* So, instead of paying taxes, we pay protection money?

* Why do you assume these armies would uphold the "non aggression protocol"?

* "In a true free society..." Again, I refer to afghanistan - you had tons of private armies, and the Taliban came through, swept up public support and decimated most of those private armies.

* "the courts will follow the laws.... will likely ask people to vote..." Again, not reality based. This world is usually one where "he who has the guns makes the laws"; In a scenario that you're creating, I'd assume the armed protectorate would make the laws, not let the people vote for such things.

* "no one will pay of the services of a private army that works with a court making laws nobody wants" - again, ignoring the fact that the private army has the guns and therefore can extract their pay from you whether you like it or not. In fact, this whole scenario you're creating seems to mirror, exactly, the scenario you claim to deplore so much.

* "laws must be compatible with the non aggression protocol that the private armies are upholding."  - what insures that these private armies are enforcing a non-aggression protocol? leap of faith?

No thank you. Any of that.

I'd suggest to Mr. Paulson that he refer to countries where such experiments are underway. Sudan. Afghanistan, perfect example, had MANY private armies.

I'm sorry. Things that look good on paper rarely work in reality. Saying that the private armies won't attack one another because it'd be a waste, akin to a 51% attack, is nonsense.

Complaining about government waste, when we can vote those guys out, and instead hoping for a collection of private armies to pop up and offer "protection" seems like it'll create the same end result (paying taxes, tribute, protection), just under a different name. And with warlords, the peasants and serfs can't vote them out.

That argument doesn't work; even with the switch to ASICs, either intel or Amd could corner the mining market in a heartbeat if they so desired; no, they wouldn't be able to do so using off the shelf parts, but designing a processor to the the sha hashing is well within either companies abilities, and producig  said chips.... Either could produce enough capacity to dominate the mining market without batting an eye.  

@BADecker: It's why i posted a link to the original story, rather than attempting to reformat it using simple machines forums' syntax. If i do so in the future, rather than copy/paste to give people a way to access it without leaving this site, would it be better to simply create an .html as you did and post that? I mean, is that the preferable way of doing things?

Lots of "scarce" items don't hold their value.

Baseball cards were once routed (in the 1980's to early 90's) as great investments, alternatives to stocks, and, more familiarly, as "inflation hedges". Same for comic books.

Gold itself hit highs in the early 80's that took decades to reclaim.

And a LOT of people are now underwater with their bitcoin investment, having bought in at prices well exceeding where they're at today.

So, I'd be especially weary of assuming that ANYTHING can hold its value.


Those were the famous last words of the dotcom boom. People running around saying that the fundamentals that had been used to measure the worths of businesses didn't apply to the new era brought about by the dotcom age. Not long after that, the boom was over, and so many of those highly touted companies with such poor fundamentals that their investors were driven to believe that line went on to vaporize. So, no, economics matter to bitcoin. There might need to be a slight change in paradigm, considering it is an asset of strictly limited supply and speed of creation while the fiats don't have those characteristics, but to say hundreds of years of economic research don't matter to bitcoin, that strikes me as short sighted....

It's one thing to assume exponential growth when an asset is worth .10 and $1. Much harder, and I'd say, less realistic to think that earlier growth rates would still apply at a value of $1,000 or $10,000...

Link to formatted story (RECOMMENDED):
http://www.dioxidized.com/2014/10/08/pantera-capital-says-a-single-bitcoin-could-be-worth-4-2-million-hold-your-horses-i-say/


Copy/Paste (not sure what the result will be, plus its over 2000 words!):

<img class="alignleft size-full wp-image-629" src="http://www.dioxidized.com/wp-content/uploads/2014/09/bitcoin-75px_featured.png" alt="bitcoin-75px_featured" width="75" height="75" />The other day, a firm by the name of <a href="https://panteracapital.com/">Pantera Capital</a> released their rather bullish assessment of bitcoin's potential titled <a href="https://cdn.panteracapital.com/wp-content/uploads/Bitcoin-vs-Gold.pdf">"Gold Versus Bitcoin As A Store Of Value"</a>, which estimated that the future value of a single bitcoin could exceed $4 million ($4,291,060 if you want to be precise), which was released to an <a href="http://www.reddit.com/r/Bitcoin/comments/2imk7q/pantera_capital_what_could_bitcoin_be_worth/">extremely receptive audience on Reddit</a>.

