Most likely #1.

Also remember that the US has an obligation to pay contractual liabilities.  Things such as principle and interest, defense contracts, etc.  The US has incoming funds, just not enough to cover all their obligations.  If an agreement is not made, they may still pay their bond holders and other contractual obligations, and delay payments on everything else such as social security, military salaries, etc.

Whether the bond rating agencies will find this sufficient enough to avoid a downgrade remains to be seen.

Your first two sentences make the argument that bondholders are trapped.  Your third sentence then says they may bail if the US loses its AAA rating.  How can you "bail" if you're trapped?  That's rather contradictory.

Gross has made it very well known that he's short Treasuries.  So?  If the bond market is expecting a default, technical or otherwise, it would be priced in the yield.  The yield in the market at the moment is giving a "meh" sentiment.  You want to see a bond market that looks concerned, look at Greece or Italy. 

Edit:  Let me qualify this post by saying that by no means do I think the US's indebtedness is not a problem.  It is a rather severe and potentially catastrophic problem.  When I say "meh" I mean that specifically towards this August 2nd deadline in which we are heading.  Short-term the bond market is shrugging its shoulders.  Long-term, we do have a very real problem on our hands.  Just to be clear.

I didn't realize that was the goal.  I think there is a place for a banking industry as well as alternatives in a healthy economy.

An important aspect indeed.  However, being unaccountable also presents challenges.  Without a captain to steer this ship, it's quite possible Bitcoin could drift aimlessly.  Naturally because the model does not put accountability on anyone specifically, the users of Bitcoin are rather fragmented at the moment.

That's not to say an individual or a group of individuals cannot step up and take initiative (MtGox for example) but it is all the more imperative that people stay proactive and not simply sit content.  Bitcoin by design puts the onus on the user to shape its future.  That is rather revolutionary.  It will be interesting to see if it will be successful.   

Thanks GreenFox, who took a risk since I'm not very well known as a trader yet.  He communicates very quickly and was a great buyer.

Just to be clear, I wasn't speaking to you or anyone else directly, which is why I didn't quote anyone.  It has been an argument I've seen many times and one I'm not particularly fond of.  That's the reason for my post.

They do.  Do you dispute this?


I said drugs are a billion dollar industry.  I never said the entire industry is using Bitcoin. 


Again you're putting words in my mouth.  I did not say they are suppressing anything.  I said they do not care about the appreciation nor the depreciation of Bitcoin, only the stability.  The fact that you feel Bitcoins will logically appreciate only shows your bias.  Maybe they're propping up the price?  Who knows.

To everyone else, this is merely speculation on my part.  Put in the SPECULATION section of the board.  I don't have statistics or hard numbers to bring, if I did, I would put this somewhere else.  I'm just looking at the current Bitcoin market and coming up with a hypothesis.  I thought it might be a nice change from the "buy! buy! buy" "sell! sell! sell!" threads that pop up every time BTC moves ten cents. 

None.  Pure speculation.  If you have a source to refute, I'd be glad to hear it.

Yes, it's quite different.  No one else is storing their wallet on my computer, just me.  If my computer is compromised, then my security is compromised.  No one else.  It's decentralized.  MtGox is compromised and thousands of users and their personal information is compromised.  It has already happened.

(Keep in mind this is the SPECULATION section)

Outside of speculation, what's likely the largest use of Bitcoin?  Drugs.  A billion dollar industry. 

Drug dealers use Bitcoin for their anonymity.  Their profit is off the illegal product, whether the medium of exchange appreciates or depreciates is probably either secondary or of little importance to them.  The stability, however, is of importance.  Like any other vendor, being able to keep price relatively stable allows them to forecast profits.

An industry with the money, the need, and the means to keep Bitcoin stable.  And lo and behold, Bitcoin price has become very stable (admittedly over the short term).  I'll admit even as I write this myself it has a little "tin foil hat" ring to it.  But I don't think it's out of the realm of possibility that we're seeing a coordinated effort by the drug market to keep Bitcoin prices stable.  They're the only industry right now that really uses Bitcoin to a great degree and has the capital to move the market as they see fit.  If all this is true, I would figure this flatline trend will continue for quite some time. 

