Looks like he already did the segment:

http://www.bloomberg.com/video/irs-no-need-to-report-bitcoin-accounts-rvUil~OYQOOYR4CptUtfAQ.html

Exactly. It's a slippery slope, the same as blacklisting/redlisting certain coins. The highest confidence in the system comes when everybody knows nobody will mess with it.

Besides if people are worried they can simply use Litecoin. Satoshi may have 0 litecoins which was launched when far more people could get it at the beginning. Judging by the giant difference in market cap for the two coins I'd say people are not so worried about it.

Peter Shiff had a great response to the Piketty book where he comments on comedian Bill Maher praising the book.

Peter Schiff - Marxism Rebranded

Near the end Peter notes European immigrants left everything to come to America, with nothing but the clothes on their back, going to a country where they had no money, didn't speak the language, where there were no safety nets, where there was only capitalism, and did so because that's what the poor wanted. The poor knew there were no nets whatsoever to catch them if they fell, but there was no government standing in their way.

So to answer this thread's original question that's how Bitcoin/cryptocurrency can help, by restoring the opportunities of a free market to those who seek them. A final Schiff quote on tax:

If I understand correctly, after the hack they said they would no longer hold user coins themselves in escrow. Did that change?

I agree merged mining can be beneficial, possibly even critical, to complementary block chains. As you point out it's a win-win by sharing resources to different tasks.

Peter Todd gave an interesting perspective on a LTB episode which is merged mining can encourage mining centralization. This is due to conflicting incentive vs resource requirements to merged mine. Independent miners need to maintain updated block chains for every coin mined which can offset monetary gains, whereas pools can manage the overhead while still offering the gains. The more chains providing incentive to merged mine, the greater the incentive to join a pool, especially one offering the most chains, undermining things like P2Pool.

I'm thinking (and hoping) we'll see many more pools spring up to counter the recurring theme of a single pool or a few comprising worrying percentages of global hashrate. However, I think it's also healthy to have a large number of independent miners. A healthy mix of pools, enterprise miners, hobbyists and independents I think is probably best. Just something to consider.

All of those events can be linked to leaving a metal standard:

http://en.wikipedia.org/wiki/Panic_of_1857


http://en.wikipedia.org/wiki/Panic_of_1866


When you leave a sound money (hard metal) standard it affects the market. The greater the deviation/inflation the greater the potential boom bust cycle. Those first Panic events didn't last long:



However, the U.S. went off the gold standard and inflated for the Civil War in 1862. Which initially led to a boom, partially responsible for full recovery from the Panic of 1857, but ending in a bust causing the Long Depression spanning 1873 to 1879.

Similarly, the U.S. inflated for World War I which resulted in an initial boom ushering in the "roaring twenties" but ending in a bust causing the Great Depression in 1930 lasting into the 1940's.

Bitcoin is fundamentally about the little guy.

It's about empowering people to do for themselves what others do simply because they have a monopoly on moving money, like charging 10-20%, which some would argue is criminal, to move it from point A to point B.


No, Bitcoin exists openly in the world which is full of all kinds of people, including scammers, con men, altruistic people, etc. I certainly don't say there is anything wrong with seeking profit. However, I might question those whose actions toward the poorest people appear more predatory than anything else. Watch the following 5 min video and get back to me:

Bitcoin in Uganda - Empowering People

It's not like banks are constantly looking to reduce user fees. A typical wire costs $25 or $45 internationally, and can take days to clear. In 2012 ABC News reported bank overdraft revenue rose 3.6% to $31.5 billion. Bank of America was planning to charge users to use their own debit cards until a wave of backlash turned them from it.

It may be surprising but the banking system wasn't built up to cater to the little guy. It was built up by stodgy, lazy, greedy financiers looking for any way to extract another penny profit from their privileged position. There is much a fresh crop of tech entrepreneurs can do. If you don't see how a worthwhile impact on finance can be made with cryptocurrencies you don't have to. Just sit back and let the free market (for as long as it can remain that with Bitcoin) do its thing.

I agree. As I said it's a bit off the topic but, yes, there are so many dollars sloshing around the system, especially at the top end, we get these kinds of distorted markets. Is it a bubble? Absolutely. It has little to do with dotcom. The whole stock market is in a bubble, which partially popped in the 2008 financial crisis. My point was more that if companies which don't charge and don't even have a profit model can have such valuation, what would the story be for companies with actual valuable money management services?


