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Author Topic: If all of the world's paper currency was replaced...  (Read 3409 times)
SgtSpike
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April 28, 2011, 08:33:11 PM
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This website estimates that there is $4.5T of physical currencies in circulation as of September 2009.  If all of that was replaced by BitCoins, and all 21M BitCoins had been released, a single BitCoin would have the purchase power of $214,285.

I'm sure it would be several times that number if electronic currency was considered as well.

Interesting to think about...
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MoonShadow
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April 28, 2011, 08:35:35 PM
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This website estimates that there is $4.5T of physical currencies in circulation as of September 2009.  If all of that was replaced by BitCoins, and all 21M BitCoins had been released, a single BitCoin would have the purchase power of $214,285.

I'm sure it would be several times that number if electronic currency was considered as well.

Interesting to think about...

Interesting, yes.  We will all be dead before this day comes, however.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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April 28, 2011, 08:53:05 PM
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Interesting, yes.  We will all be dead before this day comes, however.

You are such a bear.  Grin
Ian Maxwell
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April 29, 2011, 02:00:43 AM
 #4

Interesting, yes.  We will all be dead before this day comes, however.

Speak for yourself, I'm spending my fortune on cryonic suspension.

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MoonShadow
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April 29, 2011, 02:29:42 AM
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Interesting, yes.  We will all be dead before this day comes, however.

Speak for yourself, I'm spending my fortune on cryonic suspension.

You would still be dead, even if the possibility of revival were high.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
FreeMoney
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April 29, 2011, 03:00:38 AM
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I'm going to try that trick with the light speed spaceship then.

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clonedone
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May 04, 2011, 02:10:51 AM
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Interesting, yes.  We will all be dead before this day comes, however.

Speak for yourself, I'm spending my fortune on cryonic suspension.

hell yeahh!

CoinOperated
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May 04, 2011, 03:57:09 AM
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Interesting brain teaser in the OP.  I like these.

Cryonic suspension at warp speed aside, you would not actually replace the paper.  If you exchange $4.5T for 21M BTC, the miners end up holding $4.5T of paper currency after unloading their BTC.  That's a pretty large briefcase.   

As you point out by that time the paper is pretty much worthless, except to burn as heat.  So ironically the miners are happy just to get their kWh back.  The buyers of BTC don't make out, they just get a 1:1 exchange in buying power.  Their only win is they remove the threat of inflation.

In reality there is rougly 10x that amount of money, the rest being in the form of demand deposits or equivalent, which in theory is exchangeble for paper currency in both directions 1:1 (at least in small quantities).   What BTC will do to that, who knows.

Humm, head hurting already.
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May 04, 2011, 03:58:38 AM
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As fantastical as that price sounds if Bitcoin became the only currency of the world I think that one coin would have more value than $214,285 currently has. The reason being that smart people currently minimize the value that they hold in paper currencies for fear of devaluation, but this won't be the case with Bitcoin. It will be the default value holder until you find something good to invest in (like a sweet new burger joint).

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FreeMoney
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May 04, 2011, 04:07:05 AM
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Interesting brain teaser in the OP.  I like these.

Cryonic suspension at warp speed aside, you would not actually replace the paper.  If you exchange $4.5T for 21M BTC, the miners end up holding $4.5T of paper currency after unloading their BTC.  That's a pretty large briefcase.   

As you point out by that time the paper is pretty much worthless, except to burn as heat.  So ironically the miners are happy just to get their kWh back.  The buyers of BTC don't make out, they just get a 1:1 exchange in buying power.  Their only win is they remove the threat of inflation.

In reality there is rougly 10x that amount of money, the rest being in the form of demand deposits or equivalent, which in theory is exchangeble for paper currency in both directions 1:1 (at least in small quantities).   What BTC will do to that, who knows.

Humm, head hurting already.

I don't know if you are kidding or what, but miners aren't going to end up holding all the paper currency. They of all people will know when to stop taking it. It'll be the slow, stubborn and patriotic holding the bag.

