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Bitcoin Is Not Real Money
Townhall.com ^ | March 1, 2014 | Larry Kudlow

Posted on 03/01/2014 7:33:41 AM PST by Kaslin

Just before the bankruptcy of the Mt. Gox bitcoin digital-money (or virtual-currency) exchange, Japanese finance minister Taro Aso predicted the inevitable failure. “No one recognizes them as a real currency,” he told reporters. “I expected such a thing to collapse.”

I totally agree with Mr. Aso. For weeks and weeks I have been tweeting and broadcasting that bitcoin is not real money. It is not a reliable medium of exchange, nor is it a reliable store of value. It has no central-bank regulation, network operations, or even centralized issuance. And because of its wild price fluctuations, bitcoin can never be a reliable payment system.

The virtual currency originally offered a way to make transactions across borders without third parties like banks. But the collapse of Mt. Gox -- with 850,000 bitcoins unaccounted for, summing to $425 million of losses, according to many reports -- illustrates the grand failure of this digital experiment.

Venture capitalist Ezra Galston writes in the Wall Street Journal, “without a regulatory framework, credible payment processors -- such as PayPal, Dwolla or Square -- cannot service bitcoin exchanges. And because payment processors are vital for converting fiat currencies into virtual deposits, bitcoin operators will be forced to move downstream into the black market.” Mr. Gaslton concludes by asserting that “the bitcoin community must embrace external regulation to ensure that credible vendors may participate in payment processing.”

Hundreds of bitcoin supporters have tweeted attacks at me for arguing that bitcoin is not real money. But historically, money must be a reliable medium of exchange, and a reliable store of value. Bitcoin meets neither of these definitions.

How can you transact using so-called digital money when prices fluctuate by hundreds of dollars in the space of an hour, or less? You might think you bought something for $500. But by the time the retailer processes payment, the so-called digital-currency price drops to $100.

Both buyers and sellers lose big because bitcoin is not a reliable medium of exchange with a dependable store of value. It is backed by nothing but pure speculation. You can’t even hedge it, because there’s no interest rate. You can barely even get a price quote -- not for the value of the product being bought or sold, but for the value of the monetary medium of exchange.

Years ago, Arthur Laffer warned that many currencies around the world lacked “the moneyness of money.” He was referring to third-world-type currencies. But bitcoin would qualify as well.

Now, I’m not going to defend the value of the dollar, which has depreciated substantially over time. But this unfortunate depreciation has happened over long periods of time -- not ten-minute intervals.

Of course, I’d love to see a gold- and commodity-backed dollar. And maybe future bitcoin reformers can restructure in such a way. But the dollar is accepted around the world by governments, banks, businesses, and consumers because it is a reliable medium of exchange, even if its store of value has deteriorated.

The dollar serves as a payment mechanism, has a central issuer, and is regulated. When the bitcoin people created their digital money as a way of avoiding banks and regulators, they forgot, or maybe never learned, the classic day-to-day requirements of a currency.

So fellas, please go back to the drawing board. I’m all for the digital revolution and trading assets online. But money is different. It must conform to certain long-held principles. That’s why bitcoin is not real money now, and why without huge reforms it will never qualify as real money in the future.


TOPICS:
KEYWORDS: bitcoin; currency; dollar; gold; kudlow; ponzi; pyramid; unreal
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1 posted on 03/01/2014 7:33:41 AM PST by Kaslin
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To: Kaslin
Mr. Aso?
2 posted on 03/01/2014 7:36:41 AM PST by ImJustAnotherOkie (zerogottago)
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To: Kaslin

The US dollar isn’t “real” either. The green paper rectangles are used as a means of exchange. Their only value is in the fact that we all agree it has value, and one can reliably exchange it for something of that approximate value. We could just as easily use blue seashells, plastic noodles, or electronic records.