It will be cheap the same way email is cheaper and in lots of ways replacing snail mail. Digital information is easy to manipulate.

The reason is because technology itself makes things so much more workable and efficient. That results in cost saving which can be passed directly to users.

As for tech company profitability it goes a bit off the subject of Bitcoin, but currently volume (eyeballs) alone is enough to result in exceedingly high valuations. For example look no further than Twitter. How much are users charged there? Yet Twitter recently IPO'd at 24.9 billion. Similarly, the WhatsApp chatting application was bought by Facebook for 19 billion. These services boil down to publishing text, for the most part, on the Internet. By the way does Facebook even make a profit yet?

Yet, with Bitcoin you're dealing directly with money, people spending money to be more precise. It would be harder to believe popular Bitcoin services couldn't be valuable.

What about the merchant? The merchant receives a chargeback and eats the cost, which means cost indirectly does get passed back to consumers. Also victims of credit card and identity fraud can suffer damage to credit history which is tedious and sometimes impossible to recover from.


If you read my earlier post you'll see my emphasis is on technology evolving. The way Bitcoin was experienced in the previous five years will not be how it's experienced in the next five. One thing I think we'll see is hybrid solutions like BitGo where the user essentially partners with an online service to manage their coin security. Such companies, being based completely on technology, don't need much to operate; even less than Amazon.com, for example, which while building physical warehouses absolutely destroyed traditional brick-and-mortar retailers.

As for regulation/compliance that is still shaking out, but things are not as arduous as you make out. For the U.S. at the federal level, a business only needs to register with FinCEN which is simple. Individual states are slowly making their positions known, but Texas for example says no additional regulatory burden applies, so long as no fiat is involved. Previously two other states (I forget which, something like WY and MT I think) had no MSB licensing which remains the same for Bitcoin. California recently adopted Bitcoin favorable legislation and NY is working on a 'Bit license'. So we may find completely above board business compliance for Bitcoin is quite workable for enterprising entrepreneurs, especially funded ones, after all.

That's a laugh.

OP, Bitcoin will in all likelihood become quite cheap, easy and efficient to use as money, more so than it is now even.  Bitcoin is fundamentally technology and that historically happens over time. Look at the television, airplane, car, telephone, cellphone, computer etc. All of these things started out as clunky toys for only the rich. Over time common people gained easy access. It's simply how technology evolves.

Bitcoin is still a baby and is already capable of saving people money and increasing the security of their transactions against fraud (contrasted to 190 billion annual credit card fraud) because spending authorization (like card numbers) is never out in the open, and things like multisignature wallets will make super strong coin security easy.

Banks and credit cards were here before the Internet existed. If you redesigned the entire financial system from scratch you would probably get something that looks more like Bitcoin. Instead all the world's financial infrastructure rests upon that built up, clunky, inefficient, legally hypocritical, fraud and privacy vulnerable system.

Bitcoin is technology built with the benefit of hindsight, entering a space which hasn't seen innovation in over 50 years. If you're someone betting against it (looking at you exocytosis) good luck.

Bitcoin can't solve problems because those were here long before it. However, that doesn't mean Bitcoin can't make dealing with the problems substantially better.


This came up often early in this forum's history. It's the same old 'late to the game' argument. Won't people complain and seek other coins. In reality everybody that says they're late to the game has people who say that after them. No new alt-coin will spring up and displace Bitcoin without offering something substantially better.


True, but before it was only that, predictions and arguments. Now there are visible (and worsening) cracks in the system.

Unpleasant things happen. One might argue if they didn't what would you compare the pleasant things to?


You could say that about the current state of things, especially in places like Argentina (50% annual inflation) or Venezuela (food rationing). As for the complex part I disagree. That might be the case with having to barter PMs, because they are cumbersome to actual transactions, but Bitcoin solves that. As for the miserable part, again, thanks to Bitcoin I feel a speedy recovery is quite possible.


Things only appear to grind slowly away at the surface. The macro state of events is much different and clearly unsustainable. The grinding has already ground along to the end of its tether.

They shouldn't, but we can help them

This community has many computer experts, cryptography experts, and mathematicians all readily available. If someone wants to know why they should trust the system we can explain it exactly, and to what degree there are any risks. The forum is open to public participation so anything said here can be challenged anytime.



Tell people even established currencies like the dollar do lose value over time. When people diversify into alternative currencies like gold or bitcoin they can have some of their money go up sometimes instead of always down (felt by goods becoming more expensive). That can be a fun idea for people. They don't need to jump in with both feet, but they can play with inconsequential amounts just to see what else is available and get more familiar with how things work.

