http://www.coindesk.com/barry-silbert-private-blockchains-will-capitulate-to-bitcoin/Very interesting discussion and argument to why private centralized blockchains, (as I predicted in my original post at the start of this discussion would take over Bitcoin), will not take over Bitcoin. The article touches on other aspects that I attempted to simplify in my Youtube video on "Dollars, Gold and Bitcoin" that you can view at:
https://www.youtube.com/watch?v=872B88VWm_sThe text of the video is below:
Dollars, Gold and Bitcoin
There are about 165,000 tons of gold in the world. This can be represented by a cube with an edge length of about 20 meters. At $US 1,000 per troy ounce of gold, all the gold in the world would cost $US 5.3 trillion. There are about $US 4 trillion worth of coins and paper currency in circulation in the world. $US 1.2 trillion are US coin and paper currency. There are about 7 billion people in the world, and about 1 million of them hold BTCs. There are about 14 million BTCs in circulation. At $400 per Bitcoin, all BTCs in the world would cost $ 5.6 billion, a thousandth of what all the gold would be worth.
If all the BTCs were equally divided, each person would have 0.002BTCs or about $US 0.80. Enough to buy a piece of bread. If all the gold was divided equally, each person would have 0.75 troy ounces of gold worth $US 750. Enough to make 5 finger rings. If all the currency was equally divided, each person would have $US 570.
Fiat currencies, like the US dollar, are not backed by anything except empty promises. Throughout history, they have a 100% failure rate of maintaining value. The US dollar lost 95% of its value since its creation by the Federal Reserve in 1913 by being indiscriminately printed to hide an ever increasing debt that enslaves people. History keeps on repeating our mistakes and we never learn from them. We keep swinging like a pendulum from quality money like gold to quantity currencies like debased coins or fiat paper notes and back again. Gold always delivers the knockout blow to debased currencies.
When currency is debased by printing too much of it, prices inflate and when people lose the purchasing power of their currency, they bid the price of gold up till it reaches or exceeds the value of all the currency in circulation. This has been repeated throughout history. Because the currency of all countries are fiat currencies that are backed by the US dollar, this repeating cycle is now happening at a global scale for the first time.
The cycle starts with the country issuing good money based on precious metals. The country develops economically and socially and builds public works and grows in affluence and influence. To defend their economic affluence and politic influence, they build up a military complex. The military is eventually used and expenditures explode. To fund the wars, governments steal the wealth of the citizens by debasing their coinage with base metals and expanding currencies in unlimited quantities. The loss in purchasing power of the expanded currency supply is sensed, prices increase and confidence in the currency decreases. A mass movement out of the currency into precious metals and tangible assets eventually collapses the currencies and raises the gold price.
There has never been a fiat currency in history that has survived. When the US dollar eventually dies, there will be a great world crisis because the dollar is the world reserve currency holding up all other currencies of other countries. For all crises, there are great opportunities. When the dollar collapses, new currencies have to replace it. Like the cycle of history shows, it will be based on precious metals in the beginning. Many of the few rich will lose their wealth. Wealth never gets destroyed, it just gets transferred, and a few of the many poor will become very rich.
At present, there is a global lack of confidence in the US dollar that is accelerating rapidly. The change to a new monetary system is inevitable and will be chaotic. One new candidate to replace the dollar is Bitcoin.
Both gold and BTC have their strengths. Gold has been in use as money for over 6,000 years and has a proven record to be one of the best ways to store wealth. Bitcoin is only a few years old based on new technology. It has been proven to be a reliable, safe, cheap and convenient method of payment. It is electronic cash that cannot be counterfeited, stolen and controlled and produced by any central authorities like governments and central banks, all of which have a proven record of over printing their currencies until they are worthless.
Gold and BTC make a great pair to act as a world currency. BTC by its definition and protocol can never be printed to any excess. The amount of its creation is inherent in its design and cannot be changed. Its cryptology protects it from being counterfeited, and its decentralized nature protects it from being hijacked by any centralized criminals be they legal banksters and politicians or illegal mafia. Its digital form makes it convenient to be transferred in our digitalized world. It upholds all the requirements of money as an accountable medium of exchange with purchasing power such as portability, durability, interchangeability, divisibility and guaranty of not being counterfeited. The only requirements that are not met by BTC is its lack of having any inherent store of value over long periods of time. Gold has proven to be the best at that. BTC can act as digital gold and be like digital cash for transactions made on the internet. BTC together with gold fulfills all the requirements that money should have, including that they cannot be indiscriminately printed to excess till they are worthless.
Of the about million people who have BTCs, most of the BTCs are owned by only about 1,000 people. About a 100 of the 1,000 own most of the BTCs. Unfortunately, money, whether fiat paper, glittering gold or virtual BTCs breeds greed. Once a form of money is created that cannot be owned by individuals in amounts greater that what they need and cannot be horded in amounts greater than they can spend, then and only then will world poverty be eliminated.
It is hoped that the new rich, the early adapters of the new monetary system, will be more like robin hoods than barons. If that happens to be Bitcoins, then there is a chance of that happening, because the early adapters of BTCs are mostly intelligent geeks born without a silver spoon in their mouths and born with the fortune of having experienced the humility of poverty and strengthened by the misfortune of being exploited economically. May their humbleness overshadow any inherent greed in their souls, and their strength help them in their resolve to blaze out new trails to world prosperity.
