seriously, thats why i just had to put up this thread, LOL!  i also thought of using "Zhoutongued" but i thought that would be too dirty altho perhaps a more accurate representation of whats going on!  

i know Prechter's writings and the way he thinks since i've been a subscriber for years.

there's an inconsistency in his thoughts here.  one of the main tenets of his societal collapse theory and a return to the GD is that he thinks the Fed and gov't will lose control of the markets thus facilitating a long spiral downwards.  well, if they lose control, how will they have the time, wherewithal, resources, and technical ability to enforce an illegalization of Bitcoin?

at first i was a bit disappointed that someone i sort of admire used Bitcoin as an example to prove his theory of State regulation to accomplish what they wish.

its important for everyone here to realize that Prechter is the quintessential example of what you'd call a PermaBear when it comes to Society, State, and the stock market.  he thinks the Dow is going to 400.  yes, thats right.  400.  3 digits.  He thinks we're going to repeat the Great Depression on a much bigger scale and that cash USD's will be the best performing asset for the next 5-10 years.  he is the Bear's Bear and has a wide following who paraphrase his theories all the time.

but using a centralized example, GoldMoney, to support his argument of the ability of the State to control a decentralized form of money demonstrates to me a misunderstanding of Bitcoin.  what are those Dutch investors going to do?  pull their gold out of GM and stick it in their safes.  during the GD when the US called in all the citizens gold only perhaps 20% complied.  are you kidding me?  who here would let the US gubmint just confiscate their money?  no one.  and it would be worse today b/c most US citizens are armed as in guns.  no one is going to walk up to my front door with the intent to confiscate my money w/o risking their lives.  most sophisticated analysts also don't think this is a reality today. 

Bitcoin makes all this danger talk go away and even further emphasizes my point.  which is why i sold most of my gold in exchange for Bitcoin.

what do Bitcoins look like?

http://www.ritholtz.com/blog/2011/09/tbps-30-most-influential-finance-sources/

Prechter is on Barry Ritholtz's list of the top 30 Most Influential Finance Sources.

heres the relevant section:

"As noted in the June issue, government can crush any useful service it opposes. One service it opposes is free-market money. In June, Senator Charles Schumer (D, NY) called the brilliant on-line transactional unit called bitcoin “a form of money laundering.” In March, the U.S. Attorney’s office and the FBI issued a statement (http://goo.gl/J8Jhz) calling privately minted “Liberty Dollar” gold coins “a federal crime,” an “anti-government activity” and “a conspiracy against the United States.” The U.S. attorney on the case, Anne M. Tompkins, called Liberty Dollars “a unique form of domestic terrorism” that presents “a clear and present danger to the economic stability of this country.” The federal government says it shut down the mint “to protect and preserve the constitutional currency for the benefit of all citizens of the nation.” In order to get rid of this scourge of precious metals coins, the government seized all of them for itself. Minting money may be treason (so was succoring Jews in Nazi Germany), but the only terrifying acts in evidence here are the government’s threats to ruin anyone who peacefully offers better monetary services. As Tompkins stated, “We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.”
Another money-of-the-future is James Turk’s brainchild, GoldMoney, which EWT featured in the November 2004 issue. Like any good or service highly desired in a free market, banking with goldgrams is affordable and efficient. In a free society, GoldMoney and services like it would be the premier banking alternative. But the warning I issued about bitcoins applies here, too: Government can crush anything it doesn’t like. All it need do is declare it illegal. This is essentially what a regulatory body in the Netherlands did this year with respect to the service offered by GoldMoney. In January, the Autoriteit Financiële Markten (AFM), the Netherlands financial regulatory body (shortly after ordering a Dutch pension fund to divest itself of most of its gold holdings), contacted GoldMoney and demanded that it comply with its rules relating to “investment objects,” namely grams of gold and silver. GoldMoney, already overseen by the regulators where it is domiciled, chose not to comply. It has withdrawn its services from the patronage of Dutch citizens, who must close their GoldMoney accounts by the end of this month. You can read about it at these sites: http:// goo.gl/zlcYf and http://goo.gl/TBhrp."

in the article, Prechter thinks Bitcoin could be shut down by gov't regulatory bodies simply by declaring it illegal.  i think he's wrong about that too.  there are no regulatory bodies for Bitcoin.

sorry, i stand corrected then.

his son goes by BrightAnarchist.

last Spring a similar quote was mistakenly attributed to Robert but was in fact from his son Elliott who is a member of this Forum.

this though is the Real Deal.

