Is Bitcoin Money?

[Brian4Liberty]

Is Bitcoin Money?

Money arose via market transactions, and precious metals have served as money for thousands of years. Then government, for its own reasons, monopolized the creation of money. It has been a disaster ever since. Competing currencies, without government intrusion, will clean up this mess. Is Bitcoin a step in the right direction?

[Zippyjuan]

Money's primary use is as a "medium of exchange". Is that the primary use of Bitcoins?

[TheTexan]

Money's primary use is as a "medium of exchange". Is that the primary use of Bitcoins?

Primary use for crypto is to turn $10 into a yacht(s)

Its like magic

[Zippyjuan]

Primary use for crypto is to turn $10 into a yacht(s)

Its like magic

So it is more of a commodity- used for speculation.

[ClaytonB]

Good video. Dr. Paul and the host make some good points about cryptocurrency but their admitted lack of understanding does limit the validity of their criticisms.

1) Dr. Paul mentions that when he asks how people buy cryptocurrency, they say with a credit card - this is not anonymous, therefore, the government can chase you down, tax you etc.

It is not necessary to use a credit card to buy cryptocurrency. You can buy Bitcoins with straight cash and there are local sellers that do this. Recent headlines aside, this practice will doubtless continue.

Also, once you have purchased cryptocurrency (with a credit card) you can use a mixing service (like CoinJoin) to anonymize your assets. In addition - a point that is often overlooked - all you really have to do is sweep the initial purchase of coins into a new address generated from a "brain wallet". Now, the government has no way to prove that you actually own these coins anymore. "I'm sorry, I paid the coins to some guy in exchange for services rendered and he moved them to that address - it's not mine." In other words, cryptocurrency gives you a feature that no physical commodity can emulate: unconditional deniability. With deniability, you no longer need strong anonymity.

There are also new cryptocoins, specifically Zcash, that enable unconditionally anonymous on-chain transactions. This kind of anonymity is actually stronger than physical anonymity. To pay you a gold coin, I must see you face-to-face which means I could betray you. Not so with an anonymous cryptocoin. The transaction is anonymous on-chain and you and I can remain completely anonymous to each other, as well, removing the possibility of betraying one another to the authorities.

Lightning Networks and other off-chain technologies are going to move the vast majority of transactions off-chain. The records of these transactions will only exist locally on the devices of the involved parties. While this is not as strong a form of anonymity as Zcash, it's pretty good anonymity. We don't have to see each other face-to-face or even exchange personal information. So, if I burn my receipts, there's pretty much no way for the government to prove I transacted with you at all.

2) Dr. Paul points out that the main cryptocoins (Bitcoin, etc.) are not backed by a commodity

This is one of those "damned if you do, damned if you don't" situations. If Bitcoin were backed by a commodity, the backing would have to be auditable, which means it would have to have a public physical location, which means that the authorities could (and would, cf LibertyDollar, e-gold, etc.) shut it down. But remove the backing, and people will say, "it's the same as fiat."

It's not actually true that cryptocoins can be issued in just any amount. To see why this is the case, you have to understand what is actually "backing" Bitcoin. To see this, you have to understand two points about cryptocurrencies (together):

a) The entire pool of cryptocurrency should not be seen as a competing "market" of monies, rather, it is a single money with many extensions or branches; this is true regardless of whether the cryptos are explicitly linked together
b) There will always be one crypto (or maybe two, a tiny number) that acts like gold to all other cryptos; there will always be a crypto that is acting as a de facto reserve currency. Today, this is Bitcoin.

From this, we see that the concept of unbacked digital currency is not so crazy after all. Rather than putting a name on it (such as "Bitcoin") and focusing on that name, try zooming out a bit and realizing that, if it wasn't Bitcoin, it would just be something else. The question is whether this "digital gold" really has the features - or quality of money - required to compete with the fiat monetary regime. I think Bitcoin does have these features (due to Lightning Networks, channel factories and other coming enhancements that are already enabled in the blockchain) and, furthermore, I think that even if Bitcoin were to fail, someone else would succeed. In other words, even if Bitcoin simply "drops the ball" on choosing the right basket of features required for a digital currency to compete with the fiat monetary regime, some other cryptocoin would get it right. So, success is inevitable, short of catastrophe or an unforeseeable backlash (e.g. a monetary scorched-earth response from the global fiat regime).

The "backing" of Bitcoin, then, is its userbase. This is often called the "network effect." It's a question of arbitrage. When Bitcoin's userbase is sufficiently large and it is used over wide geographic regions with significant demographic variety and for many kinds of uses, localized collapses in demand for Bitcoin (localized to certain demographics, regions, uses) will simply convert over to arbitrage opportunities for someone else in the Bitcoin ecosystem. "US government bans Bitcoin use; classified as a felony, punishable by lengthy prison term on first offense" is no longer a threat to Bitcoin because it just makes bitcoins held by US persons cheaper for non-US persons to acquire.

