Gold collapsing. Bitcoin UP.

[tvbcof]

That won't help you at a border crossing.

Neither will having been tagged as an individual who had had an interest in Bitcoin.  Just sayin'

Safety in numbers

Fuckin' TED talks.  Almost universally fascinating.  I have no idea how this talk bore any relationship to this conversation, but it was new to me and very interesting.  I'm usually skeptical of such amazing results.  This guy's thinking is 'orthagonal' but actually should not be.  Ecosystems are so amazingly complex and tens or hundreds of millions of years of evolution are such a good tuning fork that it would make sense to look to pre-history to find solutions which work.

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[bitcool]

bitcoin is ( and rightfully so ) stealing golds thunder?

I don't feel it's a far-fetched thought there's a connection between Bitcoin's rise and PM's recent downfalls.

To a portion of hardcore PM bugs who have great influence on fund flow, the psychological impact has be huge and profound. To some, Bitcoin rocked the foundation of their concept about wealth and value.

If you are a PM investor or a fund manager, and Bitcoin hasn't made you rethink wealth and money, you didn't work hard enough.

 

[tvbcof]

bitcoin is ( and rightfully so ) stealing golds thunder?

I don't feel it's a far-fetched thought there's a connection between Bitcoin's rise and PM's recent downfalls.

To a portion of hardcore PM bugs who have great influence on fund flow, the psychological impact has be huge and profound. To some, Bitcoin rocked the foundation of their concept about wealth and value.

If you are a PM investor or a fund manager, and Bitcoin hasn't made you rethink wealth and money, you didn't work hard enough.

Bitcoin did not change my thoughts on PM's or wealth or value one iota.  Bitcoin is just another entry in a certain class of vehicles, albeit a fascinating one with some neat features.  I made up my mind quite early in my interest in Bitcoin about where I wanted to set my wealth percentages and has not changed since.  (My posture strongly favors physical PM's and probably always will.)

Obviously Bitcoin has vastly outperformed PM's at the time of this writing.  I am, of course, delighted, and I'll be even more delighted if that remains the case which is very possible.  But I'm not going to think I'll roll snake-eyes, then do so, then take a victory lap about it.  I anticipated a number of possible scenarios for my BTC holding in two years form the time I set them.  We are sitting at one of them.  Things could be both much much better than we see today, or they could be zero'd due to a system failure or other causes.

My speculation in Bitcoin actually has to do more with the impacts of things which have not happened yet...to me because I live in the US and not in Cyprus...  I'll be a lot more interested in what the landscape looks like after such an event rather than during this dead-space period we are in now.

[bitcool]

Bitcoin did not change my thoughts on PM's or wealth or value one iota.  Bitcoin is just another entry in a certain class of vehicles, albeit a fascinating one with some neat features.  I made up my mind quite early in my interest in Bitcoin about where I wanted to set my wealth percentages and has not changed since.  (My posture strongly favors physical PM's and probably always will.)

People's confidence in PMs' value is backed by thousands years of human history, it hasn't changed since 2009.

OTOH, confidence in Bitcoin as a trustworthy "entry in a certain class of vehicles" has increased multiple orders of magnitude. Bitcoin is much better tested technically and socially today than a year ago.

With these two drastically different growth curves in terms of their soundness, it doesn't make a lot of sense to keep their allocation ratio constant.

[tvbcof]

Bitcoin did not change my thoughts on PM's or wealth or value one iota.  Bitcoin is just another entry in a certain class of vehicles, albeit a fascinating one with some neat features.  I made up my mind quite early in my interest in Bitcoin about where I wanted to set my wealth percentages and has not changed since.  (My posture strongly favors physical PM's and probably always will.)

People's confidence in PMs' value is backed by thousands years of human history, it hasn't changed since 2009.

OTOH, confidence in Bitcoin as a trustworthy "entry in a certain class of vehicles" has increased multiple orders of magnitude. Bitcoin is much better tested technically and socially today than a year ago.

With these two drastically different growth curves in terms of their soundness, it doesn't make a lot of sense to keep their allocation ratio constant.

The bolded is a good point.  I did say 'strongly favor' to allow for some shifting.  It's a giant and expensive pain in the ass to shift reserve assets around and so far it has not been worth it in spite of the gain in confidence that several more years of Bitcoin has produced.  At some point it probably will for me.

