I think I've come to the conclusion that these kind of debates are meaningless with Bitcoin, it was designed to be a currency, therefore it is and it is now also being used as a currency, the arguments about Bitcoin I've seen in regards to whether it's a currency or not usually revolve around what people like about a currency rather than whether it actually is one. Simple Explanation of my answer: If people use it to trade with, it's a currency http://dictionary.reference.com/browse/Currency?s=t
currency
Use Currency in a sentence
cur·ren·cy
[kur-uhn-see, kuhr-] Show IPA
noun, plural cur·ren·cies.
1.
something that is used as a medium of exchange; money.
2.
general acceptance; prevalence; vogue.
3.
a time or period during which something is widely accepted and circulated.
4.
the fact or quality of being widely accepted and circulated from person to person.
5.
circulation, as of coin.
Its sold to speculators as a replacement currency. But its useless as curency because you have to "mine" it. If you need several trillion dollars to prevent some banks from going insolvent to avoid another Great Depression. Easiest way is just to magically make it appear and put it on balance sheet as debt. Can't do this w bitcoin. Or gold for that matter. Study the Great Depression for god's sake |
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To answer the OP. If you kept cash in your mattress it doesn't get taxed. You get taxed as income when you first receive it.
If you keep money in assets those assets may get capital gains tax or ordinary income depending on how long you hold
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Bitcoin is not useful as money. Neither is gold or silver
Money needs to be elastic in order to be useful in modern economies. As economic activity expands, the money supply needs to expand to meet demand. Liquidity is one important aspect of money.
Read about Modern Money Theory L. Randall Wray if you want to know more. Money should be approached as stock and flow rather than commodity
If you can divide the unit "1" infinitely, I can assure you that "1" is very liquid. Thats not what liquidity means. Liquidity means you want the money to flow. If people are saving you create inflation so they spend it. Thats why we have Central Banks |
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Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(
Maybe its you who don't understand "decentralized". Before Centrals Banks all currency were decentralized meaning it was backed by the individual issuer (private banks). What you don't understand is that bitcoin isn't even money. Money is an IOU thats backed by the issuer. For example in the olden days: Someone holding your gold deposit will give you gold note in return. You go spend that note and the person holding the note has claim that amount in gold from issuer. Fiat is money that is not backed by hard asset so it has no intrinsic value. By definition bitcoin is fiat. However, fiat is backed by gov't. The gov't creates fiat on debt. Then they make you pay taxes so they can pay down that debt in future. Because we are legally required to pay taxes the demand on dollar is guaranteed. This assures its stability not some "trust" system. Fiat currencies valuation are derived from things like GDP and also supply/ demand of money. What I noticed is that bitbugs get smarmy about their knowledge of bitcoin. But most don't understand undergrad economics. The irritable misconception of bitcoin come from the bitcoin community itself not from outside. Most bit bugs are towing the line without critical thought whatsoever Um ok dude.... go look up the meaning of "money" and get back to me. I just defined money for you. Its an IOU. Bitcoins are "mined". Money is like for a carpenter to buy bread but the baker doesn't need a chair. A bank creates notes so these people can exchange stuff. But these notes have to be backed by assets or credit How does bitcoin do this? It doesn't. Its a public ledger that tracks exchanges using a network. Its more of a transfer system than money |
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I just learned that some scholars question "Tulip Mania", thinking the stories were exaggerated. How can we learn from history, if the truth is not known? ....
Then why not just call it a speculative investment?...
Of course, this can be done right away. So... if I can show tulips were a speculative investment, that would strengthen the comparison to Bitcoin even more? Tulips were a speculative investment, they had "formal futures markets". Here is 'proof': The contract price of rare bulbs continued to rise throughout 1636, but by November, the price of common, "unbroken" bulbs also began to increase, so that soon any tulip bulb could fetch hundreds of guilders. That year the Dutch created a type of formal futures markets where contracts to buy bulbs at the end of the season were bought and sold. http://en.wikipedia.org/wiki/Tulip_maniaps. When I compare Tulip Mania to Bitcoin it's about the way people rush in trying to make big money fast. There is a strong similarity, whether you see it or not. Bitcoin speculation also has some amazing similarities to a Ponzi scheme, but it is NOT a Ponzi.Besides tulips there were a lot of speculative bubbles and they all share similarities regardless of asset class. Definition from investopia: A speculative bubble is usually caused by exaggerated expectations of future growth, price appreciation, or other events that could cause an increase in asset values. This drives trading volumes higher, and as more investors rally around the heightened expectation, buyers outnumber sellers, pushing prices beyond what an objective analysis of intrinsic value would suggest. The bubble is not completed until prices fall back down to normalized levels; this usually involves a period of steep decline in price during which most investors panic and sell out of their investments. |
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Yeahp and I think the HUGE thing that people struggle with is the word "Decentralized" ... they dont get how much of an impact that word when it has in relation to current monetary systems.
