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1361  Economy / Trading Discussion / Re: Dwolla's Response to TradeHill | Lies and Defamation? on: March 07, 2012, 04:45:14 AM
why was mt gox seemingly unaffected by this?
1362  Economy / Trading Discussion / Re: Dwolla's Response to TradeHill | Nothing but Lies and Defamation on: March 07, 2012, 04:05:58 AM
this fiasco is a damn shame. it sure seems like dwolla is pulling something seriously shady, but what exactly? how could there possibly have been $100,000 in chargebacks all around the same time? are they just trying to straight up steal TH's deposits?
1363  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 02, 2012, 10:01:48 PM
It is a theoretical possibility that the bank could make it impossible to pay off the loan by taking all the repaid coins out of circulation, but is that really any different from the much more common case where you are forced to default because you misjudged your operating costs or the effective demand for your product?

A "theoretical possibility"? Is this not the root of recession? Regardless of what starts a panic, banks bear down and get stingy. This makes defaulting so much more likely, which means the banks take possession of all your stuff. They win either way. Then things can snowball unless someone (JP Morgan/central bank) intervenes. Interest+fractional reserve+debt-based money is a really nasty combination. And with the recent housing crisis, the world has basically said go ahead and keep doing this, we will make sure the middle and poor pay for it. I don't think I could even imagine how different the world would be today if governments simply paid employees and contractors in debt-free money. Would there even be such a thing as the business cycle? Would recession ever be a word used in regards to economics?
1364  Other / Beginners & Help / Re: Mixed/Merged Mining on: March 02, 2012, 09:30:27 PM
Litecoin uses a different algorithm for mining blocks, so they are not compatible. However, Litecoin's algorithm is designed to be CPU-restrictive (i.e. doesn't work well on GPUs), so it is possible to run both at the same time. There is a debate about whether Litecoin is all that GPU-unfriendly though, check the alternate currencies forum.

The only cryptocurrencies of any real note are bitcoin, litecoin, namecoin, and solidcoin. Others have crashed and burned, coiledcoin did so spectacularly by including merged mining, so you may not see this feature in future currencies.
1365  Bitcoin / Bitcoin Discussion / Re: Bitcoinica lost 43,554 BTC from Linode compromise, suspicious TXIDs publicized on: March 02, 2012, 02:49:13 PM
He said it's not a problem as the companies historical profits are high enough to cover it.  Zhou is a smart guy, smarter than leaving all his profit in bitcoins on a internet-accessible server.  If anything, it's a testament to Bitcoinica's success.  (This is assuming that Zhou does in fact stick to his word)

If he has made enough to cover it, it would certainly seem to be in his best interest to stick to his word.
1366  Bitcoin / Bitcoin Discussion / Re: Linode compromised and it's effect on TradeHill on: March 02, 2012, 01:14:31 PM
Good work, TradeHill. In the interest of protecting from future events like this, would you disclose what you did that made your accounts immune to this attack?
1367  Bitcoin / Bitcoin Discussion / Re: Bitcoinica lost 43,554 BTC from Linode compromise, suspicious TXIDs publicized on: March 02, 2012, 05:02:05 AM


3k was one thing, but 44k? damn
1368  Bitcoin / Development & Technical Discussion / Re: Elliptic Curve Calculator UI (now part of Armory) on: March 02, 2012, 03:58:00 AM
Isn't it possible to compute the public key from a signature? I don't know if this is useful client-side but who knows.
1369  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 02, 2012, 03:25:15 AM
My mistake. I assumed the points would not be transferable because having an exchange rate between savings points and regular current goes even further toward undermining their argument that the loans are interest-free. How are you not being paid interest if you receive "savings points" for your deposit which you can turn around and sell for ordinary currency? That there is an extra step involved seems like a very minor technicality.

But the technicality is that a) both you and the buyer benefit in that you earned money you otherwise would have not, and they will have to pay significantly less or they could just deposit that amount and get the loan from a JAK bank anyway (if you don't have many points you can use a bigger down payment and this is calculated into how many points you would make as if you saved that over the life of the loan) and b) it isn't a bank getting the money.

There is no rule that says you must go to a bank to get a loan. Credit unions are an example of a deposit and lending institution where the profits go back to the community (or at least the members).

This is true, and I use a CU for my banking needs. I just really hate traditional banks. Smiley

It was the principal which was being put back into circulation, but no matter. Sure, there's nothing forcing banks to put currency they hold back into circulation, but there's also no point in keeping it unless they plan to use it eventually. So long as there remains some currency in circulation, it is possible to pay off the loan, even if total loans exceed total circulating currency.