It is also worth noting again that my posture about wealth storages is strongly influenced by things which have not yet transpired.  And with a lot of luck, never will in my lifetime.  These would be major upheavals and it is difficult to predict how they would impact the infrastructure upon which Bitcoin relies.

Relatedly, the evolution of Bitcoin itself and the nature of it's reliance on the network infrastructure which rides are currently big question marks.  As are the questions about proliferation (or not) of alternate similar solutions.

Distributed cryto-currencies will always have more complexity and hence more risk than a chunk of metal.  I rely on PM's not to grow but rather to simply act as a storage tank which does not leak to much.  My Bitcoin footprint is still on the highly speculative end of the scale and if it does not grow significantly it will not live up to my hopes.  I expect it to take a lot more tending to however.

[Frozenlock]

Wtf... are they just really really bad dealers?

https://www.cachemetals.com/store/index.php

Due to limited supply, online ordering has been temporarily suspended. To place an order, please call us at 416-916-6660 or 1-877-916-6670. We apologize for any inconvenience this may have caused.

[cypherdoc]

bitcoin is ( and rightfully so ) stealing golds thunder?

I don't feel it's a far-fetched thought there's a connection between Bitcoin's rise and PM's recent downfalls.

To a portion of hardcore PM bugs who have great influence on fund flow, the psychological impact has be huge and profound. To some, Bitcoin rocked the foundation of their concept about wealth and value.

If you are a PM investor or a fund manager, and Bitcoin hasn't made you rethink wealth and money, you didn't work hard enough.

 

Very good.

These two gold threads have represented an enormous amount of work for all involved.

James Turk probably represents the best example of who you're talking about.  And you're right. There are many more.

It's been amazing to watch.

[tvbcof]

...
Distributed cryto-currencies will always have more complexity and hence more risk than a chunk of metal.  I rely on PM's not to grow but rather to simply act as a storage tank which does not leak to much.  My Bitcoin footprint is still on the highly speculative end of the scale and if it does not grow significantly it will not live up to my hopes.  I expect it to take a lot more tending to however.

No, there is nothing complicated at all about mining, forging, transporting, storing, and securing a chunk of metal.

When the Krugerrand hits my hands, it's a chunk of metal with the inherent simplicity (and thus, reliability) that I mentioned.

The fact that it took some effort to get it into my hands is a factor in the 'store of value' aspect that I expect of it.

---

As an aside, Bitcoin is similar in a way in that a relatively short string of numbers is the analog of a Krugerrand.  Even if the transmission system failed there would still be a set of entries in the block chain which have value to me and me alone.

In that case, though, actually extracting value from the blockchain would be somewhere between extremely challenging and impossible (unless one had wisely broken their holdings into multiple wallets before-hand...hint,hint...) whereas the pool of market participants with which one could exchange gold or silver coins would be much more expansive.

[Frozenlock]

Wtf... are they just really really bad dealers?

https://www.cachemetals.com/store/index.php

Due to limited supply, online ordering has been temporarily suspended. To place an order, please call us at 416-916-6660 or 1-877-916-6670. We apologize for any inconvenience this may have caused.

Inventory management is a pretty basic function for any store. Other dealers don't seem to be having this problem.

http://www.apmex.com/Category/1150/Gold_Bars__Gold_RoundsAll_Sizes__Manufacturers.aspx

So they are really really bad.

[wachtwoord]

It is not a store of value. It is not money. What you transact for it—that is the money.

I disagree. Crypto-currencies in general and Bitcoin in particular are the purest form of money that has ever been available to men: They implement the requirements of money the best.

[tvbcof]

This is the mistake that people usually make when thinking about Bitcoin.

It is not a store of value. It is not money. What you transact for it—that is the money.

Bitcoin is anti-money. Not a generalized unit of value, but a reciept, which proves that a specific transaction occurred.

Gold is still the money—the USD is still the money in Bitcoinia. Bitcoin's value is due exclusively to its ability to be liquid, it is an essence of liquidity in a level in the hierarchy of abstraction blow generalized units of value.

That is your interpretation of Bitcoin, money, value, and etc.  And it is fine.  Other people look at things differently and come to different conclusions or at least different ways of describing the same conclusion.

I view fiat, Bitcoin, and gold as nothing more than 'accounting systems'.  Each have their own properties, strengths, and weaknesses.