3 posted on 03/01/2014 7:39:37 AM PST by Teacher317 (We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men)
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To: ImJustAnotherOkie; Lurkina.n.Learnin; nascarnation; TsonicTsunami08; SgtHooper; Ghost of SVR4; ...
Just another Aso...


Click to be Added / Removed.

4 posted on 03/01/2014 7:40:01 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Kaslin

Is the paper issued by the Federal Reserve then REAL MONEY.... A good paradox. It´s where people want to put their trust. People give it value.


5 posted on 03/01/2014 7:40:15 AM PST by rovenstinez
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To: ImJustAnotherOkie
Mr. Aso?

That's up there with Madoff!

6 posted on 03/01/2014 7:41:21 AM PST by Menehune56 ("Let them hate so long as they fear" (Oderint Dum Metuant), Lucius Accius (170 BC - 86 BC))
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To: Kaslin

We need an article from Larry Kudlow to tell us this?


7 posted on 03/01/2014 7:41:53 AM PST by FAA
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To: Kaslin
"The dollar serves as a payment mechanism, has a central issuer, and is regulated."

I guess two out of three ain't bad... IMO though, the regulator is broke!

8 posted on 03/01/2014 7:43:03 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Errant

Will “they” be able to track down the bitcoins that “disappeared” from Mt. Gox?


9 posted on 03/01/2014 7:43:46 AM PST by nascarnation (I'm hiring Jack Palladino to investigate Baraq's golf scores.)
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To: Kaslin

It’s as real as any electronic bank account balance on anyone’s phone or computer. The powers that be are just mad at Bitcoin’s decentralized architecture.


10 posted on 03/01/2014 7:44:57 AM PST by Tonytitan
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To: Kaslin

At any given time, approximately 3% of money issued by the Fed is in the form of paper currency. The rest floats around in the form of digital bits. The source of this statistic is G. Edward Griffin, author of The Creature from Jekyll Island, and also known for interviewing Soviet defector Yuri Bezmenov.


11 posted on 03/01/2014 7:49:44 AM PST by SpaceBar
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To: Kaslin

Gee, ya don’t say?


12 posted on 03/01/2014 7:50:57 AM PST by nuconvert ( Khomeini promised change too // Hail, Chairman O)
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To: nascarnation

If “they” can identity which ones and if those who took them try to use them, then it’s possible. Mt. Gox is also missing millions of fiat. So there is more to this than is being reported, IMO.


13 posted on 03/01/2014 7:57:05 AM PST by Errant (Surround yourself with intelligent and industrious people who help and support each other.)
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To: Kaslin
I totally agree with Mr. Aso. For weeks and weeks I have been tweeting and broadcasting that bitcoin is not real money. It is not a reliable medium of exchange, nor is it a reliable store of value.

If Kudlow investigated a little further he'd learn that bitcoin's volatility has actually been on the decline as adoption spreads.

It has no central-bank regulation,

One would think Mr. Kudlow could understand that this means there is no central bank that can manipulate the total supply of bitcoins. That is by design.

network operations,

The entire currency is a decentralized network of transaction verification nodes. Why doesn't he at least investigate the basics of the system he is attempting to criticize?

or even centralized issuance.

Issuance is decentralized to encourage the creation and maintenance of the verification nodes that are the bitcoin network. Issuance is regulated and ultimately fixed by the protocol itself. The protocol itself is the 'central bank authority' he wants. This is further proof no one has explained to him how bitcoin works, and he hasn't found out himself. He just has an inkling of who doesn't control it - does he speak on their behalf?

And because of its wild price fluctuations, bitcoin can never be a reliable payment system.

"Bitcoin is still about ten times more volatile than, say, the Euro priced in US dollars. But if Bitcoin’s volatility kept falling in half every three and a half years, it would be as stable as the Euro in less than 15 years." link

The virtual currency originally offered a way to make transactions across borders without third parties like banks. But the collapse of Mt. Gox -- with 850,000 bitcoins unaccounted for, summing to $425 million of losses, according to many reports -- illustrates the grand failure of this digital experiment.

