Bitcoin can be fractionally reserved, and will be. But we will see ratios closer to the ratios we saw on the gold standard which were closer to 2:1. Ratios around 10:1 are just not possible with there is no printing press to guarantee on demand liquidity.

For example even as recently as the 80s banks needed 20% capital for a 5:1 ratio. This was after 70 years of the FED existing. When there was talk of lowering the requirement below 20% several FED members commented that going past 20% was a red line, meaning beyond that the system was just not sound.

Entities will most definitely fractionally lend bitcoin, that is normal. But the market will learn without a bailout entity to not trust any but the most conservative lenders.

Yes, this is the vision of the gold bugs. What the gold bugs are missing (and I used to be one) is gold was used as money because it was the best construct humanity had access to that fulfilled all the properties of money. Bitcoin however can do better and the gold bug vision just might be realized in bitcoin.

This is exactly right.

It is the FED's printing press, and only the FED's printing press, that enables banks to operate at the 1/10 to 1/30 ratios we see today. The reason is markets do not worry about a bank running out of capital because the FED can and will provide "liquidity" on demand.

If a bank operates at 1/30 and runs out of core capital, the bank can swap assets as collateral for dollar funds at face value with the FED. Because of this, banks could run on infinite leverage and it is only regulation which limits them. The system is designed to enable the FED to stop any and all bank runs in their tracks, and as a result there are no bank runs.

In a sense the leverage reported is just an fictitious accounting trick and is not real since the FED can and has simply created money "on demand" as needed for liquidity. If the FED took this away, every single bank would go under within 24 hours. That is exactly what happened to Bear Sterns in '08, the FED decided they needed to make an example of one IB that went too far, selected Bear and said they would not back them further, and Bear was bankrupt in hours.


Under a sound money system banks by necessity keep leverage less than 1/2, because otherwise they could not stop a run since there is no FED to provide "on demand" "liquidity". This was the banking system pre-FED. This would be the banking system under bitcoin. Leverage would be very low and fractional used money would be in line with base bitcoin money.

The issue is due the massive fractionalization the FED enables, the ratio of "base money" M0 to circulated money M3 is much higher today than under a sound money system.

It is only the FEDs printing press that enables the banks to run at the 10x or 30x leverage ratio's today. This is possible because if any run starts the FED can provide liquidity on demand.

When the US was on a gold standard bank leverage never went above 2x and the ratio of base money to circulated money was much closer. Since bitcoin is a sound money system it makes a lot more sense to consider M3 as the target because significantly lower leverage in the system  is closer to what we'd see.

Recommended buying strategy:

1) Work at job (or two)
2) Receive paycheck
3) Pay rent, utilities, buy food, spend nothing else
4) Buy bitcoins with any money left over
5) Goto step 1

It ain't over till it's over which is BTC/USD = $0 USD/BTC = $0

FIFY

It doesn't matter if deepbit topped out at 80% or 55% or 45%.

The main point is that that a large-ish pool has not been an issue in the past and won't be today either because: 1) it is not in a pool's interest and 2) any attempts are highly public and would result in the majority of your subscriber base immediately leaving.

If today's largest pool made something as simple as a 2 block re-org that invalidated any transactions, their hashrate would drop to near zero within days.

Again, a pool is only as strong as the trust individuals place in it. With a public ledger this trust is not blind but checked and verified constantly...

Will only sell once I don't have to.

Just make something a "generally accepted truth" and 99% of the people will assume it is fact and never investigate further.

To me what is shocking about this is any simple study of history shows that what constitutes as "generally accepted truth" changes over time, and often within just a generation or two. Knowing this the amount of complacency and acceptance among most people is something I will never understand.

Bitcoin is one of the first projects in a long time that is rewarding those who question the system, instead of those who blindly follow and support the system.

As an American who was born in south america and lived several years as an expat in both the EU and north Asia, my experience has been the opposite. Yes most Americans are sheeple who don't question anything, but I've found the ratio of ones who do to be higher in the states than elsewhere. Of course that could be because my last stint was in Korea where thinking is shockingly uniform to a disturbing degree, I love Korea and the people there, but there is absolute following of authority.

Completely agree, which is why it continues to amaze me that the vast majority of people year after year invest in an asset that has steadily decreased in value every single year for 100 years (the dollar) and who's managers openly state they will continue this policy (the FED).

The smart ones will never touch the principle, and only spend the investment income that is left over after a certain level of reinvestment required to keep investment income growing with (real) inflation. You actually need quite a bit of money to do this.

Real wealth buys someone time and freedom from having to work ever again, which frees one to pursue interests and life endeavors as they come and go. Time is the measure of wealth, not houses, cars, vacations, etc.

Do all the kiddies and their parents use Facebook because of Zuckerberg? No. They use Facebook because it is easy and everyone else uses it (ecosystem).

People will use Bitcoin when it is easy to use and everyone around them uses it, a leader does not matter.

This is simple standard S-curve exponential growth in adoption. Each wave of merchants that accept bitcoin are progressively larger and larger, from small independent shops, to overstock, to ebay, to amazon, etc.

The effect is more people use Bitcoin and thus more people hold onto some number of bitcoins, and thus demand increases and price with it. I disagree with those who say the price will go down because now people can spend their coins, it's easy to spend your coins today.

