Topic: Just wait, this is coming down the pipe. - page 2. (Read 3721 times)

My opinion
1) The fundamentals of bitcoin are VERY strong. There are a few minor issues which will be worked out over time. As more people adopt the bitcoin currency the power of bitcoin will increase and so will the economy. Eventually we will hit a point where EVERYONE will use bitcoin simply because its more efficient and makes economic sense to do so. Countries that outlaw bitcoins will be left behind and eventually those laws will be scrapped because they are being left out of the bitcoin economy. Its like people using dollars. Right now oil is traded in dollars because its easier to have everyone, "on the same page." per say. The same thing will happen to bitcoins. Everyone will use bitcoins because it just makes everything easier.  


This is a good chart to show where bitcoin is headed. The innovators wrote the source code, mined the early bitcoins, developed the early exchanges. Now we are in the early adopters phase where people buy and sell bitcoins for real money and use them for commerce, mainly technical savvy people. These people will develop technologies that make bitcoins EASIER to use for EVERYONE else. Bitcoin banks, more complex exchanges so on so forth. The next step will consist of getting average non-technical people to use bitcoin. The only way this will happen is if bitcoin is easy to use, can be spent at many places, and is secure. If we make it over the top of the hill then bitcoin is definitely here to stay for the long term. The late majority will probably be forced to switch over to bitcoin because everyone prefers to accept bitcoin over other forms of (riskier) currency. The laggards will just be people who don't trust online currency, mostly consist of old people.

2) They might be able to but only if we allow it. For example, think of the old days where we had full reserve banking where people put their gold/silver coins in the bank in exchange for certificates. Then people simply traded those certificates and never got their gold/silver out. Its going to be the same way. Bitcoin will be full-reserve banking BUT not if the banks start over issuing bitcoin certificates. Therefor, the important thing to mention is to keep most of your bitcoins in your wallet and not in a bitcoin bank.

Bitcoin banks will exist but they will operate more like small time companies and not the current mega corporations we have today. Bitcoin loans will probably be at high interest rates, since it has to be full reserve and most people won't keep large amount of bitcoins in the bitcoin banks. Instead the bitcoin banks will operate by providing currency exchange or offering debit cards. The debit cards would be able to be used at any store that accepts credit/debit cards. You would keep some bitcoins in the bank and then when you processed the transaction the bank would pay the transaction and convert the relevant BTC to cash on the fly. They would charge a small fee for this and BTC to BTC transactions would be free. They won't be that profitable once the market has matured.

Yes, they can.

If a bank / webwallet (essentially the same thing) keeps a balance on your account, you have no guarantee that every single BTC is backed by an actual BTC in their possession. Only at the moment everyone would withdraw all of his bitcoins, you could find out whether said webwallet/bank REALLY has all the bitcoins they claim to have. It would be possible for them to offer interest and give out loans, basically causing fractional reserve banking on a smaller scale. The difference is that you do not HAVE to use these systems, and can easily use Bitcoin without relying on banks/webwallets with practices like these.

Bitcoins can easily be stopped. If Bitcoin sees steady adoption and abuse is not widespread it can probably coexist with, and gradually take some market share from banks. If it continues it's current militant/illegal approach it will be gone fairly quickly.

A, banks don't make money out of "thin air" they make it out of the future obligation of the borrower. The problem is that all money is thus an exponential debt, and this is obviously unsustainable.

B, "fiat" is not the central characteristic of debt based money, fiat is just a name for what is acceptable to be paid in taxes. Time was chickens and cows were "fiat", time was gold itself was "fiat". So whining about fiat currency like you've done here doesn't really make sense. It's like saying the Nazi's were evil because they spoke German, or Stalin was bad because he had a big mustache. It's beside the point. One day bitcoin itself might be considered fiat in some country somewhere, who knows. I wouldn't recommend it though.

Umm, no. They don't use savings to give loans. This is the most important aspect of our current monetary policies you need to understand:

http://en.wikipedia.org/wiki/Fractional-reserve_banking

To wrap it up: banks create ~98% (2% is the reserve requirement in EURO zone at least) of the loan out of thin air. Just think about it. They only ad the digital numbers to your bank account and in return, you promise to work 9-17 for the next 20 years to pay the loan back.

That's why I call the fiat money as the modern slaver whip.

Banks earn money by giving loans more than 20 times higher in total than their own funds. They cannot do this with bitcoins. They can only lend a bitcoin for a bitcoin they possess. They wont do much profit with it.

Excellent post, killer!

It provides a great backdrop to the 2 questions I have:

(1) will the technical fundamentals of Bitcoin make it so resilient to being destroyed by the central powers that a significant enough number of people will continue to use it even if it were outlawed to significantly disrupt the existing economy?

(2) if so, will they be able to control Bitcoin by assimilation, integrating it into the fractional reserve banking system etc etc. until we're effectively back to where we are now?

I suspect that the answers are (1) yes and (2) no

Banks earn money by giving loans for buying houses etc and giving interest on savings. (Since they use savings to give loans) They can still do this with bitcoins.
They can create safe storage for bitcoins, solving the problem with inheritance, and exchange services. So yes there will still be a need for banks.

But ofcourse it can force them to cut their made up fees.


 

So we all know that bitcoin has the power to change the world (if everyone uses it). However, we are going up against a very powerful institution so powerful that I would call it the single most powerful institution on the planet - the banking institution.

This system was established when mankind was making the transition from commodity money to representative money. People would use their gold/silver and deposit it in a bank, they were issued a receipt of their deposit which they could use to redeem the gold/silver on demand. People began to use these receipts as money instead of gold/silver. This was when the banks started to gain power during the 7th century. Ever since, the banks have been establishing an ever tighter grip on society.

Today, banking institutions are insanely powerful both directly and indirectly. Over the centuries they have created vast fortunes and centralized these fortunes into a few family dynasties. They have a tight grip on society and control virtually every industry indirectly. Government and mainstream media are in their backpocket. Bought and paid for.

"Give me control over a nations currency, and I care not who makes its laws.”
Baron M.A. Rothschild

My friends, this is what bitcoin has the power to do - change the world by taking the power from the banks and giving it back to the people.We haven't had decentralized money for well over the past 1,000 years and now bitcoin has the power to do that.

With that being said, bitcoin has an uphill battle. The banks will try everything in their power to destroy bitcoin. They will draft laws against bitcoin and they will demonize people who use bitcoin. For quite some time, we have sought to escape these banks. We have used gold/silver to slightly escape. Those who bought in, were rewarded handsomely with silver/gold going through the roof. However, we have never completely been able to escape the banks. That was before bitcoin. Now we have the solution. Bitcoin is the final solution to the banking cartels of the world. With bitcoin we have the power to completely escape the banks.

Right now, the waters are relatively calm, but just wait bitcoin will be the next wikileaks. On the front page of every newspaper, on the daily news all demonizing the, "threat" of bitcoin. They'll say anything and everything to destroy bitcoin - it supports terrorists, it will destroy the economy, it isn't safe. Anything and everything, just wait. You've seen what they've done to assange.

http://www.youtube.com/watch?v=MXQozTxQSiE