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ECB: "Roots of Bitcoin Can Be Found In The Austrian School Of Economics"

The ECB (European Central Bank) has produced the first official central bank study of the decentralized cryptographic money known as bitcoin, Virtual Currency Schemes. Ignoring for a moment the ECB’s condescending and derogatory use of the virtual currency phrase and scheme phrase, the study produced at least one landmark achievement.

In claiming that “The theoretical roots of Bitcoin can be found in the Austrian school of economics,” the ECB forever linked Bitcoin to the proud economic heritage of Menger, Mises, and Hayek as well as to Austrian business cycle theory. This recognition is also a direct testament to the monetary theory work of Friedrich von Hayek who inspired many with his 1976 landmark publication of Denationalisation of Money.

Bitcoin fully embodies the spirit of denationalized money as it seeks no authority for its continued existence and it recognizes no political borders for its circulation. Indeed according to the report, proponents see Bitcoin as “a good starting point to end the monopoly central banks have in the issuance of money” and “inspired by the former gold standard.”

DOWNLOAD: http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyscheme...


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"No, there isn't a free market in money. That's the whole problem and the reason Dr. Paul spent 12 terms in congress."

Then don't say Bit Coin is winning in a free market. It's just not seen as a legitimate threat, and it's not.

If this was a free market, and I had my receipt money business going, there would be no exchange rate between Liberty Dollars and Bit Coin or any other form of fiat money. I would consider it an insult to even try to buy real money with Bit Coin. I would consider it my job to destroy Bit Coin as a fraud within the free market.

I didn't

say Bitcoin is winning in the free market (not yet). I said it's not losing. One bitcoin is currently worth 10 times as much a 1 dollar. I don't call that losing.

As for whatever you think of bitcoin, that's totally fine with me. You're entitled to your own beliefs/actions. So are others. That's how a free market works.

You said it's not losing and this is a free market.

Oh come on now. Be honest. This why I cut and paste choice nonsense.

The antonym of losing is winning, and you said "it's not losing", so it must be winning, and you described this as a free market in money.

I'll just log this as one more episode of deceit floating around the Bit(ch) Coin crowd.


if something is not losing then it must be winning is a false dichotomy.


You just keep right on thinking that.

I'm a Libertarian. I let others do their own thinking.

Well let

me spell it out for you.

Let's say two horses start a race. You said if something is not losing it must be winning. Let's see how that holds up, shall we?

Horse A and Horse B take off at the starting gun. However, the horses remain exactly next to each other all race. That means Horse B is not losing. But according to you Horse B is winning. False.

Let's try another.

Horse A and Horse B take off at the starting gun. However, Horse A is spurred to use all its energy in the first lap of a 20 lap race. Horse B uses an energy conservation strategy which suits the race better. If Horse A is not behind, i.e. not losing then Horse A must be winning according to you. However, because the race is a marathon not a sprint Horse A loses. Again your axiom fails.

"My axiom fails!!!" ROFL Get a grip

So you meant that it's a tie, or did you mean it's just winning at the moment?

You're boring me.

You've already

been proven wrong, but also in a championship game of chess, if a player makes an opening move at that point neither player is said to be losing, because it's too early in the game. However, no sane person would say either person was winning after only one move.

I tried to tell

you all Bitcoin is a friend to Liberty! :)

A few points:

1. Bitcoin suffers greatly from being both complex and misunderstood. I answered a lot of (skeptics) questions in this DP thread already.

2. If you are even the slightest interested in really learning more about Bitcoin I highly recommend the following primer article written by a prominent bitcoiner and libertarian:


3. Bitcoin started in January 2009 and it is still going strong. You may think you have an original idea for why it won't/can't work, but trust me every conceivable issue has probably been raised before. Nothing is guaranteed, but like I said Bitcoin continues to go strong.

Yes, this is all very interesting

But the immense, looming, 100 Kagillion Pound Elephant surrounding the whole concept of digital currency is ...... *drumroll* ....

It's electronic.

Power goes out?

You're broke. :)

... or, best case scenario - holding onto a smartcard that anybody selling food, gas, or other necessary supplies in your actual *real* life area will laugh at you for.

I can imagine central bankers scheming to attach positive "austrian free market" associations to digital currency ...

Merely to sell the gullible on the idea that digital currency is "good" so they can sell everyone on the REAL global digital fiat currencies that they have coming down the pike.

Overall assessment:

If you can't hold it in your hand - and its not directly made of OR backed by a universally valued commodity?

Then it is not money.

