A cunning plan....

[Anonymous]

What if people decided to destroy the current system of predatory banking  without having to pick up a gun or engage in violence whatsoever because they view what the central bankers have done as an act of economic terrorism? Are they justified in bringing this criminal system to its knees ?

How it would work is everyone would start getting loans in fiat and buying bitcoins. They then default on those fiat loans meaning they now have thousands of bitcoins and the bankers have nothing but thin air . Rinse and repeat. If enough people did this what effects would it have?

[da2ce7]

Getting a loan of something that is worthless, to pay for something that is of worth... Sound like good business, on everyone's behalf other than the banks. 

[TiagoTiago]

Many would not be able to repeat though; if it was that easy to keep getting more and more loans there would be tons of poor people living like they're millionaires.

[kiba]

Don't do evil to do good. Do good to do good.

Spread bitcoin!

[Anonymous]

Many would not be able to repeat though; if it was that easy to keep getting more and more loans there would be tons of poor people living like they're millionaires.

They throw credit card offers at you like youre a drunk sailor.

How much would you have made if you purchased bitcoins 6 months ago using a credit card. You wouldnt need to default .

I am not encouraging people to do this as I believe you need to honor your contracts . Its probably similar to max keiser's plan to create a run on silver to bankrupt jp morgan.

[Anonymous]

Getting a loan of something that is worthless, to pay for something that is of worth... Sound like good business, on everyone's behalf other than the banks. 

My thoughts exactly.

[gigabytecoin]

Soooo... try to take down the banks? That most all of the superpower world governments just recently bailed out and now have a stake in?

Good luck with that!

[sverre]

You could, in theory, do exactly the same with cash. Get $10,000 credit card, go to ATM's over the next 10 days withdrawing the maximum amount ($1000) as a cash advance in USD, default on the loan and have $10,000 in USD cash. Of course you'd ruin your credit rating, probably be made bankrupt by the bank, the govt may even seize any assets in your name (house, car etc) as part of the bankruptcy proceedings.

How much would you have made if you purchased bitcoins 6 months ago using a credit card. You wouldnt need to default .

Only assuming BTC is increasing in value, which it has been, but then again so has the stock market over the last few months. But like any investment, whether it's shares or international currency or BTC or property, investments can go up as easily as they can go down.

[breandan81]

If a bunch of people did this it would basically be a leverage fueled price bubble in bitcoin, it would undermine bitcoin as much as it would the banks in the long run.

[Sultan]

Interesting idea.

The only way it would work is if one could sustain their lifestyle using BitCoins only.

After the government would seize your assets and you declaring yourself bankrupt after being summoned to court by the credit card companies, you shuold be able to buy all of your stuff back with BitCoins, but that would be a waste of time anyway, unless you took out a loan worth more than your actual worth.

Most huge loans are collateralised, so no way of making money there.

If you really believe in BitCoin, just buy more with every single penny you earn until eventually even the pennies you earn are actually BitCoins themselves.

[deadlizard]

heres an idea, STOP using their service.

[FooDSt4mP]

The only way it would work is if one could sustain their lifestyle using BitCoins only.

From little acorns great oaks grow... not need for all or nothing attitude here... one could start small, use bitcoin for some online services and virtual goods first, than move on to all online and virtual goods and services, than on buying some tangible goods, than move on to paying with bitcoins for food and utilities. It's an evolutionary revolution... lol

I agree vladimir, but I think Sultan was referring to after the state seizes all your assets (I hope you backed up your wallet.dat to the cloud!).  In that situation, it's all or starve.

[FooDSt4mP]

I think that even in US the state does not confiscate ALL the assets.

In UK they do not confiscate low cost cars, tools of the trade, household items etc... they do not even confiscate all the income and leave enough to live pretty comfortably. There are many cases where with properly structured/prepared bankruptcy one often gets much better standard of living than before it. But well... UK is a rather strange semi-commy welfare state...

Of course, I also agree that when someone wants to live completely off the grid, bitcoin is not as mature as gold, silver, ammo and canned tuna, not yet anyway.

Also there is one thing that no state can confiscate. I mean what's in your head.

Air?  Shit, there I go with the self deprecation again.

