Topic: Gold collapsing. Bitcoin UP. - page 970. (Read 2032274 times)

One key advantage for bitcoin is the ability to use signatures to create proof of reserves. For example the questions of "How much gold does the FED have?" and "How much of that is leased in the open market?" are questions that apparently are too difficult to answer for the past 80 years.

However, with bitcoin it is easy to automatically on a per-month/day/hour/minute basis prove your reserves and that there is a 1-to-1 relationship with custodial assets. I hope that due to the ease of this, it will be demanded by bitcoin owners. This simple aspect can go a long way towards preventing the gaming that gold has allowed.

Yes Steve that is a great point. The initial distribution of coins in the "the people" and not "the banks" will go a long way towards preventing manipulation. Over time however this initial distribution can switch back to the banks though...


My point was more related to the effect government regulation can force on the community, instead of what the community demands itself.

For example, a federal version of a BitLicense together with an overly aggressive IRS, could effectively outlaw private ownership of bitcoin without actually having to enact an FDR style order. The tax and regulatory compliance issues could be layered on in such a complicated manner, that even individuals who try to be compliant are brought to court for tax evasion, money laundering, etc, etc. This would create an environment where only large established entities with legal teams hold bitcoin directly, and most people simply view it as too much of a hassle (or are too scared).

This is why fighting back against BitLicense and establishing an open legal precedent for bitcoin are imperative today IMHO.

Someday entrusting Bitcoin to third parties will not be such a disaster.  In fact it will be a sound redundancy strategy to store some of your wealth that way just in case your computer and your backups die or someone tries to physically beat the coins out of you.  For example, large retail stock brokers in the USA have generally been pretty responsible safeguarding stock shares (of course there have been some issues, especially in mutual funds). 

However, this is very different from trusting a recently incorporated company with 5-20 employees operating halfway around the world in a different legal jurisdiction with an asset that has still not been unambiguously recognized worldwide as property.

Indeed. As I said, I don't think the attempts will be successful, but I also don't think people should underestimate the amount of damage that will be incurred by those attempts.

After all, Hollywood and the recording industry lost the filesharing wars years ago, but they're still causing problems every now and then.

Haha, thanks wachtwoord, for these encouraging notes. I agree with your assessment, and it is reassuring to think that even if the bitcoin ecosystem isn't perfect, it's technically better and has a lot of room left to grow before it supplants the current and even less desirable alternatives. I'm reminded of the "outrunning a bear" analogy, where you don't necessarily need to be able to run faster than a bear, just faster than everyone else, and it appears that we're on course for that, at the very least.

Yep!  Heard it straight from the Braintree CEO's mouth.  It was nice to hear him discuss how the bitcoin protocol solves structural problems with the legacy payment systems that are holding back their users and merchants.   

it's official:

http://blog.coinbase.com/post/96987622472/braintree-partners-with-coinbase-to-accept-bitcoin

This is a very nice write-up on the current state of the world economy (September 2014) and why the financial sector and especially the Euro zone is going to implode. The explain how the situation is actually a centrally planned market (as in the Soviet union) and not an open market in the slightest.

 http://www.icecapassetmanagement.com/uploads/documents/2014.09%20IceCap%20Global%20Market%20Outlook.pdf

and then everyone else's Bitcoin just got more valuable encouraging even more responsible users.  a self reinforcing network phenomenon.

the way i respond to this is that wealth and capital will efficiently seek the safest, most liquid, and best store of value asset out there.  normally, this used to be savings in gold and silver (and even cash), at least for the last few decades since we depegged.  now with the Fed's unfettered manipulation of interest rates and gold's failure to check this, wealth and capital will start seeking a better safe haven.  i think the fact that Bitcoin has diverged in an upwards direction for the last 3 yrs since gold and silver topped is yet further evidence that pm's are failing and conversely that Bitcoin is winning.  as noted earlier, gold is now also failing to hedge against the war premium.  that's very bad news for goldbugs.

there can't be 2 global safe haven currencies.  despite Bitcoin's 9 mo bear mkt, i am MORE focused on the new plunge in pm's.  it's a big clue, imo.

