Topic: James Turk's Q&A with GoldMoney followers includes section on Bitcoin - page 2. (Read 5274 times)

started recommending it around $0.05, to a few of Mr. Turk's friends in person even,[/i].

Source

From the relevant section quoted below, James Turk (founder of GoldMoney) clearly doesn't yet grasp the nature of Bitcoin, equating it with fiat currencies "backed by nothing". Oddly enough, GoldMoney accepts fiat currencies backed by nothing. His response really had nothing to do with Bitcoin at all. Sadly, this view probably won't change for some time, if ever.

Even if he understood perfectly well what BTC are and their potentialities, he still would have an incentive to talk them down, to discredit a big competitor to the stuff he is selling.

I can totally understand that he doesn't get bitcoin, even is he knows monetary history.

Fascinating. He's clearly spent a lot of time thinking about this stuff, but misses the fact that bitcoin and gold have value for many of the same reasons... Don't know how you miss that after thinking about it for a bit.

.....

I guess it just all stems from his irrational obsession with physical tangibility.....how quaint.

Gold?

Gold is only living on borrowed time. Once somebody mine an asteroid full of gold, it's all over for the goldbug. However, for the rest of us, it means we can use gold in area where we are previously afraid to use gold. This mean gold will get incorporated into our bodies, electronics, etc in a higher percentage.

It is not money in my view because money is a tangible asset, and BitCoins are not.

.....while BitCoins may not end in hyperinflation, like all national currencies, they are not backed by anything tangible.

25) Felix Fms: When will I be able to fund/withdraw my GoldMoney Holding with Bitcoins?

JT: Probably never. BitCoins are the ultimate currency backed by nothing. It is not money in my view because money is a tangible asset, and BitCoins are not.

From time to time, new conventional “wisdoms” defying logic and historical precedent become fashionable and fixed in the mindset of the population, holding sway until the bubble brought about by this fallacious thinking pops. We saw this phenomenon during the internet bubble, when it was said that profits don’t matter – only market share does. We saw it again in the real estate bubble when it was said that home prices only go up. And we are seeing it now when people say the dollar is money. It is not money in the true meaning of that word. The dollar is only a money-substitute, as are all the national currencies of the world.

In recent decades, people have lost sight of the fundamental truth of economic activity that goods and services are paid for with other goods and services. One cannot consume the currency we accept in payment, which is used merely to facilitate the exchange of goods and services. Only goods and services can improve our situation in life. So to properly describe its purpose, currency is a tool we use to temporarily hold some wealth in the form of deferred purchasing power, until we are ready to purchase a good or service.

The deferred purchasing power embedded in national currency is not solely reliant upon the view of market participants, as is the case for physical gold and silver. Rather, it also relies upon the creditworthiness and reliability of the issuer of the national currency, which is a feature that highlights the fundamental difference between tangible assets (land, food, an oil well, gold, etc.) and financial assets (basically anything dependent upon a counterparty).

As society developed, the most liquid and reliable tangible asset – namely, gold and silver – became money in a market process that began in pre-history, thus giving the precious metals what is now a 5,000-year track record as money. When used as currency, the precious metals enable tangible assets to be exchanged for other tangible assets, resulting in an exchange that is immediately extinguished. There is no lingering obligation.

However, if a national currency is used to “buy” some good or service, the exchange is not complete because the currency is nothing more than an I.O.U. dependent upon the promises of both the government that is the issuer and the counterparty, which is the government and its central bank in the case of cash-currency while banks are the counterparty for deposit currency. The party accepting this I.O.U. does not extinguish the exchange until they can use the national currency to purchase a tangible good or service; this period of time often entails considerable risk to the holder of the national currency. This basic monetary principle applies regardless whether one is considering a purely domestic transaction, or an international one.

In our society, one works efficaciously to produce some marketable good or service, and we all accept currency in payment. We accept currency not only because it is useful to each individual, but also because more broadly, it makes possible the division of labour, which enables humankind to achieve a higher standard of living than if we had to rely on barter.

So to understand the essential nature of the ongoing fiat currency bubble, we need to recognise that currency today is a money-substitute. It is not money itself because the dollar and other national currencies are not tangible. And to avoid being caught up in this bubble, we should hold physical gold and silver. Even though they are not used much as currency – which is a paradigm that GoldMoney eventually hopes to change – they still are money.

Trillions of dollars have been widely accepted in global commerce in the belief that those dollars can eventually be turned into tangible goods or services. The fiat currency bubble will pop as the understanding grows that dollars – and indeed all fiat currencies – have been issued to too great an extent. There are not sufficient goods and services at current prices to satisfy everyone’s desire to spend their accumulated deferred purchasing power held as dollars. As confidence in the dollar erodes, the fiat currency bubble will eventually pop. It inevitably must because the banking system continues to create dollars “out of thin air” to provide the federal government with the dollars it is spending. The structural federal deficits and the undisciplined approach to creating currency that ultimately enables the issuing of unlimited dollars explain why we are approaching hyperinflation of the US dollar. And while BitCoins may not end in hyperinflation, like all national currencies, they are not backed by anything tangible.