Buy gold and silver shot, little tinny BBs, very costly to make it filled.

AMEX sells it in USA. Small refiners sell it every where in world.

But it is harder to sell.

Coins are easy to sell and you can discern if they are fakes usually very easily. Have a good one for comparison, then hit them with a spoon and listen to sound.

One thing to bear in mind, now that Bitcoin has shown success, everybody and his half-uncle are going to be trying to create a new P2P currency.

Buy low, sell high. Arbitrage is your friend. But no one knows timing, unless they are manipulating and controlling a market.

As an investor, you need to discern which new P2P currencies have the unique features, quality, professionalism, etc... to be taken seriously.

Anyone thinking $10,000 or $100,000+, you are not living in reality. Please don't get angry at me, but markets respond to opportunity cost. There is no way that other smart developers won't respond when now they see $100 per coin created out-of-thin-air.

I don't see it as a game of cat&mouse. I see it as the govt is giving you rope to hang yourself with.

The govt is tracking everything you do over the internet, and 10 years from now they can come knocking and say "where is your paper trail for the these transactions we know you did".

The global economy is going to utterly collapse into MADMAX.

Billions unemployed means millions hired to do tax collection and audits.

Bitcoin is not anonymous there is a permanent record on the internet forever.

Use physical gold and silver if you want anonymity. Otherwise keep a paper trail for everything in your safe...

Why not buy Litecoin, they are still much cheaper?

Buy low, sell high.

Are you sure you know what you are talking about?

You are saying that he incurs no liability if he can avoid compliance radars?

I read the FinCEN statement and I read it as saying each individual is a money transmitter and is responsible for filing.

With the shit coming with global economic collapse and rabid tax authorities in near future, I would not try to skirt the edge of the literal statements.

1. Can he remain anonymous?

2. Does a USA citizen abroad have to comply when dealing with non-USA affiliated exchanged in foreign currencies?

3. Is law retroactive?

Illegal?

FinCEN compliance?

What makes you think you are anonymous?

The governments are going to access all the records and come after you for capital gains taxes you did not report and pay.

When ever you FX to any currency, you are now required to report to FinCEN or your exchanger must keep records of your identity.

If you are in a jurisdiction where this does not apply (Europe?), your tax man will be coming... don't worry...

The Proof-of-Work in Bitcoin favors large investors in terms of obtaining coins from mining. I have a better design that would let all regular users mine more coins (you need a terabyte hard disk only). But this is not implemented.

Bitcoin : The Digital Kill Switch

https://bitcointalk.org/index.php?topic=160612.0

Bitcoin: The Digital Kill Switch

https://bitcointalk.org/index.php?topic=160612.0

Bitcoin: The Digital Kill Switch

by Shelby H. Moore III

March 29, 2013

Bitcoin is the first peer-to-peer (P2P) digital currency and payment system to gain significant interest. This month its marketcap surpassed $1 billion.

P2P currencies promise some differences from credit cards, such as increased privacy, no control by authorities, instant signup, lower fees for the merchant, and no chargebacks (buyer at the mercy of the merchant to issue refund if dispute).

Unlike a credit card which allows the merchant to see your details, making unauthorized charges to your P2P account is impossible, unless you allow someone to get your private key. Note credit cards are adding for example Verified By Visa to provide a similar degree of security.

The government control increased on March 13, when FinCEN ruled that transactions for goods and services paying with P2P currency are not regulated, yet exchange to other currencies is regulated and can't be anonymous. Since most users need to exchange from legal tender to and from P2P currencies, some of the purported privacy has already been lost. Also instant signup has been effectively eliminated for many, as now many new users must "practically give a DNA sample" to become verified by exchange providers— however this tsuris may not exist in all jurisdictions.

The anonymity of payments for goods and services is given by the fact that each sender and receiver of a payment is just a number without any other identifying information attached. New numbers can be generated by users at-will. However, the authorities regularly collect information from the internet about usage activity using various means of tracking such as man-in-the-middle routers, spyware, and requests for information from sites that collect information via cookies such as Google's ads and Facebook's Like that appear on many pages of the internet.

So what are the compelling advantages of P2P currencies, since most of the differences from credit cards are being diluted?

For merchants it is the elimination of the 2 - 5% fees charged by credit card companies, the elimination of the ability of the buyer to issue a chargeback, and accessing a new market of highly motivated buyers. In some cases however, the buyer will not like this "no chargeback" provision and prefer to use a credit card.

For the buyer or payer, there appear to be no remaining significant advantages. Even most merchants don't accept P2P currencies yet. The non-merchant has one significant reason to buy digital coins— the expectation of appreciation.