I feel it's important to note that while it took me some time to come around to bitcoin (a friend first mentioned it to me in the 2010 or 2011 time-frame, to which I essentially just rolled my eyes and said "that's nice"), I have since seen some of the light and do think/will agree that bitcoin does indeed have a future. With that said, no matter how many mental leaps I make, I can't come close to agreeing with Pantera's assessment of the value of the technology.

<!--more-->

<a id="Atlantic" name="Atlantic"></a>Strangely, on the first page of the report, by quoting an article titled <a href="http://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/">"Why the Gold Standard Is the World's Worst Economic Idea"</a>, by <a href="https://twitter.com/ObsoleteDogma">Matthew O'Brien</a> from the <a href="http://www.theatlantic.com">Atlantic</a>, Pantera makes a rather strong argument FOR fiat currencies. That quote can be summarized as follows:
<p style="padding-left: 60px;"><em>Exactly zero economists endorsed [returning to the gold standard] in a recent poll ... It <strong>prevents the central bank from fighting recessions</strong> by outsourcing monetary policy decisions to how much gold we have ... When we peg the dollar to gold we have to raise interest rates when gold is scarce, regardless of the state of the economy. <strong>This policy inflexibility was the major cause of the Great Depression</strong>, as governments were forced to tighten policy at the worst possible moment. <strong>It's no coincidence that the sooner a country abandoned the gold standard, the sooner it began recovering</strong>.”</em></p>
Pantera continues, explaining in their own words that <em>"inflation (and deflation) was much worse under the gold standard than it has been since"</em>, and that a return to such would not lead to any form of price stability.

So far, in their argument for bitcoin, Pantera has explained that the root cause of <a href="http://www.history.com/topics/great-depression">Great Depression</a> was due to the <a href="http://www.frbsf.org/economic-research/publications/economic-letter/1999/march/monetary-policy-and-the-great-crash-of-1929-a-bursting-bubble-or-collapsing-fundamentals/">monetary inflexibility</a> (of course, <a href="http://www.freedomworks.org/content/debunking-myths-great-depression">others disagree with that assessment</a>) that was imposed on countries who operated under the gold standard, that the sooner a nation abandoned the gold standard in favor of fiat currency, the sooner they recovered from the Depression, and that both inflation and depression have been far more pronounced when monetary policy is dictated by the supply of a scarce resource. While factual, I'd expect a pro-bitcoin article to gloss over such details, not emphasize them.

[caption id="attachment_794" align="aligncenter" width="500"]<a href="https://bitcointalk.org/annoyance.php"><img class="size-full wp-image-794" src="http://www.dioxidized.com/wp-content/uploads/2014/10/bitcoins.jpg" alt="Physical bitcoins by Casascius, because every article about bitcoin needs a picture of them." width="500" height="285" /></a> <a href="https://bitcointalk.org/annoyance.php">Physical bitcoins by Casascius</a>, because every article about bitcoin needs a picture of them.[/caption]

<strong>But all that is just an aside, let me continue...</strong>

Citing the <a href="http://www.gold.org">World Gold Council</a>, Pantera shows that from 2010 through 2013, world-wide demand for gold amounted to 17,500 metric tons, of which 8,400 tons were used for jewelry, 5,900 tons were purchased for investment purposes, 1,600 tons in industry, 170 tons for dentistry and 1,500 tons were purchased by central banks (if you're using a calculator, I'll admit that the numbers won't total correctly, as I did some rounding).

<strong>Jewelry is not an investment in gold...</strong>

Pantera assumes gold jewelry to be an investment and argues that by moving their wealth from gold jewelry to bitcoin, and Indian family's (without access to banks, but presumably with access to the internet) wealth would be much safer.

