Fourthly, a general rant about the gold standard. It is a sign of our times that every politcian or central banker seems to agree that the gold standard was a useless invention and bad economics. NO! The gold standard is what we should be using 90% of the time. Of course, the late 1920s/early 1930s are ALWAYS cited as an excuse as to why the world came off the gold standard. NO again! The gold standard should be used 90% of the time, because it enforces fiscal discipline. This is EXACTLY why politcians don't like it and eventually moved off it. Occasionally I believe, as in the 1930s, there is a case for moving away from the gold standard - for example, in a deflationary spiral. However, it should be reapplied ASAP to prevent exactly the type of crisis we are in now. I agree with you that the gold standard (or systems like it, e. g. Bitcoin) are good as basis of the money. However I'm not exactly sure how you think that switching off the gold standard for 10% of the time is going to work. Do you mean that during such a time (deflationary spiral as you mentioned it) the money supply may get inflated beyond the gold backing? But if you do this, how can you ever get back to a full backing - only by devaluing your currency at the end of this period with respect to the amount of gold you can get for a bank note, right? IMHO this defeats the whole point of a gold standard in the first place - as soon as people realize their money got worth less (in gold) even though they were promised it is backed by some fixed amount, won't they just stop using it and hold gold? Like a couple hundred years ago, when everybody believed the world was flat? Or when people believed in creatonism? Nitpick: Even though this is commonly cited, it is not true that people in the Medieval Age believed the world to be flat. Already the greeks knew it is not. The misconception of those times was that it is the center of the universe. Also, I'm sure still today a lot of people believe in creationism - especially in the modern center of the developed world, aka US, one hears....  Sure. I accept this, sorry my factual knowledge is not totally there. Probably there are some people who believe the world is flat today, but the point is it's not universally accepted. RE: gold? Well this is just my personal idea. It's not backed up by any economic theory. The point of the gold standard is that it control the monetary balance, right? It's impossible for governments to run up a deficit with the gold standard. If they spend like crazy, they just loose all their monetary supply / gold. In this case, they experience a huge deflation and have to take their currencies off the gold standard. This is what happened in the 1920s/1930s - in my understanding. What I'm arguing is that, if this were to happen, then a government would have a legitimate case to come off the gold standard - to prevent a deflationary spiral, which is when consumers don't spend -> businesses make falling profits -> businesses fire staff -> consumers don't spend .... It's a feedback loop. To break this, sure - it would be necessary to come off the gold standard. So, the gold standard is not completely perfect. However, what I'm arguing is that the consequences of *not* using the gold standard are 10x worse than using it. At least, a deflationary scenario *can* be fixed, and does prevent governments from taking on debt after a certain point. It also alerts them and the population to the problem. So, it has a preventative effect against running up huge debts. ...Just look at the U.S. national debt since gold standard abolished [loosely exponential chart]
... What exactly does US national debt mean to me, Joe consumer? My standard of living hasn't gone down as the debt has gone up. It's in no one's interest to call in the debt. What do you see happening in case US defaults? People are impressed by exponential charts -- "unsustainable" is a word often used. Population growth is exponential -- economy has to grow on an exponential curve *just to keep even* with human population. You like scary charts? Here:  Match this with economy predicated on linear growth. Ahhh. Yes, of course it's not so simple. You see, you missed out the graph showing an exponential increase in human technology and innovation, and therefore an exponential decrease in the use of natural resources by each individual person. Let's hope it continues, I see no reason for it not to. In my opinion, the US situation is a simple matter of maths. The country is loosing money at an alarming rate, and is only able to carry on due to the crazyness of its creditors to keep lending. It has no chance of even making a profit with its current indebtedness, let alone repaying the huge debt load that has been accumulated over decades - in the private and public sector. The only way of paying off the debt is to tax the assets of all the citizens within the country, like Cyprus. Given that there are various other serious imbalances in the world, if there is a serious financial crisis or some other event that causes the debt markets to freeze up, it's possible that the citizens may be forced to pay up - ala Cyprus. For me, this is one of the scenarios that could see wide adoption of bitcoin. I relate to the Austrian school, but one of the criticisms of the Austrian school is that it is too simplistic. It looks at a general overview, without taking account of the huge, complicated picture of macro economics. I do accept that I have a limited knowledge of the situation and I'm sure that there are people who know alot more than me about the USA economic circumstance. However, I have considered all the different scenarios about the path the USA is on, and this one is the only one that seems to check all the boxes. Someone in this thread mentioned that the history of fiat is a history of failure. By that measure, the history of *everything* is a history of failure. Gold-backed currency, in particular. As extinct today as the dinosaur.