Nonsense. Humans (for the most part) have a natural aversion to violence. Are you a spokesperson for the Military Industrial Complex? If you end up in a street fight, if it came to that, would you rather it dragged on as long as possible or would you rather it culminated in some result sooner so both sides could move on?


Yes... and now we get to the root of the problem. For whom is war fought, generals or the state they represent? If the answer is the state, then whom does the state work for if it's not a communist regime? If the answer is the people then what you're really talking about is not money, but support. To win generals need the support of the people they fight for, but can do much without any support whatsoever so long as they have funding, and that can come from a state even if not willingly from the people, via inflation.

If a war is unpopular its funding will be withdrawn by the people and be over, that is unless the people don't feel the direct costs of the war while it can remain funded, as in Vietnam where as you correctly point out the U.S. lost that unpopular war, which dragged on nonetheless. We now trade with the Vietnamese.


I believe this is a key argument of Keynesians. It is false. You can have a thriving economy, by some definition, without money at all. Wealth comes from things people produce, not units of account. I should define "wealth". When I say wealth I mean things which provide directly for or some enhancement to the basic needs of humans. If your house is filled with useless trinkets, although pleasure may have been taken in buying them I wouldn't say it makes one truly wealthy.

In this light we see it's goods and services which are produced by people, such as quality farm fresh food and the skilled chefs to process it, which are examples of valuable products within an economy and these things can be bartered for in the absence of money. Money simply makes barter more efficient, by providing a common medium through which various goods are traded.

Let me put it another way. Say there was an isolated neighborhood of a few city blocks, completely cut off from the rest of the world. Within this neighborhood there are people with different skills, doctors, chefs, musicians, etc. These people get together and determine to make an economy. They find a special sheet of paper and cut it up so that everyone has an equal amount of squares. They ask the doctor how many squares he would charge to do a life saving surgery. The doctor upon seeing everyone had 100 squares said 30 squares, this thereby giving each square measurable value. For example, the musician couldn't charge 30 squares to play a song.

For years this community lived happily enjoying fine food and music, trading squares for things they want, and building fine houses for say 1,000 squares. There would be no need to increase the money supply if the population didn't increase.

One day a stranger with zero skills arrives, but he finds a hidden trove containing three sheets of that special paper. Realizing he has stumbled into enormous wealth he calls over a few friends and they cut up the paper between them. They enter the economy wealthy men though they have contributed nothing of value. What effect does their lavish spending have on everyone else? The extra paper in circulation bids up prices, aka inflation, causing the other square holders to become poorer. That's what simply adding more money into supply does. It doesn't inherently add valuable GDP.

I guess you don't appreciate why limits are necessary. Without limits you lose meaning. It would be like a basketball game with no limit on how many players each side could bring onto the court. Pretty soon that game becomes meaningless because there is just no point to passing the ball.


War would have a heck of a lot better chance at being over quicker. As Stefan says when the money stops so do the bullets. War is expensive, yet governments don't have unlimited wealth without ability to create/counterfeit/inflate fiat money.


Really? Who won the Vietnam War, which spanned almost 20 years? The U.S.? What about Iraq? Did the U.S. win that war? What exactly were we fighting over again and what was the win?

Do you see how murky these answers get? That's the problem with going to war without clear impetus and objective. The wars drag on and because governments can mask the cost via currency inflation, there is little deterrent to those favoring war, for whatever reasons.


Well it's a slippery slope. If you provide people no restraint on drinking and driving that will inevitably get abused. Then you get the casualties of that policy.


Why so? Even if you follow a hard gold standard global human population increases by roughly 2% per year, which is about how much gold enters the supply as well.


I think that's an over simplification. The fact is that inflation of a currency provides an automatic, gradual transfer of wealth from lower to upper classes. That's a key reason wealth inequality is so high currently, that along with crony capitalism. Those wars and inflation certainly had effects on the economy, but the real way you help the poor is by allowing open access to a free market built on top of sound money.


The talk about gold standards and fractional reserve is about keeping the upper echelons of society, government and banks, honest. Once you have those two, which can do much damage due to the power they wield, under control then you let the free market work. I agree there should be common sense policies against unfair, uncompetitive monopolies.


I don't know why you have faith words are the simple answer. Even the U.S. Constitution has clear language, for example, which is routinely ignored.

Then how did the U.S. survive prior to 1913 when the Federal Reserve was created?