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CoinOperated
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May 04, 2011, 04:17:44 AM
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I'm half kidding.  Miners are too smart for that, but it's worth thinking about:

In order to "replace" all the paper currency, it has to be traded ie. exchanged.  You have to have a willing recipient. Who would that be?  Yes there will be some stupid diehards but at some critical mass everyone will run for the exit .... together.

Maybe I already answered my own question, once the value of BTC rises to the point where it can buy a significant portion of the goods and services offered in a given year, then by definition you have inflation on the paper because it is the same amount of paper chasing an ever shrinking pool of goods and services (the leftover that weren't bought by BTC).  At some point the price of the paper falls below its thermal value and people literally burn it.  Maybe they run a generator to .... mine more BTC.

I feel like I'm trapped in an Asimov novel.....
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May 04, 2011, 04:28:57 AM
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In order to "replace" all the paper currency, it has to be traded ie. exchanged. 

Not really. People can just leave it in their sock drawers until it's worth the same as the receipts they've been saving. It doesn't have to get converted.



Maybe I already answered my own question, once the value of BTC rises to the point where it can buy a significant portion of the goods and services offered in a given year, then by definition you have inflation on the paper because it is the same amount of paper chasing an ever shrinking pool of goods and services (the leftover that weren't bought by BTC).  At some point the price of the paper falls below its thermal value and people literally burn it.  Maybe they run a generator to .... mine more BTC.

I feel like I'm trapped in an Asimov novel.....

Yeah, I think you've got it. I think I'm in the same novel Smiley

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May 04, 2011, 06:48:52 AM
 #13


In order to "replace" all the paper currency, it has to be traded ie. exchanged. 

Not really. People can just leave it in their sock drawers until it's worth the same as the receipts they've been saving. It doesn't have to get converted.



Maybe I already answered my own question, once the value of BTC rises to the point where it can buy a significant portion of the goods and services offered in a given year, then by definition you have inflation on the paper because it is the same amount of paper chasing an ever shrinking pool of goods and services (the leftover that weren't bought by BTC).  At some point the price of the paper falls below its thermal value and people literally burn it.  Maybe they run a generator to .... mine more BTC.

I feel like I'm trapped in an Asimov novel.....

Yeah, I think you've got it. I think I'm in the same novel Smiley


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marcus_of_augustus
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May 04, 2011, 07:01:40 AM
 #14

There is also the U$1 quadrillion in notional assets up on derivative mountain awaiting the BTC bonfire.

In the end, it is about the shifting of power. People with U$D billions and those who own the printing presses don't use it just to buy nice toys with (although they do some of that), they use it so that things are done the way they want them done.

"He who holds the gold makes the rules."

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May 04, 2011, 08:10:45 AM
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Do you think credit default swap derivatives have an "if people burn money for heat" clause as a trigger for a default event?  It would be fun to watch it all unwind.
SgtSpike
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May 04, 2011, 06:23:34 PM
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Hey, I'm all for the dollar going wild with inflation.  That'd take care of my mortgage in short order!
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May 04, 2011, 06:24:58 PM
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Interesting, yes.  We will all be dead before this day comes, however.
[/quote]

I believe you consistently underestimate the speed of change.

MoonShadow
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May 04, 2011, 07:22:16 PM
 #18

I believe you consistently underestimate the speed of change.

Perhaps I do.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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May 04, 2011, 07:56:00 PM
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I suspect you have added the total aggregates for all currencies.  If so, I doubt this makes any sense.  Different currencies don't add one another.
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May 04, 2011, 09:38:38 PM
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I don't like this estimation. It does not tell you anything and therefore has no meaning, if such situation is impossible. If Bitcoin replaced all cash, there wouldn't be much sense in using these currencies in any other form. I think better way of estimating how much Bitcoin would be worth if it replaced traditional money is to think how many people would use it and how much they would need over a certain period of time(interval between paychecks lets say). Whatever value you get, then you can increase it with respect to how much people would like to have and are able to obtain/hoard.
If bitcoin indeed replaced traditional money, it would be worth a lot more
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