Mr. Kudlow's initial observation has nothing to do with the failure of MtGox. Bitcoin is a way to make transactions across borders without third parties. But MtGox is not bitcoin. MtGox was an exchange that you could register an account with. If you registered an account with MF Global and Jon Corzine took you money out of your account and gambled it on Euro bonds - is that proof that dollars are a failure? Or is it proof that MF Global was mismanaged?

People are pouncing on the MtGox story and using it to spread FUD about something they obviously haven't taken 30 minutes to investigate. If you want to see a brief video explaining what bitcoin is, how the network functions, and how it manages transfers this youtube is a good intro.

14 posted on 03/01/2014 7:57:53 AM PST by Gunslingr3
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To: Tonytitan
It's as real as any electronic bank account balance on anyone's phone or computer

That's why I choose to bank in the real world. We can argue about if paper money is real, sure, but it does have an agreed-upon value that makes it so. I can walk into the local bank, write a check, and they will give me cash.

That's a big difference. Money has a real-world manisfestation. Bitcoins do not, unless you find someone who will trade a bitcoin entry for real goods.

At least with the tulip ponzi scheme of old, when it collapsed, some people had very pretty flowers.

15 posted on 03/01/2014 8:04:14 AM PST by grania
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To: Kaslin
The Open Source "no single person in charge" paradigm might work for developing software, but not much else.

Open Source software works because people ultimately use or don't use the software. It either works or it doesn't. It is found to have flaws or viruses in it, or not. Over time good Open Source software succeeds and bad Open Source software fails.

Bitcoin is like an Open Source currency. There is no Central Bank or nation regulating it. But Bitcoin, like all currencies today, doesn't have any intrinsic value. The only thing Bitcoin has that distinguishes it from other currencies is some algorithm defining how much new Bit coinage can be brought into existence. Let's say a bunch of different groups created computer currencies and competed to create the "best" to attract people to use their currency over other people's currencies. What would they do to make theirs better?

The only thing that would make me prefer one currency over another is if a specific group of people stood up and said we guarantee the value of this currency. We will protect this currency. Why would I give my trust to a currency created by someone with an alias and that's being held up by a group of rather shady organizations with little transparency?

However pathetic the US is today, we do have millions of people going to work every day and creating wealth, paying taxes, etc. This suggests that over time the dollar will still have some value. However non-transparent the workings of the Fed are, they do have to report to Congress on a regular basis, they publish their findings, they make public pronouncements, etc.

How far did the Open Source Occupy movement go? Not far because no one wanted there to be any leaders.

How successful has the Tea Party been? A bit more successful, but only because there are some Tea Party members who have stood up and become leaders such as Cruz.

If the Tea Party had gotten no one into elective office and was just a bunch of people gathering regularly to wave signs at politicians then what little it has achieved wouldn't have gotten accomplished either.

With all do respect, years of continuous Freeping in front of the White House didn't get Clinton out of office any earlier and certainly didn't taint his brand in the eyes of the world.

Sometimes you have to fight fire with fire. Currency backed by real people with currency backed by real people. Politicians with politicians.

Bitcoin is tulip bulbs. Bitcoin is a scam. The scammers made their money. There are suckers out there that don't want to be the last suckers. They are trying desperately to unload bitcoins to the last suckers.

16 posted on 03/01/2014 8:06:00 AM PST by who_would_fardels_bear
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To: Kaslin

“I have been tweeting and broadcasting that bitcoin is not real money”

More than a thousand retail locations would disagree...

It is an exchange of value that is outside government control (largely).


17 posted on 03/01/2014 8:07:28 AM PST by aMorePerfectUnion
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To: who_would_fardels_bear

The stuff found in rusty tins by a California couple recently was real money.