Valuation

The supporters of Bitcoin are projecting very high valuations ranging from $1000 to $1 billion per coin in the future, based on a limit of 21 million coins to ever be created, and a projection of percentage share of global transaction processing.

Notably 50% of Bitcoin's future money supply was issued to the founders and early adopters in first 4 years ended 2012, and by 2016, 75% of the 21 million coins will have been created. By 2020, 87.5%. By 2024, 93.75%. By 2028, 97%.

This accelerated phaseout in the creation of new coins is creating a mad "gold rush" to get in before it is too late. Even though at least 59% (but most likely 75 - 95% since that is only a lower bound that can be measured reliably) are holding long-term and not spending, the skyhigh valuations are based on the hope for adoption by merchants and then increased spending on goods and services in the future.

The 21 million Bitcoins are replacement goods with low barriers to entry and thus can be debased by market share. If competing P2P currencies issue many more coins, then the total finite demand for P2P coins has to be spread between the coins in all P2P currency competitors. However, this spread of market share is not uniform. Today, Bitcoins traded at $75 - $95 with 10.8 million coins issued and Litecoins traded at $0.58 - $0.68 with 2.5 million coins issued. Given real-time exchange between P2P currencies, there is nearly no barrier-to-entry, since merchants will want to accept as many no chargeback currencies as they can if value is rising or stable. Also Gresham's Law dictates that coins will higher issuance will drive coins with less issuance out-of-circulation towards a higher store-of-value. Valuations are also crucially based on market share of transaction processing to be captured in the future, which requires circulation of the currency. So it is quite naive to think that the 21 million coins of Bitcoins are immune to debasement by competitors, unless all competitors suck and have no desirable differences.

Much of the fervor is further amplified with a false sense of altruism under the delusion of being part of a momentus and historic creation of what supporters expect to be the first meritocratic money system— one which can't be debased by the power elite who control the strings on banks in the fiat fractional reserve systems society uses now.

Scaling

For Bitcoin to meet the expectation of investors in its digital coins, the transactions for goods and services has to scale up.

And here is where the hidden diabolical quality of Bitcoin (and Litecoin too) becomes too obvious when the technical details of the design are closely scruntinized by an expert programmer such as myself.

The processing of transactions in P2P currencies is provided by "mining" peers, who provide some Proof-of-Work to insure that double-spends can not exist in the single correct copy of the distributed database. These peers are computers connected to the internet and interacting in a protocol with the other "mining" peers.

To incentivize the "mining" peers to offer their hardware and electricity to this task, they are given the new digital coins created with each new block of transactions. Also they may be offered an optional transaction fee by some payers.

However, the rate of creation of new coins is halving every 4 years, and will eventually stop. Given the fervor the supporters have over non-debasement for meritocratic money system, the end of the creation of new coins is "non-negotiable".

If an attacker can muster 51% of the Proof-of-Work capacity of a P2P system, the attacker can take over the system. There are differences of opinion as to the degree of malicious behavior an attacker could do. However, one unarguable mathematical conclusion is that an attacker that had for example 60 to 90% of the Proof-of-Work capacity could process 60 to 90% of the transactions. If this attacker did not do any thing noticably malicious and did not charge a transaction fee, then virtually all customers would not find it necessary to offer a transaction fee, because over just 3 blocks of waiting time the 60 to 90% becomes 94 to 99.9% of all transactions.* If this was sustained for sufficient months or years when the production of new coins had ended (or declined significantly), then all the other miners would go bankrupt because their costs are not subsidized. Such attacker would then control virtually 100% of all transactions processed. Note this 60 - 90% could be built up over time, because offering free transactions to a percent of the market (when no new coins are being minted), drives some percent of the other miners bankrupt thus increasing the percent the attacker has— it is a snowball effect.

This was explained to some of the developers of Bitcoin who hang out at bitcoin.stackexchange.com, but they claimed it is only an opinion and not a fact. How can math be an opinion?

*First block, 60 to 90% + second block 60 x (100 - 60) to 90 x (100 - 90)% + third block 60 x (100 - 84) to 90 x (100 - 99).

Digital Kill Switch

There is an expectation that large retailers such as WalMart, Amazon, etc., will want to provide the "mining" peers at no transaction fee cost to the buyers, so as to gain a competitive advantage over other retailers.

But we see from the prior section that the incentive is very great to create a cartel that has control over all transactions. Once you have that cartel, you can eliminate those outside the cartel by delaying their transactions or charging transaction fees only to your competitors (billing the competitor, not deducting from the payer in the system). So this is just the credit card fees we have now all over again, except then they will also have a public global record of all transactions in the world (total end of privacy).

