Bitcoin is not traditional money, but some kind of value abstraction far superior than money. The legacy money concept barely made it out of the boarder of a country: When you enter another country, your fiat money suddenly become useless without exchange, while with bitcoin you might still able to find someone accept it in another country without exchange

Why most of the country do not accept foreign currencies domestically? Because all the governments know that fiat money is a taxation on domestic people, it will be stupid to allow some foreign government to tax their people

However, bitcoin is similar to gold, it is wealth, not taxation, so governments might eventually allow it to circulate, since this will bring wealth into their country

People also felt very jealousy for those bought a lot at $5, like Winklevoss twins 

You spend bitcoin by first convert to fiat money and then buy goods, just like when you are traveling in Japan, your dollar/euro can not buy anything there, you have to first exchange to Japanese Yen and then spend

In fact, it is very difficult to understand that the current system you are living in is a huge scam, but try watch some youtube videos and you will get to that conclusion sooner or later 

Inflation or deflation is not the problem, the problem is that the money creation must be done by work or exchange resources of a value similar to its face value, that is what makes money valuable, since everyone has to work or exchange valuable resources to get money (except robbery and stealing). But fiat money is not created by any thing of similar value, so it is some kind of robbery/stealing, which impoverish the whole society

Notice that inflation or deflation is just a small variable in the big picture, you can print 2 trillion dollars to get inflation, and print 1 trillion dollars to get deflation, both do not change the fundamental flaw in the existing system

Ture, bitcoin will benefit the savers, however, everyone can be a saver, not only central bank. It will indeed encourage saving, but as observed during recent years, when bitcoin price rose, people spent them more, because they were richer, so deflation is not a problem for the same reason that inflation is not a problem either

The economic model behind fiat money is even more severely flawed, but human can still adapt to it, so they will have no problem adapting bitcoin

They want to be able to freeze funds, which is not possible with bitcoin. But similarly, they can not freeze the movement of cash either. So I guess eventually all the regulations for cash will be applied to bitcoin, before more strict address-based regulation is in place

He wanted to ban exchange/conversion of bitcoin into and out of Ruble, but then bitcoin can be used directly in trading without even touch the current financial system, an even worse nightmare for authorities, they will totally lose the trace of it

OBS, thanks for pointing that out, I thought this is recent news since the video is still active

http://edition.cnn.com/2014/11/13/world/meast/isis-currency/index.html?hpt=hp_c2

--- ISIS is planning to mint its own currency in gold, silver and copper, the group said Thursday.

Its aim is to stay away from the "tyrant's financial system," ISIS said in a statement. It said it would issue another statement to explain the new currency's exchange rate, and where it can be found.

The currency will include seven coins: two gold, three silver and two copper.

The move is "purely dedicated to God" and will remove Muslims from the "global economic system that is based on satanic usury," ISIS said.



It seems none of the government/organization that powerful enough is interested in bitcoin, they all want to make their own currency 

The only one that is not taxed are money creator, e.g. central banks. Rest of the people all have to work to get those money from banks, so the tax is applied on everyone, even include the government, but government can always borrow new money to pay back the old debt, so they are not taxed in principle

Your loan or speculative investment on housing has nothing to do with money creation, money creation is a tax to everyone who use this money, that's why bitcoin's limited total money creation is the way to a tax free monetary system

Tax is an old tradition and it does not matter anymore since the removal of gold standard. When government can borrow unlimited money, each dollar they borrow will just be a tax to everyone who did not receive the new money immediately, in fact that tax is much more widely applied and will get almost no resistance from general public (FED printed 5x more money, equal to a 500% tax, but no one cares)

Keynes said that only one in a million would identify this form of tax. The tax income generated through this way is magnitudes larger than traditional tax collection, which makes traditional tax debate a TV show without any impact for whatever party's government: When you can borrow trillions, who cares if your tax income is 2 billion or 4 billion, they are just pocket change

Theoretical limitation is at Satoshi-USD parity, see my signature. Anything beyond that require huge increase in the economy output, at a GDP increase rate of 1-3% per year currently, that's impossible

Unless it is a p2p distributed mixer behind the TOR, an official mixer would be heavily regulated like all other financial institutions

The unavoidable failure of altcoin (include banks' altcoin) will prove that only bitcoin works as a decentralized world wide cryptocurrency


1. Inflation
Every altcoin is inflation in cryptocurrency world, thus against the fundamental spirit of bitcoin: Limited total supply

2. Community
Altcoin is too late in the scene and have almost no community from every part of the ecosystem, world wide

3. Hashpower
Altcoin has none or very little hash power in the network, usually quite centralized, means the security and investment is far below bitcoin's level

Let's say that these pictures are all plastic blocks coated in Nordic Gold coating (which is used on Euros) - Copper 87%, Aluminium 5%, Zinc 5%, Tin 1% , they look exactly the same as gold bars, would that still make you feel charming?