"Oops, sorry my hard drive malfunctioned and the back-ups spontaneously disappeared.  Just like Louis Lerner and her 10 accomplices' did.

Then the entire computer was lost in an unfortunate boating accident."   

still have higher lows and working on a spinning top reversal today:

Bitfinex BTC shorts at 10000.  time for short squeeze:

Yes, if they all do just that.

Hopefully there's enough of them who can't be bought out.

I agree that most people are fools and they will continue to entrust their asset to third-parties but I also think that it will be very difficult for entities to conduct naked short sales of bitcoin without being called on the carpet for it (squeezed). The assumption is that most of the bitcoins are already in private hands and not bankster hands making it much harder for the manipulations to take place. Of course, I could be wrong.

My optimistic opinion is that counterparty risk failures in the legacy banking system will drive bitcoin adoption along with the awareness of the importance of taking possession of one's assets.

it's then up to us to raise holy hell about audits in that case.  i have no problem doing that. 

if all the top experts in the Bitcoin field do just that, i doubt they can be ignored.

I think it is too late for them to be successful at this, but I'm convinced they will make the attempt.

PayPal et al. can throw a lot of resources at UX and advertising (propaganda) designed to keep people from taking physical custody.

They can also get help with this from the IRS and other government agencies. We might see a situation where anyone who takes physical custody of their coins will be subject to merciless and endless legal harassment.

Thanks rocks and notme.

You both agree that the simplicity of taking delivery of bitcoin is what is going to protect it from the same fate as gold. I think it's a reasonable observation, but so far we've seen no evidence of that happening. The general public, and even some outstanding members of our early adopter community, have repeatedly lost bitcoin entrusted to a third party. The general feeling I get from normal folk when I talk about bitcoin is that it's too complicated, and they'd rather have someone else holding it for them and allowing access with a nice GUI or credit card analogue. This is what gave me pause; Outside of the people in threads like this, everyone wants a 3rd party to hold their bitcoin, and they may or may not care about solvency or audits. These are things that they don't really have a grasp of. With the majority of the world made up of people like this, how can we expect the industry NOT to capitalize on them? We can shout about private keys and audits all day long, but to an outside observer, we sound like the gold bug stackers ranting about physical coins.

i think it's too late for them to try that. 

the good thing about the mtgox hack is that it's now forced the community into performing Bitcoin audits via the hashing trees.  i don't think legacy payment processors like Paypal will be able to just get away w/o the same auditing as awareness is now high regarding the importance of this.

"Gold truly is the barbarous relic."

More accurately it's the gold 'Standard' that Keynes referred to as the relic. Gold itself will be in every new iphone because nothing else can do what it does as efficiently from an industrial perspective.   

Gold can only function properly if the majority of people demand delivery of physical metal. If the majority do not demand delivery of physical then it becomes possible to fractionalize gold and artificially increase supply by selling paper. Essentially the scarcity property of gold breaks down unless the majority of people take physical delivery.

This is why FDR's executive order banning physical possession was so effective at breaking the gold standard, after 2 generations the majority no longer demanded physical possession, but see paper products as "gold". It also is why the "gold bugs" vision is never realized, you need the majority of the population to demand physical and reject paper. If only 1% of the population regularly buys gold eagles, then banks can continue to sell paper for a long time.

The advantage for bitcoin is it is just so easy to take delivery. Any smartphone app can do so in seconds, and there is no reason not to. If people who adopt bitcoin for the most part use bitcoins directly then we just might fix the problems gold ran into.

My suspicion is this is how bitcoin will be attacked though, with regulation that drives adoption out of individually held wallets and into coinbase type online services by making compliance easier with online services. From there it becomes easier for online services to fractionalize bitcoin same as gold...