18 posted on 03/01/2014 8:07:48 AM PST by SpaceBar
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To: Teacher317

What makes money viable is the controlled creation thereof. Sure the Fed prints more money, but does so at a predictable rate balanced with economic & population growth, and with just one reliable issuer and difficulty (and active severe prosecution) of counterfeiting. Gold works as money because, while anyone can go mine gold, the process & difficulty & rate tends to parallel the needs of a stable currency, and the material is easily verified.

Bitcoin is similar to gold, in that computing valid new “coins” takes considerable computing power and (between Moore’s law and available resources) tends to parallel needs of a stable currency. The coordination of exchanges establishes an equivalent to sovereign control, assuring no undue behaviors.

Insofar as there are problems, I’m sure digital, paper, and coin currencies went thru similar problems early on (and still do at times).


19 posted on 03/01/2014 8:10:28 AM PST by ctdonath2 (Making good people helpless doesn't make bad people harmless.)
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To: Kaslin
Good article, and good comments. I can see this from both sides: On the one hand, a third-party currency that is not subject to government manipulation is a good thing ... but on the other hand, a currency isn't "real" unless it has widespread acceptance and a relatively predictable value over time.

While it's true that a currency like the U.S. dollar has lost its value considerably over time, it's also true that there is some level of predictability in this over long periods, and that short-term fluctuations actually work to the detriment or the benefit of an American citizen (think of someone paying off a 30-year fixed rate mortgage at 5% if inflation is at 8%).

For anyone who really thinks Bitcoins are a legitimate currency, I'd ask a simple question: Would you ever take a job with an employer who paid you in Bitcoins?

20 posted on 03/01/2014 8:11:29 AM PST by Alberta's Child ("I've never seen such a conclave of minstrels in my life.")
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To: SpaceBar
Hatred for government is not a justification for support of a non-governmental currency.

A large percentage of the people who support bitcoins support large government safety nets.

The rest don't care what governments do so long as they can bribe the right governmental official to look the other way while they continue to flaunt the law.

21 posted on 03/01/2014 8:13:08 AM PST by who_would_fardels_bear
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To: Kaslin
The Obama dollar won't be real money for much longer.

That's why people are so desperate to find something else.

22 posted on 03/01/2014 8:17:14 AM PST by E. Pluribus Unum (If Barack Hussein Obama entertains a thought that he does not verbalize, is it still a lie?)
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To: Kaslin; GeronL; Revolting cat!; Slings and Arrows

Someone should point this out with the trading schemes Al Gore has lined up for his “carbon tax credit$”.


23 posted on 03/01/2014 8:17:21 AM PST by a fool in paradise (The Texas judge's decision was to pave the way for same sex divorce for two Massachusetts women.)
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To: nascarnation
Will “they” be able to track down the bitcoins that “disappeared” from Mt. Gox?

There is not such thing as a bitcoin. Anyone with any brains has already converted the ephemeral currency into dollars or commodities.

Bitcoin is going down fast. If you have any now, you'd better spend them today. Buy anything from anyone who will accept it. By this time next week bitcoin will not be accepted anywhere by anyone.

24 posted on 03/01/2014 8:17:54 AM PST by P-Marlowe (There can be no Victory without a fight and no battle without wounds)
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To: Kaslin
But historically, money must be a reliable medium of exchange, and a reliable store of value. Bitcoin meets neither of these definitions.

By his own words, neither does the dollar.

25 posted on 03/01/2014 8:22:28 AM PST by DakotaGator (Weep for the lost Republic! And keep your powder dry!!)
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To: ImJustAnotherOkie

My Filipino bud says aso’ means dog.


26 posted on 03/01/2014 8:23:51 AM PST by max americana (fired liberals in our company last election, and I laughed while they cried (true story))
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To: P-Marlowe

I’ve been a spectator rather than a participant.
But I’ve found the saga quite interesting.