[cypherdoc]

Please explain

[cypherdoc]

Please explain

The same kind of mistake that gold traders have made concerning abstracting gold in a derivative's market. As long as Bitcoin is relegated to a custodianship of that nature your access to it is subject to similar risks. That is, in an exchange, in an online wallet. If you don't physically control the keys you can potentially lose the chain of custody which proves that you have conducted specific transactions in the blockchain. This is because a denomination of Bitcoin is not a generalized unit of value that proves some general transaction occurred (like a gold coin), but is a receipt that proves specific transactions occurred.

I agree.

We have a lot of people treating exchanges like banks.

Not a good idea.

[wachtwoord]

It is not a store of value. It is not money. What you transact for it—that is the money.

I disagree. Crypto-currencies in general and Bitcoin in particular are the purest form of money that has ever been available to men: They implement the requirements of money the best.

That thinking may be popular, but it is an abstraction.

The thing that actually makes Bitcoin work is triple-entry bookeeping. It is a receipt which proves that specific transactions have occured in the blockchain.

Forgetting this, will lead you to make fatal mistakes concerning your risk management.

What you say is completely true. How does it argue against my statement though?

[marcus_of_augustus]

It is not a store of value. It is not money. What you transact for it—that is the money.

I disagree. Crypto-currencies in general and Bitcoin in particular are the purest form of money that has ever been available to men: They implement the requirements of money the best.

That thinking may be popular, but it is an abstraction.

The thing that actually makes Bitcoin work is triple-entry bookeeping. It is a receipt which proves that specific transactions have occured in the blockchain.

Forgetting this, will lead you to make fatal mistakes concerning your risk management.

What you say is completely true. How does it argue against my statement though?

Money is an abstraction for exchanging one thing for another.

There is a hierarchy of for this abstraction.

Bitcoin exists in a lower level of of that abstraction.

It is not money—Bitcoin is a receipt. It is closer to the objects being exchanged in the abstraction because it is more specific, and money is more general.

Not all bitcoin transactions are receipts of previous transactions though. You seem to be glossing over the significance of coinbase transactions when bitcoins are created into 'existence' by mining ... what receipt do these transactions represent?

[notme]

It is not a store of value. It is not money. What you transact for it—that is the money.

I disagree. Crypto-currencies in general and Bitcoin in particular are the purest form of money that has ever been available to men: They implement the requirements of money the best.

That thinking may be popular, but it is an abstraction.

The thing that actually makes Bitcoin work is triple-entry bookeeping. It is a receipt which proves that specific transactions have occured in the blockchain.

Forgetting this, will lead you to make fatal mistakes concerning your risk management.

What you say is completely true. How does it argue against my statement though?

Money is an abstraction for exchanging one thing for another.

There is a hierarchy of for this abstraction.

Bitcoin exists in a lower level of of that abstraction.

It is not money—Bitcoin is a receipt. It is closer to the objects being exchanged in the abstraction because it is more specific, and money is more general.

Not all bitcoin transactions are receipts of previous transactions though. You seem to be glossing over the significance of coinbase transactions when bitcoins are created into 'existence' by mining ... what receipt do these transactions represent?

The miners traded their equipment's longevity, electricity, and time for those btc.  Coinbase records those transactions.  Remember, the blockchain only ever stores the bitcoin half of the transaction.

[vokain]

You are talking about conventional receipts. In triple-entry bookkeeping the receipt takes on a special meaning, you have debits, credits, and receipts. The public ledger that is Bitcoin is just such a triple entry ledger. It issues receipts.

ah, good ol' BUS-A200. never covered this!

I came up with the term TRIPLE ENTRY CROWD ACCOUNTING as a way to abstractly describe Bitcoin in as few words as possible.  I wanted to solicit feedback.  This term would make sense to those who are familiar with banking but not with technology.

Slightly expanded (EDIT: and revised):

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a documented and published process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one consistent transaction ledger."

[miscreanity]

That won't help you at a border crossing.

Neither will having been tagged as an individual who had had an interest in Bitcoin.  Just sayin'

Safety in numbers

Fuckin' TED talks.  Almost universally fascinating.  I have no idea how this talk bore any relationship to this conversation, but it was new to me and very interesting.  I'm usually skeptical of such amazing results.  This guy's thinking is 'orthagonal' but actually should not be.  Ecosystems are so amazingly complex and tens or hundreds of millions of years of evolution are such a good tuning fork that it would make sense to look to pre-history to find solutions which work.

The part that's relevant was when Savory mentioned large herds forming as a deterrent against predators. Probably not the best video to illustrate a point, but it was too good to pass up.