It is today. But you're talking about a relatively short period in history when it has been disregarded (last 60 years) vs. hundreds of years preceding this, when it was used successfully. Not sure what you mean by history of *everything* is a failure, please clarify. The doomsday prophets of this forum, the ones prognosticating the end of fiat, back up their soothsaying with examples of economic failure. How absurd to assume, then, that exchanging one currency for another would somehow solve the problem. Economic collapse is not undone by swapping bad money for good.   Fiat is totally different to the way gold money works. It's not absurd at all. Economic collapse is not undone, but it can be solved by fixing the problems that caused it. IMO, since the last crisis very little was fixed. I don't believe it was *just* loose regulation that caused the housing crisis. I'm sorry if Im a doomsday prophet, I kind've regret posting a thread called 'The end is near'. I would wipe it if there wasn't so much attention to it. However, in my opinion the majority of people continue to believe a lie about what's going on in the western world, a lie which is perpetuated by those who have an interest in people believing it. There are many more people with an interest in the mass population believing this lie, than there are people with an interest in people believing the truth. Most of the people who like people to believe the truth are people selling gold, silver or pumping currencies like bitcoin. These people are in a huge minority compared to the established elite who would prefer people to believe that a "recovery" is underwzy. I believe that it is only a matter of time before the truth reveals itself, unfortunately it will probably be after those responsible have left office. Once again, I - and the other prophets - may be wrong about the situation. Maybe things are getting better and debt will eventually be repaid. However, looking back on history, it is unfortunate that things never proceed as straightforwards as this and, unfortunately, when countries are in the economic situation we are in right now, sooner or later there is usually a serious crisis. |
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Ok , tl;dr for most of this thread. To answer the OP's questions, that have btw been answered 1000 times already on these forums I'm sure. But anyway.
First of all, the idea of an anonymous decentralized e-cash system was not Satoshi's. This idea has been around for a long time.
Secondly, bitcoin is the only anonymous decentralized e-cash system that has gained traction online - and has not been hacked or anything. This is really the genius of Satoshi, it's in the design & implementation of the idea, not the idea itself.
Thirdly, most of OP's points are due to the currency not having gained enough traction. It takes a critical mass to adopt it before it really gets proper usage. We are only in year 5 of bitcoin - that's very early indeed.
Fourthly, a general rant about the gold standard. It is a sign of our times that every politcian or central banker seems to agree that the gold standard was a useless invention and bad economics. NO! The gold standard is what we should be using 90% of the time. Of course, the late 1920s/early 1930s are ALWAYS cited as an excuse as to why the world came off the gold standard. NO again! The gold standard should be used 90% of the time, because it enforces fiscal discipline. This is EXACTLY why politcians don't like it and eventually moved off it. Occasionally I believe, as in the 1930s, there is a case for moving away from the gold standard - for example, in a deflationary spiral. However, it should be reapplied ASAP to prevent exactly the type of crisis we are in now.
Remember in some eras of history, there are dogmas that everybody believes no matter what, even though there is NO logical reason behind it? Like a couple hundred years ago, when everybody believed the world was flat? Or when people believed in creatonism? Or when they believed that women or non-white races were inferior. Etc. Well, the dogma of our age is that we believe that politicians and central bankers can dictate and control the money supply and the economy.
It is unbelievable to hear Bernanke say that countries are not subject to the same fiscal discipline as, say, a company - and can carry on borrowing and running up debt indefinitely. This is INCREDIBLE to hear an educated person saying this, let alone the Fed chairman. To me, it's like somebody saying that 2+2 = 5. But this is exactly what he said in his press conference last week.
