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BERNANKE: Bitcoin ‘May Hold Long-Term Promise’

Excerpt from Bernanke's letter to Congress:

Historically, virtual currencies have been viewed as a form of “electronic money” or area of payment system technology that has been evolving over the past 20 years. Over time, these types of innovations have received attention from Congress as well as U.S. regulators. For example, in 1995, the U.S. House of Representatives held hearings on “the future of money” at which early versions of virtual currencies and other innovations were discussed. Vice Chairman Alan Blinder’s testimony at that time made the key point that while these types of innovations may pose risks related to law enforcement and supervisory matters, there are also areas in which they may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.

Full letter at The Liberty Crier

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It's just a fiat fad...

It's just a fiat fad... Investing in bitcoin is no different than investing in Tesla or Solyndra.

It's not a store of wealth. It only has short-term value based on the psychology of the masses in a "capitalist" market.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

TwelveOhOne's picture

Hmm, sorry then

If you believe that investing in a fiat-based heavily-regulated stock market is the same as Bitcoin, you haven't studied either of them enough.

If you think it's a fad and don't want to participate, fine. Just don't tell anyone else that that is the truth, or people will argue with you.

Do you think that your bank account is "a store of wealth"? Why?

You cannot prove your statement regarding psychology of the masses. However, one can mathematically prove that there will only be 21 million Bitcoins, and can also mathematically prove that Federal Reserve Notes will continue to be printed unabated, thus the value of the cotton money in my wallet is continually shrinking compared to currencies that aren't being inflated (its value compared to those other currencies that are being inflated holds steady -- that is, as long as the other currencies are being inflated at the same amount, which they generally aren't). Therefore the most prudent use of my cotton money is to convert it into some other form of currency that is not inflationary. Bitcoin is one such. Litecoin is another, Feathercoin is a third. There exist many others, and more are being created constantly. They're also dying constantly, as developers move from one project to another, and as users do as well.

It's an evolving landscape. You're not perceiving or describing it accurately. Good day sir.

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Store of wealth

Do you think that your bank account is "a store of wealth"? Why?

Certainly not. But are you arguing that bitcoin would be a reliable store of value, in contrast to dollars in bank accounts?

You go on say that bitcoin has a mathematically provable limit on the total available quantity, but this isn't sufficient to make it a store of wealth for several reasons. As you say, new digital currencies are being created and dying. So digital currencies are here to stay and bitcoin *might* be a long-term winner, but it might not. The buying power of your bitcoins depends on its market share among digital currencies and market share is a fickle thing.

More importantly, if it's ever easy to exchange between bitcoin, litecoin, feathercoin, xcoin, ycoin, zcoin, and so on and so on, then it's not the scarcity of each one that matters but the scarcity of them all, collectively. If the number of FRNs was capped but there were competing FRN2, FRN3, FRN4, etc., being introduced instead, none of them backed up by anything tangible, that would be just as bad as printing more FRNs. Same with digital currencies.

Also the scarcity is not mathematically provable since with control of 51% of the mining it could be changed. You can make an argument about why it would be hard to gain control of 51%, and why it's not in the self-interest of any set of miners who collectively already control 51% to agree to change it, but that's not mathematical proof.

storing fiat money in a bank is no store of wealth

There are only 21million bitcoins set based on the current programming. That programming can be adjusted and they can create 21trillion as soon as the banksters openly seize control.

You're looking at it as if this is something different FROM fiat money and it's just different fiat money.

Real wealth is gold, silver, ammo, land, seeds & food stores.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

I agree with one thing you said..

"I don't understand why people are going along with this... "

If you study Bitcoin you begin to understand that it is peer-to-peer and trans-national. It has no masters and a finite supply.

Theoretically yes, it could be controlled.....but in order to do so they would have to employ more people to doing that than anything else. It's just logistically impossible.

"You'll not be able to store any real wealth (it'll all be electronic) and you won't be able to make any kind of trade off the grid." - Nope. You don't have to associate yourself with a point of sale at either end. It stores value as a fiat currency but without losing buying power through artificial inflation of the supply.

