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Bitcoin -- Boom or Bubble?
Real Clear Politics ^ | 20 January, 2014 | Robert Samuelson

Posted on 01/20/2014 8:17:37 AM PST by Errant

WASHINGTON -- The baffling Bitcoin boom is either an exercise in self-delusion -- a high-tech Ponzi scheme that will come crashing down -- or an imaginative new Internet technology that will ultimately change how millions of people around the world conduct everyday business. There is little middle ground.

Called a "digital currency," Bitcoin originated in early 2009 with a software program written by Satoshi Nakamoto. Who is Nakamoto? Good question. It's a pseudonym, and we don't know who's behind it -- whether man or woman; individual or group; American, Japanese, Russian or some other nationality. But what seems clear is that Nakamoto owns bitcoins worth "hundreds of millions of dollars," says Jerry Brito, an analyst at the Mercatus Center of George Mason University and a Bitcoin enthusiast.

You can do two things with bitcoins: buy stuff, just as with traditional money; and hold them as an investment or speculation, hoping their price will rise.

Some shopping does occur with bitcoins. The first retail transaction is usually attributed to Laszlo Hanyecz, a computer programmer in Florida, who in May 2010, persuaded someone to order two pizzas for him in exchange for 10,000 bitcoins. Recently, Overstock.com -- an online retailer -- agreed to accept bitcoins; the Sacramento Kings basketball team will do likewise. According to coinmap.org, about 2,600 stores and businesses worldwide accept bitcoins, with concentrations in Western Europe, California and New York.

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


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: bitcoin; bubble; crypto; cryto; currency; pyramid; scam; scheme; shamwow
Other News:

Bitcoin’s Recent Price Stability Could Point To Growing Maturity

UK reviews Bitcoin tax as global regulators seek to cash in

Texas medical clinic accepts BITCOIN as a form of payment

São Paulo to get first bitcoin ATM in South America

Bitcoin Judged Commodity in Finland After Failing Money Test

Korea's biggest Bitcoin exchange gets $400,000 from Silicon Valley investors

Bitcoin Resumes Service In India

Milton Friedman Predicted The Rise Of Bitcoin In 1999 [Video of Milton at Link]

1 posted on 01/20/2014 8:17:37 AM PST by Errant
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To: Lurkina.n.Learnin; nascarnation; TsonicTsunami08; SgtHooper; Ghost of SVR4; Lee N. Field; DTA; ...

Click to be Added / Removed.
2 posted on 01/20/2014 8:19:21 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

Bitcoin - another “carbon credits” scheme, similar in many ways to AlGore’s patented scam and sale of non-existent value.

What is the source of “bitcoins” and how is the accounting kept? It is just another kind of “fiat currency” that has not yet been widely accepted, NOTHING backs it.

How much is a bitcoin worth in zlotys or lire?


3 posted on 01/20/2014 8:26:44 AM PST by alloysteel (Obamacare - Death and Taxes now available online. One-stop shopping at its best!)
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To: alloysteel

Captain Obvious says: “It’s totally dependent on what people will continue to pay for it.”

Peer to peer transaction history and protection…
Hmmm sounds kinda disruptive.


4 posted on 01/20/2014 8:31:11 AM PST by shineon (.)
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To: Errant

If I were disposed to do so, the only thing I would use them for is to purchase illegal drugs on the internet without fear of being tracked.


5 posted on 01/20/2014 8:33:38 AM PST by Gaffer
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To: alloysteel
How much is a bitcoin worth in zlotys or lire?

Not sure, but the last price on the Mt. Gox exchange shows $954.00 US dollars each!

6 posted on 01/20/2014 8:34:27 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Gaffer
only thing I would use them for is to purchase illegal drugs...

Says you...

After buying a watch with a part of a Bitcoin, I'm looking at replacing my fillet knife on Overstock right now.

7 posted on 01/20/2014 8:38:14 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

Bubble


8 posted on 01/20/2014 8:42:37 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: Georgia Girl 2

:)

9 posted on 01/20/2014 8:47:07 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: shineon

Very. Revolutionary vs. evolutionary. The blowhard naysayers should pause and educate themselves before spouting off here on FR; but that’s just what some uninformed people tend to do here.


10 posted on 01/20/2014 8:49:10 AM PST by pingman (In the Land of the Perpetually Outraged, truth is the enemy.)
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To: Errant
Bitcoin causes some vigorous discussions.
And thanks for your links.
I understand the criticism of bitcoin as ‘fiat’, but the criticism seems to equally apply to the dollar, backed by nothing, infinite quantity, possible market manipulation by secret forces.
At this point in time, it may be advisable for those with savings, to consider a dip in the bitcoin pool..not betting the farm, but enough to buy a bus ticket back home and a can of beans. If bitcoin goes bust, it would be like leaving a months 1965 wages in bank savings at 3% interest minus taxes minus inflation. If dollars savings are confiscated or the currency is changed, most people would lose everything...see Greece, Cyprus as comparisons. The screwing would be different but comparable.
TWB
11 posted on 01/20/2014 8:58:01 AM PST by TWhiteBear (Sarah Palin, the Flame of the North)
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To: Errant

What ever else it is or isn’t it sure isn’t a Ponzi scheme.