Then the government could easily collude with these cartels to turn off the transactions of political dissidents, free speech advocates, gun rights advocates, Ron Paul supporters, and any other classification of terrorist. With control over the processing and the merchants who depend on it, they can easily force an upgrade to the protocol which requires a SSN or other government tax ID to be attached to each transaction.

This is not a stretch at all. The design of Bitcoin and Litecoin encourages it— I go so far as to say they were designed for it given there are alternative designs (I proposed one) that don't have this diabolical possibility.

Having numerous competing P2P currencies does not escape from this diabolical threat, if all of them have the same diabolical design. A non-diabolical design would either have debasement that never ends and/or a minimum transaction fee.

I doubt one can create a non-diabolical P2P currency at any time in future, because the first-mover advantage will apply inspite of low barriers to entry. Because if the users already have Bitcoin and Litecoin, they may not see any compelling reason to add another, in spite of the diabolical quality which does not affect them directly (as a member of the majorty and not a dissidant or other threatened class).

Not Gold

The P2P currency fervor was further stoked by the illusion that they are somewhat like gold. Gold is a private hedge against government malfeasance, it can be traded privately with no public record. P2P currency ownership and transactions are stored in one public database that is never erased forever!

Gold's money supply is always increasing forever (we can mine it in outer space if we run out on earth) and the rate of nominal increase every year is also increasing. Bitcoin and Litecoin are geometrically decreasing the rate of increase of the money supply and will terminate production of new coins at 21 and 84 million respectively. Some people think this makes them even better than gold and silver.

Many people have the illusion these days that inflation is bad and deflation is good. Sorry to bust their bubble, but both transfer wealth to the power elite. The power elite have more savings relative to their expenses, thus they can switch their savings between investments which increase during both inflation and deflation. Whereas, the middle-class are hurt by inflation since they must spend more their income, and they are hurt by deflation, because their wages decline.

If distributed to the middle-class, some minimal debasement is beneficial to offset the guaranteed (government backed stopped) usury interest income the wealthy earn during deflation. I am not a socialist and I love free markets, but the fact is that money is a social collective institution and this is the reality of the math. Either you redistribute algorithmically with debasement and mining of new coins, or you redistribute with taxes and politics. I would much prefer the former.

It is possible to make a P2P currency that more closely emulates gold's money supply. And has the advantage that no one controls its rate of debasement and thus can't manipulate it to create false business cycles.

I am not saying that Bitcoin is a scam for that reason. Read the next post please.

It is possible that there are people who would otherwise buy Bitcoin, who would prefer some features in another system more.

You are actually missing the KEY POINT, which is barrier to entry. Replacement goods have low barriers to entry.

If there is an exchange rate from currency A to currency B, then the barrier to entry is nearly zero. Merchants will accept as many currencies as they can.

That is why I say real-time market exchange at POS is a crucial factor. Surely some aspiring entreprenuer will provide it, if not already.

People should be dumping Bitcoins and buying Litecoins like mad right now. Those who do are going to make a big arbitrage when the rest of the herd catches up to this reality.

But the competitors can't all be the same. You are correct someone won't go buy Litecoin if it is just an exact copy of Bitcoin.

So each competitor has to have a few compelling features. I don't know how many such features are possible. The market will tell us.

So I am saying that not everybody buying Bitcoin now or in future, is getting exactly what they want from Bitcoin. Competition will come (I hope).



Study "replacement good" in economics.

You are missing a point. There is only a finite demand for P2P currency. That demand has to be spread between P2P currency units that are issued. The spreadout won't be uniform (e.g. Bitcoins are $90 and Litecoins are $0.65 at the moment), but there is a conjecture that the competitors will become better and gain more market share.

So if I create a better Bitcoin and I debase mine more than Bitcoin does, Bitcoin will suffer a debasement of the market. But remember what I wrote below too...


I sort of superseded those comments with the following. Did you miss my post above?

I missed the main point. Gresham's Law.

Bad money drives good money out of circulation.

So Bitcoin will end up being more hoarded than a P2P competing currency that has more debasement. Which will be better for that competitor, because lack of velocity is the problem in Bitcoin. Too much hoarding as store-of-value, not enough using as a unit-of-exchange.

1. This was not my point. The writer mentioned it and as sleepless as I am at the moment, I agreed in a rush that it might be a possibility.

2. Actually gold and silver do extend the money supply of each other, but they are not exactly fungible because they have different qualities. In terms of valuation, silver is more volatile. In terms of physical properties, they are different and have different applications. Thus they have different  pricing. But do not think that their prices are not related. If either gets too overvalued w.r.t. to the other, this is an arbitrage opportunity over the long-term. C.f. the gold/silver ratio and the Bimetallic standard. These were important concepts in the 1800s. Many elections were found over them.

