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Aussie Bank Asks "Will Bitcoin Replace The Dollar?"
Zero Hedge ^ | 12/27/2013 | Tyler Durden

Posted on 12/27/2013 7:39:33 PM PST by Errant

Bitcoin is rapidly becoming part of the everyday lexicon. Following David Woo's investigation, National Australia Bank's Emma Lawson looks at its creation, use, and quality as "currency," and find that Bitcoin meets most, but not all the conditions required to be a currency. Lawson concludes Bitcoin may not be the most efficient monetary system, given the costs to create, and that the supply set-up can be seen as both an advantage (hyperinflation is not possible) but also a disadvantage (there are conditions which may create deflation). But, if enough people believe in it, and use it, it may be here to stay as a payment system. Simply put, its success (or failure) will depend on establishing trust and adoption.

(Excerpt) Read more at zerohedge.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: bitcoin; currency; dollar; gold

1 posted on 12/27/2013 7:39:33 PM PST by Errant
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To: Errant

How many divisions does Bitcoin have?


2 posted on 12/27/2013 7:40:43 PM PST by 2banana (My common ground with terrorists - they want to die for islam and we want to kill them)
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To: Lurkina.n.Learnin; nascarnation; TsonicTsunami08; SgtHooper; Ghost of SVR4; Lee N. Field; DTA

Very good article with plenty of relevant information.

3 posted on 12/27/2013 7:42:20 PM PST by Errant
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To: 2banana

Up to 8 digits.


4 posted on 12/27/2013 7:42:40 PM PST by Errant
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To: Errant

Mmmm...first I hear of Overstock.com, now the Aussie’s. This Bitcoin concept is sure gaining currency (no pun intended). Well, maybe a little.


5 posted on 12/27/2013 7:44:00 PM PST by Paulie (Buy local, bank local, exert your influence locally; the left will fold like a cheap suit.)
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To: Errant

“(hyperinflation is not possible)”

If it were to replace the dollar as a reserve currency it would have to hyperinflate just to catch up.


6 posted on 12/27/2013 7:47:20 PM PST by Lurkina.n.Learnin (This is not just stupid, we're talking Democrat stupid here.)
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To: Lurkina.n.Learnin

No, it would be the opposite. Hyperinflation is when a currency buys less and less. If Bitcoin were to skyrocket in price, say by replacing a country’s currency, it would purchase more and more.


7 posted on 12/27/2013 7:51:25 PM PST by Errant
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To: Errant

Your right. The price of bitcoins would have to raise dramatically.


8 posted on 12/27/2013 8:01:30 PM PST by Lurkina.n.Learnin (This is not just stupid, we're talking Democrat stupid here.)
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To: Lurkina.n.Learnin
I suppose that's were the author is getting the "deflation" characteristic upon adoption. Deflation is were the prices of goods and salaries fall in relation to the currency (i.e., too few dollars chasing too many goods).

I'd rather have deflation than hyperinflation any day, as long as the money is good. Bitcoin is yet to be fully tested, IMO.

9 posted on 12/27/2013 8:04:13 PM PST by Errant
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To: Paulie

Will be glad when Overstock.com starts accepting them. I have my eye on a new watch that they carry. ;)


10 posted on 12/27/2013 8:06:33 PM PST by Errant
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To: Errant

How will the word, “bitcoin” be used in a sentence when used as a verb? Anyone have some good examples?


11 posted on 12/27/2013 8:08:18 PM PST by Jack Hydrazine (Pubbies = national collectivists; Dems = international collectivists; me = independent conservative)
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To: Errant; RichInOC; Prince of Space; JoeFromSidney; TNMountainMan; alphadog; infool7; Heart-Rest; ...

12 posted on 12/27/2013 8:09:08 PM PST by narses (... unless you eat the flesh of the Son of Man and drink his blood, you do not have life within you.)
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To: Errant

No. There’s not enough of them to handle our economy.


13 posted on 12/27/2013 8:09:09 PM PST by discostu (I don't meme well.)
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To: Errant

The idea that deflation is an unspeakable horror that must be prevented at all costs is absurd. This is promoted by entities such as the US federal government and the financial elite who benefit from fiat currencies that constantly diminish in value.

Prior to the establishment of the Federal reserve in 1913 US dollars consistently increased in value. If you stuffed $100 into your mattress in 1850 it would be worth a lot more in 1900.


14 posted on 12/27/2013 8:16:31 PM PST by Junk Silver
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To: Lurkina.n.Learnin; Errant

the current bitcoin market cap is under $10b.

the market cap of a valid world wide currency would have to exceed $1 trillion

that means the bitcoin market cap will need to grow at least 100x it’s current value. possibly 1000x


15 posted on 12/27/2013 8:23:21 PM PST by sten (fighting tyranny never goes out of style)
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To: Errant

Bitcoin is going the way of the unicorn.


16 posted on 12/27/2013 8:23:35 PM PST by Beowulf9
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To: sten; discostu; Lurkina.n.Learnin
the market cap of a valid world wide currency would have to exceed $1 trillion.

Since it's divisible by up to 8 digits, you could have something like 2,100,000,000,000,000 units to work with. And there are other crypto-currencies like Litecoin, of which there will be four times as many. So it should meet the market demand.

17 posted on 12/27/2013 8:30:19 PM PST by Errant
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To: Junk Silver

Agree.


18 posted on 12/27/2013 8:31:03 PM PST by Errant
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To: discostu

22,000,000 bitcoins ... divisible to 8 digits

that’s 2,200,000,000,000,000 units of currency.

the minimal demonization of the US dollar is the penny. there are less then $3,000,000,000,000 in the M1 supply, or about 300,000,000,000,000 units of currency

or 1/7 th the total amount able to be represented by bitcoins

more then adequate to become an M1 currency unit


19 posted on 12/27/2013 8:40:25 PM PST by sten (fighting tyranny never goes out of style)
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To: Errant

I read the whole thing but I don’t know any more than I did before. I don’t understand the language in which it was written. I’m too old to learn it.