[caption id="attachment_795" align="aligncenter" width="512"]<a href="http://www.fashionstrend.co.uk/gold-jewelry-sets-collection-for-indian-brides-2013/indian-jewellery-bridal-jewellery-collection-2013-1/"><img class="size-medium wp-image-795" src="http://www.dioxidized.com/wp-content/uploads/2014/10/india_jewelry-512x561.jpg" alt="Gold jewelry shouldn't be viewed as an &quot;investment&quot; in gold, but rather, as &quot;bling&quot;.  Image Source: FashionsTrend.co.uk" width="512" height="561" /></a> Gold jewelry shouldn't be viewed as an "investment" in gold, but rather, as "bling".Image Source: <a href="http://www.fashionstrend.co.uk/gold-jewelry-sets-collection-for-indian-brides-2013/indian-jewellery-bridal-jewellery-collection-2013-1/">FashionsTrend.co.uk</a>

[/caption]

Lets first point out that jewelry is one of the worst possible ways to "invest" in gold. Even <a href="http://webcache.googleusercontent.com/search?q=cache:qOPhm1H4-f8J:https://www.thegoldbug.com/index.php?option=com_content&amp;view=article&amp;id=105&amp;Itemid=115">thegoldbug.com</a>, (the link goes to a cached version of the site on Google's servers, as the "real" site has been defaced by hackers), lists investing in gold in the form of jewelry as one of the top 10 mistakes, saying:
<p style="padding-left: 60px;">"<strong>Remember that Gold Jewelry is not an Investment</strong> — As with nuggets, jewelry is an unreliable source of gold. Not only is the<em> purity of the metal once again a concern,</em> but there is also <em>the added artisan's premium present in all jewelry</em>. The cost applied by the craftsman who made the piece will <em>always inflate the price well past the value of the metal alone</em>. Therefore, while jewelry may have value in its own right, it has <em>no place in the hands of an investor</em> who is looking to own gold as an asset. (<em>Emphasis' </em>are my own)</p>
Essentially, gold jewelry is a means of displaying that one has wealth, but to use the jewelry a method to store that wealth itself is a terrible idea. Whether the national currency of India is Rupees or bitcoin, Indians who want to display that they hold significant wealth will contiune to buy gold jewelry. Gold is "blng", and bitcoin, existing only in the form of electrons, has no "bling" factor. Arguing otherwise is essentially trying to argue that as a result of an ec51%onomy moving to bitcoin, that demand for <a href="http://www.mbusa.com/mercedes/index">Mercedes</a>' or <a href="http://www.rolex.com">Rolex</a> watches will dry up. Right there, 48% of the gold demand which Pantera presumes that bitcoin could replace evaporates.

<strong>Bitcoins' "advantages" over gold. Are they really "advantages"?</strong>

Further along, when Pantera tries to explain the traits that bitcoin has but gold lacks, explaining that for gold miners to deliever the same service as bitcoin miners, they would have to provide armed guards, concealed tranaction values and a constantly updated ledger of transactions. None of these arguments make sense:
<ul>
   <li>armed guards (why? miners don't guarantee the security of the wallet file on your computer),</li>
   <li>concealed transaction values (inexplicable; if I hand a gold coin to you, is that transaction not concealed from the rest of the world?), and</li>
   <li>a constantly updated ledger (for what? an up to date ledger is essential for a digital currency, yes, but for a physical currency, a ledger is of no added value - why do i need a transaction recorded in a ledger when I have my gold in hand?)</li>
</ul>
Furthermore, in explaining bitcoins' advantages over gold, they state that bitcoin is superior to gold due to the difficulty of theft. Dig through enought bitcoin-related discussions on <a href="http://www.reddit.com/r/Bitcoin/">Reddit's bitcoin-related threads</a> and <a href="https://bitcointalk.org">bitcointalk's forums</a> and you'll see that whether its because of a keylogger on one's computer, an exchange not using <a href="http://en.wikipedia.org/wiki/Multi-factor_authentication">2-Factor Authentication</a>, a user choosing an insecure method of generating a wallet (say, <a href="http://www.reddit.com/r/Bitcoin/comments/1ptuf3/brain_wallet_disaster/">brainwallet</a>, for example), or an <a href="https://www.mtgox.com/">exchange</a> declaring that all of their customers holdings are gone due to a "bug" in the bitcoin protocol, bitcoins can be stolen just as any other asset can be.