"In June, Senator Charles Schumer (D, NY) called the brilliant on-line transactional unit called bitcoin “a form of money laundering.”"

this is a paid subscription.  he is one of the worlds most famous market analysts, the father of Elliott Wave Analysis.

From the latest 10/21/11 issue of the Elliott Wave Theorist.

i think the randomness that the SHA 256 hashing algorithm introduces into the Bitcoin system is a big part of the economic wherewithal that will allow Bitcoin to survive and become a competing currency.  to reiterate, it forces computers to guess repeatedly to hit below the difficulty target.  it does not allow shortcuts via hacks.  this makes it an inherently democratic process.  anyone who can setup his computer and run the client has a chance to solve a block and get the reward even tho my laptop has a low chance of winning.  but the chance is not zero.  people buy lottery tickets all the time despite having extremely low odds of winning.  and if you're willing to setup and run a more computational powerful system you will mine Bitcoins at a significant rate.  everyone who climbs on board will make it that much more difficult for a non rational actor, like a bank, to attack the network.  they will be forced to guess as well which can be very expensive for them in the end.  they might as well just leave it alone.

i guess i left out the part of public key cryptography.  let me know if you want to test my understanding of how that works from an investor level as well.

how am i a hypocrite?

well i can assure you i am not one of these guys.  i have never sold a single Bitcoin and have been accumulating.

first of all, even tho we had that one run in a while back, i've learned to respect your postings based on a technical perspective.  you understand the code better than most around here.  at first i just thought you were another shill based on following Nagle but i no longer see that to be the case.  i still think he's dangerous to follow.

second, what i mean by the above is that the Bitcoin sourcecode appears to be a first in that it allows a peer to peer public network the ability to prevent the copying of files (Bitcoins) for double spending.  perhaps better said, it prevents the rewriting of tx's in the blockchain ledger that are shared across the internet btwn multiple anonymous computers to prevent double spending through this same rewriting of transactions.  Satoshi has accomplished this primarily by the use of hashing, a one way complex mathematical function based on SHA-256 and ECDSA, that was necessary to introduce randomness to the production of a number anywhere btwn 0 and 2 ²⁵⁶ power when solving blocks.  each guess is based on hashing the block headers data consisting of the previous block hash, timestamp, current tx's, and a nonce,  with the only change btwn each guess coming from an incremental change in the nonce.  the solving of these blocks allows the reward of an ever decreasing number of Bitcoins (every 4 yrs) to the node that is forced to guess, as oppose to hack or find a shortcut, enough times (proof of work) to come up with a numerical result that is below a targeted numerical result to keep the number of blocks down to an introduction level of approx 10 minutes.  this target numerical result is adjusted every 2 wks to keep this 10 min interval intact.  this fixed introduction level allows a predictable amount of inflation that investors should respect, not criticize. once a block is solved, at least 50% of the other nodes in the Bitcoin network, that have a copy of the accepted (longest) blockchain have to verify that this node is not cheating by trying to rewrite tx's or double spend.  this is based on a majority of nodes >50% accepting this block.  b/c this proof of work is theoretically impractical to skirt, until perhaps a quantum computer is invented (even then this is disputed), the only way for a rational miner to pay off the costs of his hardware, electricity, and time involved in solving blocks is to go along with the program and generate as many Bitcoins as he can to pay for these expenses.  they are especially economically incentivized by an increase in the Bitcoin price in USD terms for as the higher the price goes, the more they will make.  in doing so he ends up supporting the network by verifying tx's, providing security for the network, and increasing the costs (computational power) associated with any attacker trying to undermine his work.  i know you know all this but you're testing my understanding here of whats going on.  correct anything i've got wrong.