20 posted on 12/27/2013 8:48:11 PM PST by WVNan
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To: Beowulf9

Perhaps some enterprising prepper will develop a hand-cranked global computer networking device so that wealth in Bitcoin can be accessed in the event of a grid failure or other catastrophe.

In the meantime as far as I can tell Bitcoin’s current value is mostly based on the “greater-fool” concept - some other guy will pay more for them so they must be worth that amount. I’m very curious about what will happen when large numbers of people stop holding Bitcoins and actually start trying to use them to buy goods and services.


21 posted on 12/27/2013 8:48:14 PM PST by Junk Silver
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To: WVNan

Don’t feel bad about that. It takes awhile to get your head around it. Took me a long time too and I’m still learning more about it. Still learning about the Fed too and find that Bitcoin is not only easier to understand, but the information doesn’t require a FOIA request and court fight to get. :)


22 posted on 12/27/2013 9:07:02 PM PST by Errant
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To: Junk Silver
Perhaps some enterprising prepper will develop a hand-cranked global computer networking device so that wealth in Bitcoin can be accessed in the event of a grid failure or other catastrophe.

Have you heard that they've given O an internet kill switch? It won't only be Bitcoin users that are in trouble. It will be the equivalent of an EMP attack once he pushes that button as everything now relies on the internet.

23 posted on 12/27/2013 9:15:07 PM PST by Errant
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To: Errant

“Have you heard that they’ve given O an internet kill switch?”

Oh hell, don’t anyone tell him about this website!


24 posted on 12/27/2013 9:31:25 PM PST by Junk Silver
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To: Errant

bitcoin’s problem is current or future copycat-currencies.


25 posted on 12/27/2013 11:19:36 PM PST by RockyTx
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To: Errant

bit ping


26 posted on 12/28/2013 4:28:53 AM PST by maine yankee (I got my Governor at 'Marden's')
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To: sten

Most of the dollars running around in our economy exist only in electronic form, which makes bitcoin less than adequate to replace the dollar. And given that bitcoin is a virtual currency it has no ability to replace physical currency.


27 posted on 12/28/2013 6:59:33 AM PST by discostu (I don't meme well.)
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To: sten

Thanks, I was wondering about that.


28 posted on 12/28/2013 7:15:32 AM PST by Balding_Eagle (Damn ObamaCare, full speed ahead!)
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To: discostu

the dollar is a virtual currency

unless you think magic scribbles on paper somehow make it impervious to counterfeiting

and it’s already proven to be dilutable

fiat currencies are weak at best and open to corruption. this is why gold has value... it cannot be diluted (significantly) and cannot be corrupted (once verified it’s gold).

crypto currencies are more aligned with gold then the dollar


29 posted on 12/28/2013 9:39:25 AM PST by sten (fighting tyranny never goes out of style)
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To: sten

All currency is fiat currency. Gold is no more innately valuable than dollars, things of actual value make bad currency because we’re too busy eating them or using them to build things. Crypto currency is just another brand of making up currency, the big problem it has is that it’s self limited, making it not useful for a large flexible system.


30 posted on 12/28/2013 9:43:39 AM PST by discostu (I don't meme well.)
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To: discostu

you have no concept of why currencies exist. your understanding is based around the barter system of goods with no concept of an item that can represent wealth inherently

your mindset would have you walking around with 30 chickens to buy a side of beef instead of selling the 30 chickens for 1/2 ounce of gold and taking that gold to buy the beef. that’s the point of currency

the main qualifier for such a currency is that it cannot be easily counterfeited nor diluted in value by virtue of someone arbitrarily printing more.


31 posted on 12/28/2013 10:21:24 AM PST by sten (fighting tyranny never goes out of style)
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To: sten

Actually I know EXACTLY why currencies exist, and no my mindset would have me use the 1/2 of gold because the 30 chickens would be a pain in the ass which is exactly why currencies exist. But one of the most important parts of a currency is that it not be useful for things other than a currency, because if they were useful for something else people would use them for something else, which is why all currencies, including gold, do NOT have intrinsic value. If you and I agree 1/2 gold, a side of beef and 30 chickens all have the same value then they do, but only the beef and the chickens (stuff that can keep you alive) have intrinsic value, the gold is only useful as a currency or ornamentation.

And nothing represents wealth inherently, only things we’ve decided represent wealth do, and that’s a societal decision not inherent property.

In the old days when all money was physical protection from counterfeiting and diluting was important. But those days are on the way out as less and less money is physical. Which is funny because we’re putting more and more effort (and cost) into making our less and less important physical dollars hard to counterfeit, so hard in fact we have a hard time making them legitimately, meanwhile most of us barely ever even touch the stuff.


32 posted on 12/28/2013 10:57:16 AM PST by discostu (I don't meme well.)
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To: WVNan

“I read the whole thing but I don’t know any more than I did before. I don’t understand the language in which it was written. I’m too old to learn it.”

I don’t understand it either, much.

I just know that I manage the mining machines for my geeky son. I know the electricity and cooling aspects. He’s been involved in btc for years now. He has been a home renter for years with 4 kids and a wife. Just a week ago he bought a home on 2.5 acres for cash, and only touched a 1/4 of his bitcoins to do so. Thank you btc.


33 posted on 12/28/2013 3:46:04 PM PST by George from New England (escaped CT in 2006, now living north of Tampa)
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To: George from New England

Send him to WV, I have a big ole ten-room house with full basement for sale...cheap.


34 posted on 12/29/2013 5:56:42 PM PST by WVNan
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