Very good point, I'm a little new so I was unaware that large transfers would take restrictively longer. I was aware transaction would eventually take longer, but not that it would be so long as to be prohibitive.

Wouldn't this then rather lead to competitive crypto-currencies overtaking Bitcoin in popularity if they are capable of solving this restriction?

Stores of value have in the past become traded currency. Once "value" is established, it become possible to trade valuables.

Knowing this how much of your personal income would you be willing to convert to BTC to support the price and kick start the economy? Remember that in this hypothetical strategy you could always later convert your BTC back to normal currency.

Banks do not lend out money, they create it from nothing and back it with loan contracts. The rest is simply semantics.

Private holders of BTC would lend out their own BTC at an interest they believe the borrower could pay. They would do this totally at their own risk, if the borrower could not pay, the lender would lose his money, a simple feature missing from the current system.

Someone might attempt to hold a set of BTCs and promise interest on those and loan them out or extend credit based on a separate accounting system that they control. (This is how gold became paper money btw) Since Bitcoin is basically an accounting and payment system that is already very convenient, I don't see why anyone would want to use an external service. This would also be very unstable and risky for the operator to do in the long run if they were extending significantly more BTC credit than they had reserves for.

I'm kind of new but I assume you mean J2ME, iPhone app type client? I agree totally, there needs to be a simple way to just pay.

Imagine bitcoin on cell phones in a country like Somalia or Zimbabwe!

Both gold and silver are currently manipulated through electronic trades that are not backed by gold or silver.

We will see either a total deflationary collapse, or in an attempt to avoid it we will see hyperinflation in most of the developed world.

So lets cover bother scenarios.


Inlfation: Way up, since more paper chases same amount of gold.
Hyperinflation: WAY, WAY up.
Deflationary: WAY up, this is because currently when the worlds financial system cashes out it cashes out into bonds. During deflationary collapse you will have every government on the planet defaulting. So the cash out will have to occur in the next best go-to asset.


Politicians could implement sovereign money that is strictly enforced by legal tender laws and forbids excessive fractional reserve banking. This would take away the incentive for investors to run for safety as economies can get away from debt and savers can save. This would also end the manipulation of the AU an AG markets and might mean still reasonable gains.

Chances of this happening, basically zero.

Sound fiscal policy is what ended the previous gold bull run.


Yes, but I would buy 10 times as much silver. There are both monetary and industrial arguments behind silver. Gold at $2000 is a steal!


They have value because they can be used as forms of payment and stores of value that are independent of counter party risk. If you have precious metals, you don't need the bank or the government for someone else to be willing to trade goods with you in exchange for your precious metals. If the gov / banking system abuses the currency people always remember gold and silver.

BTW Major note, gold is no where NEAR bubble territory. When people begin discussing gold with the frequency they discussed real estate investment at dinner parties, take your gold and trade it for their assets, the end is neigh, but that's still a thousand days or more away. Start a separate thread if you want to discuss if gold is in a bubble or not, should make for interesting debate

Thanks,

No never read it, read a quick synopses. Are you referring to counter-economics?

Error fixed, thanks.

I think the economic need exists for sound currency. If currency and stores of value do not presently co-exists as one item people will attempt to store value in some form and conduct trade in the currency.

Gold and silver historically have been the commodities of highest liquidity, they held intrinsic properties that made them easy to trade, hide, divide, etc. and they were very rare. If crypto-currency can deliver on all these properties and in addition to all that facilitate instantaneous global trade and provide anonymity, it is, at least in theory, better than gold.

To kick start the process though and for bitcoins to have any value we need a functioning economy willing to accept bitcoins in exchange for goods and services. This is probably the only important element to achieve next. Everything else will not matter if this doesn't happen.

I think people would much rather spend bitcoins in a collapsing international monetary system if they could do so without constant meddling from financial regulations. Even if they don't though, enough people should realize the potential of bitcoins as a store of value while other currencies crash.

-Schalk

Profound

Interesting note on the phenomenon of good money driving bad money out of existence.

Generally the monetary cycle is that of bad money driving good money into hiding, a rapidly debasing currency causes the accumulation of a non-debasing currency. This persists until enough non-debasing/sound currency has been accumulated. Then the sound currency can very rapidly drive out the debased currency when there are sufficient amounts of it to supplant the debased currency in trade.

This is similar to what happened in Zimbabwe during the hyperinflation recently, Gideon Gono was printing money like there's no tomorrow. This causes every observant Zimbabwean to store any other form of value they could (Rands, Pulas, USD (sadly) and microscopic granules of gold). Slowly the levels of these rose, till it eventually reached the point where enough sound money had entered the system and 100% service levies could be charged against customers still paying in Zim Dollars. This completely broke the Zimbabwean governments ability to issue currency.

This stopped the mad rush for real value goods leading to the constant shortages in stores and lead to a very quick replenishment of the supply chain (about 1 month and most everything was available for purchase again)

Since BitCoins are neither inflationary nor debt based, if enough of an economy can develop around it, it will become an incredible store of value. It is by definition deflationary (since it's economy grows and it's quantity stays stable). BitCoins are very good money and I hope they drive out the very bad money.

-Schalk

"In the long run, there is no such thing as an unpopular government"
-Ludwig von Mises