27 posted on 03/01/2014 8:24:39 AM PST by nascarnation (I'm hiring Jack Palladino to investigate Baraq's golf scores.)
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To: Kaslin
Where's their?


28 posted on 03/01/2014 8:27:09 AM PST by McGruff (Every night has it's dawn.)
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1st Quarter FReepathon

Less than $5.4k to go!!
We can do this.

29 posted on 03/01/2014 8:29:28 AM PST by RedMDer (May we always be happy and may our enemies always know it. - Sarah Palin, 10-18-2010)
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To: Kaslin
Real money is limited and requires work to produce. Gold, bales of cotton, polished shells, goats, or whatever are all forms of real money. It represents work. The more work it takes to produce, the more difficult it is to obtain, the more valuable the real money is. Then a person can use that real money to get other people to work for them - baking a loaf of bread, constructing a house, writing a legal contract, mining a lode of iron, building a city, whatever. Real money is wealth and creates wealth.

Mediums of exchange can be used to represent real money as a convenience. Who wants to carry around bales of cotton all the time? One of the most innovative and secure methods of exchange was the Tally Stick. It was used for 700 years in England.

Bitcoins, which are limited and requires work to make, are more real than the Federal Reserve Notes that are conjured up out of thin air by the private, foreign owned, for profit corporation known as the Federal Reserve, which is neither Federal, nor has reserves. FRNs aren't even real mediums of exchange because they don't represent real money. FRNs represent debt. FRNs are anti-money and destroy wealth.

30 posted on 03/01/2014 8:31:35 AM PST by Count of Monte Fisto (The foundation of modern society is the denial of reality.)
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To: grania
I can walk into the local bank, write a check, and they will give me cash.

Until you can't. For whatever reason.

Granted, I am referring to extraordinary, unlikely circumstances here but not out of the realm of possibility these days.

31 posted on 03/01/2014 8:33:50 AM PST by Tonytitan
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To: Kaslin
Hundreds of bitcoin supporters have tweeted attacks at me for arguing that bitcoin is not real money. But historically, money must be a reliable medium of exchange, and a reliable store of value. Bitcoin meets neither of these definitions.

He forgot "unit of account," which is also a requirement for money. Still, his citation of "central bank regulation" was a red flag for me as to where Mr. Kudlow stands.

32 posted on 03/01/2014 8:37:09 AM PST by Carry_Okie (Islam offers us three choices: Defeat them utterly, die, or surrender to a life of slavery.)
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To: grania; Tonytitan
All exchange, whether money or barter, is based on faith (trust if you will), to a degree. That's why business is a civilizing influence in the world. In order to get what I want or need from someone else, I have to figure out how to give equal value that they will accept, and do so in good faith. Otherwise we're back to a Viking plunder economy.

Liberals are of course too economically illiterate (OK - I'll accept stupid, too) to ever comprehend even the above basic fact.

One last thought - the points in the first paragraph above are not mine - I think they came from my favorite economist, Dr. Walter Williams. Even if they didn't, I want him to have credit.

33 posted on 03/01/2014 8:44:12 AM PST by Hardastarboard (The question of our age is whether a majority of Americans can and will vote us all into slavery.)
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To: Alberta's Child

>>For anyone who really thinks Bitcoins are a legitimate currency, I’d ask a simple question: Would you ever take a job with an employer who paid you in Bitcoins?

If I wanted to do the job, sure. If I didn’t, no amount of currency would get me to do it. Job satisfaction isn’t only about the money.


34 posted on 03/01/2014 8:48:00 AM PST by Lisbon1940
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To: aMorePerfectUnion

“More than a thousand retail locations would disagree...
It is an exchange of value that is outside government control (largely).”

Except not a single one of these retailers holds their bitcoins more than a few milliseconds before they convert them to an actual currency CONTROLLED BY A GOVERNMENT. Not to mention pricing is 100% in terms of the putative “value” of a bitcoin in terms of an actual currency CONTROLLED BY A GOVERNMENT.

