.

 

[eyer]

I would be very wary of using Bitcoin.

Because it is uncontrolled, it is also unregulated. If the system is hacked there will be no recompense for anyone who loses out.

The potential for theft is greater than in other currencies.

If the Bitcoin bubble bursts - real people will be hurt.

Awwww...

...misplaced your security blanket today, oggy?

 

[tactful]

Bridge in Brooklyn is still available, no reasonable offer will be turned down.

 

[oggbashan]

Bridge in Brooklyn is still available, no reasonable offer will be turned down.

We still have a few London Bridges that could be sold.

 

[oggbashan]

Awwww...

...misplaced your security blanket today, oggy?

Nope. I will be surprised if Bitcoin survives untainted for even ten years.

 

[tactful]

We still have a few London Bridges that could be sold.

I'm surprised Omar Sharif hasn't called yet, oh wait,
sorry, wrong game.

 

[cjh]

But who is the THEY?

Can we find the THEY?

Can we stop the THEY?

Maybe not all the they. But enough to throw friction into the market: http://www.newscientist.com/article...urrency-at-its-alltime-high.html#.Ue0yamS9Kc0

Somehow, I have a hard time reconciling belief in bit coins as a currency with belief that currency should be backed by gold or some other commodity.

 

[Sean]

Maybe not all the they. But enough to throw friction into the market: http://www.newscientist.com/article...urrency-at-its-alltime-high.html#.Ue0yamS9Kc0

Somehow, I have a hard time reconciling belief in bit coins as a currency with belief that currency should be backed by gold or some other commodity.

Most of the world's currencies went off the gold standard a long time ago. Bank notes are basically excercises in trust. Castles in the air and the emperor's new suit.

 

[cjh]

Most of the world's currencies went off the gold standard a long time ago. Bank notes are basically excercises in trust. Castles in the air and the emperor's new suit.

Yup, to much wailing and teethgnashing.

So, when bitcoin miners come up to the sunlight from deep in the Earth's bowels, what are the bringing with them?