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Bitcoin is a Bitcon by Karl Denninger

A large article, but worth reading if you are considering Bitcoin and are interested in an alternative perspective.
BitCon: Don't
by Karl Denninger - Posted: 2013-03-30 17:44

Ok, I've been asked enough times, here it is -- my view and analysis of "Bitcoin", which I have taken to calling "Bitcon." That probably deserves an explanation....

Let's first define what an ideal currency would be. Currency serves two purposes; it allows me to express a preference for one good or service over another, and it allows me to express time preference (that is, when I acquire or consume a good or service.)
Unfortunately Bitcoin, as I will explain in detail, also does a*****-poor job of satisfying either of these requirements.

But before I get to that, I want to first demolish the argument for using it that is going around in various circles and media these days -- the idea that it is stateless (that is, without a State Sponsor) and this is somehow good, in that it allows the user to evade the tentacles of the State.

This is utterly false and, if you're foolish enough to believe it and are big enough to be worth making an example of you will eventually wind up in prison -- with certainty.
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SteveMT's picture

Yes, I did read the entire story. No, I'm not into bashing,....

...at least without a very good reason. I posted this, like I said, to provide another opinion about Bitcoin. My point about Bitcoin is why not just buy metal? 5,000 years is a proven track record of value. Gold is what the bankers are buying. They aren't buying Bitcoin. I know that Bitcoin is easily transferable, but how many people actually send money overseas these days? For those that do, it would be an advantage. For the rest of us, that advantage is meaningless.

My question is are the arguments made by Denninger against Bitcoin enough to cause concern? I understand that he is defending fiat. He also hardly mentions gold, which is the comparison that I thought he would make with Bitcoin. I appreciated reading your feedback about the story, except about my blindly posting this story.

can you carry your fortune in

can you carry your fortune in metal... in your brain?!

SteveMT's picture

Yes. Can you carry your fortune in Bitcoin?

An old paint can can easily hold 100 ounces of gold. If the internet disappears, if Internet 2.0 goes online, if you have to skedaddle quickly, or if you need to trade for something else you need, that paint can will come in handy.

I'd ask you a similar question. Can you carry your fortune in Bitcoin?
Yes I have a brain.

Have you also answered whether Denninger's arguments against Bitcoin are valid ones?

The arguement is not Bitcoins vs Metals

It's Bitcoin vs Dollars. I have Gold, Silver and Bitcoins... and Honestly the best decision I made out of those three was Bitcoins. I like that with minimal effort and due diligence I can transact anonymously with it. I like that I escape government control through it. I like that I can make transactions around the world in an instant. I like that It's system mimics a gold standard. I like that it's not a manipulated market. I like that I can bypass the Fed reserve system. For all those reasons I rather use Bitcoins than dollars and right now I can't use Gold or Silver in such a way. So I'll use Bitcoins because using Bitcoins instead of Dollars is a way to empower the people and Fight for Liberty!

P.T Barnum: "There's a sucker born every minute."

"My point about Bitcoin is why not just buy metal?"

Because that would mean you know that "nothing" isn't "something" and recognize that "nothing" is a poor way to store of value.

A pyramid scam always starts with nothing of value and a conman, followed by a long parade of suckers thinking they're going to turn nothing into something.

At least it's better than gambling. Showmanship counts. Just tell people they don't understand and they're being paranoid. Tell them it's the wave of the future and enormous profits await. With enough showmanship, you can get them to buy in and become showman themselves because that's where the profit comes from, a steady supply of suckers.

P.T Barnum: "There's a sucker born every minute."

Just because early adopters

Just because early adopters stand to profit by it's success doesn't make it a pyramid scheme. Early adopters are understandably rewarded for taking on more risk and their belief that bitcoin has a future. And how the system works has always been fully transparent. Bitcoin isn’t some blackbox algorithm. You are missing the bigger picture of what bitcoin represents and can be. The market is moving away from being held hostage by a cartel forced currency and this is just the beginning.

Ron Paul brought me here.

In the end, it doesn't matter. Suckers buy into pyramid scams.

It doesn't matter that a pyramid scam is a transparent fraud. There are still people who buy in imagining enormous financial returns. Doing so just means they're trusting in their showmanship.

They never actually believed that "nothing" is "something" or that investing in "nothing" is a good way to store value.

They believed getting you to invest in nothing was a good way to profit off nothing.

By referring to it as

By referring to it as "nothing" shows your lack of understanding. It is no more nothing than a 100 dollar bill is nothing. What is money is what we the people believe is money. Also, bitcoin was not an intended investment product. You can use bitcoin to transfer money and make payments without holding it or investing in it. Investing is a side issue not the primary purpose so the pyramid scheme accusation is just plain ignorant and dumb.

Ron Paul brought me here.

I'd laugh in your face if you tried to settle a debt with BitCon

I would laugh in your face if you tried to pay me with either BitCon or Federal Reserve Notes. I'm forced to accept Federal Reserve Notes by the government, but not BitCon.

Bill Still

Referred to this article too after his bashing of Bitcoin. It seems like both this guy and Bill Still, want monetary reform through political process. Trusting a 3rd party not to screw with your money, doesnt' seem to work.

History has shown it has

History has shown it has never worked. Thats why this could make history.

Ron Paul brought me here.

I used to read Denninger's

I used to read Denninger's stuff, but he's still stuck in the old system and probably financially benefits from it's continued growth and tyranny. Bitcoin is not perfect, and I'm certainly not saying it's better than precious metals. But I still think BitCoin is brilliant as a means to get around fiat money.

That tis' all.