"Bitcoin is the enemy of liberty." Actually Bitcoin will trigger the hyperinflationary decline of the USD and many other world currncies. I'd suggest you get some at once. The Chinese are already dumping dollars for bitcoins and the price is skyrocketing.

----------------------------------------------------------------
A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history.
~Mahatma Gandhi

dump all of your bitcoin now while it's priced high

get a bunch of small pieces of silver for practical trade and perhaps some bigger pieces or gold for big purchases.

the value of bitcoin is only measurable in terms of other fiat currencies. How many ounces of gold is 1 bitcoin worth?

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

Your claims

are completely baseless. I don't blame you (and others) for being skeptical, after the fraud that has been pulled off in this country with FRNs.

But the difference with Bitcoin is that it is supported completely by the free market. If the market/users think you're right then the value will plummet to zero. The U.S. dollar has the force of government and the strongest military in the world backing it. That's the only reason dollars are strong (but there is a limit, fast approaching the end...). Bitcoin has nothing strengthening it except what it is. It's not backed/forced from any government. That's why it's not fiat, which means "by decree" usually of a government. It's free market money, like gold.

EDIT: oh and by the way Ron Paul has only said positive things about Bitcoin, but I guess you know better than him...

Respectfully...

Whether the decree comes from one or many it is still fiat money with no real value... but, to be fair, I don't really understand our lust for shiny things either.

NOTE: I am not advocating violence in any way. The content of the post is for intellectual, theoretical, and philosophical discussion. FEDS, please don't come to my house.

you're just not thinking it through

Can you use federal reserve notes to purchase bitcoin? Can you use other central-bankster fake-currency to purchase bitcoin?

Can we trust that criminals with licenses to print money aren't buying up bitcoins and manipulating this market?

This isn't secure (as is evident by the government being able to seize funds from silk road) and the fact that even THE BERNANK is now discussing how it has "legitimate" uses (any time a central bankster says something has use, he's already abusing it for personal gain).

To your edit: Forgive me for researching things for myself and not blindly following the shepherd.... I swear the man and the dog are working together.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

Last time I checked you could

Last time I checked you could purchase gold and silver with fiat as well

of course you can... but

of course you can... but those have real value independent of the fiat currency. Bitcoin's value is only measurable in fiat.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

No it has been thought through

"Can you use federal reserve notes to purchase bitcoin?"
Yes...peer to peer at whatever price you both agree to.

"Can you use other central-bankster fake-currency to purchase bitcoin?"
Yes but as the currency of those who inflate grows in supply the price for bitcoins goes up. It's not a fixed ratio.

"Can we trust that criminals with licenses to print money aren't buying up bitcoins and manipulating this market?"
No. But to what end? If they print up fake notes and buy up bitcoin the exchange price corrects but while the limited supply of bitcoin goes up the buying power of the fiat fake notes goes down. So bitcoin exposes the fraud.

This isn't secure (as is evident by the government being able to seize funds from silk road). The Fed's may have seized the servers with the wallets but they could not spend them. Those who used the Silk road did not have to leave funds on that server. They did it out of convenience or laziness. Had they only interacted at a point of sale and had their funds on their home computers bitcoin wallet or an online storage service and backed them up then there is nothing to seize.

"and the fact that even THE BERNANK is now discussing how it has "legitimate" uses (any time a central bankster says something has use, he's already abusing it for personal gain)." - Even a broken clock is right twice a day.

----------------------------------------------------------------
A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history.
~Mahatma Gandhi

Yes

I've thought it all through. I've studied a lot about how money works and the scam of central banks and not using something that can't be manipulated like gold (or Bitcoin).

Your first question asks can you use FRNs to purchase Bitcoin. The answer to that is yes. However, you can also use FRNs to buy gold, right? So what do you say to that?

The criminals can't buy up all the bitcoins just like they can't buy up all the gold, because other people ALSO buy these things. So if they buy a lot it drives the price up.