But with collateral loans and fractional reserve, the interest is significantly more than any money the bank actually had to reserve for the principle. So for you to pay it back with circulating currency, that currency must be debt blah blah blah it's a wonderful cycle of guaranteed default.

I left it out because I didn't feel it made any difference to the argument. It's an aspect of the "banks are bad" issue, and has little to do with interest in general.

Still, some points regarding the spread between deposit interest and mortgage/credit card interest rates: Checking accounts are pure demand accounts, so any interest you're receiving has to be added to what you would otherwise be paying for the bank's services, which could easily be a couple of percent, particularly if you hold a low balance. Mortgages and other loans also have to factor in the possibility of default and other overhead on top of the plain time-preference interest rate, whereas money in checking and savings accounts is considered extremely "safe". (It doesn't matter how true that really is, so long as people believe it to be true.)

All definitely true, and JAK is a community-based system and not so much a credit-based one, so it probably would not work on a large scale. I still found it very intriguing, but for now I'll stick to my local CU.
1370  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 02, 2012, 01:00:31 AM
The savings points aren't free; they're the payment (i.e. interest) you receive for leaving your savings on deposit. Because they're restricted to buying and selling loans, they're disconnected from the rest of the economy, which limits their usefulness as a measure of the time demand for money relative to other goods. The requirement that interest on loans can only be paid in the form of non-transferable points received from previous deposits unnecessarily limits access to currency where and when it is needed.

I'll admit the "limits their usefulness" part is a bit over my head, however though the points are non-transferable inasmuch as they can't be converted to cash directly, the points are transferable to other people, and presumably this could be done for a price. Also, on a community level, I remember reading that points have been donated for local improvement projects.

Encouraging (over)saving and "an interest-free economy" are not positive outcomes. Interest plays a vital role in regulating the balance between present and future consumption. Eliminating it (which the JAK system does not do, despite the claims) would be tantamount to saying that there is no reason to ever save; if money saved is of equal or lesser worth as money spent, you might as well spend the money now and receive instant gratification. Incentivising (over)saving errs the opposite way; there is a balance point where the sum of present value from immediate consumption and present expected value from future consumption is maximized. Deviating from this balance by over-saving is just as bad in terms of wealth/quality-of-life as deviating through over-consumption.

I guess the main point is that it isn't banks siphoning interest off the economy, but rather the community mutually benefiting. There is nothing that necessarily incentivizes over-saving. I'm not going to save more points than I need to buy a house or a car, for example. People who are not good at saving money still aren't going to get many points. And these are the people that are most likely to default anyway.

Neither is it necessary to create more currency to pay interest in the same currency as the principal. Once you've paid the principal back, that money reenters circulation and thus becomes available to pay the interest.

There is nothing that forces a bank to put that interest back into circulation other than to earn interest on the interest. Instead of the community benefiting, the banker benefits. Bankers have been manipulating currency for hundreds of years now, and constricting supply has been used many times to snatch up wealth.

The slight-of-hand is in the pretense that their customers are not receiving interest on their deposits, nor paying interest to take out loans. The interest may be in the form of "savings points" rather than a more marketable currency, but it is no less real for that.

But you conveniently left off the point I made where checking accounts make 0.05% or less whereas mortgages are 3-6% or more, with any other kind of loan being even higher still.
1371  Economy / Economics / Re: Fiat Dollar cause of rising gas prices in the U.S? on: March 02, 2012, 12:08:54 AM
What the hell... he says that oil is tied to gold which is absurd. They are two commodities and they function just like every other commodity based on supply and demand. Then he uses the price of oil in gold over time to estimate that oil is under-priced by 75 cents, but that is like saying the price of bread is under-priced because corn's price is higher than the traditional bread-to-corn price ratio. The reality is that gold has seen a huge surge in demand with all of the financial crises and has thus risen more sharply than the price of oil.

I really don't think we've seen anything yet when it comes to the financial bailouts. The value of the dollar is probably going to plummet in the next decade. Why gas is so high right now? I don't know, but the US has enjoyed the lowest non-middle east gas prices in the world for a very long time and is only finally starting to catch up.
1372  Economy / Economics / Re: Ron Paul schools 'the Bernank' on inflation, 'real money', and preserving value: on: March 01, 2012, 09:17:50 PM
But this makes even less sense. If the value of Bitcoins rises, all the holders of Bitcoin become wealthier.

And all the bitpoor, comparatively become poorer. Bitcoin either needs to effectively be able to replace existing currencies, or someone is going to get left holding the bag. If the latter is the case, the eventuality of bitcoin is failure since there is no actual commodity except transferring money over the internet. And people can do that without risking their wealth.

