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Author Topic: The *Real* Advantages of Bitcoin  (Read 2420 times)
David Swatts
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January 18, 2012, 05:18:18 AM
 #1

I wrote them up here fro my blog: http://goxxed.blog.com/

But I repost here:

The *Real* Advantages of Bitcoin

Compared to fiat currencies, Bitcoins have absolutely astounding advantages. Most people only list the “PC” advantages, but for this blog, I’m going to list what I believe are the REAL advantages, despite what the public may think about them. Here they are, in order from most to least important (in my opinion):

#1 – Immune to Litigation


This is the #1 advantage of Bitcoin in my book. Anyone who has been sued, or has been threatened legally, knows that your money and property are NOT SAFE in a world owned by lawyers. You could work your entire life and have all your savings wiped out by a single bad actor in our true criminal “justice” system.

With Bitcoin, you can store of wealth in a veil of secrecy through the full power of modern cryptography, making a large portion of your property immune to confiscation by the lawyers. Bitcoin will make litigation vastly weaker as a tool of oppression and inequality. No longer can a bad wife or husband take your retirement savings in a divorce settlement… and so on and so forth.

#2 – Borderless

When I say “borderless” when speaking of Bitcoin, I mean so in the most powerful way: Bitcoins can be secretly transported anywhere in the world instantly for free. Contrast this with gold or fiat money, which is almost impossible to get out of the country incognito.

Ever tried walking through customs with massive piles of cash or gold bars? Somehow I doubt it’s going to work. With Bitcoin, however, you can walk through the metal detector and get a full pat down etc., and walk right to your gate without hassle, despite having millions of dollars of Bitcoins on your truecrypt-protected flash drive – it’s that easy.

While in the past difficult and expensive international diversification was absolutely essential for anyone serious about keeping their wealth and themselves safe from a potentially oppressive government at home, Bitcoin is the ultimate offshore bank, literally bringing ultra-cheap international diversification to the masses right in their own living rooms!

#3 – No Inflation

Inflation is the great wealth tax, the invisible arm of government that can reach into your pocket and steal any day or night, without your direct knowledge, simply by devaluing the currency. You may feel you’re protected by investing in “hard assets” such as gold, but in reality, those assets are going to be taxed relative to the base monetary unit, which is usually being debased. In other words, although the gold price may keep up with inflation, you are forced to pay a phantom capital gains on it — so it doesn’t really keep up, and that’s not even taking into account storage fees.

Bitcoin, both due to its anonymous nature and hard cap in coin issuance, is much more practical for protecting large amounts of wealth from the ravages of inflation than any other medium. One could argue gold can do this if you store it yourself and sell it secretly for cash when you wish to spend it, it’s very hard to do this for many obvious reasons (acid tests, divisibility difficulty, transportation, etc.), and neigh impossible for very large sums.

Finally, Bitcoin may even prove to have some resistance from the adoption of fractional reserve banking, since one of the main purposes of banking (making it easy to store and transport wealth) has been taken over by the Bitcoin protocol, so it probably means less capital available for FRB and thus less overall credit expansion in the Bitcoin market (this would also mean a more stable Bitcoin-based economy… but we’re getting off track here.. Smiley )

#4 – No taxes or regulatory overhead

Think of all the sky-high costs associated with doing business in a fiat money system: income taxes, payroll taxes, regulatory costs, compliance personnel, legal fees, accountant fees, estate taxes, gift taxes, sales taxes.. the list literally goes on and on and on. Have you ever thought of what happens to a dollar as it circulates through the economy? Every time a transaction happens, the government gets a big piece of that dollar — so it doesn’t take very many transactions for that dollar to make it way completely back to the government.

Taxes and regulatory bodies are like a giant vacuum cleaner, sucking wealth from productive people and giving it out to parasites. Productive people are impoverished while big bankers,  lobbyists, bureaucrats, and lazy government employees live high off the hog. It means less money to build out productive capital infrastructure, less people doing real productive work, less money available for legitimate charity, and lower standards of living for everyone. Since Bitcoin is anonymous, taxes suddenly become voluntary — and thus, a better world.

#5 – Freedom to spend your own damn money!

What do Visa, Mastercard, PayPal, and pretty much all the big banks have in common? They all block you from giving donations to WikiLeaks! Now, whether you approve of WikiLeaks or not is a personal decision ( you can probably guess that I love them Smiley ), but that’s the point — it’s YOUR choice. By restricting what you can spend your money on, the current financial system is overriding your decisions and controlling you. Use Bitcoin, and spend your money freely.