I don't think so

While all you bitcoin farmers out there have a hard on for your digital alternative currency, which I've looked into heavily, you make 'make' some added value or worth on it in the short term, however due to the very unarguable fact that you can be shut down by the flip of a switch makes you as vulnerable if not more than holding fiat money as savings in the bank (which I also do NOT do).

Argue it all you want, if Uncle Sambo wants to make an EO that makes it a black market activity because of the very FACT that they lose revenue as a result, they just shut you down at the ISP switches. Period.

There are defenses against

There are defenses against this. It's possible to make backups of your wallet outside of the internet. Furthermore, you can even hide your activity, but that is arguably more tedious to do.

I'd like for what you say to be true

However, I happen to know that BC user activity can be ID'd at the ISP regardless of whether you spoof your IP or anything else. If they want to take it down, they can. You may still have your wallet but when BC code is intercepted, and yes for sure it can be whether you want to believe it or not, your wallet is digital brick.

What I do know, is that they

What I do know, is that they can most likely get your identity when you BUY BC. But if you take extra steps, they cannot know when you sell BC or what you did with your BC. The legislation could be rather tricky concerning this.

Anyways, I heard alot of pros and cons about this and I'm not sure which of them are true or not. But one thing I am sure of is that control over BC is severely limited. That makes it unlikely to be a scam. It bears looking into, for this reason alone. And even if it fails, it doesn't mean it was worthless to try. This is new territory and I don't think the gold standard is the best we can do. We should experiment a bit.

It's a total fiat scam from the get go.

All the value can disappear because there is no value there.

Are we supposed to trust these people? Even the Federal Reserve went through all those motions, calling itself part of the government, making itself theoretically answerable to the President, until all the smoke and mirrors disappear, you have no President, and we all recognize we're slaves to a scam.

Bit Coin is the most corruptible of systems and a threat to all productive labor.

Why not receipt money, privately operated and backed up with something of value?

You'll HATE it. Nobody will be able to just print money, and without fractional banking, nobody will be able to debase my money or loan it out to their shiester friends, charging interest and bankrupting my depository.

There are a lot better systems than an unabashed fiat scam like Bit(ch) Coin.

Thing is, there are no smoke

Thing is, there are no smoke and mirrors here. It's OPENSOURCE. The people themselves can determine how trustworthy BC is by checking the source code. It cannot be corrupted, unless the community decides so.

Per my first message

I have looked into it further, for over a year. Who cares if they can "ID" you when they don't have to, they just trace BC code at the ISP and block it. Now of course there are ways around this block and then more ways to reblock etc. Have fun with that, I will be stacking tangibles that are increasing daily in value as of late with no one able to block what I have zero need of internet or a bank or the government to have.

FYI, I'm not a BC user. Won't

FYI, I'm not a BC user. Won't be putting money into it either. Just can't stand nonsense arguments, which is the usual of people who haven't looked into it. But you seem to be somewhat knowledgeable about it.

Regarding government intervention, I think it's likely that they will indeed try to intervene. But even if they do intervene, this does not mean that they will win or that they won't damage their own cause in the process. Because if they try to abolish the use of BC, it will certainly create some blowback for them as the circumstance of abolishing it is suspect. I already wonder in what creative manner they will pose their reason for blocking BC.

It's for above reason (and other I've already stated) that I can't look upon BC with any disdain. Because from the sound of some of the posts here, it's almost like some people WISH for it to fail and this sentiment is illogical to me. If it can advance our cause to end government controlled currencies, it should not be disdained.

There's a good chance for it to fail. But if a failed currency can make a crack in government monoplies, it's already a success in my eyes.

Fair enough

I did a bit of bit coin farming with a couple machines. I have a small little pile that cost me more in energy on my comps to make than it is worth to resell though. I know a few people doing it now that don't care that it's worth less than it cost them to make it and they think the value will shoot through the roof... It may well I suppose, but that money they spent on electricity helps the big power conglomerates more than them right now.

And people are spending US fiat dollars to buy bit coins and these sellers are accepting these fiat dollars. That's a deal breaker for me as it presents itself as an oxymoron (I am sure there is a better word for this but this gets my point across.) I thought the point was to get around the fiat dollar with BC.

I don't know, but gold and silver are in my hands and going up by the day so they make a much more sound investment for me.

ALSO, BC has no backing for it's value. It can rise and fall like a stock. That is why it has no relevance to Austrian economics. If it fails, you could have 10 million BC and it would be worse than having $10million Zimbabwe dollars.

I think you're in the wrong place?

What did you think would happen when singing the praises of digital fiat money on the Daily P(AU)L?