Therefore, bitcoins in the retail world would be 100% useless unless immediately convertible to an actual currency CONTROLLED BY A GOVERNMENT and no retailer would accept them. In other words, bitcoin is NOT a currency, does not function as a currency, and has value as a medium of exchange solely because of its convertibility into an actual currency CONTROLLED BY A GOVERNMENT.


35 posted on 03/01/2014 8:52:55 AM PST by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: Kaslin

Things have never been better for Bitcoin. It’s about to get very, very real.


36 posted on 03/01/2014 8:56:20 AM PST by TsonicTsunami08
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To: Tonytitan
...the realm of possibility these days

I agree that it wouldn't be totally out of that realm for banks to restrict how much cash you can withdraw. Doesn't hurt to stay a few weeks ahead on expense money.

There are a few things that make sense. One is to pay a few months ahead on utility bills....better on account with them since it's paying 0% in the checking account anyway. That maneuver eliminates all possibility of late fees.

Another one is to stay ahead on purchases of things that last and you know you'll need in a few years. It's like insurance against price increases, quality decreases, and shortages.

37 posted on 03/01/2014 9:03:26 AM PST by grania
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To: Kaslin
Anyway, the Bitcoin logo closely resembles the logo of the Bruins - who are a "hockey" team out of Boston.


38 posted on 03/01/2014 9:06:23 AM PST by SamAdams76
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To: Carry_Okie

“Still, his citation of “central bank regulation” was a red flag for me as to where Mr. Kudlow stands. “

Kudlow is confused about what constitutes a “currency”. While a number of attributes are required for a medium of exchange to be considered a currency, “central bank regulation” is not one of them. e.g., see “wampum” (before it was devalued by counterfeiting).

In general, currency is a money that is freely circulated. In general, useful money must be durable, divisible, convenient (or portable), stable in value, limited in quantity, and universally accepted. Nowhere in those definitions is a “central bank” required.


39 posted on 03/01/2014 9:17:32 AM PST by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: catnipman
In general, currency is a money that is freely circulated. In general, useful money must be durable, divisible, convenient (or portable), stable in value, limited in quantity, and universally accepted. Nowhere in those definitions is a “central bank” required.

To "divisible" I would add "into an understood unit of quantity." Currency without a dollar, guilder, krone, or franc; i.e., without a single defined "unit of account" would be a pain in the ass. Even gold dust had "ounces" with which to account.

40 posted on 03/01/2014 9:26:19 AM PST by Carry_Okie (Islam offers us three choices: Defeat them utterly, die, or surrender to a life of slavery.)
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To: catnipman

“Except not a single one of these retailers holds their bitcoins more than a few milliseconds before they convert them to an actual currency CONTROLLED BY A GOVERNMENT.”

I know of retailers who do exactly as you describe, and others who keep substantial amounts stored in bitcoin.

“Not to mention pricing is 100% in terms of the putative “value” of a bitcoin in terms of an actual currency CONTROLLED BY A GOVERNMENT.’

Value isn’t controlled by government. It is simply a measure of the value in a currency.

“Therefore, bitcoins in the retail world would be 100% useless unless immediately convertible to an actual currency CONTROLLED BY A GOVERNMENT and no retailer would accept them.”

Exactly! The movement and storage are not controlled by government. It is different from a piece of gold, but similar. You buy a bar of gold. You can measure it in any currency. You hold it outside the system. You are not required to cash it in. The price is always quoted in a currency - telling you the amount of the current consensus value of the gold. If you want to quit holding your gold, you sell it in some currency in order to make your store of value liquid. You then can move it or use it.

You and also move or spend bitcoin or other cryptocurrency - as a currency.

“In other words, bitcoin is NOT a currency, does not function as a currency,”

It can be used as currency.

“and has value as a medium of exchange solely because of its convertibility into an actual currency CONTROLLED BY A GOVERNMENT.”