<strong>Would nations really rely on the blockchain to store their wealth?</strong>

They also describe the network of bitcoin miners as being a robust form of security. While presently true that achieving enough computing power to conduct a 51% attack is beyond most people means, if a nation adopted bitcoin as their currency, I could easily envision a scenario where a rival, or a group of rivals, could be motivated to discretely and covertly develop and deploy their own network of ASIC miners in order to conduct <a href="http://econwarfare.org">economic warfare</a> against that  state. And unlike the "limited" means that most of us have that places a 51% attack out of reach, once nation-states are in the game, there is no telling how many of their resources they would devote to such an effort. Just because such an event has not yet happened <a href="http://www.johnperkins.org">does not mean that it won't</a>, ESPECIALLY if bitcoin became the official currency of a country.

[caption id="attachment_796" align="aligncenter" width="336"]<a href="http://www.amazon.com/gp/product/0452287081/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=390957&amp;creativeASIN=0452287081&amp;linkCode=as2&amp;tag=dioxidizedcom-20&amp;linkId=2VLRWLSNPRSMT4N3"><img class="size-full wp-image-796" src="http://www.dioxidized.com/wp-content/uploads/2014/10/confessionshitman.jpg" alt="Economic Warfare a real occurrence, and a nation relying on bitcoin as its national currency would be especially vulnerable." width="336" height="506" /></a> Economic Warfare a real occurrence, and a nation relying on bitcoin as its national currency would be especially vulnerable.[/caption]

<strong>Supply Limits</strong>

Another "advantage" they cite is bitcoin's strictly limited supply, compared to the continued mining of gold. I struggle to see the relevance - 165,000 metric tons of gold <a href="http://www.numbersleuth.org/worlds-gold/">has already been mined</a>, and the <a href="http://www.usgs.gov">US Geological Survey</a> that Pantera cites says that there are an esimated 52,000 metric tons of gold still remaining underground. Meanwhile, bitcoin mining continues along, creating 3600 new coins per day, and though reward halvings will continue to occur roughly every four years, the full supply of bitcoin won't have been mined until the year 2140.

Aside from that, recall earlier in their report when Pantera pointed out how the flexibility of fiat currencies was "superior" to the inflexibility imposed by using an asset of limited supply as a means of conducting trade. Now, it is a supposed advantage? They need to take one side of the argument or the other, not both.

<strong>So where does that leave us?</strong>

For starters, bitcoin is incapable of replacing gold in dentistry and industrial applications, two sources that contibute $66,114 to the $4.2 million final estimated value that bitcoin could achieve. Neither would bitcoin replace jewelry, as jewelry is means of displaying value, not storing it. There goes another $286,496 of their estimate. While it could and likely will be used as a means of investment, indeed, it already is, it's foolish to think that the bitcoin would replace 100% of the gold presently held either in investment portfolios or in safes. Yes, it is another instrument that people can use to invest their wealth in, but it won't erase nearly 10,000 years of human history and cause demand for holding gold as an investment to zero. Another $88,153 off of the value

<strong>And the biggest item on their list, world M2 (money supply)</strong>

First off, to bear down on the same point yet again, circle back to Pantera's original <a href="#Atlantic">quote from the Atlantic</a> regarding the effects of a nation sticking with the gold standard versus fiat currencies, as a bitcoin denominated economy would operate in a manner far closer to one operating under the gold standard than one with fiat currency.

Secondly, from what I just pointed out above, I have difficulty imaging any nation wanting to switch to bitcoin as their nominal currency, knowing that another nation could concievably overtake and subvert the entire network. The two biggest threats in that scenario would be the United States and China, both of whom have a deep supply of people with the necessary skillsets to design the needed hardware and the domestic production capacity to create the needed hardware without drawing any outside attention until it is too late.

