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Chicago Fed Bitcoin Essay "Bitcoin does not truly embody what Hayek and others in the “Austrian School of Economics” proposed."

In this topic essay, François R. Velde, senior economist at the Chicago Fed writes a very informative piece on Bitcoin. Its worth a read.


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Bitcoin just dropped to $317

from $395 just hours ago. Granted it was $149 just three weeks ago.

The volatility you see today

The volatility you see today will eventually disappear as it is used more widely. Speculation in a hot new sector is typical. Some will get very rich... Then some will get rich... Then fewer will get rich... Then it will be commonplace.

haha, so let me get this right?

1)You have what the market considers money(gold/silver)

2)they invent a currency(Dollars) to hold value in accordance to that money

3)take away the money it is based off of, and redefine the currency as a commodity in the market(even though its value retains nothing except that which it is printed on)

4)create a 2nd currency based on the inflated value of the failing old currency(dollars) that is barely worth the paper it is printed on, and replace it with a new currency that is not physical at all(and not worth anything by itself)

5a)Hope the old currency it is based on doesn't fail, and can always be traded for your new "invisible currency" based around promises of justice and protection from someone you don't know.

5b)Hope that when the currency its based on DOES fail, people(while in a panic) will still want to accept your "invisible currency" in exchange for what they own.

In what world, after all we have been through with currency manipulation, could you possible think this is a good idea.

If governments don't attack it,

it will bring credibility. If they do attack it and it survives, well, then, it will bring credibility.

Interesting times.

they have already attacked it a few times locally

Like they do with Medical Pot growers. While I disagree with its "use" in principle, and not as a medium of exchange/comparative currency, I think the Govt is stealing as much as it can, without raising too much attention, so it can cash in on it later.

I have said too, all someone has to do to corner bitcoin, is save more than everyone else, then pull them out of circulation. Less supply will cause price to jump up, then they will sell them back and flood the market, crashing its value.

Only a few people/groups of people have enough money to really do this, and the govt is one of these.

That's not how it works.

That's not how it works. There are no central bankers. Only with the exchanges are there large amounts that can be potentially seized, otherwise the majority Bitcoins are widespread, anonymous and invisible.

That IS how it works.

Your a fool if you think otherwise, this is how EVERY commodity works.

Even though Bitcoin is NOT a commodity(as it holds no physical value), its value is as medium of exchange, the service of its use, and false claims that it can't be seized is what makes its rate go up.

Don't kid yourself, it is not invisible, and it is not anonymous. This is the exact reason it's being seized at exchanged, LACK of anonymity.

Bitcoin WILL Fail, as was posted by Lew Rockwell, "Contrary to the recent hype, we hold that Bitcoin is not money but rather a new way of employing existent money in transactions. The fact that the price of bitcoins has jumped massively lately implies that people assign a high value for the services it offers and nothing more."

Nothing more than a medium of exhange, and when you can't trade it for your FRN's? Your Euro? Your Yuan? or whatever you want to change it for, when people stop accepting it, or the rest of the world economies collapse, what is it really worth?

Bitcoin is

already at at least almost 300 us dollars what was it offered at publicly when it first started?

Those who expect to reap the blessings of freedom must. like men, undergo the fatigue of supporting it.-Thomas Paine

The R3volution requires action, not observation!!!!

and is it a buy

I am starting to lean towards a yes, can anyone give me the ups and downs of bitcoin? I started researching it a bit. Yeah I am the dick who knew Ford Motor Company stock was a buy at under 2 bucks and it went up to 18 bucks in less than a year. I am still sick about it, but my money was tied up.

Those who expect to reap the blessings of freedom must. like men, undergo the fatigue of supporting it.-Thomas Paine

The R3volution requires action, not observation!!!!

I had a huge buy order for

I had a huge buy order for Ford stock at $1 when it looked like the world was ending in 2008. Looks like it hit a low of about $1.43... Regrettably, I never adjusted my order and I missed out also. But there were plenty of bargains I grabbed at the time, so I'm not too upset.