And, to a certain extent, that's actually progress.  I'm sure that it doesn't seem like it, but governments exist at all because having a permanent criminal class that would keep the other mobs out really was progress to the early farmers who could be raided by any group at any time.  From this perspective an established annual 'taxation' cycle really was progress.

Seriously; perfect is the enemy of the good.  MJ will be legalized only after a decade or two wherein the general public has experience with it and the drug prohibitionists' predictions do not occur.  What the feds do in the meantime is whatever the feds are going to do.

That guy also makes a bit of circular argument; considering that many of those articles that he talks about accusing Bitcoin of being a ponzi scheme reference his Wikipedia article as their source.

I'm a netflix member and don't even know how one would redeem such a code.

Yes, it could; and the size limit on the bitcoin block is arbitrary and amendable.  It's generally assumed that the max-blocksize will be increased several orders of magnitude in the future; but never permitted to be unlimited.  This forces a premium on transactions that need to be processed quickly if there the network is close to the limit.  In prior threads on this very topic, a max-blocksize limit of 1 Gbyte is likely to be the high end in a distant future wherein Bitcoin is processing more transactions per second than Visa while remaining within the practial limits of bandwidth that a dedicated server can afford, assuming that the costs of bandwidth do not continue to drop, which is also unlikely.

Not really, it's just flexible in another place.  Fiat currencies are 'flexible' in the sense that the absolute number of monetary units (the total monetary base) is not fixed, and therefore the issuing entity (in theory) can add or witdraw (ha, ha) currency as it sees fit to maintain "price stability".  This makes the assumtion that price stability is desirable, but there is no economic reason that this is so.  Hard currencies, like Bitcoin or gold, have a fixed monetary base so they are "flexible" at the price point; which is one reason that the market exchange rate of bitcoin moves so much relative to fiat currencies and can be expected to do so for some time.

While parrallel clones of the bitcoin system could lead to expansion of the monetary base in theory, I don't think that's what is going to happen in practice.  A competing cryptocurrecy has to offer an advantage over bitcoin in some fashion or another in order to establish a market value at all.  This could be done by a niche need, such as with Namecoin; or it could be done by the promises of a trusted entity, such as WalMartCoin or AmazonCoin; or it could simply be that a clone fixes an as-yet-unknown bitcoin flaw (that is otherwise unfixable within bitcoin itself).  But without some obvious advantage in a particular market or function, bitcoin clones will never do well if they have to compete alongside bitcoin, because bitcoin has the first-to-market advantage and new vendors will desire to use the most widely known cryptocurrency first while most new digital consumers are going to desire the most widely accepted cryptocurrency as well. 

Bonds are just a form of private loan, wherein some company (or other institution, such as a city government) needs to raise their cash position.  Normally, bonds are a one-for-one exchange, no fraction involved.  Investment banks will often issue bonds to be sold, so that they can raise their reserve fund high enough to grant a huge construction loan without breaking the reserve ratio required by law.  This is what is supposed to happen, but it doesn't always.  Bonds are unsecured revolving credit for huge institutions in a similar fashion that credit cards are for consumers.  Bonds function much like an old fashioned bank CD,  in the sense that bonds don't pay out on demand unless you're willing to sell them for a discount on the secondary bond markets.  Utility bonds are some of the safest places to store fiat currency in any of the first world economies, but really all they are is storage.  You're lucky to keep up with inflation under normal circumstances and you certain won't right now.  But even utility bonds sometimes go bad.  Municipal bonds, IMHO, are riskier than utility bonds mostly because you have a group of polititians trying to make a sound judgement on whether or not they can repay the costs of constructing that new sewer system with the tax base.  So you have a group of people who salary is not dependent upon their economic prowess, deciding upon a debt to be paid back by taxes, the amount of which is not often related to the success of the project it's funding.  Whereas a utility bond is pretty straight forward, you're loaning money to a company that (for example) builds power plants with the expectation selling the power from those plants to the city and it's people. 

No we wouldn't need such an alternative currency, but one could exist. 


No, you're getting confused.  We already have rudimentary banks, in the form of online wallet services.  Imagine if one particular service, let's call it BitcoinPal, were to grow large enough that it had thousands of consumers & retail websites with accounts.  Whenever a consumer used his web portal or smartphone app to import the address of a member's retail website, the computer doing the action could recognize that address to belong to a member, and simply credit that member's account.  This would require group storage of bitcoins, like a bank does with cash, and thus there would be some currently unmet need that the bank can provide that is costly to an individual consumer.  Most likely this would be transaction fee reduction, as thousands of members could operate in this way (so long as the banking institution was trusted) and only produce a blockchain bound transaction. Such transactions are cheap now, but they are subject to market forces too.  When Bitcoin is seving as many transactions per second as Visa, we can't expect a transaction fee to still be a nickel.


