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Are We Being Hypocritical About Bitcoin?

The US Dollar and Bitcoin have a lot in common. They are one in the same. They are both wearing the same suit.

The Dollar is backed by nothing. Not gold, not silver. No hard asset backs the US Dollar anymore, hasn't since 1933.

Bitcoin is backed by nothing. Not gold, not silver. No hard asset backs Bitcoin, not even a country. It's just an idea. It's a new product from?

Ever since 2007, many of us here on the Daily Paul have been proponents of a gold and silver backed currency, as the Constitution mandates.

Runaway government via the printing press (in theory) would be put in check by the strict balance of gold and silver. There would be no more wars, because the governments of the world would not be able to afford them. Inflation would not exist, and the value of the dollar would never increase nor decrease because of its gold and silver plated checks and economic balances.

So along comes Bitcoin, but many people here at the DP are not applying the same logic or scrutiny to it which is quite ironic given the site's, "P AU L," Peace Gold Love motto.

If you support Bitcoin, you are supporting the Dollar as well because both currencies are backed by nada.

We can't have our gold and eat it too.

Bitcoin is quite the conundrum given the context of Ron Paul's economic principles.

I so happen to like Bitcoin, even though I can't figure out where the heck it came from. I like it because it's a good idea. Competition is good. But I also think the Dollar is a good idea too. The two currencies are built upon an idea alone. Nobody cares who printed it or where it came from, they just think it's valuable. It's more money, not less.

You have to admit - the Bitcoin logo/image looks like a lottery token or some kind of chip you get in Vegas.

To those who cashed in Big on Bitcoin, congrats! Long ashes my friends.

When the players who won big on Bitcoin turned their, "chips," in, what did they receive in return?

Dollar bills.

The more I think about Bitcoin, the more I think of a valve or water dam redirecting the flow of the monetary currentcy.



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Having trouble undertanding why people care so much?

If Bitcoin is your thing, buy it.

If not, don't.

Isn't that the free market solution? No hand-wringing necessary.

This is what Ron Paul is talking about when he talks about competing currencies and allowing for them.

If some "competing currencies" are shyte, they'll fail because no one buys them.

If some are perceived by the market as valuable, they'll succeed.

Either way, who cares? Buy what you like. Avoid what you don't. Let others do the same. The "invisible hand" will sort it out.

Bitcoin is backed by the

Bitcoin is backed by the market's desire to be free. There is absolutely no way for some person or group of people to steal value from all those who hold & use Bitcoin by creating more of it at will. There will only ever be 21,000,000 Bitcoin, period.

So, what's the market value for freedom, and the ability to protect the value that you create?

"There will only ever be

"There will only ever be 21,000,000 Bitcoin, period. "

that's 21 million too many if nobody actually values the bitcoins themselves. sure, the bitcoin system is valuable, but as it stands now, it is 1000x more expensive to participate in bitcoin than it was 3 years ago.

Bitcoin vs. Gold

Now we can observe a very amusing situation: the government has gold and those that don’t possess gold have bitcoin. However, bitcoin is not just a virtual counterpart of gold. It is something more convenient and modern. The global transition to bitcoin will bring benefits for everybody, except for those that possess gold. I’d like to enumerate five key advantages of bitcoin over gold:
- Bitcoin is a decentralized currency. It can’t be controlled from outside, so the situation like this is essentially impossible.
- It’s difficult to speculate because the economy based on bitcoin is transparent.
- It’s convenient to buy goods and make transfers.
- There are no intermediaries and controlling organizations.
- High anonymity and security.

Gold don’t have all the above features:
- Gold and forex reserves are kept in one place, to which no one has access. In majority of countries it is prohibited to keep gold at home or, at least, there are many limitations to it.
- It’s very easy to speculate with gold, because all reserves are controlled by a rather narrow group of people.
- Gold in pure form is not suitable for exchange and it’s necessary to make paper currencies which are inconvenient. There is no need in extra abstractions.
- A load of intermediaries amass a fortune from scratch and 99% of gold reserves are once again controlled by a very narrow group of people.
- There is no anonymity and security with gold. Moreover, it’s almost impossible to exchange gold in pure form.

In my opinion, future belongs to bitcoin.

http://versusit.org/bitcoin-vs-gold

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

Difficult to speculate?