<rant>
But seriously, the state may not be able to confiscate, but they do have the patience to wear down your ideals.  Teaching us all to assume freedom leads to frustration, which breaks the spirit.  The US is not the land of the free, it's the land of economic enslavement.  I can't just raise my own food, I also have to earn enough money to pay the government to maintain low oil prices and fund a nearly useless healthcare system.  Don't get me wrong, our medical professionals are great diagnosticians, but they know nothing about treatment beyond pharmaceuticals.
</rant>

[ryepdx]

If a bunch of people did this it would basically be a leverage fueled price bubble in bitcoin, it would undermine bitcoin as much as it would the banks in the long run.

Exactly. The bitcoin economy would come crashing down as soon as people started buying back their fiat money to pay for things. For the bitcoin economy to really flourish we need to have as closed a system as possible.

[nofuture]

what we need is more exchange, more FOREX if you will to provide more points of entry or interchange between the fiat markets and the bitcoin (cryptocurrency) market.   The wealth will flow into cryptocurrency and goods and services will appear in a virtuous cycle. 

It's no coincidence that we have seen this amazing rise in BTC/USD since Mt. Gox appeared on the scene.  We need more Mt. Gox's in every local currency market.   We also need currency exchanges on a smaller scale that are less susceptible to attack.   


Ideally in the not-to-distant future you will have something like an off-shore DEBIT card (in this case offshore is in cyberspace) that converts from your BTC holdings to local fiat on the fly.    At the rate BTC is increasing (long-term) you may not need to ever reload the card as you the rate of increase may exceed your expenditures.

In essence you being at the bottom of the food change would be the primary beneficiary of the deflation much as the banks are the primary beneficiary of inflationary currency (first at the tap flowing down).     

   

[sverre]

If a bunch of people did this it would basically be a leverage fueled price bubble in bitcoin, it would undermine bitcoin as much as it would the banks in the long run.

Exactly. The bitcoin economy would come crashing down as soon as people started buying back their fiat money to pay for things. For the bitcoin economy to really flourish we need to have as closed a system as possible.

The OP is talking about loan fraud, with a goal of destroying the existing banking system, and using BitCoin as a replacement for cash. While the conversation progressed to whether BitCoin can be used to live off-grid, I think the point is that in this scenario BitCoin holds no additional benefits beyond normal cash. Loaning money from a bank and defaulting on it will get your assets potentially seized, and "the man" can't seize well hidden cash any better than BitCoin. The loan fraudster might as well use cash.

Certainly if a bunch of misguided people THOUGHT that BTC offered benefits over cash when performing loan fraud, that might cause them to all simultaneously buy BTC, which would drive the price of BTC up. Then when they all simultaneously sold out of the market the price would go back down to what it was before. It may cause some larger fluctuations in the price of BTC than normal, but ultimately the economy wouldn't come "crashing down".

Even if BTC devalued so that 1BTC was worth just 1c, the position of the decimal point relative to fiat currency makes no difference to the BitCoin system. Your $100USD would buy more BTC now, but then you'd spend more BTC buying things with it. A devaluing currency hurts those holding it, but only by the EXACT amount it helped when it was increasing in value. It's a zero sum game.

[Anonymous]

You can carry $50 000 of bitcoins on a thumb drive or stash it in an encrypted file somewhere.

$50 000 of cash is not as easy to hide and is far more likely to be stolen and as i said in another thread if you have a physical item it can be seized or raided.

[da2ce7]

If a bunch of people did this it would basically be a leverage fueled price bubble in bitcoin, it would undermine bitcoin as much as it would the banks in the long run.

Exactly. The bitcoin economy would come crashing down as soon as people started buying back their fiat money to pay for things. For the bitcoin economy to really flourish we need to have as closed a system as possible.

Depends if you spend the Bitcoin's or not.  If you don't spend the coins, you are forcing the bank to donate to the Bitcoin community.  The question comes down to if it is a moral thing to do or not.

[elewton]

Or to whether a group of people can put together the skillset and organisational resources to commit such massive fraud.
Though I am not one of them, there are many people on this planet who would happily do this, so the question becomes one of difficulty.

The only property of the loans>bitcoins fraud that is specially useful is if it actually crashes the banks and inflates the bitcoin economy to too-big-to-fail status.

People positioned to perform this fraud have to control their own microeconomy, or agreement will have to emerge from an already large community (or a small, unethical community, I guess.

Russian mobster, large corporation, drug cartels, third-world leader in receipt of foreign aid.

Ireland is in a perfect position:
Receive large amount of IMF loans
Default and invest in bitcoins
Crash the Euro
PROFIT!