I dont think they can fathom it. I knew for the first 2 weeks I was introduced to Bitcoin, I was CONFUSED as fuck and Im a nerd/geek for my career & passion for the last 20yrs of my life!
If it was that hard for me, tryin to get an avg person to wrap their heads around it... I can see how they are confused as hell and the media just jumps on that confusion and drives fear into them =( .. scaring them away from potentially the greatest invention in the 21st century ... it saddens me really =(
Maybe its you who don't understand "decentralized". Before Centrals Banks all currency were decentralized meaning it was backed by the individual issuer (private banks). What you don't understand is that bitcoin isn't even money. Money is an IOU thats backed by the issuer. For example in the olden days: Someone holding your gold deposit will give you gold note in return. You go spend that note and the person holding the note has claim that amount in gold from issuer. Fiat is money that is not backed by hard asset so it has no intrinsic value. By definition bitcoin is fiat. However, fiat is backed by gov't. The gov't creates fiat on debt. Then they make you pay taxes so they can pay down that debt in future. Because we are legally required to pay taxes the demand on dollar is guaranteed. This assures its stability not some "trust" system. Fiat currencies valuation are derived from things like GDP and also supply/ demand of money. What I noticed is that bitbugs get smarmy about their knowledge of bitcoin. But most don't understand undergrad economics. The irritable misconception of bitcoin come from the bitcoin community itself not from outside. Most bit bugs are towing the line without critical thought whatsoever |
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Or maybe they don't buy into the hype. Its bitcoin speculators who are emotional from greed. For everyone else you guys are nuts buying bitcoins I'd argue that most of us early investors did so for reasons other than greed. Speaking for myself, I held onto my BTC for months as it lost value before finally seeing (enormous) profit. For me, divesting from my nation's fiat was primarily an ethical decision, and that is why I did so with my entire life savings. I was later financially rewarded for my sound ethical choice. Yeah right.  Unless you can pay taxes in bitcoin you'll have to convert those into legal tender i.e. fiat. It is impossible for you to divest yourself from fiat. |
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OMG is that like Zeitgeist BS??? Please please please do yourself a favor and learn from real scholars. If you really wanna understand how banking works I suggest this Coursera.org course by Prof. Merhling of Columbia Univeristy. Merhling is a respected economist not some conspiracy nut job. His course is interesting because you will understand the mechanism of banking as it relates to overall economics. Its not theory but real world understanding of how banking works. He also teaches present day banking as it relates to history of banking. He is not interested in politics. There are flaws in current banking system. In order to improve on it you have to understand how it works https://class.coursera.org/money-001https://class.coursera.org/money2-001 |
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Seriously, I don't why so many bitbugs are anti bank.
Banks perform an important function in economies. They take risk to provide liquidity. Bottom line, If you take risk you get paid for it. Banks are liquidity dealers & market makers
Even if bitcoins go mainstream there still needs financial services. People need mortgages, credit, etc.. Banks aren't going to go away cause some anarchist geeks don't understand banking
I agree w futbol that its more likely that banks will make a type of "bitcoin" if the consumers really demand it.
I agree with you, banks and finacial institusitons have a role to play, but regards to history they often takes advantages of the users in a bad way. The financial products are always tailored to monetize the bank owners. here is one example: The noregian government gave the banks in country order to build their capital base. The biggest bank went out and said all needed to contribute to this. They kept the interest rent unnaturally high in cover up building up the capital base government had requeired. Because if good times and the bank itself has low interest on the loans they take, they earned a lot in the difference in interest. Same time they downsized numbers of workers and paid the shareholders a historical amount. Also the bank boss got a real big bonus. They during the process claimed that all must pay the price, but the ones paying the price were the ones with loan that fueled the share holders. Government has also said this was not the intention with the requirement to build up the banks capital base. They should have lowered the interest rent. But due to low competition (the smaller banks follows the bigges) the market did not selfregulated. This is an example of the capitalism and financesystem in work. So in general I might think this is what many bitcoiners do not like. But in general we need a finance and bank system otherwise we would not have be able to finance minor and bigger things. Things like getting a house would be hard without a bank for ordinary people. Does anyone complain that in casinos the house always wins? Of course banks design their financial products to be profitable. That's their business! But when they are wrong they go insolvent. Like Bear Stearns & Lehman over leveraged on mortgage derivatives If you believe that banks take advantage of the little guy then you have issues with regulations not banking itself. You need to use politics to change regulations. |
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The most common misconception I hear from friends and family is that Bitcoin has "peaked" in value, and that they're "too late" to benefit from investing now.
