The OP might be absurd, but if you think about it this is something that somebody is going to probably try at some point.  We don't have to detach all virtual cryptocurrencies from governments.  We can attach a cryptocurrency to any structure we can dream up.  It might not be successful, but we can try it.

If I were a mad scientist I could create a currency with a central bank that sells bonds every time it rains in Lake Titikaka on a Tuesday and I could sell bonds every time the Steelers win a football game by more than 6 points.

By the same reasoning, if I were into monarchy I can create a currency that runs based on my whim, because I declared myself the emperor of the local sushi bar.

If I were into Athenian style direct democracy I could make monetary decisions based on the votes of the currency holders, with each unit of currency being worth one vote (this doesn't seem like a completely horrible idea to me, in theory).

By the same reasoning, it would make sense for Marxists to try to create a cryptocurrency based on their political beliefs.

In all the above situations, on a certain level, we are starting to create the basis for governments that people can join and leave voluntarily, regardless of geography.  Easy entry and exit to a marketplace could make government more efficient by introducing competition to government.  Right now if I don't like the US government that's too bad, I'm stuck with it unless I want to move.  If I don't like how bitcoin is going, though, I can just drop my BTCs and buy BTC Lite or Liberty Reserve or in the future I might be able to buy MarxCoins from the OP or Democracy Coins from somebody else or Mad Scientist coins from somebody else. 

Changing currencies would change who I can conduct business with.  I can't buy a loaf of bread from the BTC only supermarket, but I might be able to buy a loaf of bread from the Marx Coin bakery on the next block if I change to Marx Coins.  Hell, if the bread is good enough I might change over just to get some of that delicious Marx Coin bakery bread.  This creates a network effect.  The currency I exit has less people working in their currency and whatever currency I move to has more people working in their currency, which increases the attractiveness of the currency I move to for other people.  In this way, all currencies are strengthened because they are all competing for my business.

Of course, the best way to handle a complex situation like that would be to diversify, but even then I would probably hold less of a currency I don't like and more of a currency I do like, which would have kind of the same network effect.

Thanks for the advice!  I'll definitely check these options out.

This has nothing to do with the US Government and nothing is destroyed.  If anything, it makes bitcoins circulate more, which is a good thing.

This also allows people to make money off of market movements whether the market goes up or down.  The lending institution makes money in the form of interest, the short seller makes money if the BTC value decreases.  If it doesn't then the short seller looses money, but the lender still gets their original investment plus interest.  On top of that, you can use the interest charged on short contracts as an indicator of optimism about BTC, which is pretty useful.

I don't see a downside to this at all.

Do you really think there are any investors out there who can build up the value of BTC, then short the market, then crash it and then cover their shorts when the market tanks?  If people like this do exist then bitcoins are insecure and should not be used.

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Edit:  Oh, you were responding to the OP, not to me.  Sorry about that.  Some people have accused short sellers of 'destroying value' before, so I misread the two posts above this one, LOL.

If you have bitcoin loans then you de facto have bitcoin short positions.  Investment sites that allow you to short by checking the box for 'short sell' rather than 'buy' is just a convenience.

The mechanism for short selling is to get a loan for say, 10 BTC, then use that to buy cash (say, $650 USD today), then when it's time to pay back the loan you buy 10 BTC at current market rates to pay back the loan.  If you pay the loan back a month from now and the price has dropped by $10 per BTC, then it would cost $550 to buy 10 BTC to pay back the loan, earning you $100 USD.

Of course, you have an interest rate on a loan, so if your interest rate on the 10 BTC is, say, 1% then you have to pay back 10.01 BTC, which would eat into your profits from a short position.  You want to take this into account when timing your purchase of BTC to cover your short position.  If a lot of people start to think that BTC is going to go down in value then demand for short positions will increase, which will increase the demand for BTC loans, which will increase the short term loan interest rate.

How many services are there for BTC loans?  In aggregate, how much BTC credit is really out there?  If there isn't much BTC credit out there and short selling picks up then it would be very profitable to be a seller of BTC credit, because as demand increases so do interest rates.

From the top post in the conversation in Reddit:

"It's interesting that the peak usage time in most of the world is during the dusk hours, but in North America the peak usage looks to be more around noon - 3 PM."

That's followed by a discussion of American internet habits.

Don't forget the Liberty Dollar in the US.

Speaking of the effect of time zones on trading, here is a gif showing the effect of time zones on internet usage.  I think the bitcoin trading probably sees a similar effect.



Source

P.S. - If you are like me, you might have a hard time seeing the night and day shifting across the GIF.  It's easier to see in the reddit post I sourced this from.  I think that's because it's smaller, maybe.

