Bitcoin as Zimbabwe's official currency + Prince of Sealand interest in bitcoin

[Brushan]

Bitcoin has never been tried at such a wide scale in a single country, this is probably bupkiss though given their hyperinflation problems making their existing money absolutely worthless I could see this happening in some country sometime soon.

Why is deflationary a bad thing? Is it bad your money continues to appreciate in value over time instead of losing it like the Euro of Dollar never to recover their spending power? People need to disconnect fiat currency from crypto-currencies, they do not work the same and cannot be compared in an economic way. Bitcoin's deflationary nature ensure hyperinflation never occurs which I think has been proven to be infinitely worse for an economy.

Well let's say a corn farmer in Zimbabwe gets paid 10 BTC a month. To be able to to pay him 10 BTC a month the owner has to sell 1 kg of corn for 1 BTC. Let's say his exporting the corn to the neighbouring nations. When the value of 1 BTC rises the corn gets too expensive for the importers and they start importing from elsewhere. A country has to do business with other countries or else it will end up like North Korea. So when the whole world has inflating currencies and 1 country has a deflating currency they will have a hard time.

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[caveden]

Brushan, if you analyse your argument a little deeper basically what you're saying is that the purchasing power of everybody else should be kept weaker than what it can be just to help exporters.

That's wrong both ethically and economically.
No, you should not decrease the purchasing power of an entire society in order to temporarily help a segment of it. When your money earns value, you earn more purchasing power and you become richer. So if the money of an entire country is getting more valuable, everybody in this country is getting richer!

And this effect over exporters is much less worse than what people make it look like. With his stronger money, the exporter farmer of your example will have more purchasing power to acquire more tools/machinery and be more productive, for example. Also, since the value of money increased, people can receive nominally smaller wages - which could be actually higher in purchasing power.

[Brushan]

I understand your argument and i know many on this forum share it. I'm not saying i'm right and your wrong. Hell, people have been battling about this for a long time and still there is no consensus. The problem i see with your argument is that when you give the farmer less BTC every month because it is worth more he won't be able to pay back any loans he has. You could solve it by making the loan less BTC every year but then why would anybody lend it if you win more by just holding.

To be honest i don't see a problem with an inflationary currency. In my point of view, i see currency as one thing and a store of value as another. I think of currency like a hot potato which you want to hold for as little as possible. It's just something that makes trading easier but doesn't have any value by itself. Also when a currency loses purchasing power, the wages become bigger so there is balance. So when a worker gets his paycheck, he buys food, pays his rent etc and the part that he wants to save he invests in gold, silver, real estate, BTC etc. Nobody is forcing anybody to hold a currency, i don't see why somebody would like to hold it and complain that it loses value.

[caveden]

I understand your argument and i know many on this forum share it. I'm not saying i'm right and your wrong. Hell, people have been battling about this for a long time and still there is no consensus. The problem i see with your argument is that when you give the farmer less BTC every month because it is worth more he won't be able to pay back any loans he has. You could solve it by making the loan less BTC every year but then why would anybody lend it if you win more by just holding.

Loans in BTC particularly are not feasible due to its extreme volatility.
But if a currency is used by an entire nation, its price won't fluctuate that much. A stable currency would increase in value proportionally to the economic growth of its user base. Loans would then be a possibility, likely with low interest rates. Like they were during the gold standard (during the second half of the XIX century in the US, for instance, prices would systematically fall)

To be honest i don't see a problem with an inflationary currency. In my point of view, i see currency as one thing and a store of value as another. I think of currency like a hot potato which you want to hold for as little as possible. It's just something that makes trading easier but doesn't have any value by itself. Also when a currency loses purchasing power, the wages become bigger so there is balance. So when a worker gets his paycheck, he buys food, pays his rent etc and the part that he wants to save he invests in gold, silver, real estate, BTC etc.