Are you really going to try and call it "a nonsense argument" when pointing out that Bit Coin is totally fiat and has no value? Is it a nonsense argument when I take exception to you saying money doesn't have to be backed up by anything of value?

Who do you think you're talking to? Where do you think you are?

I'm not singing any praises.

I'm not singing any praises. What I'm interested in, is if your argument holds water. That's it. Because you see, I still haven't heard something from you where I can think "oh, makes sense" or something where I can see that an effort is being made to counter-act the point. All I'm hearing is talking points where no effort is being made to adress the points that have been made. That tells me the person I'm arguing with is not controlled by logic, but by emotion or partisan hackery, a generally bad sign.

Even RP is not eager to condemn Bitcoin straight away, because he can see that the creators made some effort to implement some libertarian principles within it.

I'm no rabid defender of BC,

I'm no rabid defender of BC, but some posts here smack of paranoia and inflexibility of thought. It's certainly possible that BC will fail, but I doubt it will be for the reasons cited in this thread. I even think it likely that an unforeseen problem will pop up that will make it fail. But that doesn't mean that any of the arguments that are stated here hold true.

You see, I don't just swallow propaganda and hold it as an unalterable truth. For every rule that exists, an exception also exists (most of the time). If RP says that fiat currencies will always fail, I'll not just swallow that as truth. I first think about WHY he said that they will always fail. I also think about why fiat currencies fail in the first place. This gives greater understanding and soon one can see situations where these general rules may not apply. Reality is often too complex for absolutes to exist afterall.

For starters, you cannot call BC a true fiat money. Because it doesn't derive its value from government regulations. It derives its value from FREE MARKET PRINCIPLES. The only thing that is the same as fiat, is that it isn't backed by anything.

But why was it necessary to back the currency with a commodity? Why do governments prefer fiat in the first place?

For starters, the advantages of the gold standard, was that it prevents INFLATION. This is THE most important function of the gold standard. How does it prevent this? Well, the mining of gold is constant, which means that supply and demand is relatively constant as well. This keeps the currency stable. Furthermore, you can't PRINT any money with the gold standard. You are forced to be disciplined and you cannot overspend, preventing the accumulation of debt. IMO, these are the most important advantages of the gold standard: Constant production and the inability of printing more money. Both of these aspects are mimicked with BC.

There's a third advantage of the gold standard and that is that it has intrinsic value. So theoretically, even if all confidence in the gold currency fails, it will still retain value, because of its intrinsic value. Gold can still be used for jewelry, electronics and other stuff.
IMO, this is the most unimportant aspect of the advantage of the gold currency. The intrinsic value of gold isn't worth THAT much. And I can't remember a single time that a situation ever occurred where this reason was relevant enough that it somehow was a factor in retaining significant market confidence. If there ever was a situation where the worth of a gold currency fell back to its intrinsic worth, that currency can already be considered a failed currency. It might add SOME market confidence to a gold currency and its ability to retain value, but IMO this added confidence is marginal at best.

Now mind you, it's perfectly possible that this third advantage could prove more important than I regard it. But it has never been tested how important this aspect truly is. Before I start shouting that this third aspect is da bomb and makes it all worth the effort, I want to keep my mind open to see how currencies do with only the other two advantages.

Because let me answer the second question as to why governments prefer fiat: Control of the money supply (being able to manipulate the currency) and the ability to spend and print money. Governments like the absolute feeling that they can control everything. And they don't like the idea of being limited in spending either, so they want to be able to print money. BC prevents both of these aspects.

Bottomline, BC prevents most of the disadvantages that are wrong with fiat currencies. Its biggest weakness is not having intrinsic value. But I'm willing to give this currency a chance for this reason alone: NO PERSON CAN CONTROL BC.

Some say that this is a scam. But for it to be a scam, SOME people must profit at the expense of others and they have to do this scam with THIS PURPOSE IN MIND. That BC is decentralized tells me that they really want to have a currency where no person can control it. Most scams need the scammers in control of the system. Or at the very least, scammers WANT control.

Now it's certainly possible that BC will still fail. It's done through technology afterall and the complexity of technology can make unforeseen problems pop up and make it fail. It may even fail because it has no intrinsic value. BUT, if it can demonstrate that it performs BETTER than fiat money DESPITE this....Do you know what that means? It will be the first step in breaking down the monopoly that bankers have. Irrevocable proof that government controlled money really doesn't work. That consideration is important enough to give BC a chance.

And keep one other thing in consideration. The production of gold cannot be kept up indefinitely. It was one of the advantages of the gold standard in the first place. Experimenting with other currencies might not be so bad. If it fails, that's more knowledge to developing a new better currency similar or better than the gold standard. Because to think that the gold standard is the best thing we can do and that mankind can do no better, that's last century backward kind of thinking.