If there's one good thing that will come from this period in history, it's that fiat money is ALWAYS a disaster, politicians CANNOT be trusted to manage the economy (or be trusted with pretty much anything), and that the gold standard is the ONLY thing worth using. Unfortunately, as is common in human history, we are going to learn this lesson the hard way. A VERY hard way.
Where does bitcoin come in? Well this is the `economics` section, so please excuse me for ranting on about the economy. However, bitcoin has all the properties of gold - that made people trust gold as an ultimate store of value - but it has even more properties - such as, it is totally digital, transferred instantly to anybody worldwide, easy to store. In short, it was specially designed as a store of value, as a global currency. Gold was not. So it is totally logical to accept that one day bitcoin will replace gold as the monetary standard. Furthermore, if fiat currencies collapse, it is also totally logical to accept that bitcoin will replace them - because it is a technologically better substitute for gold, as already discussed.
* I am borrowing some things here from some Peter Schiff videos on YouTube admittedly. But I totally agree with what he says, I think he is really spot on about the economy. He is a little crazy though and he comes across as trying to constantly pump up his own investment firm, so I think many people don't trust him - which is a shame.
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Well he's certainly buying when there's blood in the streets, people are fearful, and all the other applicable adages. Unfortunately for him, it is quite possible that "all applicable adages" - that would have applied in the past 50 years - are simply not applicable in today's world. For the same reason, I believe many existing successful investors like Warren Buffett - who see the situation in the USA as improving - are totally wrong. There's an interesting article by Meredith Whitney in the Financial Times today - titled "Detroit aftershocks will be staggering" - about Detroit and how there are a whole collection of states in a similar position, ready to do the whole thing. Anybody read it? It's on pastebin In my opinion, Meredith Whitney is one of the smartest people on Wall Street right now, and furthermore she has the balls to come out and say what's actually going on in the USA. Which says a lot about Wall Street, since she's a woman. http://vpaste.net/la3QH |
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Might be a good time to buy-to-rent in Detroit. Especially if the USD tanks as that will mean that inland production will go up (imports gets more expensive). The bankruptcy might lead to better financial control and federal money/ local tax breaks etc If I was in the US and wanted to start up a production facility, Detroit might be a likely location. From the bottom the only way is up. Wow. It would take some real balls to invest in Detroit right now. Well, furthermore, to invest in any business in the USA right now takes balls, IMO. Btw, anyone notice article today in WSJ talking about the effects of this on the European banks? Seems UBS was involved in lending to the Detroit muni back in the boom years. http://online.wsj.com/article/SB10001424127887324328904578619993814520624.html?mod=WSJEurope_hpp_LEFTTopStories |
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We've seen the speculators get flushed out, when the price moved down to $60
Now it's only strong hands holding bitcoin.
I don't see any downwards movements in the near future, unless there is a fundamental cause - ie. a problem with the blockchain or protocol, or a serious competitor
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Yup. Infact, entire states can go bankrupt - and they will.
I'm not sure if this is big enough to trigger effects elsewhere in the system - it's only $20bn written-off - although apparently it might affect some smaller insurance companies.
I guess we'll have to see.
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Detroit is an order of magnitude worse than any other major city in the US. This isn't necessarily a leading indicator, although some of the same dynamics (massive indebtedness, stagnant/declining revenues, underfunded pensions) apply. My guess is what Detroit is going through now will be happening elsewhere, but only 5+ years from now.
Hmm It always amazes me how people think that any debt crisis is 5 years away. It has always been 5 years away. Well, in my opinion, it is at a maximum of 2 years away. If I was to time it, I would guess this house of cards would begin to fall later this year or in early 2014. |
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Hmm. Great, I had about 100 bitcoins on MyBitcoin.
If I ever meet this Bruce Wagner guy..
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WOW. THIS is big news.
We are entering a financial apocalypse.
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We gonna have a price crash soon then?
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Gold price is going down, no question
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This has nothing to do with the end of bitcoin, but about things that are going to cause problems for the regular investor. I have been thinking about this for a while. Before starting, I assume the price of bitcoins has been lifted due to speculation.