now whether the sourcecode as written will allow this to continue i don't know but its been almost 3 yrs and guys like Dan Kaminsky who initially thought there were 9 holes to exploit have since apparently been convinced otherwise.  realize i'm not talking about scalability here.  i'm talking about as it is today and with current usage; everything seems to be progressing w/o a hitch.  i know you think its cumbersome given how its meshed various techniques together into a long complex code.  for me, since it hasn't failed despite what we know to be multiple attempts at bringing it down is very encouraging from an investment/speculative standpoint. and i know many brilliant people are working to make it more elegant.  and some think its a Mona Lisa as it is.  since this is a first for something distributed so openly on the internet, somewhere somehow it will find a purpose.

the distributed nature of Bitcoin is important as well since it is so disruptive to the current banking system.  i truly do believe the only way to shut it down is to shut down the internet.  that didn't work so well in Egypt did it now.  the ones who screamed the loudest were the banks who needed their tx's to go thru.  wasn't the internet designed to withstand a nuclear attack as well and is it not just in the US of A?


i see what you're getting at in terms of trying to understand the investors perspective so let me try and help you and maybe you can help me from the technical end.  

first, you're right, i can't read code and wouldn't be able to see holes in it if they were present.  my confidence comes from directly talking with Gavin and theymos both whom are experienced coders as well as several of the other early adopters.  how they rate compared to you i don't know. also hanging out on these forums helps quite a bit despite all the bs.  but as an investor piecing together the puzzle there is some credibility that comes from Gavin being a Princeton graduate and i understand his personal position and circumstances as to why he donates his time towards this project. he really does believe in it.  these guys also seem to understand the basics of the financial crisis and economics which matches my own and helps assure me they are moving the technical aspects of Bitcoin in the right direction.  also i hang out in the Dev and Tech section from time to time to see what all you guys are talking about.  it seems to me, rightly or wrongly, that so many technical people discussing the ins and outs of a myriad of different technical aspects of Bitcoin can't all be wrong.  the amount of time and effort devoted to this project is astounding you must agree.

even though these are technical discussions clearly an understanding by these guys of the economic motivations of investors and of the financial system as we know it usually are interweaved into why this or that should be included in the code.  i continuously weight these in my analysis and usually finding myself agreeing with them.

Geezus, why are we getting mad at each other?  precisely correct.

ok, so at the very minimum, whether Bitcoin works or not, i am in it for the principle and you would seem to understand that.

fundamentally the code is working, as in the blockchain marches on.  from an economically fundamental point of view, yes the merchant economy is not there yet.  but i see it getting there slowly.  rather than pronouncing it dead at this early point, i say lets give it time.

maybe i should try to frame this differently.  

what i think has been the root cause of all our financial problems for the last decade or the last 100 years depending on your time frame is a "fiat currency crisis".  as central banks around the world print money to solve economic growth problems via sovereign currency devaluation as a means to increase exports, savers, elderly and financially prudent are punished greatly.

Bitcoin was designed as a poison arrow directed at the heart of the central banks of the world precisely to try and solve this problem.  whether it works or not remains to be seen and we can agree to disagree.

if we can't agree on these points then we should stop talking.

did i not say it right? how about the first p2p file sharing system that prevents copying?  how would you say it?

this is very true.  and if you have read my stuff on the gold thread you realize i don't view things traditionally too often. i prefer to think for myself acknowledging full heartedly that i could be incorrect.   but i just see too many similarities to gold in Bitcoin and i see the potential for a nexus btwn the power of the internet and a solution to our financial system problems. 

you're right.  whatever you want to call it; speculating or investing i don't care.  lets just say i'm putting USD's into what i consider an undervalued asset that has the potential to become a competing worldwide currency to gold and other fiat.  call me foolish.  thats ok.  i'm sure Jobs and Wozniak were considered foolish when they started up in a garage and after several years when they had 1% market share next to Microsoft.  even i thought they were dead.

its only irrational if you can predict the future and Bitcoin ends up destroyed.  none of us know for sure.  i just like the odds from what i see.