<strong>And where does that leave bitcoin?</strong>

Despite my arguments above, I believe that bitcoin is still an asset that could possess significant value; as a peer-to-peer currency, it allows individuals to send money to one another quicker than sending checks through the mail and more inexpensively that wire transfers or worse, money transfer services.

It can certainly be adopted by companies as a means of receiving payments to cut down on credit card processing fees. The challenge there is convincing the customer to opt to pay using bitcoin and abandon the incentives offered by credit card companies to "charge" their purchases. Bitcoin doesn't have reward points, for instance, and more critically, consumers lose the ability to charge back a purchase if necessary (for instance, if a company refuses to adhere to its refund policy), or, to take an example from the bitcoin community - if <a style="text-decoration: line-through;" href="http://www.butterflylabs.com">Butterfl</a>... I mean, a company,  takes orders for a product and doesn't ship those orders until a year had passed.

The lack of ability to reverse a bitcoin transaction is frequently cited as reason why biusinesses should adopt bitcoin, but there are also plenty of legitimate reasons why consumers prefer to have that ability besides try to defraud merchants.

One place where the lack of chargebacks shouldn't be a concern to consumers are for products/services that can't really be returned anyways. Dining. Haircuts. Digital purchases such as software or musc (an area where <a href="https://www.paypal.com">Paypal's</a> subsidiary <a href="https://www.braintreepayments.com/blog/goodbye-passwords-one-touch-hello-bitcoin">Braintree</a> has already entered the market).

But for goods, especially from vendors whose ability or willingness to deliver those goods in a <a href="http://www.reddit.com/r/BitcoinMining/comments/1w2hdk/horrors_of_butterfly_labs/">timely manner might be in question</a>, most consumers will likely want a payment method that allows them to dispute the charge and recoup their money if the vendor doesn't honor their obligations.

<strong>That brings us to the next place where bitcoin can really shine - the remittance marketplace. </strong>

I fully expect bitcoin to either overtake or be adopted by <a href="http://www.dioxidized.com/2014/09/18/remittance-a-place-where-bitcoin-can-shine-today/">the remittance market</a>. For it to trully dominate, though, my personal thought is that bitcoins involvement in remittanes will need to be made transparent to the end-users; a remitter would simply walk into a store and hand their money to the cashier and provide instuctions as to where to send the funds. The transfer company would then buy bitcoins and send those coins to the branch were the receiver will be picking up their funds, who would then immediately sell those coins and deliver the proceeds in the recipients currency of choice.

[caption id="attachment_793" align="alignleft" width="500"]<img class="wp-image-793 size-full" src="http://www.dioxidized.com/wp-content/uploads/2014/10/fannie-mae_stock.png" alt="fannie-mae_stock" width="500" height="434" /> The dangers of putting all your eggs in one basket, whether that basket is bitcoins, litecoins, or the shares of any single company is irrelevant.[/caption]

Lastly, bitcoin can absolutely serve as a means to store wealth, but in my view, only it's only appropriate to use it as "store of value" as part of a diviersified investment portfolio. Asset prices flucuate - storing all of ones wealth in bitcoin should be just as frowned upon as storing all of ones wealth in shares of a single company, say, Fannie Mae, for example.

To conclude, while I think that bitcoin certainly has value in the future, I think that the maximum value of a single bitcoin well below the $4,291,060 estimate published by Pantera, and disagree with many of the reasons that Pantera cites that bitcoin could or should replace gold rather than being viewed as an asset to own in addition to gold (and real estate, and equities, and bonds, etc).

Long post, so I'll do the TL/DR first:


TL/DR: 1) Fractional reserve banking isn't evil; 2) there is most certainly a role for banks in the future bitcoin economy; 2b) right now, those functions can be done in a P2P environment, but if the bitcoin grows exponentially, the economies of scale will give banks/centralized lending pools huge advantages over the p2p lending marketplace; 3) should all of those happen, then a bitcoin Central Bank should be a welcome addition to the bitcoin economy. All of this depends on what you view the functions of banks and central banks are though, you'll have to read the rest of this to see how i describe it though.