#6 – Dead Simple

This may seem to be an odd point to a non-techie, since Bitcoin is so technologically advanced and “complicated”! Well, this may be true in some ways, but honestly, how many accounts do you have with the government’s fiat system just to take advantage of tax breaks? An IRA, a Roth IRA, a 401K, a 509 plan, an HSA account… and you can only contribute so much to blah blah…, and with this plan you cannot invest in blah blah blah. Honestly, Bitcoin is dead simple. Buy Bitcoins, they’re yours, spend them when and if you wish.

No Rules.
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Mellivora
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January 18, 2012, 11:45:41 PM
 #2

Nice.

In regards to #4, I can't remember who it was that said "A dollar is a lot smaller after a round trip from your pocket to Washington D.C. and back".

#6, my head is kinda spinning right now with the techie stuff, but it is getting clearer and there is light at the end of the tunnel after only a few dedicated hours to learning this.  Can't say the same for the fiat system's taxing and regulations...that stuff is a clear as mud and getting muddier.

"Whoever wishes peace among peoples must fight statism." - Ludwig von Mises
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January 19, 2012, 06:18:47 PM
 #3

BTC might not be taxed, but you're paying a cost in increased volatility. You never know when your savings might be wiped out by an extreme move in the market.
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January 19, 2012, 06:36:32 PM
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BTC might not be taxed, but you're paying a cost in increased volatility. You never know when your savings might be wiped out by an extreme move in the market.

If you can afford the time, it'll come back. But it's a myth that Bitcoins can't be taxed. Granted, you can make some profits that you can hide from the authorities, but those have equivalents in the traditional world. If you own stock of a company in S'pore, you can simply choose not to pay tax on it in your home country. If you are self employed and work for private customers, you can make a "special agreement" with your customers, as you can today.

In a world where Bitcoin is ubiquitous, nothing would change: Your employer would subtract the taxes from your salary and transfer them to the tax authority. When you buy stuff, you pay the consumer tax (VAT...) to the company which then relays it to the authorities. If you are self employed and work for companies, your revenue is another company's cost which they deduct. If you are a doctor, the record of your revenue is with the health insurance.

Zero Reserve - A distributed Bitcoin Exchange

Install - Getting Started - BitcoinTalk Thread - Github Source
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January 20, 2012, 02:17:02 AM
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Blog bookmarked.

Do you know of operation fabulous (bitcoin ad market)?

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
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January 20, 2012, 05:44:13 AM
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Nice first post. Totally agree, although thats a handful out of hundreds if not thousands. Priority's and perceived benefits will differ from person to person.

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January 20, 2012, 06:22:47 AM
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To me, #2 and #3 stand out as the tallest advantages, and #6 is probably fair. Nice to see your list, though.

#1 - it works both ways, you could be robbed while vulnerable and will never have any chance of seeing your wealth again. Accidents are also definitive.

#4 and #5 are libertarian friendly, but one way or another, unless you choose to live on an unclaimed iceberg floating around Antarctica, and have the means to defend it, you're going to have to pay taxes in one form or another. Govts resort to coercing this for a reason.

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January 20, 2012, 09:09:54 PM
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Bitcoin does have advantages, but there are numerous problems with it:

1.  Volatile - "real" currencies move around 5-10% per year at most
2.  Shady - it's a great way for criminals to transfer money
3.  Learning curve - the common man doesn't have the reason or desire to learn about it
Myrtlewood
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January 22, 2012, 12:38:48 AM
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Very exciting, i'm looking forward to adoption ramping up so they're a bit easier to talk about without getting blank looks and having to play professor
lucif
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January 22, 2012, 12:41:47 AM
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Bitcoin isnt simple yet for new users. But since developers updated UI with serveral usability improvements, it became more simpler.

The key point of disunderstanding is sinchromizing process and block model.
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January 22, 2012, 12:55:23 AM
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We are still in the experimental/development stage. Future clients will be monitored and regulated by government agencies (probably privatized) that will control and tax transactions through the use of whitelisted and green addresses. We will be free from banksters inflating our money, but never from taxes.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
payb.tc
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January 22, 2012, 12:56:30 AM
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Bitcoin does have advantages, but there are numerous problems with it:

2.  Shady - it's a great way for criminals to transfer money

it's not a problem for those criminals though... you said it yourself, it's 'great'.

i'd say being 'shady' is more of a neutral quality.
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