You're ignoring that inflation is not neutral. Those who receive the money first profit from those who receive it last, by being able to buy things before prices account for the new money. When the last people in the chain receive the new money, it'll be already too late. So, at least (when we're talking about 'simple inflation'), it is a nefarious wealth transfer mechanism. It's the most disguised of all taxes, and tend to hit harder on the most ignorant and/or poor.
And that's not all. Inflation nowadays is not simple. It's always directed to the credit market, creating signals to investors that there's lots of resources to invest in long term projects, Obviously creating money doesn't create resources, so this false signal will trigger a malinvestment boom which will result in a burst. These boom and burst cycles result in lots of lost capital. You can read more here:  https://mises.org/daily/672

Nobody is forcing anybody to hold a currency, i don't see why somebody would like to hold it and complain that it loses value.

You're forced to hold at least some because you're forced to pay your taxes in fiat. The network effect of the banking system will also ensure you hold much more than what you strictly need only for taxation.
Let's hope Bitcoin makes it easier to live without fiat one day.

[Brushan]

I understand your argument and i know many on this forum share it. I'm not saying i'm right and your wrong. Hell, people have been battling about this for a long time and still there is no consensus. The problem i see with your argument is that when you give the farmer less BTC every month because it is worth more he won't be able to pay back any loans he has. You could solve it by making the loan less BTC every year but then why would anybody lend it if you win more by just holding.

Loans in BTC particularly are not feasible due to its extreme volatility.
But if a currency is used by an entire nation, its price won't fluctuate that much. A stable currency would increase in value proportionally to the economic growth of its user base. Loans would then be a possibility, likely with low interest rates. Like they were during the gold standard (during the second half of the XIX century in the US, for instance, prices would systematically fall)

To be honest i don't see a problem with an inflationary currency. In my point of view, i see currency as one thing and a store of value as another. I think of currency like a hot potato which you want to hold for as little as possible. It's just something that makes trading easier but doesn't have any value by itself. Also when a currency loses purchasing power, the wages become bigger so there is balance. So when a worker gets his paycheck, he buys food, pays his rent etc and the part that he wants to save he invests in gold, silver, real estate, BTC etc.

You're ignoring that inflation is not neutral. Those who receive the money first profit from those who receive it last, by being able to buy things before prices account for the new money. When the last people in the chain receive the new money, it'll be already too late. So, at least (when we're talking about 'simple inflation'), it is a nefarious wealth transfer mechanism. It's the most disguised of all taxes, and tend to hit harder on the most ignorant and/or poor.
And that's not all. Inflation nowadays is not simple. It's always directed to the credit market, creating signals to investors that there's lots of resources to invest in long term projects, Obviously creating money doesn't create resources, so this false signal will trigger a malinvestment boom which will result in a burst. These boom and burst cycles result in lots of lost capital. You can read more here:  https://mises.org/daily/672

Nobody is forcing anybody to hold a currency, i don't see why somebody would like to hold it and complain that it loses value.

You're forced to hold at least some because you're forced to pay your taxes in fiat. The network effect of the banking system will also ensure you hold much more than what you strictly need only for taxation.
Let's hope Bitcoin makes it easier to live without fiat one day.

I'm still not convinced but i have saved the link and will read it when i have time. Thank you and hopefully i'll learn something new.

[Brushan]

I think i read somewhere that digital cash is already very popular in Africa and that they do most payments with their cellphone. Not sure though. As for the Zimbabwe story, sounds more like a joke to me.

Keep an eye on Ghana and Kenya.  I know people who are actively promoting Bitcoin in both countries.

Yeah i read in another thread about their system called Mpesa. Maybe we can learn something from them and create a layer for bitcoin that is similar to their system to make BTC payments more user friendly. I'm not a programmer but if a developer could make something similar i think it would be a huge leap for Bitcoin.

[ffernandex]

I've heard of important bitcoin advocates trying to convince small nations to adopt bitcoin as official currency. This would make impossible to make bitcoins illegal.

Regarding the practical feasibility of this, there's a lot to speculate though.

But tying your currency to an inflation free-index is a solution that has been used with success in order to stop inflation. In Chile, my country, we have since the late 70's something called "UF" which is an alternate currency that readjust every month according to inflation. This currency is used in almost all real state transactions and for most credits. You can even make time deposits in UF to protect agains inflation.