Speaking of anonymity, I hate it when Radio Shack doesn't want to deal with me anonymously.  I'm waving cash at them and they don't want it.  Last time I was there they literally refused my cash because I wouldn't give them my cell phone number.  No skin off my back, I just ordered the parts I needed on line at a fraction of the price at Radio Shack.  I just had to wait a few days for shipping.

As far as gold goes:  Gold is fiat.  It has low use value, it's value comes from people telling you it has value, same as USD or Euros or Pesos.

I agree with you on the land thing.

I would agree with that.  The chart juxtaposing the search engine interest with the value against the USD is interesting, though.

I wonder what a regression exploring the connection between various search terms and the BTC value against traditional currencies would show.

Gold has always been a bubble.  I'll never understand why people seem to fetishise it as the substance that is the basis for all value everywhere.  I mean, I understand the history and all that, but it's not the greatest currency ever.  Now that we aren't on the gold standard any more we should be trading it based on it's use value, but it's exchange value has very little to do with it's use value.  People seem to think that when the zombie apocalypse happens gold will be the only thing worth having, rather than, say, weapons or clean drinking water.

That said, in the event of a horrible apocalypse style disaster gold seems more stable than bitcoin to me (although potable water would be better than gold or bitcoins).  Bitcoin is only usable if you have the internet, right?  I mean, there is no physical Bitcoin protocol like the IP over avian carriers protocol, right?  (AKA RFC 2549)  In an apocalyptic breakdown of society the infrastructure will be one of the first modern conveniences to crumble.  Bitcoin seems ideal for protection from financial sector meltdowns and protecting you from statist thievery like what is happening on Cyprus, but not for serious breakdowns like, "shit, my government is harboring Bin Laden, we're about to get bombed into the stone age!"

Changing the logo might be a good legal move.  I know that when the Liberty Dollars went down the fact that they used the USD symbol was used against them in court.  Using anything resembling the USD symbol might be used as evidence against BTC traders, and the current BTC symbol looks like a USD symbol made with a B instead of an S.  I mean, I"m not a lawyer or anything, but from what I read anything that makes it look like you are trying to pass something off as legal tender is a bad thing legally.  You can barter with anything, but 'legal tender' is a complicated concept legally.  That might be something to ask a real lawyer about.

It might be an interesting project to try to figure out price inflation.  I mean, if we did something like the CPI of bitcoin, what would that look like?

The CPI comes from a basket of goods that is supposed to represent things that most people buy to sustain a certain standard of living.  Would it be possible to do that with bitcoins?  To begin with, you would have to describe what the standard of living is.

As far as I know, I can't buy groceries or make mortgage or car payments directly with bitcoin.  I can pay for my VPN service with it, and I can buy video games and all kinds of digital goods.  I don't think I can pay for the actual internet connection I need to work with bitcoins, though.  I mean, if I look down the list of places that use bitcoin on the wiki I see that I can buy food and things like that if I really want to, but I'm not going to buy fresh eggs and milk online.

Maybe, rather than looking at what you need to sustain a standard of living we should look at what most people buy with bitcoins and turn that into a basket.  I'm not sure how you would get that kind of metric, given the nature of how people seem to use bitcoin.

Anyway, thanks for the chart, Whitslack!

Thanks!

Sorry if I came off a little gruff, I was just looking for some kind of interesting conversation to post in while I waited for the posting rights to go through.  I guess I forgot that we're all new and all of us probably overlooked a few things when we put up our first posts, especially since there is pressure to make the 5 posts here so you can get into more interesting conversations elsewhere.

See you around the forums!

What does the term 'slippage' mean in this post?

I'm guessing it means transaction fees or time delay?

Don't bother with the money laundering.  Aside from the ethical and legal peril you create doing that, there really is no point.  You would be trading a strong currency for a weaker one, which only makes sense if you are going to spend the money immediately.  Financiers and investors who work overseas make transfer payments like that all the time when they want to build a factory in China or buy foreign stock in Pesos.  When they do it they hold the strong currency as long as they can and when they transfer it into the local currency they spend it as fast as possible.

If you want a solid store of value buy durable goods with your bitcoins directly.

They think this spike is a bubble, and cite usability as the major reason for the instability of the currency.

Daily Chart:  A Bit Expensive | The Economist

Thoughts?

WOOT!!!  Thanks!

Here is some more charity:

I don't like you.

Should you care?  Probably.  Because trust is important with this currency.  Have you read the sticky titled "trust no one" yet?  If you haven't then you should, and you should really think about what it means with regards to how trolling at people here can impact your ability to make moves with bitcoin.  I don't trust people I don't like.  That means you have already cut off one possible trading partner for no good reason other than because you had to be a wannabe internet tough guy.  Keep it up and you won't have anybody to trade your BTC with.

You're welcome.