Governments want ability to print money to do whatever they (and their special interests, including war profiteers) want to do. This includes financing popular social programs which help politicians win election, but put a costly drain on the economy.


That's our point. Governments did suspend gold standards and inflate for those wars. Check out the following:

http://www.zerohedge.com/article/war-causes-inflation-and-inflation-allows-government-start-unnecessary-wars

From Wikipedia:

https://en.wikipedia.org/wiki/Gold_standard


It was the newly created Federal Reserve in 1913 which inflated for WWI leading to a bubble facilitating the "roaring twenties". The subsequent popping of that bubble caused the stock market to crash in 1929 ushering in the Great Depression.

World War II cost the U.S. 15 times more gold than it had in Fort Knox and the Fed.

Apparently you didn't read it carefully. As I tried to point out the word war isn't in the quote. Fighting to achieve something doesn't always mean you're fighting war.


I agree there has probably been in place a U.S. military wishlist to invade and occupy Iraq, Iran, Syria, regardless who landed in the Oval Office. Also as my Rwandan Genocide example shows it must be about oil, not morality.  What I'm saying is Saddam Hussein allowed enough interests to align to turn a wish into action.


Aha, but this is my (and Stefan's) point. If BTC (or gold) was used by Americans as the dollar is it absolutely could have prevented the Iraq War. Why? As I pointed out that war cost over 2 trillion dollars, all borrowed. If everyone was using BTC those costs would have been due and payable in BTC.

The problem is the government doesn't have the ability to create BTC on demand. It would have to actually get BTC from its citizens in some way, all bad: taxation, bonds (lending), or confiscation. In the case of taxation with such a large cost taxes would be high enough to anger the populace, and the war would be over quickly. In the case of borrowing with such a large cost interest rates would be high (remember things like gold or BTC hold or increase in value over time) and repayment would be steep so as to again require higher taxes. Confiscation, well you should know the rest...

None of those war finance options are preferable to a government that wants to remain easily in power, due to the cost felt by its citizens. This is how sound money prevents, or at least limits, war. Wars are then only fought over legitimate conflict, not frivolous, profiteering motives.


That's a false dichotomy. You're implying either govts can print money or there will be no war. Other possibilities exist, such as starting limited, less costly, war.


I'd argue there is a lot hidden from the masses, sometimes intentionally, sometimes not, but either way the masses remain ignorant of much.


The fact is both he and Alex Jones have amassed large and growing audiences, so what they're saying obviously resonates with someone. Even if they don't get all of their information 100% correctly proven and presented in the best possible way, it seems foolish to dismiss the whole of their content as worthless and never deserving any attention.
  

Stefan didn't say politicians have always fought wars for the power to create money. You implied that. There are many ways to gain political objective without fighting war.


The Iraq War.

Was Operation Iraqi Freedom fought over land dispute? Ideology? Religion? Economics? That's certainly not what we in the U.S. were told. Iraq is nowhere near our borders.

We were specifically told it was over weapons of mass destruction (WMD), and further we knew where they were. Although I wouldn't hold my breath for an official government explanation of what went wrong let me propose a guess. Let me first remind viewers Americans in general didn't seem to be clamoring for war over WMD. There was also the Rwandan Genocide in 1994 where 500K to 1M were killed with no intervention from the U.S. If we are so concerned for the well being and slaughter of distant people, why not?

The real downfall of Saddam Hussein was interests of a powerful nation (the U.S.) were aligned against him. An empire the size of the U.S. which doesn't produce much domestically needs something else to export to sustain a debt fueled economy: war. The Iraq war cost over 2 Trillion dollars of additional U.S. debt. Second, as Stefan mentioned there are those who do profit from war and somebody got paid from those dollars.

Third, Saddam proposed selling oil for euros which threatened the petrodollar. While Iraq wasn't the world's biggest oil producer, others could get ideas and Iraq was small enough to be made an example of. Combine all this with the fact Saddam wasn't the most saintly ruler and you probably have the real basis for that war. Now that explanation I'd argue makes far more sense, and is certainly about the ability to continue printing fiat (the U.S. dollar).


I'd agree with the fierce part.


You're missing the point. It's not printing money that restrains government. It's cost. The two are not the same.

If the barometer for what people use as money is gold, something which government can't simply create to dish out, then people will feel the cost of things like war in a more pronounced way, rather then gradually over years by inflation.


Maybe the speeches of George W. Bush in the lead up to the Iraq War were more to your taste.