I would go further. It is accepted for the identical reason currencies are always accepted... confidence. Once confidence in any currency and the government it represents fails, hyperinflation results. In the case of bitcoin, that confidence isn’t in the government currency, unless there is confidence in that government. It is in the other value of bitcoin - freedom to do things with a measure of privacy. It is a connecting piece between many currencies worldwide and is without border. It move through a distribution channel without friction, like bank wires. Without mandatory government reporting of the transfer.

In short, it exists because of the lack of confidence in government actions that erode privacy and freedom.

You an argue it isn’t the exact equivalent as government backed currency. Fine. I don’t think people use bitcoin because they think it is exact. They use it because of perceived freedom and privacy.

For full disclosure, I have never owned a cryptocurrency. I have and do own gold.

My personal theory is that the US govt and Europe (the failing governments) are letting this experiment proceed to learn from it. They would love to force the use of their own digital currency in order to tax and control every purchase. Perhaps they can plant a chip in the forehead or hand of every human and require it to buy or sell... this would allow them to track and deduct your taxes instantly.

Thanks for the conversation.


41 posted on 03/01/2014 9:28:38 AM PST by aMorePerfectUnion
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To: Teacher317

BINGO!


42 posted on 03/01/2014 9:29:56 AM PST by Elsie (Heck is where people, who don't believe in Gosh, think they are not going...)
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To: Alberta's Child

Part of the problem in any discussion of the US Dollar, Euro, Bitcoin, etc. is basic concepts. Money & currency are not the same things. There is a similar problem with Media conversations about government/country/nation. They throw those terms around too as if they are interchangeable.

Bitcoin is closer to a currency than it is to “Money”. Money has to be a store of value. Currency can stand in for money as a medium of exchange.

Paper money is currency. The US Dollar — when it was backed by Gold & Siver — was real Money. Now it is “Fiat Money”.


43 posted on 03/01/2014 9:33:14 AM PST by Tallguy
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To: Carry_Okie

“To “divisible” I would add “into an understood unit of quantity.” Currency without a dollar, guilder, krone, or franc; i.e., without a single defined “unit of account” would be a pain in the ass. Even gold dust had “ounces” with which to account. “

You’re correct, “understood unit of quantity” should have been in the list! Thanks for pointing that out.


44 posted on 03/01/2014 10:02:57 AM PST by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: ImJustAnotherOkie

Aso as in “Ah….so”


45 posted on 03/01/2014 10:29:58 AM PST by WashingtonSource
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To: Kaslin

July 6 2012

Executive Order — Assignment of National Security and Emergency Preparedness Communications Functions

Bitcoin WILL be shutdown. Just a question of when.


46 posted on 03/01/2014 12:11:40 PM PST by Organic Panic
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To: Teacher317

Exactly.

I will say that as easily as the Dollar is exchanged electrically today, I’m a little fuzzy on why a product like BitCoin is necessary.

Now, I will admit that it could be a safe haven should the Dollar go sub-orbital. Fact is, that could tank a whole lot of other currencies, and perhaps even an electronic version like BitCoin.

You need stable economies for something like BitCoin to exist. If international currencies are impacted negatively seriously, something like BitCoin won’t be the savior IMO.

Speculation considerations were all that was driving it IMO. Those considerations couldn’t sustain it. Either the structure was flawed, or something else caused BitCoin to go down in ashes.

Next...


47 posted on 03/01/2014 12:37:41 PM PST by DoughtyOne (Immigration Reform is job NONE. It isn't even the leading issue with Hipanics. Enforce our laws.)
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To: Kaslin

Then why file bankruptcy if it’s not real?


48 posted on 03/01/2014 1:13:23 PM PST by SgtHooper (If at first you don't succeed, skydiving is not for you.)
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To: Tonytitan

How can that be?