I've tried my best to explain why that's illogical, but the argument comes from an emotional place (regret, envy of early investors), and people seem largely immune to logical arguments.
Or maybe they don't buy into the hype. Its bitcoin speculators who are emotional from greed. For everyone else you guys are nuts buying bitcoins |
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If BTC is going to become a widely used currency, it needs to be convenient. Simplest way to do that is by relying on the convenience infrastructure that's already in place. Yeah, the "convenience" of the big banks and the governments who have financially strangled their populations for generations... because THAT'S what everyone desires. Because THAT'S what is making Bitcoin so popular in all the places in the world with hyper-inflating fiat currencies. You are delusional, pal. Everyone is sick of the greedy big banks and their evil, manipulative bullshit. It is cryptocurrency's liberatory power from those very institutions that has gained it so much traction so quickly in the first place! Oh grow up. Only schmucks think this way. Everyone else is trying to get degrees, start businesses, buy a house, etc. You think it's so easy to be a bank? Try lending money some time. Its pretty risky if the borrower doesn't pay you back. |
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Seriously, I don't why so many bitbugs are anti bank.
Banks perform an important function in economies. They take risk to provide liquidity. Bottom line, If you take risk you get paid for it. Banks are liquidity dealers & market makers
Even if bitcoins go mainstream there still needs financial services. People need mortgages, credit, etc.. Banks aren't going to go away cause some anarchist geeks don't understand banking
I agree w futbol that its more likely that banks will make a type of "bitcoin" if the consumers really demand it.
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Please refer to "Tulip Mania"...
If you bought only $50 to $100 of BTC in early 2010 and sold in late 2013 you would have ~$12,000,000 (12 Million) USD for every small purchase 3 years earlier. No matter how great (and different) Bitcoin is, the "Tulip Mania" references are rational and fair. by that logic, facebook and twitter and pretty much every successful company is a tulip mania. Wrong FB & TWTR are companies. Their stock value can be fundamentally derived from things like earnings per share. They generate revenue so thats why they have value. However you are correct that sometimes these companies stock price get too far ahead of their valuation. Bitcoin's value can't be derived from fundamentals. It should be treated more like a commodity like gold. Except gold has a history as money haven in crisis and actual intrinsic value for jewelry & electronics. Bitcoin is a binary bet. If it becomes mainstream then it will be of great value. But it could also disappear and be zero value. The problem with bit coin is that it is not a well designed currency. By its design it will fail at mass adoption. |
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The fiat blockchain enables full reserve banking. The units on the block chain are fully backed by the reserves in the safes of fiat bankers. Of course, everything depends on the honesty of the fiat banker. However, the current situation in banking is much worse. The current-day, traditional fiat banker keeps only a fraction of its deposits, the rest is loaned. If only a fraction of these loans default, the bank defaults and the depositors will lose their money for as far as it is not insured.
About fractional reserve. Banks do overnight loans to each other to balance their books. If one one bank is runned they have to borrow from another bank. If they become insolvent they get bought out. If all banks get runned they turn to the Fed as lender of last resort. Theres nothing wrong with fractional reserve. The crisis we face now has more to do with how banking and finance became too advanced for current regulations. 2008 crisis has more to do w derivatives and shadow banking. Bitcoins don't address any of this only regulations will. Its not about honest bankers. Its about how bankers and regulators play cat and mouse I think the only interesting thing about bitcoin is the tech minus the amateur economics and libertarian/ anarchist politics. If anything the banks and govt will develop a crypto for transfering money / making payments digitally. Thats what consumers care about, not politics or speculating. Im not a tech so I don't know if its feasible or not Nothing wrong with fractional reserve? That may be your opinion, but there are many who disagree. http://wiki.mises.org/wiki/Criticism_of_fractional_reserve_bankingI don't subscribe to Austrian economics. Its too much ideology without a empirical foundation. I prefer MMT |
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I don't want it either cause its already corrupted by allowing few people own most the currency
85 people control the world with their wealth, and have as much wealth collectively as the rest of us. Are you sure Bitcoin will be no better once it is adopted wide scale? I think it will. Reason is, because it cannot be counterfeited. Unlike gold, it can't be used to coat tungsten bars  It's based on pure unadulterated mathematics...and the codes are absolutely unbreakable. I think Bitcoin has the ability to destroy the monopolies that have taken over...but you do have a point with centralization with regards to mining. Maybe Quarkcoin or Vertcoin, or perhaps some other more-decentralized mining-wise coin will take over Bitcoin as the ultimate cryptocurrency...nobody knows, and only time will reveal the answer. I believe its way more than 85 people. http://escholarship.org/uc/item/3jv048hx#page-1In any case. Inequality is not correlated to Central Banking or fractional reserve banking. Inequality is correlated to the transition from mercantilism to globalism. But its complex and many factors contribute to economic inequality. My criticism of crypto utopianists is they ignore the economics and politics of power. You might be able to disrupt the curent financial system, but what replaces it will be 10 times worse without govt oversight. I want my money to be inflationary and controlled by a Central Bank. Cause I want to avoid something like Great Depression |