If ebay/paypal adopt bitcoin, then I'll conduct all of my buying and selling there in bitcoin and keep x number more coins in an ebay/paypal wallet for such a purpose. This increases holdings.

Congratulations Gingermod on being today's internet fool.

The post is obviously a joke, if you need a /sarc tag in every post to explain that to you then you have a bit of growing up to do.

To explain it to you in the very simple terms you obviously need, the last line is the point of the post:

Meaning it is pointless for the OP to ask for reasons for the dump yesterday because there are a million different possibilities none of which are more or less provable than any others. The point is to say something absurd and then point out it is as valid as anything else that could be proposed.

Bitcoin is a project created by the NSA in order to take money from the crazy anti-government libertarian movement, by getting them to invest all of their money into the project and then pulling the plug.

The problem is those wacko libertarians then invested not just their money but also their time building more and more services on top of bitcoin and popularizing it into a larger movement. Seriously who builds things anymore? No one in the government foresaw that coming.

Now the NSA is desperately trying to shut bitcoin down, but too many people are supporting the network and more and more people keep viewing every price drop as a buying opportunity, so their attacks are less and less impactful.


At least that is my theory for today's crash, it is as good as anyone else's theory and just as provable as far as I can tell.

Sounds a lot like me in 2012, when I refused to buy in the $5 to $6 range because I could have gotten 50% more coins for the same money just a few months earlier in 2011. And then later that year saw $10-$15 as an even worse price.

Not making that mistake again.

I completely agree that any investment advice that claims "this time is different" should be met with a very high degree of skepticism because this time is almost invariably NOT different. The current classic example is the .com boom where every TV and newspaper and adviser claimed that PE ratios no longer mattered, and what they ended up with was a bunch of unprofitable crap businesses which would never turn a profit.

But that's not what I said, I never claimed that "this time is different", what I claimed is bitcoin needs to be looked at from a different lens than most people are used to, which it does.

Most people only see the price of a business (stock prices) after a given business has become established and gone public, and the process of going public involves significant marketing efforts to get the maximum valuation possible. What this means is your average investor usually only sees the slow growth phase of a business, take for example facebook or google. Sure google has gone up a lot since the IPO, but it's still only 10x it's IPO price, and that was 10 years ago. The simple fact is most of google's growth was already realized by the time it went public, and it only has so much growth left.

What most people don't usually see is the early exponential adoption phase, but VCs and angle investors are used to seeing this. For example if you tracked facebook's valuation from a seed round through multiple VC rounds, it would have looked to just be going up exponentially, but in reality the valuation was largely tracking the expected user base through a long period of S-curve adoption that went from Harvard, through universities, through high schoolers and finally the general public.

This is what we are witnessing in the price of bitcoin, we are in a sense the angle and VC investors and for once are getting a glimpse of what they see during a successful ramp. What is scary are the number of "financial experts" on CNBC and the like who don't understand this yet provide financial advice to millions.

TL;DR - Bitcoin is a startup and we are the angle and VC investors who will either see our investment ramp exponentially up with S-curve adoption or crash to zero with a total loss. That is the lens people should view this and what I meant by takes all the standard investment advice and throws it out... "Standard investment advise" here is retail investment advise by CNBC and your Schwab advisor.

It continues to amaze me how the government and MSM promote the idea that increases in the price of housing is beneficial for people, which is completely absurd. All it means is that it is more and more expensive for the next generation to survive and that the next generation has to pay more interest to the banks.

For fucks sake they are now talking about 50 year and interest only mortgages for "home owners" who are in reality anything but and are in actuality permanent renters to the banking class.

I've come to believe that future generations will look on these times as the dark ages and bitcoin will be viewed as the savior for humanity from the barbaric (and by then acient) banking class.

Roughly speaking, over the long term price is directly correlated to adoption.

Since 1/1/2012 when the price was $5, we have gone up 135x to $675 (current coinbase price). The question is do you think bitcoin usage has gone up 135 times in the past 2 1/2 years. Personally I think it has given the momentum of new services, or at least will be soon.

What we are witnessing in the price is simply growing S-curve adoption. This is why people incorrectly keep thinking bitcoin is in a bubble, even though each "bubble" is higher than the last one. What we are witnessing for the first time is exponential S-curve represented in price, that has not happened before. Maybe VCs in Facebook and Google could see it, but most of us never have.

This takes all the standard investment advice and throws it out. If price equals adoption, and that adoption is growing along a typical S-curve, the price is virtually guaranteed to rise during the "early adopter" phase where less than 3% of people use it.

This seems the most logical.

This address was the address MtGox created to fund his MtGox account. What he just did was fund his MtGox account post-bankruptcy. Since MtGox is not able to legally accept new deposits since they are not in operation anymore, any deposits they do receive should simply be funded.

I think the main issues for the OP are: 1) Getting the process for this started, this is essentially another headache for the trustees and they may not be sure how to handle it at first 2) working out any fees the trustee will charge. There will be some level of effort required to process and verify any refund, that won't be free....

In short, for half a million I would hire a lawyer in Japan ASAP. He probably will not get 100% back after everything, maybe 100% minus several tens of thousands of dollars...