Conflating issues like legal tender laws only make your stance weaker, not stronger. But you can believe what you want because I know I won't be able to make any sense for you.
1373  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 01, 2012, 09:08:28 PM
I really don't understand some libertarians' PoV on fractional reserve banking.

Bill deposits 20 Bitcoins with Jon. Bill has invested the coins in Jon, but clearly no longer has the coins. Only Jon has the coins.
Jon lends Josef 18 coins, reserving 10% (this is the fractional reserve part) to pay those who may want to withdraw their funds.
No coins are created. If anything, due to reserve requirements, coins have essentially been destroyed as they must sit around doing nothing.

Josef has 18 coins, Jon has 2 coins, Bill has no coins.

Bill deposits 20 dollars with Bank of America. Bank of American now loans out $18. Joe deposits $18 at BoB. BoB loans out $16.20, and so on.
1374  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 01, 2012, 08:00:49 PM
Private banks do create their own money via collateral (mortgages, cars, etc.) and fractional reserve.
1375  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 01, 2012, 07:09:17 PM
I personally would love to see a global-scale JAK style banking system emerge (
The JAK system seems to be little more than thinly-disguised slight-of-hand. All they really did was force the interest paid/received to be in a different currency ("saving points") than the principle. It's still a form of interest.

What an odd viewpoint. Would you rather not pay interest on your mortgage in cost-free savings points or in cash? The savings points allows other people to borrow your money and then when you have enough you may borrow theirs. It encourages saving and it encourages an interest-free economy. How is that a bad thing? There is no necessity to create more currency. The JAK bank system is basically non-profit only charging membership dues to pay for a small staff. There is no sleight-of-hand going on here that I can see. Besides, how much interest do you earn on your checking account? 0.05%? How much is a mortgage rate, 3-6%? There is quite a discrepancy there.
1376  Economy / Economics / Re: Ron Paul schools 'the Bernank' on inflation, 'real money', and preserving value: on: March 01, 2012, 07:03:40 PM
All money must at all times be in someone's possession. There is no scientific way of distinguishing "hoarding" from other possession of money.

Sure there is, by its velocity. If you allow those with lots of money to control a significant portion of its velocity, they can control its value. Assuming the actual supply is stable, slow velocity will always cause deflation, high velocity will always cause inflation.

Even if it worked this way, there is no reason to conclude that this would somehow benefit the perpetrators. They could just as well lose and make some Bitcoins speculators incredibly rich.

You aren't seeing the big picture, I'm afraid. The bitcoin speculators are probably already wealthy. The panic/crash scenario would work differently as it is currently a side currency, but if the stock market were denominated in bitcoins, the wealthy would stand to make a great deal. I'm not talking about the value of BTC crashing; on the contrary, it would rise assuming it was widely accepted.

Even if this was correct, this only could have worked with legal tender. If JPM had crashed the pound rather than dollar, again there would be no effect. Like Soros when he shorted the pound in 1992. It made the BoE angry but there's no reason why US public or politicians should be affected by that.

I don't know where this legal tender argument has spawned from, but it is simply flat out wrong. Is gold legal tender?

Just because it is or isn't legal tender does not mean that lots of people can't lose money by the commodity being manipulated.

Here is what Ludwig von Mises says:
Quote from: Ludwig von Mises
But in any case I must protest against the belief that it has to be a goal of monetary policy to make money neutral and that it is the duty of the economists to determine a method of doing so. I wish to emphasize that in a living and changing world, in a world of action, there is no room left for a neutral money. Money is non-neutral or it does not exist.

Here is what Mises also said, Human Action:

The notions of inflation and deflation are not praxeological concepts. They were not created by economists, but by the mundane speech of the public and of politicians. They implied the popular fallacy that there is such a thing as neutral money or money of stable purchasing power and that sound money should be neutral and stable in purchasing power. From this point of view the term inflation was applied to signify cash-induced changes resulting in a drop in purchasing power, and the term deflation to signify cash-induced changes resulting in a rise in purchasing power.

However, those applying these terms are not aware of the fact that purchasing power never remains unchanged and that consequently there is always either inflation or deflation. They ignore these necessarily perpetual fluctuations as far as they are only small and inconspicuous, and reserve the use of the terms to big changes in purchasing power. Since the question at what point a change in purchasing power begins to deserve being called big depends on personal relevance judgments, it becomes manifest that inflation and deflation are terms lacking the categorial precision required for praxeological, economic, and catallactic concepts.