If you look at the bond market, which filters out all the noise, you can basically see there is no panic.  These guys know a lot more than the average American and they're reaction so far to this looming deficit is, "meh." 

Granted Congress can surprise the market, such as when TARP was not originally passed and we saw a 900-point intra-day plunge.  However, the current sentiment seems to be overwhelmingly that something will get done.

In the current, fractional reserve lending system this would be correct.  With BTC's finite $21MM coins, it doesn't work this way.  Eventually someone will not be paid back.

Storing a decentralized currency on a centralized database (exchange, eWallet, whatever).  How ironic.

I dislike the first to market argument.  The economy of Bitcoin is but a blip on the economic radar.  It's akin to having a mom-and-pop store be first on the block.  That's fine and dandy until a Walmart or Walgreens is constructed next door.  Facebook wasn't the first social media website on the market.  iTunes wasn't the first seller of online music.  Sites like MySpace (or its earlier incarnations) and Napster were innovative and game changing, but in the end they were rendered obsolete.  It's not only arrogant but also foolish to believe that the genesis of an idea will equate to long-term success.  Ideas are modified (stolen) all the time.  I'm sure we can all think of many examples of this, if not see above. 

Call it what you want, a wide moat, high barriers to entry, whatever, these are what you need to give yourself a competitive chance.  I think the OP in a roundabout way is trying to point out that Bitcoin may not possess enough of these barriers.

Scarcity is also a rather weak argument.  If you want something that is scarce, intrinsically valued and useful to just about everyone in the world, buy oil. 

Do I own Bitcoin?  Yes. Have I sold goods for Bitcoin?  Yes.  It's a rather fantastic and ingenious concept.  That doesn't mean I can't be objective about Bitcoin and see that it does have potential flaws.  Other than speculation, Bitcoin's biggest market, unfortunately, is illegal trade.  The legalization of marijuana alone could hit Bitcoin very hard.  It probably wouldn't destroy it but I would guess that it would take a significant chunk of the economy away.  I guess my point is that I see a lot of "this time it's different" arguments.  That's always a very dangerous assertion to make.  I'm hopeful that Bitcoin will be a success but I'm also cognizant that it's chances are rather low (being that we're still in the infancy stage).  Never become emotionally invested in your investments.

+1

I actually tried to explain there were fees once.  No such thing as a free lunch, even in Bitcoin utopia.  I got some smart ass reply about being a sheep to the credit card companies.  Maybe you'll have better luck.

Deal.  You'll get the going rate as of June 1st.  I'll get the going rate as of July 22nd.  Ready when you are.

Gotcha.  I thought maybe you were just trying to raise funds so I wanted to give you an option I've used before.

Since you're doing this as a proof of concept, goodluck to you, I'd be interested to hear the results.   Hope you post a follow-up.

With risk comes a premium.  5% is a very low risk premium.  

If you don't find enough funding here, you may want to try a website like Prosper.com.  Assuming you have very good credit, you can get a loan for around 7% (depending on the amount you're trying to borrow).

I never tried to estimate the amount of new money needed.  I only stated that a certain amount of new money is needed, but I never tried to quantify that.

You're talking about the exchange, I'm talking about the market.  Also when you say:


You're making my point.  If the sum of incoming wires is greater than the sum of outgoing, that's new money!


I'm not saying the amounts need to mirror each other.  A coin minted today may not be sold today.  You're looking short term.  All I'm saying is, as supply increases, in order for price to remain constant or increase, money needs to enter the MARKET.  I don't care about the exchange and what's sitting on the side.  There's really no argument here.

If I mint 100k of new coins and put it up for bid, how do you buy those new coins without adding capital to the market and without the price of BTC falling?