Bitcoin is only as secure as you make it, just like holding gold. The feds can seize gold from people too.

Last, I'm glad you research and think for yourself. That I totally agree with.

remember the haircuts in Cyprus?

How do you protect digital currency from such haircuts?

I can think of several ways to protect my stacks of physical gold and silver.

Bitcoin is most definitely being used by the very same banksters who enslaved the world with paper fiat... now they're just doing it digitally.

Give me real gold or silver over this other stuff any day. A bitcoin doesn't even look pretty in my safe.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

I just talked with a former

I just talked with a former banker. I introduced him to BC and I managed to convince him of its viability. The next day he mentioned it to his friend whose wife is also a banker. That friend told him to stop investing in BC or it might ruin the market......

Draw your own conclusions.

lulz

sure. bitcoin can help crash the other fiat currencies as it's a competing fiat currency...

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

I'm assuming the former

I'm assuming the former banker then stopped investing?

The problem is that many here

The problem is that many here just want the government out of printing money all together that they can't see the truth, I said almost the same thing you did when bitcoin came out, it is backed by nothing, which makes it no better than the money we have now. Some just can't see the forest through the trees, sad.

I don't know if it is

I don't know if it is accurate to say that the dollar is backed by nothing. Fundamentally, you can use US dollars to pay off your tax obligations. That is a fairly permanent demand for the dollar. The dollar is also legally used to pay down debts. Plus, one could argue that the dollar is believed to have value, so it has value.

In the same way, you could argue that in a gold-standard, sure, the dollar is backed by gold. But what is gold backed by? And expectation of value. I mean, I guess there is a little industrial use of gold, but even that isn't permanent. Same with something like oil or silver.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

timeless

Gold is timeless. It can not be destroyed or created.

Oil, dollars, bitcoins, grapefruit and textbooks can all be created and destroyed.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

Well, gold can actually be

Well, gold can actually be destroyed. It can also be mined (created).

Dollars, I guess, could be destroyed. As could bitcoins. However, the US government/bitcoin central command could always replace those monetary units with presumably little change. Bitcoin may be a little different.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

gold can NOT be destroyed

You can break gold into smaller and smaller pieces but it's still gold.

why is bitcoin any different from dollars or euros? because they tell you it's not under the control of the same criminals who control all of the other fiat currency? and you believe that because...?

If the sun emits a crazy emp burst and the grid goes down where does that leave your bitcoins? how many bitcoins will you offer me for an ounce of silver? and then how will you get them to me?

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

The theory is gold comes from

The theory is gold comes from supernovas :P

Of course it can

It's far, far more expensive to create gold in an atomic reactor than to mine it, so it's only been done out of scientific curiosity. Similarly for destroying gold. But of course it's possible.

the cost is insane.

i watched a documentary about creating gold... and you're right. they can create new gold... something like 1/100 of a gram for $3million dollars.

I've yet to see any means of destroying it though. They can only break it into smaller pieces of gold.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

Destroying gold

Not that you'd want to, but destroying gold would be much easier than creating it.
http://en.wikipedia.org/wiki/Nuclear_transmutation
"It would be easier to convert gold into lead via neutron capture and beta decay by leaving gold in a nuclear reactor for a long period of time."

It's been done at least once:
http://www.apnewsarchive.com/1987/FSU-Physicist-Turns-Gold-I...

Needless to say there's no demand for a service that turns gold into lead, but it's possible. How did we get onto this topic?

agreed

and the other factor... if you have a crypto-currency that makes illegal activities easier to hide, doesn't it seem logical that the wealthiest and most powerful mafias (which already control the planet) would be the most likely to use and abuse this "product"?

I can't see e-currency as anything other than the next level of the banksters' currency-slavery scheme.

At their inceptions, the #Liberty, #OccupyWallStreet and #TeaParty movements all had the same basic goal... What happened?

You get an upvote for common sense

(and irony)

We all share this eternally evolving present moment- The past and future only exist as inconsequential mental fabrications.