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Author Topic: Intriguing: Disruptive Technology To Upend All Banks  (Read 1468 times)
jimbobway
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August 09, 2010, 05:35:01 AM
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Sooooo,  I decided to start a blog...I hope no one minds my self promotion. :-)

http://www.bitcoinblogger.com/


Intriguing: Disruptive Technology To Upend All Banks

FOR IMMEDIATE RELEASE

The latest word on the Internet is the "bitcoin", a new type of crypto-currency that has the potential to upend all banking systems around the world. What exactly is a bitcoin? According to its main website, bitcoin.org, it is a new type of currency based on a peer-to-peer (P2P) network, which means that there is no central authority to regulate it. Unlike the U.S. dollar, which is mostly regulated by federal banks, the P2P currency cannot be affected by the monetary policy of any government. It is impossible, by logical and mathematical design, that the price of the bitcoin could be artificially manipulated by human intervention. This mere fact gives bitcoin the potential to disrupt the entire banking industry.

Many governments of different countries have had a role in manipulating their currency in an attempt to remain competitive. The United States, China, Zimbabwe, etc., have all influenced their respective monetary policies by using currency manipulation techniques. The U.S. Federal Reserve System (informally known as the "Fed") raises and lowers interests rates to spur or slow the economy. The Chinese have kept the value of the yuan artificially weak to boost Chinese exports. In addition, the country of Zimbabwe suffered massive hyperinflation by re-denominating and printing new currency. According to the Cato Institute the highest monthly inflation rate for Zimbabwe was a ghastly 79,600,000,000%!

Suppose governments were not able to manipulate currency and everyone had a level playing field. The world could be more fair and economies would be based purely on supply and demand. Bitcoin offers this type of fairness. Since the recent Great Recession superpower countries have proposed instituting a global currency to replace all currencies. For example, one proposal was to take the top currencies and to find the average value. This is a somewhat good idea but the reality is that the politics required to implement such a concept is insurmountable. Instead, many bitcoin proponents would say that crypto-currency is the best idea, since it is based on a grass-roots approach instead of a top-down solution.

It is a grass-roots approach because anyone with a computer and Internet connection can download the bitcoin software at www.bitcoin.org. Transactions are peer-to-peer so payments are made directly from one user to another. No middle man or bank is required. Thus, there are no merchant fees or transaction costs whatsoever. Clearly bitcoin is a different type of currency with traits that resembles the monetary characteristics of gold.

Anytime any country's currency goes head-to-head with the U.S. dollar then that country gains respect. Bitcoin is growing in value and whenever bitcoin reaches parity with the U.S. dollar it will surely be a force to be reckon with. New bitcoin economies will rise and old banking companies must adapt or fail.

If you found this article helpful please donate to the author at this bitcoin address: 1J3zMWdVppQ6nhmxvGoEqMZFUKyZhfbNb8

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jgarzik
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August 09, 2010, 05:38:13 AM
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It is impossible, by logical and mathematical design, that the price of the bitcoin could be artificially manipulated by human intervention.

The engineer in me reacts to words like "impossible"

As a human, I can easily disrupt bitcoins at present with a large enough wad of cash.

Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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jimbobway
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August 09, 2010, 05:43:58 AM
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But can you artificially disrupt it?  For instance, in the case of Zimbabwe they re-denominated their currency which is 'artificial'.  I don't think this can be done with bitcoin.
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August 09, 2010, 06:06:30 AM
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I guess the answer delves into the semantics of what is "artificial" versus "natural"...  Smiley

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August 09, 2010, 07:07:37 AM
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It is impossible, by logical and mathematical design, that the price of the bitcoin could be artificially manipulated by human intervention.

The engineer in me reacts to words like "impossible"

As a human, I can easily disrupt bitcoins at present with a large enough wad of cash.


This was immediately in my mind.

It's easier to 'artificially' drive the price up than down though, that's for sure.

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pyrrhos
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August 09, 2010, 10:29:10 AM
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Thus, there are no merchant fees or transaction costs whatsoever

As far as I understand, this is not entirely true. See http://www.bitcoin.org/wiki/doku.php?id=transaction_fee

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Olipro
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August 09, 2010, 12:16:40 PM
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The engineer in me reacts to words like "impossible"

As a human, I can easily disrupt bitcoins at present with a large enough wad of cash.

Yes, but what's so special about cash? it's just a type of asset; you're simply reaffirming that if you are using something to purchase bitcoins, the notional value of BitCoins will be increased because of your willingness to exchange it for a different asset... you could put a car up for sale with X amount of bitcoins accepted as payment, that too would have an effect on its value, however, if your price was way above or way below the current averaged value, your distortion would be short lived.

Bitcoins accepted to 18em7jEuKe1W74ChAZMFShUuqmwudWmpgu Smiley
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August 09, 2010, 09:13:06 PM
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The engineer in me reacts to words like "impossible"

As a human, I can easily disrupt bitcoins at present with a large enough wad of cash.

Yes, but what's so special about cash? it's just a type of asset; you're simply reaffirming that if you are using something to purchase bitcoins, the notional value of BitCoins will be increased because of your willingness to exchange it for a different asset... you could put a car up for sale with X amount of bitcoins accepted as payment, that too would have an effect on its value, however, if your price was way above or way below the current averaged value, your distortion would be short lived.

Fair enough. Anything that pushes up the value of bitcoin can only do it by actually adding backing (cash, cars, whatever) to bitcoin. So I say it's 'natural'.

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