3. The key reason why they won't be fungible is because competing currencies will have different properties and their valuations will have different dynamics. However, I think it is wrong to assert that more competitors does not increase the supply of digital coins. Sorry I think the writer is correct, but he must be careful to point out they are not perfectly fungible.

I will try to get all the facts and possibilities mentioned, but I can't completely eliminate the communication barrier between a programmer (myself) and non-technical person. Some understanding will be lost in the process.

I am composing something better now. I have to rush because that writer wants to publish immediately. I'm sleepless, my prose is suffering.

fungibility point is a bit weak

I may be sending you a better document after a few hours. I'm worried that if you get some technical details wrong, they will accuse you of lying.

I will try to condense and not use technical language.

On the issue of fungibility between competing P2P currencies, I think you need to be careful about this point. It is not clear that they will be fungible.

The stronger point is that they are not fungible, and that the first mover advantage will go to BitCON! And thus it will monopolize processing for the corporate-fascism and then they have the digital kill switch on each person.

Now the fanboys will say that you can just create a new address at any time. This is myopic, because as soon as the corporates have 51% of the processing power (by giving it away for free), then they can change the protocol and work with the government regulators to require everyone to be registered with global id per person.

This is verbose. I did not take time to refine it.

Some more thoughts in this video:

http://www.youtube.com/watch?v=0UKC7iaBKvs

I like the point that "Ponzi" Sotashi (the anonymous creator) disappeared when the developers started to pressure him on his identity.

Our talking points:

1. SATOSHI:

I don't know if you like the conspiracy angle, but it doesn't make any sense that someone can work on something alone for 3 years, then pop up and be such an expert on cryptography, no one in the industry knows him, no family or friends know of him and his work, then disappear without a trace. Normal people talk to other people over a period of years. This indicates it must be CIA or military industrial complex like agent. In one of the cryptography examples that Sotashi gave on the mailing list where he first discussed his invention with James A. Donald (a person I know), he used a military example.

The design Satoshi chose (as described below) is not a random choice. It was clearly design to fail in a very specific way that gives power to the government, even there are other designs that won't fail.


2. BITCON's DEBASEMENT IS NOT AT ALL THE SAME AS GOLD:

Bitcoin fanboys claim that Bitcoin is like gold because the debasement is halving every 4 years, to stop at 21 million coins with a couple of decades (75% in first 8 years, 87.5% in first 12 years). This provided 50% of the total money supply to the insiders who mined in the first 4 years.

But this is nothing like gold, which was debased over millenia, and still has an increasing supply forever (we can mine gold in future in outer space), and the nominal increase every year it itself increasing. Gold is much more fair to mankind because the very rich can't enslave us with a money supply that never depletes. Slowly depleting money supply is important, so that lazy capitalists can't concentrate their percentage of money supply with interest bearing bonds. Innovation comes from new production, and in the small. Large capital can't see all those small innovations and can't finance innovation with guaranteed interest. Investmet at risk is required to finance innovation, not usury. A money supply which did not debase at all, is slavery to the usurists.

What is bad about debasement, is uncontrolled debasement or especially debasbement that is decided by one group. Gold is meritocracy because the debasement can't be altered easily by any one group, and new gold is added to keep capital from becoming lazy and sit in usury bonds.


3. BITCON's INFLATION IS IN THEORY UNLIMITED (but are they fungible?):

P2P currency units can be created by anyone who creates a competitor. If an exchange is created between different P2P currencies, then if a merchant accepts Bitcoin, then it also accepts the currencies that can be exchanged to it. Exchanges could operate in real-time in theory because these are digital, so "Clickout Shopping Chart" in Bitcoin could in theory be paid with any P2P units.

I liked this point a lot. Currently Litecoin is only worth pennies per coin even though there are much less Litecoins mined than Bitcoin.

Perhaps they are not yet fungible, because people a) don't see this real time exchange capability, b) they don't yet trust that Litecoin is a stable system.

Fungibility between Bitcoin and competitors can maybe be provided by a real-time exchange at the time of spend.

It is still required to have confidence in the quality of the competitor's P2P database.

I don't agree this is the strongest point. I am urging to hit the other points also.

1:1 ratio is irrelevant. Fungibility is all that is required with an exchange. Real-time makes it more fungible. Fungibility lifts the value of the less expensive currency via arbitrage, until fair-value is reached.