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Money and its associated systems of commerce are the most influential and pervasive man-made influences on the human race today. As the paradigm we use to associate value with something and transfer that value amongst us, currency informs us in many ways both obvious and subtle. Currencies drive societies and are responsible for enabling mankind to transact in such a way that we can all function together. Noble, you would say, and in its purest form, few things are nobler. However, there has been a fundamental flaw in our systems of commerce since inception – the privileged few exercising control over the most basic needs of the rest of us. You can finish reading this editorial here: http://altcoinauthority.com/2014/03/the-critical-importance-of-cryptocurrencies/Please contribute to this discussion, we're all in this together. Bad article that ignore simple economics. Bitcoin will not free mankind. It will enslave mankind. Ok let's say Winklevoss guys own 100K bit coins. That means they already own .5% of all the bitcoin wealth. But since there's been 12M mined coins. Thats little more than half. So already 2 guys own 1% of wealth for the rest of history. That is if your libertarian utopia comes true & all central banked fiat is replaced by bitcoin. So instead of the 1% being varied people who made money the old fashioned way like Bill Gates, Buffett, Masayoshi Son, Branson, Oprah, etc.. Now we have class of 1% that made money on pure speculation. So instead of businessmen manipulating politicians to give them unfair advantage. It'll be these early adopters. And what advantage do they need? To control the bitcoin currency of course. They'll be bankers. And worse than any bankers we know of today since they can monopolize a deflationary currency without a central bank. They'll set whatever interest they'll please. The Central Bank is not motivated by profit. Its role is to keep the economy going by using monetary policy. Decentralized can't do this. And worse half the entire money supply is already owned by a tiny tiny fraction of the population. Instead of the 1%. It will be the .0001% that owns 99% No thanks. Give me the Fed with its flaws over that any day. Bitcoin won't succeed because status quo won't let it. I don't want it either cause its already corrupted by allowing few people own most the currency |
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I think that was an overnight loan so these banks could clear their books. It was paid back
Different than Mt Gox
Wow.... its truly suckers born every sec... Digital Currency is the way of the future, you can't trust your Government and they can't do sh!t about Digital Currency, that's what is making them steam as they don't have any Control whatsoever. Don't be naive as long as govts makes legislation they can control. http://en.m.wikipedia.org/wiki/Legality_of_Bitcoins_by_country |
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True, but cryptocurrencies may aid in combining all different caste systems to create a single caste system applicable to the entire world. Don't know what the hell you're talking about, but capitalism is already a worldwide socio-economic caste system. And again, it has been this way for a very long time.  Cryptocurrency is our first chance since the adoption of capitalism at changing this paradigm, do you understand? This is the most exciting time we could possibly be alive. We will see more social evolution in the course of the next decade than we have seen in the previous five decades combined. By comparison, even the internet is mere entertainment, child's play.Why would bitcoin change capitalism? Its just a proposed currency. Not a economic system unto itself. Decentralized banking and deflationary (gold backed) curency are pre Modern. Didn't work back then so why would it work now? Study the history of money and banking and you'll see |
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This is well known already. But there's nothing parastic or deceptive about this. Its required for liquidity.
Any explanation of the monetary system must start with the basics. The parasitic aspects and their consequences will be fully explained in parts II and III. Don't try to politicize banking. You'll never understand it that way. Try to look at it from view of macroeconomics. Approach money as stock & flow rather than commodity. Liquidity is more important to money than value |
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Your assumption is plausible but its still speculative. The other plausible specualtive assumption is that bitcoin would go to zero.
1. You are looking at bitcoin adoption only. Not considering its competitor, the fiat. Its maybe growing exponentially relative to bitcoin. But has very far for market cap to catch up w fiat. That is, if it doesnt go bust first. Bitcoin is fiat except the govt part. Its fiat in the sense that it has no intrinsic value. Except w fiat the demand is guaranteed because we are legally obligated to pay taxes w fiat.
2. Deflationary and decentralized currency is inferior to centrally planned currency. See the history of money. Banks used to be decentralized and currency was backed by gold standard. That didn't work well so that's why we have what exists today. Bitcoin is not an evolution its devolving.
3. Unless it becomes legal tender its is just a commodity. But unlike other commodities its value is pure speculation.
4. First mover advantage is a myth in tech. Most widely adopted tech come after 2nd or 3rd iteration. As long as something better comes along and no cost to switch itll happen. Currently there is a big cost to switch from dollars to bitcoin.
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