Perhaps they don't need to actually use btcs, but just tie the exchange of their currency to btc prices.

Cheers!

[ChristianK]

I've heard of important bitcoin advocates trying to convince small nations to adopt bitcoin as official currency. This would make impossible to make bitcoins illegal.

Not impossible but harder.

A small nation can be coerced pretty easily.

[briannguyen]

The Zimbabwe's content is updated with information from CNN.

[kwukduck]

lol what a load of bullshit
'unidentified source'
'unknown journalist'
right... go on...


I thought Zimbabwe is mostly underdeveloped as in, no power or much technology to support the bitcoin system...?

[glendall]

Sealand I'm all for.

Zimbabwe not really.  That economy is a massive mess and this whole idea doesn't make a lot of rational sense to me.

[Mylon]

I don't know, I'm still very sceptical. The Sealand story, looks pretty legit. The Zimbabwe story, everything out there points back to the CNN story, which is one without sources... So unless we get any other reports. (google hasn't found any yet) Looks like its fake

[Come-from-Beyond]

Zimbabwe can launch their own coin with centralized control. Why do they need Bitcoin?

[Luckybit]

Bitcoin has never been tried at such a wide scale in a single country, this is probably bupkiss though given their hyperinflation problems making their existing money absolutely worthless I could see this happening in some country sometime soon.

Why is deflationary a bad thing? Is it bad your money continues to appreciate in value over time instead of losing it like the Euro of Dollar never to recover their spending power? People need to disconnect fiat currency from crypto-currencies, they do not work the same and cannot be compared in an economic way. Bitcoin's deflationary nature ensure hyperinflation never occurs which I think has been proven to be infinitely worse for an economy.

Well let's say a corn farmer in Zimbabwe gets paid 10 BTC a month. To be able to to pay him 10 BTC a month the owner has to sell 1 kg of corn for 1 BTC. Let's say his exporting the corn to the neighbouring nations. When the value of 1 BTC rises the corn gets too expensive for the importers and they start importing from elsewhere. A country has to do business with other countries or else it will end up like North Korea. So when the whole world has inflating currencies and 1 country has a deflating currency they will have a hard time.

That isn't really true though. Why would we have to pay him 10 BTC a month if we cannot afford? When the value of 1BTC rises he can adjust his prices to 0.1BTC and then it solves everything.

[Brushan]

Bitcoin has never been tried at such a wide scale in a single country, this is probably bupkiss though given their hyperinflation problems making their existing money absolutely worthless I could see this happening in some country sometime soon.

Why is deflationary a bad thing? Is it bad your money continues to appreciate in value over time instead of losing it like the Euro of Dollar never to recover their spending power? People need to disconnect fiat currency from crypto-currencies, they do not work the same and cannot be compared in an economic way. Bitcoin's deflationary nature ensure hyperinflation never occurs which I think has been proven to be infinitely worse for an economy.

Well let's say a corn farmer in Zimbabwe gets paid 10 BTC a month. To be able to to pay him 10 BTC a month the owner has to sell 1 kg of corn for 1 BTC. Let's say his exporting the corn to the neighbouring nations. When the value of 1 BTC rises the corn gets too expensive for the importers and they start importing from elsewhere. A country has to do business with other countries or else it will end up like North Korea. So when the whole world has inflating currencies and 1 country has a deflating currency they will have a hard time.

That isn't really true though. Why would we have to pay him 10 BTC a month if we cannot afford? When the value of 1BTC rises he can adjust his prices to 0.1BTC and then it solves everything.

What if the poor bastard has a loan of 100 BTC? How will he ever repay that? If you mean that we should also lower the loan then you won't find any lenders since people make more money by holding it than by lending it out. I'm in no way for todays economic system. It was my disgust for the bankers that made me interested in Bitcoin from the beginning. I just don't think a currency with bitcoins rate of deflation would do any good for a nations economy. There are other ways from my point of view.

[virtualmaster]

May be some people are dreaming about a Pan-African financial unity:
http://afrinnovator.com/blog/2013/04/01/bitcoin-crypto-currency-and-the-opportunity-for-a-truly-pan-africa-money-revolution/

[the founder]

http://ireport.cnn.com/docs/DOC-957375   <----  fake.