----
Now for the lengthy post
---


PART ONE:

P2P direct lending and such works in the bitcoin community right now because it is so small. Should bitcoin denominated economy really take off to the extent that it's marketshare against the big boy currencies (USD, EUR, etc) is sizable, peer to peer won't work so well anymore. Someone wants a loan and submits their request to this forum, for instance, which could trigger 1,000 potential lenders each having to perform their own due diligence. Just doesn't work.

So, if at some point in the future, people decide they're ok putting some of their wealth "at risk" (though ideally, the "at risk" shouldn't be any more risky than a dollar deposit in a bank), they could transfer funds to a company who's business is specifically lending funds at interest, performing due diligence before making such loans, etc.  People could even specify their liquidity requirements with that company - some funds they want to be able to transfer to their own wallet on demand; since those funds can be requested at any time, the company would be very constrained about what they could do with those funds; other customers might be comfortable taking, say, 5% of their funds and loaning it out for longer; they can earn a greater return, but would be constrained with their liquidity slightly. Maybe they can't access their funds at all for the time period, or maybe they can redeem their funds, they just need to pay a penalty of sorts for making the company find someone else to take out their position or, if no one can be found, using their own capital to cover the position of the exiting lender.

Sound like a reasonable business model?

Guess what? That's a bank, offering savings and money market accounts in the first instance and CD's in the second instance.

PART TWO:

People around here act as if the fractional reserve system is a crime, I just don't get it. Yes, it's true, if 100% of a banks depositors showed up at the door demanding to withdraw their funds in full on the same exact day, no modern bank would be able to accommodate that request. The fact is, though, that these events just don't happen anymore. And even if they did, such an event wouldn't necessarily mean the immediate insolvency of a bank - in their customer agreements the small print generally states that they can limit withdrawals in some instances - one instance would be depositors demanding all of their funds at once - so long as capital markets are functioning normally (like, we're not in a 2007/2008/2009 scenario), the bank might just need a couple of days to sell off assets that those deposits were invested in - loans, mortgages, credit card balances, those are all marketable securities. So, as long as every bank isn't trying to sell the same exact asset at the same exact time, a modern bank should be able to accommodate full customer withdrawals in a surprisingly short amount of time, without needing to declare insolvency.

Take JP Morgan for instance.

Balance sheet shows $1.287 trillion in "Other Current Liabilities"; those are customer deposits.

They also show $405 billion in long term debt; those are likely bonds and certificates of deposit - things that customers are either dissuaded from redeeming immediately (via a Certificate of Deposits' early withdrawal penalty), or simply CAN'T demand redemption on demand (in the case of corporate bonds).
 
To offset those two sets of liabilities, they have $604 billion in cash and equivalents, so they could accommodate almost 50% of their customer withdrawals from can on hand. I might take a day or two to shift the funds to the appropriate branches, though.

An on top of that, they have $1.5 trillion in long-term investments; these can be letters of credit, credit lines, mortgages, and the like; all of those are marketable securities which can be sold to other banks, to institutional investors (pensions, hedge funds), etc.

What am I saying?

Fractional reserve is not a crime or a fraud. If the business of banks was to hold customers cash and to keep it as cash, then what would be the point of banks? No, their business model has always been to take customer deposits and lend those monies to others of the banks customers. That's a completely valid business model, not fraudulent, not criminal or any of the other terms that get thrown about when they get whipped into a foaming at the mouth type frenzy.

Banks have found they can do business while only having a small fraction of their customers deposits on hand as actual cash, because even when many customers are requesting to withdraw funds, others are depositing new monies which offset those flows. No different than Coinbase determining that they can satisfy the day to day business demands of their customer while keeping 97% of their customer funds in cold storage.


PART THREE: Role of the Central Bank.

One of the most important things that the Central Bank does is establish reserve requirements that banks must abide by; they can do this because they have tremendous insight into the economy - insight that almost no one else has. They have this by being able to discuss, in complete confidentiality, current business environments of hundreds if not thousands of companies across a variety of industries. Information that wouldn't be disclosed to shareholders until it's time to make quarterly filings is disclosed to the Fed freely, so that it can have it's thumb on the pulse of the economy at all times. When they see that the economy is expanding, they lower reserve requirements, letting banks make more loans into the market and have less cash on hand, and when they see the economy is stagnant or contracting they raise reserve requirements, making banks remove loans from the market (that could be calling in debt, closing credit card accounts, lowering lines of credit, etc), in order to have greater amounts of cash on hand.