My bank account has the same value today as it did last week. I don’t have to beg people to tell me what the value is minute by minute, or worry about whether I can find someone to take payment when I want something.

Or worry that the product I want to buy will double in value between the time I pick it and the time I close my order.

Bitcoin is lousy money. The prime requirement of “money” is that it serve as a good medium for transfering the value of work I do through to the redemption of that work for something I want.

I would not want to be paid in company stock, and I certainly would not want to be paid in bitcoin, unless I could immediately convert it to cash.

And I’m guessing that there is not one person at FR, even the most rabid pro-bitcoin person, who has converted all of their cash to bitcoin.


49 posted on 03/01/2014 2:23:42 PM PST by CharlesWayneCT
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To: Gunslingr3

I find your argument is unpersuasive, because bitcoin value relative to commodities fluctuates wildly, making it useless as an exchange medium between my work and my compensation.

The purpose of money is to give me a way to work now for some purpose, and later to receive product or service that I need that is an appropriate value for the work I did.

Prior to money, we’d have to do this directly, which is inefficient. With money, if I want a TV set, I can clean your house even though you have no idea how to make a TV set; instead, you give me money, and then I can take it to a store and get a TV. I know how many hours I need to work cleaning people’s houses to get that TV. And while the dollar changes value, it is by such a small percentage of the price I am going to pay that I am much more concerned with the mentality of the company selling the TV, meaning that company might change the value they place on that TV relative to my work. But not relative to my dollar.

So, I decided to look at bitcoin price. And learned that you can’t even figure out what a bitcoin is actually worth.

Is it currently worth $580 dollars, or $620 dollars? What will it be worth in another hour? In another day?

I went to the bitcoin store to price a home theatre. I find this: Bitcoinstore $571.29

But they don’t sell a TV, just cheap home theater systems. Darn. I kept looking, but found a story about a bloomberg TV reporter having his bitcoin stolen:

“The guy that is hosting the series gave bitcoin gift certificates to the other two hosts. One of them opens up the certificate to reveal QR code of the private key,” he wrote. “They then proceeded to show a closeup of the QR code in glorious HD for about 10 seconds. Hilarious.”

I wonder if that is even a crime. After all, it isn’t real money that was stolen.

Then I found a link that said “Bought a TV with my bitcoin”. But it turns out they SOLD their bitcoin for CASH, and then used the CASH to buy the TV. I could do that with my old beanie-baby collection, but that doesn’t make beanie babies a currency:

“I cashed in some Bitcoin I had saved when I was mining them a couple of years ago. I took the money and bought a nice TV for my family. I went back and forth about buying one using BTC or just cashing some out and going traditional.”

But to be honest, someone commented that the guy didn’t have to cash out. Unfortunately, the commenter says he could go to the bitcoinstore, which as I noted doesn’t sell TVs.

“You do not have to go through the extra step of cashing out. There are online retailers that accept bitcoin as payment (like bitcoinstore.com) our you can purchase gift cards to use at local retailers (download the gyft app).”

Of course, a gift card is just a plastic card used for cashing out.

Then I find out that most places that sell you things in bitcoin have a no-return policy. Which makes sense, imagine offering a 30-day money-back guarantee, when your “money” could double or half in value.

I mean, so I spend 1 bitcoin on a nice TV, and then 3 weeks later I want to return the TV, but that bitcoin is only worth half of what it was before — I guess the company would be happy to take the return, and then sell the TV for 2 bitcoins. But if bitcoin doubled, then they won’t give me back one bitcoin for that TV.

Which is the problem. I work one day to earn enough to buy a nice dinner, I wait 2 weeks for my bitcoin paycheck but the bitcoin they give me is worth half, and then I wait for the weekend to take my wife to dinner and it drops another 20 percent.

That’s not money, I might as well get paid in company stock, except company stock won’t change price as much as bitcoin.


50 posted on 03/01/2014 2:47:45 PM PST by CharlesWayneCT
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