- It’s difficult to speculate because the economy based on bitcoin is transparent.

The bitcoin price for now is almost entirely based on speculation. I'm curious what you mean by that statement.

Your other four points are true of bitcoin and every other digital currency currently out there or yet to be introduced in the future, so as an argument for digital currencies (not for bitcoin in particular) I largely agree.

Peter Schiff said something

Peter Schiff said something that got me thinking. Is there some way to back a digital currency with the value of technology? Not like Bitcoin is backed only by its own value as a unique medium of exchangs, but something with more recognizable value that is also digital, like ebooks, heavily used productivity software, or even something like the value of http technology. I don't know how any of that would work. I'm just saying that we've already gone beyond recognizing only physical goods as having value and have put high value on virtual goods and ideas, trademarks, services, and contracts, so there's got to be some way of using such virtual goods to back a currency. We have so many service businesses nowadays that don't produce any physical product but provide value that may stand the test of time.

I guess it's like the stock market and such, or derivatives? I don't really understand much beyond stocks.

but the dollar IS backed by

but the dollar IS backed by something--if i don't pay my taxes in dollars, i get thrown in jail. millions of people operate under this premise, therefore, the dollar maintains it's "value" as a means to not be imprisoned.

highest and best use

The true value of something is its highest and best use. For example, land is finite but that alone is not what gives it value. If I had several acres of land in a major metropolitan area, it's best use would vary depending on what I did with it. I could sit on it and it would be worth $x. I could put condos on it and it would be worth $y. I could put a store on it and it would be worth $z.

Similarly, I could use gold to make a hammer, melt it down and use it as a wire, I could sell it, I could hold it, etc.

With bitcoin, you can sell it, exchange it for goods and services, you ciuld even choose to hold it. Right now, during this rally, the best use for bitcoin is to hold on to it because whatever you buy with it might not gain in value as rapidly. Then again, exchanging it for litecoin might be the best use. I think the major concern for doubters is that bitcoin doesn't have as many alternative uses as say gold. You can't make a bitcoin hammer if you are left holding the bag. With gold you can at least make a pretty trinket. Then again, would you even do that with gold?

FRNs are worthless except for faith, although they could still heat your home or clean your bum if they were worthless as a means of transaction. Odds are, if you kept $1000 in FRNs, in 20 years from now, you would have kess purchasing power than today. Bitcoin will either gain against worthless fiat currencies in the long term as long as people consider them useful for transactions. There are more and more merchants and exchanges opening up each day, this would indicate that its function as a means of transaction is on the rise while the supply is finite. Considering the global trend towards absurd tax rates on transactions, the number of markets willing to accept cryptocurrencies will continue to rise. I think there won't be enough bitcoins to meet that demand, thus increasing their value. This is also why I think things like litecoin will gain as well. There's probably enough room for 8 or 9 competing currencies that have been fully mined. This won't all happen in one month of rallies. Don't think of bitcoin as a way to become an overnight millionaire, think long-term.

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Yes we have gone from being sound money advocates

To believing in unicorns

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Not Hypocritical About Bitcoin... Hysterical About Bitcoin

August 5 2011 - When everyone was hailing collapse 2.0
I was quietly, with precision, saying the S&P would exceed 1375

Not entirely correct

The US Fedral Reserve Note known as the dollar is an inflationary currency. It is printed at will and created out of debt based upon work to be done by generations in the future.

Bitcoin (like gold) is a deflationary currency. It is impossible to print or arbitrarily create btc. Work must be done to produce them. Like gold there is also a fixed rate supply of BTC as well as a fixed number that will ever be created (21 million).

I know what OP is getting at, nothing has a 4000 track record like gold. But bitcoin is the kind of agorism that is designed to force the kind of societal changes that we want to see. Look at btc as our secret weapon to destroy the central bankers and central planners along with them.

Bitcoin is subversive. That's why it is so critical.

Anyone else feel like they've been doing a lot of bitcoin explaining/defending these past few weeks?

Bitcoin's numbers ARE arbitrary

They just invented 21 million of them and ask you to waste electricity to solve math problems that don't need solving to get them and if you do they are worth $1200!!!
Scam....

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as arbitary

as any other currency or value we give to anything besides food, water and shelter.