First, the people selling asic machines in return for bitcoins are going to destroy bitcoins for a period of time. Think as a seller. You sell a bunch of miners for bitcoins and let the people attempt to reap the rewards of mining. Once price rises enough, you sell out and reap the benefits before miners can. What perpetuates the price rising is early adopters who spread word of their earnings bringing in more people who want to get rich. In order to sustain the price and continue rising, you need more people to invest in the currency and believe in it. once influx of people come, this is where as a seller of machine i'd sell out or the next big wave.
It is the greed in which people want to earn money that will make this system fall faster because everyone will invest in miners and coins and watch them rise. Which it will, no doubt, but at who's expense? You and me the regular investor. It's the same in stocks or our own market. Remember this - when everyone believes they can make lots of money, that is when you get worried. All it takes is one bomb (mass sell off) to start and then rest of the disaster starts. As many investors tell you - MANAGE YOUR RISK.
I'm sure most of this has happened already, in April? There seemed to be endless posts on the forums about how people were going to be the "new elite", how the price was going to $10,000 , etc. Now it seems that we have the opposite, many threads about how price is going to $30. Personally, I have remained bearish about bitcoin price in recent months but given these endless negative postings, I'm beginning to wonder whether this could still be a buying opportunity. Having said that, the number of transactions on the network has crashed recently - but this could just be due to speculators loosing interest. I'm not sure about the situation with ASICs. The whole thing sounds incredibly dodgy, there has got to be a scam there. However, this seems like a side show. How is it going to affect bitcoin (ie. the bitcoin protocol) itself? |
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My opinion is, long term bullish, short term bearish.
As many analysts will tell you, we have been going up for 12 years now, every year.
It is only natural for a correction. I think it could go to $1,000 or even lower this or next year.
However, long term, I am extremely bullish. I am waiting to buy when it starts going lower. I don't think the recent price rises are a new trend, I think we're going down for a while longer.
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We're in a mid term down trend
Things are playing out just as expected
Target: $30
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Seriously, kudos to the Winklevii for backing bitcoin.
I think the community owes them a massive favour. Well, hopefully they'll get a return when all their hard work pays off.
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The entire point of Bitcoin was to serve as a means of exchange in a network that is: - Distributed
- Uncontrolled
- In no need of trust to transact
Off chain transactions however cannot be implemented unless you have a single entity that controls and keep track of the transactions, which means this abstraction makes transacting: - Centralized
- Controlled
- Reliant on trust
Which in turn essentially means off chain transactions are big f-you to the concept of Bitcoin. If you are okay with this, then you might as well just use USD and PayPal, what's the difference? I applaud inputs.io for trying to do what they do, which for an online wallet is innovative and overall a great business idea; I just don't see the future of Bitcoin there. What we need is simply super lighting fast confirmations that can work in the current Bitcoin network as it is. Good try, but you're missing something in this analysis. Off-chain transactions can work, because anybody can set up their own 'supernode'. Therefore it keeps the P2P values of bitcoin. Sure, bitcoin becomes more centralized, but still a hell of a lot less centralized than our existing banking system. |
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My price target is $30.
I don't think we're going straight there, but give it 1-2 months.
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If I was a smart operator with a ton of money I might be thinking of priming a litecoin bubble by smashing the Gox Bitcoin price low, then when gox takes on ltc, fire up a rally and sell into the fever of litecoin being better than bitcoin. Litecoin will be very attractive to people late to the game. As long as they perceive litecoin to be as robust as bitcoin, 100 litecoins sounds better than 3.5 bitcoins.
Basically the aim of the LTC IPO project. Wow.... this is exactly what seems to be happening http://www.efinancialnews.com/story/2013-07-05/forget-bitcoins-litecoins-are-the-next-new-thing |
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Figure out a way for late adopters to not have to download +8gb of data when they first start Bitcoin-qt.
SHHH....Don't talk about that. No one is allowed! Rule #1 of Bitcoin is that you don't talk about the blockchain size. Rule #2 of Bitcoin... Oh now its over 10 gb now, btw... But I just broke rules there.. Hahahaaha So true +1 |
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