12 posted on 01/20/2014 9:02:23 AM PST by DManA
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To: TWhiteBear
At this point in time, it may be advisable for those with savings, to consider a dip in the bitcoin pool..not betting the farm...

Thanks, it's kind of how I see it too. In today's world and knowing what's coming, I'm not sure one could diversify too much. Owning even a few fractions of a Bitcoin might get you through a checkpoint to a tank of gas and someplace safe.

13 posted on 01/20/2014 9:07:28 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Gaffer

“If I were disposed to do so, the only thing I would use them for is to purchase illegal drugs on the internet without fear of being tracked.”
*******************************************************************
I suspect that there are a number of legitimate businesses that will sell you their product at a discount if you pay in bitcoin. You’d be surprised at how many.


14 posted on 01/20/2014 9:09:08 AM PST by House Atreides
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To: House Atreides

Hiding income?


15 posted on 01/20/2014 9:11:52 AM PST by Gaffer
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To: DManA
It could blowup tomorrow, but for sure I agree with your statement that it isn't a Ponzi scheme.

Not so sure now about FRNs though after seeing this video by Mike Maloney:

The Biggest Scam In The History Of Mankind

16 posted on 01/20/2014 9:13:10 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Gaffer

Hiding income?
***********************
It’s possible (or even likely) that some are. A transaction using Bitcoin is analogous to a telephone conversation using “burner” cell phones at both ends.


17 posted on 01/20/2014 9:14:16 AM PST by House Atreides
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To: alloysteel
People have tried to educate me, but I just can't get my arms around the concept. Nobody can explain what is the "ore" that's being mined for bitcoins.

You mention carbon credits. In my mind, it seems a bit more like Enron.

18 posted on 01/20/2014 9:14:34 AM PST by grania
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To: grania

Think of BC as a commodity backed currency: time and computational power.


19 posted on 01/20/2014 9:19:23 AM PST by pingman (In the Land of the Perpetually Outraged, truth is the enemy.)
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To: Errant

This is true. Everyone thinks the Fed is the source of all monitary evil. Actually it’s the congress with their $trillion deficits that are dooming the economy.


20 posted on 01/20/2014 9:19:36 AM PST by DManA
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To: DManA
Not only congress, but the central government. It's the same story over and over. All governments eventually get themselves trapped in downward spiraling debt cycle and wind up debasing whatever currency is being used - even if gold or silver.

The ONLY solution is to put the power of the purse into the hands of the people - the ones who have the most to lose. This technology might just make that possible. At least that's what I would hope would happened, and on a global scale. Money is indeed the "ROOT" of evil. The more it can be kept out of the hands of a few, the better!

21 posted on 01/20/2014 9:24:55 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

1 Timothy 6:10: For the love of money is a root of all sorts of evil, and some by longing for it have wandered away from the faith and pierced themselves with many griefs.

It’s the love of money that is a root of evil. Money can be used for good purposes as well as bad purposes so it is the intent of a person that makes the use of money turn out to be bad or good.


22 posted on 01/20/2014 3:10:31 PM PST by Redcitizen (Never bring a tank to a Chuck Norris fight.)
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To: alloysteel
Bitcoin - another “carbon credits” scheme, similar in many ways to AlGore’s patented scam and sale of non-existent value.

With one significant difference: it wasn't created by government for political purposes. That explains much of its attractiveness.

23 posted on 01/20/2014 4:26:06 PM PST by BfloGuy ( Even the opponents of Socialism are dominated by socialist ideas.)
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To: TWhiteBear

and hold them as an investment or speculation, hoping their price will rise.


I don’t think they are an investment in the traditional sense.

The stock market, dollars, bit coins and lottery tickets all have a lot in common.


24 posted on 01/20/2014 4:36:48 PM PST by PeterPrinciple
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To: grania

People have tried to educate me, but I just can’t get my arms around the concept.


NEVER invest in something you don’t understand.


25 posted on 01/20/2014 4:37:52 PM PST by PeterPrinciple
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To: Redcitizen
It’s the love of money that is a root of evil

That's one way to look at it, another is cut the root in order to eliminate an evil. Governments also desire/love money. Its "root" sucks the lifeblood from the governed to ensure its own existence, growth and to enrich its supporters. The "beast" requires pruning from time to time.

Matt. 6:24 ...You cannot serve both God and money.

26 posted on 01/20/2014 5:24:42 PM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: PeterPrinciple
The stock market, dollars, bit coins and lottery tickets all have a lot in common.

Two are fundamentally different. Both dollars and bitcoins exist primarily to serve as a medium of exchange.

27 posted on 01/20/2014 5:28:03 PM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant
Francisco’s Money Speech: "So you think that money is the root of all evil?”
28 posted on 01/20/2014 5:28:20 PM PST by Sawdring
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To: Errant

and hold them as an investment or speculation,


Did you not read the article? We can hold them for investment and speculation.


29 posted on 01/20/2014 5:40:08 PM PST by PeterPrinciple
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To: PeterPrinciple

Of course you can, but that’s NOT their primary purpose. Both the dollar and bitcoin were designed to be used as a medium of exchange; quite difference from stocks.


30 posted on 01/20/2014 6:00:37 PM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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