QUESTION: what ARE people giving up space for on their computers

You just said, "solving problems that don't need solving". WHAT EXACTLY is BitCoin using peoples' computer to do? Is everyone unwittingly powering SkyNet while jumping for joy because they were "smart" enough to buy when it was $5 a bitcoin?

I support Bitcoin but I'm still learning about it. What is BitCoin doing with my memory and processing power?

answers

Bitcoin doesn't use anyone's computer unless they're mining bitcoin themselves or some bad actor has installed malware that uses the victims computer to mine in the background w/o being detected.

So bitcoin isn't doing anything to your processing power.

Think of digital mining just like physical mining gold/silver/whatever. The process doesn't matter (although the secure/anonymous process is one reason bitcoin has value) what matters is that you've dug up/unlocked a commodity that the market values.

This made me laugh.

I had not thought about this, but that is a great point about solving math problems that do not need solving. I had always thought that somebody with a real value added project to do with their computing power would not just put it to work making these things, so I can see where you consider it a scam. Personally though, I do not believe that bitcoin is a scam. I believe the most accurate description I have heard is that it is a digital collectible. So long as lots of people want some, it will have some value.

NO

Just more of the same, money worth nothing used to steel real wealth.

sovereign

The "value" of Bitcoin.

As has been noted elsewhere one bitcoin could be said to be the nominal equivalent of one million dollars, or indeed any other decimal currency consisting of one currency unit divided into one hundred sub-units.

This is not a value as such, merely a way of conceptualising the unit of account. If we want to come up with some kind of value then it would be useful to perform the same exercise relative to gold which most members here believe to be a store of value.

At the present time the total weight of above ground gold in existence is estimated to be approximately 210 billion grams. Coincidentally, or perhaps intentionally, the total permitted issuance of bitcoins will be 21 million. It can be readily seen that each full bitcoin is therefore the equivalent of 10,000 grams of gold at today's estimated store of above ground gold. At today's relatively low price of $40.28 per gram this would give a single bitcoin a value of $402,800.

As to whether Bitcoin is Money, I personally believe that, all other things being equal, it can be viewed as such. Bitcoin represents a complete system of exchange not merely a medium of exchange. It is the product of Labour upon Land in an economic sense. This makes it a marketable commodity cum service and in the market it will be assigned a value relative to other goods and services on offer there. Since it is a digital commodity cum service it is not subject to wear and tear and as such has a near infinite marginal utility assuming only the continued existence of some kind of electronic network.

Bitcoin is subject nevertheless to all the other risks associated with having a market value just as are precious metals or any other Money substitute. It also has peculiar risks associated with its method of production and its dependence on an electronic network for its existence.

It is in assessing these risks that I personally decided to avoid buying into Bitcoin which I could have done when it was trading below $5.00. I do not regret my decision since it was made for sound reasons and for all I know any bitcoins I purchased may have already disappeared into the ether from whence they came. It was my speculative plan at that time to accumulate bitcoins and at some time in the future to exchange them for precious metals since there are dealers offering to do this. It was a good plan but my risk analysis prevented its execution.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

If you had purchsed @ $5 each

If you had purchsed @ $5 each and stored them in a paper wallet your risk of loss of your bitcoins would have been ZERO. Of course the risk of valuation is always present. But there is no way to lose your bitcoins if you properly secure them.

What is a paper wallet?

.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

A paper wallet is a physical

A paper wallet is a physical wallet that if created correctly does not even have to be connected to the internet to send bitcoins to it. This site does a great job explaining it!

https://bitcoinpaperwallet.com/

I don't own a printer.

My idea was to save a digital wallet on a digital stick offline. Just plug it into the drive I have on my Mac and download bitcoins into it. This could also be used for any POS devices set up in stores to be used by customers when Bitcoin is more universally traded.

My concerns were not specifically related to storage issues. It was the risks associated with the network and its accessibility by malicious hackers (possibly employed by the vested interests) that could destroy the trust that is required to have a successful global currency. These concerns still exist for me and could well become valid if/when Bitcoin threatens the global banking networks. For all I know it may be an intelligence operation to snare the unwary and destroy the entire concept of such free market currencies. Having worked for 25 years in the financial markets I have seen what is possible even when done "legally". The potential for skullduggery is almost unlimited.

It was simply a speculation too far for me since I am not sufficiently computer savvy to understand the inner workings of the system. The broad concept is simple enough but how it all works via computer language is a closed book to me. It is this risk aversion that moves me to buy silver which I consider to be an insurance policy against the inevitable death of fiat currencies.