You sound pretty rabid to me.

"but some posts here smack of paranoia and inflexibility of thought"

I get very paranoid and inflexible around people who sing the praises of digital fiat money, people who rely on attacking advocates of sound money as; paranoid and having inflexible thoughts. I guess there's just something wrong with my mind aye?

Maybe the problem is I CAN think, and I'm very flexible.

I'm willing to use a lot of different things to back up the receipt money I'll barter my labor and property with, but backing it up with "nothing" just won't work for me.

I don't attack anyone, unless

I don't attack anyone, unless the person in question didn't try to surpress conversation about it in the first place.

The thing is, I sense alot of emotion from you. HATE of fiat currencies. For the most part, that hate is warranted. But people controlled by emotion are often not objective enough to talk about the subject. That you are trying to surpress conversation about it speaks volumes. Where is your freedom now?

equating bitcoins w austrian economics is blasphemy

Totally clueless.

There is mistrust in bitcoin.

There is mistrust in bitcoin. That mistrust is warranted. Only, people are mistrusting the wrong aspects of Bitcoin IMO. For starters, it's OPENSOURCE. Meaning, ANYONE can look into the sourcecode to see if there are any shenanigans. If someone wants to alter the sourcecode, the new version that emerges first needs the agreement of the community. So people cannot suddenly make themselves rich by having hidden code in the system.

And the code that Bitcoin uses is very secure. It would take resources that not even the strongest super computers has to break its security. All the newsitems about people hacking bitcoin is about the security of the STORAGE being hacked, NOT bitcoin itself. It's the same thing with regular money. People can rob the bank, but they don't know how to print it.

And like stated, Bitcoin has no central issuer. Because of this, it cannot be controlled by anone person. If the ECB wants to regulate Bitcoin, I wish them good luck, since I can't see any way that they could manage to do this.

If there's one fear to be had, it's this: quantum computing or somehow the government knocking out the internet (though one can defend against this). With quantum computing, current security can be cracked in an instant. That's the most reasonable fear IMO.

Bit Coin is for people who STILL don't understand;

Bit Coin is for people who still haven't figured out what Ron Paul's talking about. They haven't figured out what he's trying to tell you without taking down this monetary system himself.

Bit Coin is for people who don't even know what money is. Why do you think Ron Paul asked Ben Bernanke: "What is money?"

Money isn't something created by a bank or added through Bit Coin monetary policy. It's something created by productive labor. Bit coin is as fiat as money comes.

It's you who doesn't

It's you who doesn't understand. I guess this must be the first time you heard of Bitcoin. The entire point behind Bitcoin is that you CAN'T print any money. You cannot artificially create more bitcoins. Yes, it's possible to mine bitcoins, but there's a theoretical limit to that. It has been designed in such a way to mimic the same functions as a gold based currency. Furthermore, it works DECENTRALIZED, the very opposite of what the central banks do.

It is created by productive labor.

If you mean gold mining and minting is created through labor so is bitcoin if you think about it. A lot of times it is very costly to produce bitcoin and you can spend more on electricity than you get back by "mining" for bitcoins just like you can spend more money on labor mining for gold than you get back. Money needs not be backed by anything as long as it is in a free and open market place and people agree to use it as a means of exchange Ron Paul advocates for competing currency not for any one particular form of currency.

Bitcoin is not centralized at all which makes it a huge threat to central planners who cannot just create it out of thin air. Fractional reserve lending would be a thing of the past if we used bitcoins because you can only loan what you have you can't just create more money. Where as with gold they can give you paper certificates and they can perpetuate the fractional reserve scheme. So even if we have a gold backed currency the central planners can still F us in our A's by creating money out of thin air even if we had a gold back currency. Think about it.

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    You can't debate me on it, I know.

    "Money needs not be backed by anything"

    It's that you WANT fiat money to survive, and don't want me to deligitimize the whole scam.

    You're just reinforcing that you don't even know what money is when you call Bit(ch) Coin money. You don't know why money has value to begin with, or WHY money needs to be backed up by something of value.

    There are some in the Liberty movement that have no problem with fiat money. They were the ones in OWS camps screaming about "greed", when what they want is the government to print money from nothing rather than The Fed creating it through debt.

    It's all just the same scam, and it falls to covetous men who know how to use it to take slaves. It's creating value from NOTHING, because as you say, money doesn't have to backed up by anything.

    Bit(ch) Coin is just another goose that lays golden turds.