It's impossible for them to adopt bitcoin in it's current form...   freaking 900 days out of the starting line and with the infrastructure of the commercial internet... circa 1993.

unless....  well....   if they backed some sort of paper currency with bitcoins then I supposes it's possible....

publish a blockchain address and just print based on that blockchain address..    let's say they had 500,000 bitcoins... then they print off a million notes for each bitcoin or whatever they hell they want.

Their currency would flucuate like mad because it's tied to bitcoin not gold ... but if it's actually convertible from their paper to bitcoin at a set exchange rate it might stabilize both.... actually scratch that.. it would stabilize both...  because as far as they would be concerned people outside the country paying for diamonds or whatever would be paying directly in bitcoin, hence allowing them to increase their printing press...

[Luckybit]

Bitcoin has never been tried at such a wide scale in a single country, this is probably bupkiss though given their hyperinflation problems making their existing money absolutely worthless I could see this happening in some country sometime soon.

Why is deflationary a bad thing? Is it bad your money continues to appreciate in value over time instead of losing it like the Euro of Dollar never to recover their spending power? People need to disconnect fiat currency from crypto-currencies, they do not work the same and cannot be compared in an economic way. Bitcoin's deflationary nature ensure hyperinflation never occurs which I think has been proven to be infinitely worse for an economy.

Well let's say a corn farmer in Zimbabwe gets paid 10 BTC a month. To be able to to pay him 10 BTC a month the owner has to sell 1 kg of corn for 1 BTC. Let's say his exporting the corn to the neighbouring nations. When the value of 1 BTC rises the corn gets too expensive for the importers and they start importing from elsewhere. A country has to do business with other countries or else it will end up like North Korea. So when the whole world has inflating currencies and 1 country has a deflating currency they will have a hard time.

That isn't really true though. Why would we have to pay him 10 BTC a month if we cannot afford? When the value of 1BTC rises he can adjust his prices to 0.1BTC and then it solves everything.

What if the poor bastard has a loan of 100 BTC? How will he ever repay that? If you mean that we should also lower the loan then you won't find any lenders since people make more money by holding it than by lending it out. I'm in no way for todays economic system. It was my disgust for the bankers that made me interested in Bitcoin from the beginning. I just don't think a currency with bitcoins rate of deflation would do any good for a nations economy. There are other ways from my point of view.

Predatory lending happens in general with or without Bitcoin. Btw there are people who lend Bitcoins already because you do make money lending it out and getting interest. Deflation is a good thing, you just can't make sense of it because you're used to the world of credit and inflation rather than saving. You don't need to take out loans as big when you're in a deflationary economy.

[Luckybit]

I've heard of important bitcoin advocates trying to convince small nations to adopt bitcoin as official currency. This would make impossible to make bitcoins illegal.

Regarding the practical feasibility of this, there's a lot to speculate though.

But tying your currency to an inflation free-index is a solution that has been used with success in order to stop inflation. In Chile, my country, we have since the late 70's something called "UF" which is an alternate currency that readjust every month according to inflation. This currency is used in almost all real state transactions and for most credits. You can even make time deposits in UF to protect agains inflation.

Perhaps they don't need to actually use btcs, but just tie the exchange of their currency to btc prices.

Cheers!

People also forget that Ripple allows for the loans and lending element of BTC. Loans and lending already aren't going to be a problem.

[knybe]

here's a google news search of the past week with "zimbabwe + bitcoin"

...nothin: http://www.google.com/search?client=safari&rls=en&q=zimbabwe&ie=UTF-8&oe=UTF-8#q=zimbabwe+%2B+bitcoin&safe=off&client=safari&hl=en&rls=en&tbs=qdr:w,sbd:1&tbm=nws&source=lnt&sa=X&ei=HxdvUaGIBsGpiALH5YGoAQ&sqi=2&ved=0CCQQpwUoAQ&bav=on.2,or.r_cp.r_qf.&bvm=bv.45368065,bs.1,d.cGE&fp=bdbabb10b94ab79&biw=1658&bih=940