On which note I should say that Bitcoin is not a FIAT currency as others have asserted. A currency that is created as the medium of exchange and unit of account by government FIAT is so called. Bitcoin is the opposite of a FIAT currency. It is a pure market currency that only gains value and utility when people use it and invest in it. Why they do so is irrelevant.

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)

I understand your points

I understand your points completely. I too do not possess the required computer intellect to fully understand the entire underpinnings of this system. However from what I do understand the mere fact that every minute of every day the number of users and unique transactions increases and is added to the full record. The longer the system operates the harder it is to compromise. If anyone had honestly wanted to co-opt it the best time doing so would have been in the weeks after it began. I do think someone could make good money though by creating a curriculum and offering course in cryptocurrency technology.

As for not having a printer...I have read some posts that you can effectively create a public/private key pair just by rolling dice in real life and writing down the keys. I DO NOT understand how this would work AT ALL! But I did read about it and it is probably worth researching...

Prior to the invention of cryptocurrencies I was a gold/silver bug all the way. I still do believe that 'species' assets are the ultimate store of value. There are however many many significant drawbacks to using them in day to day transactions: Most businesses don't accept them as payment, few people keep scales and know how to accurately assay gold, they are easily stolen/confiscated, with the use of 3D printers it is easy to 'counterfeit' gold with tungsten... I say these things not to discredit gold -- I still think gold is the best ultimate store of value. If I personally hold 24c gold coins/bars that I personally know are 100% and accurately weighed I would feel very confident in that as a store of value. The problem would be when I tried to spend them. Cashing in large amounts of gold for cash certainly has the potential to raise red flags. I know Im starting to ramble... but yeah just a few thoughts.

This is wrong

Everybody needs to stop comparing bitcoin to dollars.

Correct. Bitcoin is not backed by anything. Neither is gold. The question is whether it has any value at all. Well, that's what the market is for. Is it's utility and functionality as money enough to give it some value? More value than gold? We dont know yet. But to say "Bitcoin isn't backed by anything" is missing the point entirely.

Gold was the first money, but that doesn't mean that we can't invent something to replace it.

Money was born from a commodity, but that doesn't mean that now that we know what money is, we can't invent one that wasn't born from a commodity.

That's like saying "wheels have been made out of wood for thousands of years. I just dont trust rubber. Its not backed by wood."

The problem is that you think bitcoin is meant to replace the dollar. Its not. Its meant to replace gold.

Séamusín

Non commodity money can be used

We use it today- all countries have their own non commodity fiat money
The question is whether that is sound.
Commodity money is attractive because it is limited in supply for real by nature.
Non commodity money like bitcoin tries to replicate the scarcity but its artificial

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It's not hypocritical to support competing currencies.

Before Bitcoin, you could only use US dollars to purchase things in the US. Bitcoin enables you to purchase things in the US, without using US dollars. That's not hypocritical.

Be aware of what could happen

I know a lot of good people have big investments in this. Just dont want to see people lose out. Be aware.

http://www.garynorth.com/public/11828.cfm

Some Thoughts I Have

Bitcoin is "backed" by its protocol. The transfer-ability and anonymity of Bitcoin may just be of more value in today's instant online digital world than "intrinsic value". Intrinsic value is not THE ONLY important metric. And Ron Paul himself has said that the currency we use should be "whatever the market decides". He does not want the government dictating or forcing even gold on us.

Also, the concept of an entirely digital and open-source currency like bitcoin is still a fairly new one. In the end I don't get why all you gold bugs are so upset with bitcoin. They're two completely separate entities in my opinion. One is more of an internet/digital wealth transaction tool and the other is a tangible asset meant for long-term savings.

Get over it. Bitcoin has it's uses and so do precious metals.

Another thing that is

Another thing that is important to note but that is hard for many to conceptualize. The face value of one bitcoin is equal to one million US dollars and one million Zimbabwe dollars. This 'face value' represents the number of individual units of exchange represented by the denomination. 1 million US dollars equals 100 million units (pennies), 1 million Zimbabwe dollars equals 100 million units (pence), and 1 bitcoin equals 100 million units (satoshis). While the purchasing power of these three currencies are vastly vastly different the face value of those representations are the same.