4. ANONYMITY IS OVERRATED:

Yes each sending and receiving address doesn't have a name. But FinCIN ruled March 13, 2013 that to cash in/out to any other currency makes the person a money transmitter and falls under their regulation and reporting requirements.

The P2P (peer-to-peer) database has one copy and is viewable by everyone. The govt tracks what we do with various methods such as cookies,
man-in-the-middle routers, our facebook and google accounts (they have to provide the info if govt asks for it), etc.. Thus they can figure out the identity of the transactions if they really want to.

Gold is a private hedge against government. You can trade it without any public record viewable by everyone on the internet.


5. MONOPOLY ON PROCESSING (666):

Digital kill switch.

I want you to get the technical description correct. So I will write the following paragraph carefully.

Bitcoin transactions are processed by the peer computers who contribute their processing power to computing a hash puzzle, in exchange for a reward which is the debasement that occurs with each transaction block. Without this processing by the peers, then no transactions can occur and the Bitcoins would be worthless. These peers compete to solve the puzzle (on each 10 minute block of transactions), and this mathematically insures that there can't be a double-spend in the one distributed copy of the database (sounds like magic but it isn't). If an attacker had 51% of the processing power, he could corrupt this database, refuse to do certain transactions, or even change the protocol to do hyperinflation or what desired. Normally it is not likely for an attacker to get 51% because the whole world is motivated to contribute processing power in exchange for that debasement reward. But this reward is halving every 4 years and will eventually be 0. So who will process the transactions then? The developers of Bitcoin claim that a) some retailers such as Walmart will have an incentive to offer processing for free in exchange for prioritizing their own transactions, and b) that a market-based transaction fee can
compensate other peers.

That is a logic fail. If the corporations can give away processing for free, then there is no market for a transaction fee. Users will not route their transactions to the peers that charge, if the corporations are offering to process the transactions for free.  (Also the market-based transaction fee wouldn't scale any way for numerous reasons... ask me if you need to know... but you don't really need to know because the other point trumps this one any way).

So therefor Bitcoin is designed to hand over processing of digital payments to corporate-fascism.

Although some might think we can't create a competitor later (in which the no debasement is a lie), I actually think that once the bitcoin is #1 and widely adopted, it will be impossible to compete to create a new P2P currency. The reason is because the primary need will be fulfilled and it would be impossible to get the momentum to build from small again. Remember money is a social institution, so you need economy-of-scale. Right now, everyone is very excited because there is no such P2P currency in widespread adoption. Once there is, most people won't want to try an upstart small currency. And I think probably they are not fungible, but you can present both arguments.


6. WASTEFUL and THUS NOT PROFITABLE FOR PROCESSORS

Bitcoin's Proof-of-Work algorithm for preventing double-spend requires all the peers to be continually processing thus burning electricity (the main cost) and expensive specialized hardware such as GPUs, FPAs, and ASICs.

Thus the mining is less profitable and the Bitcoin difficulty scales to the total mining power in the system. This keep the reward for mining nearly equal to the cost of mining on a system-wide basis. The only way to profit is the have a more efficient hardware (or lower electric cost) than the other peers. Thus there is really not net profit being generated system wide-- zero-sum game.  Many miners don't realize this yet and have doubled-down on huge hardware investments and long payoff terms (but Moore's Law means the new miners double in speed every 18 months).

Thus the miners really are not profitable. Thus this is going to fall right into the lap of the corporate-fascism to keep the processing going.

Whereas, I designed a Proof-of-Work which uses hard-disk space and the peers are only doing something when they are selected round-robin. Thus mining can be much more profitable and the more important thing is everybody already has a hard-disk to contribute and don't need to buy esoteric specialized hardware.

So my point is that Bitcoin is designed to making the processing by peers fail and fall into the lap of corporate-fascism. There is a way to fix this technically, but Bitcoin refuses to make these changes. I talked with the developers for a period of days, then they banned me when they realized I had figured out their scam system.

Fungibility between Bitcoin and competitors can maybe be provided by a real-time exchange at the time of spend.

It is still required to have confidence in the quality of the competitor's P2P database.

I don't agree this is the strongest point. But that writer likes it. I am urging him to hit the other points also.

1:1 ratio is irrelevant. Fungibility is all that is required with an exchange. Real-time makes it more fungible. Fungibility lifts the value of the less expensive currency via arbitrage, until fair-value is reached.

Article will go out to 60,000 silver investors stating that "any one can make a copy of Bitcoin, thus it is nonsense to say there isn't debasement of P2P currency units".

Supply of P2P currency units is UNLIMITED, especially as someone make a way to trade between them, then they are fungible in terms of merchants who accept one or the other.