Sometimes they mess up. 2008 is a perfect example. But even in the face of that, it doesn't invalidate their role in the economy.

Circling back to the first point; fractional reserve banking is not an evil invention, despite all the hype to the contrary; and more importantly, as the bitcoin denominated economy grows, such services will not only spring up, but will likely be in demand; they will be able to provide services that just aren't viable in a peer-to-peer manner; why should hundreds of lenders do the same amount of due diligence on a potential borrower, when they could transfer funds that they're willing to lend to a separate company, where each of those other hundreds of potential lenders have also transferred funds, and rely on that one company to do the due diligence on their loans for them? The second scenario is far more efficient, and that, my fiends, is a bank.

And should these bitcoin denominated banks have a central bank?

To me, the answer would be "ideally", but only if that central bank was able to get equivalent or near-equivalent visibly into the economy as the true Central Banks do. There's no point in having an organization making rules the bitcoin denominated banks to abide by, if they aren't in a position of having more insight than each of those banks do. So initially, there's not really going to be a place for a bitcoin central bank in bitcoins earliest days. Until the bitcoin economy gets big enough, and more importantly, creditable enough that, upon formation of a "central bank" or its equivalent, which can actually glean more information about the economy than the bankers themselves, there's no point in having an outside organization make rules for those banks. But once bitcoin gets big enough that large companies are comfortable being candid with bitcoins' Central Bankers, those Central Bankers will be in a position, knowing more about the economy than the banks themselves, to be able to hand down general decrees to the bitcoin banks that had opted to operate under their umbrella.

That's about it. Sorry about the ramble.

No, it would need to handle cash as we'll. I can't think of any user that can pay all of their bills in bitcoin. So in the ideal situation, one would set up an account, designate a percentage of their pay to be converted to bitcoins, while the rest remains as cash in their account, accessible via ATM or check.   

If you're not willing to go all the way and offer fiat banking services as well as bitcoin services, then there's really no advantage to this credit union idea compared to just getting paid as normal and having coo base make regular purchases from you linked bank account. If anything the later would be easier, since, again, people, do need a certain amount of fiat to survive. Having all their pay converted to bitcoi would just result in them needing to convert back to fiat immediately in order to pay their bills.

So do you want to go all the way? Set up a credo union that handles/accepts cash, check, ATM cards and bitcoin? Because otherwise there's just not a purpose IMO.

Hardly a killer app.

A killer app is one which makes people WANT, no, NEED to buy bitcoin. Circles makes it easier, supposing they can stay in business, accepting credit cards for bitcoin and all. So, if/when a true killer app arrives, circle will make it easier for people to get in on it. But on its own, circle is just another exchange.

I mined primecoin at launch, made quite a few of them... sold them off for a combination of LTC and BTC, though.

How does its profitability stockup against Monero's these days? Think I'm going to point a few comps at a monero pool when I get home unless i hear a compelling reason to try another instead...

Hi. I'm interested if you have any slots available still. My info is as follows:

Username: lucasjkr
Bitcoin address: 1itAPpJoDJHpxL1Qi2EfVFAhFcTgn8uJm
Starting posts: 322
Forum Rank at time of entry: Sr Member

Hi,

I've taken up  bloggin on a variety of topics, an have seen that the posts that generate the most organic traffic by far and away the bitcoin-related ones. I don't really have much desire to spend money marketing my blog, especially since its hardly specialized (instead, I basically write about whatever is on my mind at the moment). So it got me to wondering if there are any publishers of bitcoin-related blogs that wanted a source of additional content. I should warn that while I am a supporter of bitcoin, my posts are hardly of the cheerleader type, rather I take a more pragmatic/contrarian approach to the subject.