It is not a store of value. It is not money. What you transact for it—that is the money.

Bitcoin is anti-money. Not a generalized unit of value, but a reciept, which proves that a specific transaction occurred.

Gold is still the money—the USD is still the money in Bitcoinia. Bitcoin's value is due exclusively to its ability to be liquid, it is an essence of liquidity in a level in the hierarchy of abstraction blow generalized units of value.

Bitcoin can be exchanged for many things, including other forms of money. Bitcoin's value is what each user's purpose is. One user may make use of the means of exchange purpose while another uses Bitcoin as a store of value. Businesses that have zero transactions done in Bitcoin are using the system tangentially as a means to generate publicity. Does that make Bitcoin a form of social currency?

There is no exclusive either-or, but a relative share based on overall market size and maturity - the greater the liquidity and more widespread its presence, the more the system will be able to provide a store of value. There only has to be sufficient liquidity at the margin, the active percentage of the whole. Beyond that, other factors come into play.

Not all bitcoin transactions are receipts of previous transactions though. You seem to be glossing over the significance of coinbase transactions when bitcoins are created into 'existence' by mining ... what receipt do these transactions represent?

You are talking about conventional receipts. In triple-entry bookkeeping the receipt takes on a special meaning, you have debits, credits, and receipts. The public ledger that is Bitcoin is just such a triple entry ledger. It issues receipts.

Yes, a conventional receipt is a record of a transaction, being validated independently and unilaterally. In Bitcoin, the receipts are the transactions; inseparable and validated collectively. A triple-entry system by itself is an incremental improvement - as a distributed system, the advance is amplified and becomes more than a record.

Would you define a skyscraper merely as a form of shelter? At a certain scale, properties that were not possible previously manifest - Bitcoin is not simply a method of transferring wealth. Right now, the dominant purpose is as a means of exchange, but its attributes suggest an eventual status of numeraire.

[miscreanity]

There is no value without liquidity. i.e. (to trow a bone to the Austrians) If there is Bitcoin that becomes permanently illiquid its value is transferred to all other Bitcoin which may become liquid.

In that sense, yes. How much liquidity is necessary remains an open question, though. I offer that the relative amount of liquidity necessary for Bitcoin to thrive may be less than many other instruments.

But there is a risk inherent to the design of Bitcoin that, being a receipt, only has value in relation to what it is transacted for. And it only has value to you if you control either the receipt or the object being transacted. This means that it becomes money only when it obtains a generalized value, such as when you are holding it in a system of exchange and not via your control of keys to access the blockchain. It really is a critical distinction on what level of the hierarchy of the abstraction of transactions you control it, as each level has a distinct risk profile. The design is that it is a receipt and not money. It only becomes money when a generalized value is assigned to it, instead of it simply proving that specific transactions have occurred.

The next stage in the evolution of Bitcoin would be to maintain control of the actual keys while binding the receipts to an exchange value, therefore making them money. Right now you only have control of receipts, or actual objects transacted for, and it is only for that exchange, and that exchange only that imparts a transitory value to those receipts. Held in an exchange, for instance, there is a nomic value imparted to your Bitcoin because it is potentially liquid in that exchange which is trading at a nomic value. But then, in that case, you only have nomic control of a generalized Bitcoin and not actual receipts. The proof of this is that if you wish to obtain actual control of them the exchange would have to issue new receipts to you via its access to the blockhain.

The bolded section is key, particularly in reference to exchange value. It's essentially the Ripple concept, if I understand you correctly. I don't think it's the only possible next stage, though. It may turn out to be a situation where that system handles the majority of transactions, yet the common platform is Bitcoin.

Assume an environment, something along the lines of Berlin's Kreuzberg, where Bitcoin can be exchanged directly for goods and services that are denominated in BTC. There is no longer any requirement to participate in a traditional banking system: the Bitcoin network becomes the exchange, displacing other units to establish itself as numeraire. As foundation, exchanges would extend Bitcoin, not the other way around.

With sufficient adoption and usage, there is little need for exchanges; they may be mostly a temporal concern during such a transition. It is the same issue that gold proponents push, suggesting that the dollar and euro might be measured in terms of gold grams rather than gold being measured in terms of dollars and euros; just a flip in perception. The exchanges might eventually have to shift gears to become gateways not so much for different currencies, but different asset classes, both financial and real.

[marcus_of_augustus]

Great discussion ...