Ah, I see the block. You belive that successful banks would eventually own all the bitcoins, correct?  Well the free market doesn't work that way, those bitcoins, including the interest, is always in motion.  Banks pay employees, employees buy services, businesses pay their loans; and when they don't, loans default and banks lose both the principal and interest on that loan, and the interest on a couple others to balance out the loss of reserves.  Interest rates would naturally trend down toward a point that is close to the default rate plus the dispersion rate.  Very unlike our current system of fixed rates.

In our current system?  Banks are supposed to keep a 1:9 reserve to lending ratio, in other words banks are permitted to lend out nine times as much as they have on their books.  However, this includes not only the CD's and savings account balances, but also the marked-to-market value of all the collateral used in all of the loans.  I.E. the resale value of the cars and homes themselves that the bank would 'repossess' should the borrower fail to honor the terms of the loans.  So the ratio of cash on deposit to debt outstanding can be much higher, and when Lehman Brothers failed their real reserve ratio was pushing 1:50.  Reserves can be anything with an established market value; gold, foreign currencies, even raw land.

A bit over simple, but yes.

No, because the banker starting the run rumors would be first in line.  It's the depositors who heard of it late that end up screwed, and angry.  It's never the bankers you see in a mob.

No, the banks of Hong Kong issued warehouse receipt notes for gold, and these traded on par with each other based up the claim of gold weight printed upon them.  All of the banks issued more such warehouse receipts than they had gold to cover at any one time, and all of the other bankers knew it as well.  If one was taking things too far, he would also be driving down the interest rates; thus the profits of the other banks.  so the others would accumulate the warehouse receipts of the offending bank until they had enough of them that it was unlikely that the bank would be able to honor them all at once, and start a run.  Thus running the offending banker out of business.  It was called "wildcat" banking when it was the norm in the US from 1860 or so to 1890.  It was also known as the "Free Banking Era".


Deposit insurance is an illusion anyway, but yes, it does contribute to a circular justification.

Yes, that is still valid, and it was exactly how the 'wild' banks in Hong Kong would keep each other honest right up until the start of WWII.  If one of the banks took things too far, the other bank owners would get wind of it, and start to amass their "notes" (if they printed any, which they did in Hong Kong, usually on recycled newspaper) and if they thought that they had enough, might start a rumor of a bank run, and actually send agents with mass numbers of notes to demand gold in person.  This is what maintained the honor among thieves in the past, and it could do so again under a free market version of bitcoin dominated fractional reserve banking.

Danny did a fine job on that front.  The question then becomes, how strong of an institution would you consider Amazon to be?  How conservative their lending practices?  The root problem with central banking isn't fractional reserve lending practices per se, but the small amount of reserve the banks are obligated to maintain, since central banking isn't a free market and pretends to insure itself.  When the banking system is ultimately supported by taxpayers, in the form of cheap insurance, they tend to push the rational limits of the 'fractional' part, favoring profit over risk.  An independent banking system, subject to the forces of the free market, might still operate in a fractional manner but not nearly to the same degree due to the risks involved.

Ah, ther is the rub.  You don't see it.  I most certainly do.  Investment banking is different than what you are used to.  That said, what if WalMart or Amazon started a bitcoin fractional bank?  Certaily some would distrust either of them, others would respect the honestly.

It makes them higher than what you're used to, that does not make such risk "high".  A bitcoin bank that fractionally loans out twice as much as it keeps in reserves can crediblely do so, so long as it's open and up front abou it's methods and long term CD's are it's primary method of raising capital (or some other not-on-demand deposit system).

Almost certainly.  There have always been interest in investment loans.


You're guessing, and poorly.  Keep thinking and you might get there on your own.

Only while trying to download the blockchain, like any other client.  Ongoing, not so much, no.


If set up correctly, yes.

Wait, seriously? An low-end hooker is only about $50?  Where do you live?

This kind of thing has come up before, and in every case that I can recall, it turned out that the ISP wasn't really combating viri but trying to clamp down on Bittorrent or some other P2P tech that takes a lot of bandwidth.  They can't really say it that way, though.  Why would your miners be consuming a lot of bandwidth?  You should only have one that is 'net facing while the rest just connect to each other and that one.  If nothing else, you can port that one's connection over Tor, although that will slow things down.  A ssh tunnel to an off-isp-network shell account would work well.

There is at least two other forum members that use that exact avatar photo.

A statement that applies to every other elected official, everywhere.  How do you know a politian is lying, again?