For a full listing of my bitcoin related posts, please check out:
http://www.dioxidized.com/tag/bitcoin-2/

As for a selection of specific stories, here are a couple:


questioning the approach and feasibility of Circle's recently unveiled services:
http://www.dioxidized.com/2014/09/30/will-the-circle-be-unbroken/

The effect that ASIC's have had on the bitcoin ecosystem as a whole and the mining industry in specific:
http://www.dioxidized.com/2014/09/28/asics-public-enemy-1-to-the-bitcoin-ecosystem/

Counterpoint to an article claiming that Facebook should buy bitcoins:
http://www.dioxidized.com/2014/09/22/counterpoint-to-bitcoin-buyout-why-facebook-should-buy-bitcoins/

Bitcoin and the remittance market
http://www.dioxidized.com/2014/09/18/remittance-a-place-where-bitcoin-can-shine-today/

So, if publishers are seeking additional bitcoin related content for their websites, I'd love to dicusss any potential possibilities. I would definitely want a by-line and perhaps a link back to my own site in my bio, and would be open to a variety of terms for compensation, either by the article or by the page view.

If any of this is of interest to anyone reading this, please let me know, either by direct message, replying to this thread, or emailing me at webmaster <at> dioxidized @dot@ com

Thanks.

What is the best CPU-mineable altcoin to mine Today, after factoring things like difficulty, exchange rates, etc. Keeping in mind, I have zero interest in the altcoin itself, just investigating using a few idle CPUs at my disposal to generate alts to trade for BTC.

While I'd prefer a coin with an open source, Linux client, I can be open to any other choices that may avail themselves.

So please, suggest away!

I lean towards thinking that they've been a hugely detrimental development for the community, but I'd appreciate input, maybe some corrections where I'm wrong, especially being that my opinion is contrary to most of the opinions I see here z(spoiler: I think ASICs have done more harm than good.

I wrote an essay on the topic, but since it weighed in Around 1,700 words, I'm just posting a link rather than the whole essay.

http://www.dioxidized.com/2014/09/28/asics-public-enemy-1-to-the-bitcoin-ecosystem/

Again, feedback would be much appreciates on either on either venue, but tbh, I'd tather receive any feedback over here.

Thanks all!

That means that you've been successful with it, not that its been a success unto itself. There's a distinction. Lots of us have made lots of money via bitcoin, but that doesn't necessarily mean that bicoin itself is becoming successful.

In theory, yes. In reality, no.

While people can and have lost their private keys, there is no way for the rest of us to truly verify that. We can look at the block chain and look for coins that haven't moved in some time, but is that because the coins are lost, or are they in cold storage, or just in someone's wallet who hasn't had the need to move them? Without true verification that the private keys are lost, you can't just use someone else's word as basis for assuming the rest of the coins are worth more. 

I think some time ago, BTC-e was assumed of being bribed to list a coin on its exchange. When news came out, BTC-e opted to destroy those coins in order to assure the community that they weren't being bribed - they destroyed those coins by sending them to an address which couldn't possibly have a private key.

Coins destroyed in that fashion can safely subtracted foe the total current and maximum numbers of coins in circulation, but that should be the only reason for doing so.

Simple. A website owner who uses solely PayPal for payment processing can now accept bank debits, MasterCard, visa, Amex and bitcoin with not a single line of code changed on their site. All of a sudden millions of new sites could theoretically begin accepting bitcoin without even thinking about it*


* except right now! my understanding is that PayPal will only let people pay in bitcoins for digital goods and services. But should that go off without a hitch, they'll likely broaden the range of items that BTC can be used for.


Ultimately, though, the big news about it isn't so much paypal itself, it's that the millions of vendors who rely on them can or will eventually accept BTC

Taking a glimpse at that thread, but failed to see the mechanism for comvertin coins to gold, aside from the developer saying it was so. Can you direct us to more details on that?

Articles on seeking alpha aren't written by "seeking alpha" the company, but from "contributors", aka readers (I was one for a bit), who get paid by the page view. Seekingalpha doesn't have an opinion one way or the other except that more visitors = more money for them.

So at the end of the day, everyone from here who visits to read the story is just enriching the author, simple as that.