If it is not charming any more, then it is the gold itself gives you feeling of charming. So all expensive things would also give you that charming feeling. If you still feel they are charming, then your charming definition is just a yellowish metal color, totally personal preference, has nothing to do with gold (I know lots of people hate yellowish color metal, they prefer white or black)

I guess it will function more or less like silk road, mainly used for illegal and restricted goods, which can cause some further negative press

For normal goods, if OB want to reach ebay or taobao's functionality today, still many years behind

To shut down bitcoin, you just shut down exchanges, that must be coordinated world wide, but since large banks are mostly coordinated world wide, this is not really impossible

Fiat money can survive without exchanges, since it is the major transaction medium in one country. But without exchanges, bitcoin will have very limited reach. In people's imagination, there is a free market, but in reality all the markets are operated by authorities, even the largest forex interbank market is controlled by the central banks. Similarly, today's bitcoin price is controlled by a group of whale traders and possibly some banks on exchanges

If bitcoin want to survive without exchanges, there has to be an enough large group of merchants accept bitcoin payment and use bitcoin pricing without a reference exchange rate to fiat money, their pricing might derive from the mining cost of each bitcoin

A rational consumer will always first spend depreciating fiat money while saving the appreciating bitcoin

So you can observe that many people using their easy-to-get fiat money to purchase bitcoin and hold them as long term value storage. Of course not everyone has investment talent, for casual spenders, if they receive bitcoin, they are only interested in how to exchange into domestic fiat currency, similar to when they receiving some foreign currency. But the psychology behind that behavior is interesting, indicating that they have more trust in domestic fiat currency, maybe because they were used to it since they were born

It is also interesting to study the behavior of those European people cross the transition period, e.g. changing from their domestic currency to Euro. Would they still use their domestic currency or those domestic currencies totally crashed to no value? I guess in this regards people are blindly listen to what banks tell them, since without bank they can not do any large transaction

A latest example is Swedish central bank's new cash notes:
http://www.riksbank.se/sv/Sedlar--mynt/Sedlar/

Under the old note, it states: Valid until 30 June 2016. What is the meaning of this?  How come a money will suddenly lose its value after a certain date? Now you can see people are not really trusting their domestic currency, they are just blindly follow the directive of their central bank

And this demonstrated a weakness of bitcoin: There is no powerful organization like a central bank behind it, but all voluntarily bitcoin accepting merchants

Almost everyone with a little bit skill, after hearing about bitcoin's success, would start to drive his own altcoin/blockchain in 6 months, and he will realize his mistake in another 6 months and return to bitcoin

We are in a phase of large scale altcoin/blockchain experiment period which might last for another year or two, and they will fail due to they don't understand the soul of bitcoin: Decentralization and consensus based community

If you try to run a centralized system, you simply don't need blockchain, it will just be another layer of wasted resource which adds lots of complexity. If you want to run a decentralized system, then bitcoin is already light years ahead

This is the chicken and egg problem: If no one accept it, then you can't spend it. If no one spend it, no one will accept it. You can have a foreign currency accepted by merchants domestically in airport and communication hubs where there are lots of Forex exchange desks, but not anywhere else since the domestic fiat money already get first mover advantage - people seldom need more than one type of currency in their daily life

The opposite question is more interesting: Why would consumers use fiat money?

1. Because they receive fiat money as income, they spend it as a natural result
  This is also the main reason that consumer do not use bitcoin: Not enough people receive them as income. And since you can not create bitcoin endlessly like fiat money, it will be impossible to make bitcoin a lot of people's income

2. Because fiat money is widely accepted domestically
  Fiat money has first mover advantage. At this stage, it is very difficult to persuade billions of people to switch to another currency that is very high-tech with steep learning curve. Similarly, most of the merchants do not accept payments in foreign currency, because those currencies are difficult to spend domestically, and always involve some risk if you convert them to domestic currency

In fact, it is interesting to observe that people refuse to accept Euro/USD payment in Japan, even they know that those foreign currencies are much more stable than Japanese Yen. People only trust their domestic fiat currency for some strange reason. I don't think they are forced by government violence, they just unconsciously made the choice due to fear of financial loss from a foreign currency

So consumer would not use bitcoin most of the time, they will just treat it like a foreign currency. However, when they are traveling abroad or do international trading, then bitcoin is very similar to any foreign currency, and even better, you might not need conversion at all if it can be accepted anywhere in the world (That's the long term vision of bitcoiners)

Charge your bitcoin account so that you can spend it anywhere in the world without currency conversion, this would attract some consumers that do lots of international travel (Spend fiat at home and spend bitcoin when going abroad)