He is stating that money can't be neutral in the sense that inflation and deflation don't exist as a function of money itself either. You say potato, I say Milton Friedman.
1377  Economy / Economics / Re: Ron Paul schools 'the Bernank' on inflation, 'real money', and preserving value: on: March 01, 2012, 03:20:52 PM
I agree that debt-based currencies are BAD and we should adopt some sort of tally-like system (bitcoin, maybe?)...

I really don't see bitcoin solving the problem of currency being manipulated. It basically begs to be manipulated by having absolutely zero recourse to combat hoarding. This is the main problem with gold-backed currencies. The upper echelon of the wealthy can call in loans, sell investments, etc. and hoard currency and cause the markets to panic/crash, thus making cheaply available property and investments and giving them the power to control even more real wealth than they did before. There is evidence that this is what JP Morgan and his buddies did on purpose to get the Federal Reserve Act passed, so that the public can be slowly bled dry instead of causing major recessions.

I believe the central banks colluding with the federal government - and their practice of fractional reserve lending - are also at fault there...

There's no real "belief" necessary, it is a fact. Once the government gives private entities the power over money, the people have no recourse except to eventually try to elect people like Ron Paul. Unfortunately, since politicians are so easily swayed in their actions by money, very few politicians will use their power to take that power away even though it is hardly in the best interest of their constituents.

I disagree in part about fractional reserve though. I believe it gets a bad rap because of how it has been abused and how that abuse has been sanctioned by world governments. Fractional reserve can be a very good thing for economic growth, but it can be a catastrophic thing when it is abused, and historically it has always been abused.

"Until we stop talking about deficits and Government spending and start talking about who controls how much money we have, it's all just a big shell game, a complete and utter deception. It won't matter if you pass an iron-clad amendment to the constitution mandating a balanced budget; our situation is only going to get worse until we root out the cause at its source."

-Bill Steer from The Money Masters

Switching to a debt-free currency issued by the people (government) would make this a relative non-issue. But the two presidents who made this a big part of their presidency were assassinated. Of course, even if the currency were debt-free, there would still be an amalgamation of large corporations with too much influence and we would probably fall back into some other cycle of manipulation. This is one thing bitcoin certainly does fix, though not adequately, imo as it only removes government corruption from the equation, it doesn't solve the underlying issue of money manipulation.

Helicopter Ben is manipulating the 'price' of dollars; just because gold and silver can be manipulated (and it is being manipulated at the moment, it is artificially low thanks to paper-shorts) doesn't mean (imo) you should not use them to preserve wealth. If you're saving in debt-based currencies because you don't like the alternative (not the best alternative, just the most likely)...    you're cutting your nose off to spite your face.

Oh I don't disagree with you. It's just the fact that everyone who didn't save in gold and silver gets screwed, and those holding gold/silver profit because of it. I have moral issues with this. I'm not accusing anyone of being immoral for being ahead of the curve, but I just wish there weren't a curve anyone had to be ahead of. Money should be neutral. Let productivity and ingenuity decide how wealth is allocated, not manipulation. Multiple currencies is a hack, not a solution.
1378  Bitcoin / Development & Technical Discussion / Re: Is a more efficient coin possible (Ben Laurie)? on: March 01, 2012, 11:41:02 AM
The arimaa proposal is interesting and similar to something I posted recently:

This newest design is light years simpler than encoin, so it is a near-future possibility. It hinges on whether or not the "block chain heuristics" part works. But if suitable, it would require much less energy to maintain than Bitcoin.
1379  Economy / Economics / Re: Debt and banks in BitCoin world? on: March 01, 2012, 01:18:56 AM
It's going to be really, really tricky to pull off lending in bitcoin on a large scale. Fractional reserve will be difficult if not impossible. Most deposits available to loan would have to be CD style deposits that can't be touched for some time. No FDIC or its equivalent will make people much more wary. Interest? Very hard to say. I personally would love to see a global-scale JAK style banking system emerge ( But, realistically, I think there will be little to no lending with bitcoin as long as it has to compete with devaluing fiat. It just makes so much more sense for the borrower to use fiat instead.
1380  Economy / Economics / Re: Ron Paul schools 'the Bernank' on inflation, 'real money', and preserving value: on: March 01, 2012, 01:11:11 AM
If the US didn't have to pay $700bn in interest every year, it would be much easier to balance the budget. Silver & gold backed currencies are not the answer, imo, but government-issued debt-free currency is much closer. The two biggest empires in history did not use fully backed currency. The romans used copper coins worth 8-10x their metal value, gold coins worth 2-4x, and the British used wooden sticks for crying out loud. Gold and silver can be manipulated by the wealthy just like central banking can with fiat. Although I realize he is arguing for competing currencies, he has also stated he wants to return to the gold standard.
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