The supply of bitcoins really is fixed at 21M and this is not going to change. A change to this limit would constitute a "fork" and the main pool of capital has no incentive to follow a fork that devalues its holdings. So, the main pool is always going to forsake scamcoins that fork off and raise the coin limit. The "brother coin" idea - BCash is a living example of this - misses the point that there is always just one cryptocoin acting as the reserve. BCash might survive, but it will in no way "add coins" to Bitcoin. Rather, if it survives, it will become just another branch in the cryptocurrency pool, of which Bitcoin (with its fixed 21M bitcoins) is the root, the reserve-currency.

3) Dr. Paul points out that the key is to get government out of money

This is very true. I had held the view at one point that if government ever did get out of money, cryptocurrencies would collapse because their only reason for existence is to escape government corruption of any physical-based money. But I no longer think this is the case. Cryptocurrency doesn't need a commodity backing because its supply is fixed. This is in contrast to privately-issued paper banknotes, where the backing was a way to warrant that the number of notes in existence is finite and of some fixed exchange ratio with a known good money (gold or silver). There will never be more than 21M bitcoins, so you don't need a backing for that purpose. This means that the "backing" of Bitcoin is really its userbase, as explained above.

4) Dr. Paul says that cryptocurrency does not yet qualify as money

I think he's right but it is a potential money, in the same sense that gold also is not money (because it is not used in hand-to-hand transactions), but is a potential money.

5) Dr. Paul says that the ultimate goal is to live in a free society

Preach it, Ron Paul...

Conclusion

Cryptocurrency is a free-market money. It is different than gold and silver in that it cannot exist without a computer network. It offers some advantages over gold and silver in the form of stronger anonymity and potentially unconditional security and deniability (it can't be stolen and no one can prove that you own it). Even if government were to get out of money, cryptocurrrency would still exist and thrive alongside gold and silver. Many people will never "get" cryptocurrency - you can't touch it, see it, hold it, etc. That's perfectly OK. There's no need for cryptocurrency to supplant commodity money in a free-market in money production because cryptocurrency and commodity money can each do things that the other cannot. So, if that free society we're all dreaming were to come during our lifetime, we could see a world where gold and silver are used as they once used to be and cryptocurrencies are also used, each for the kinds of uses at which they excel.

[Zippyjuan]

You can buy Bitcoins with straight cash and there are local sellers that do this. Recent headlines aside, this practice will doubtless continue.

(looking for coin/ dollar slot on computer or cell phone).

From what I read, buying with cash involves making a cash deposit into the seller's bank account and hoping they send you your bitcoins over the internet.

it cannot exist without a computer network.

(it can't be stolen

OK.

https://99bitcoins.com/ways-bitcoins-stolen/

https://www.cryptocoinsnews.com/kasp...th-of-bitcoin/

https://www.forbes.com/sites/laurash.../#51a0726e38ba

[NorthCarolinaLiberty]

From what I read, buying with cash involves making a cash deposit into the seller's bank account and hoping they send you your bitcoins over the internet.

Most all businesses like this involve this type of transaction. Unless you are exchanging money & product hand-to-hand at literally the exact same time, then someone is either sending product first or sending the money first. I've sold things to people by postal mail. They always send me the money first. There is a point when you cross a trust threshold level. There are mechanisms to establish this.

[NorthCarolinaLiberty]

So it is more of a commodity- used for speculation.

Speculation is not the definition of commodity. Speculating is what someone does regarding commodities. Corn, for example, is a commodity. And yes, people can speculate on corn. That is call corn futures.

[ClaytonB]

(looking for coin/ dollar slot on computer or cell phone).

From what I read, buying with cash involves making a cash deposit into the seller's bank account and hoping they send you your bitcoins over the internet.

No, I mean, you hand a guy who owns Bitcoin some cash, and he sends you Bitcoin. "Here, Joe, here's $300. Let me know when you've sent the bitcoins and I'll check my phone." This is the power of Bitcoin, that it can be used just as easily in face-to-face or remote transactions.

https://99bitcoins.com/ways-bitcoins-stolen/

https://www.cryptocoinsnews.com/kasp...th-of-bitcoin/

https://www.forbes.com/sites/laurash.../#51a0726e38ba

You're taking my quote out of context. In context, what I'm saying is that if your bitcoins are secure (you haven't done something stupid or put them in an exchange or gotten hacked or _______), then they cannot be stolen. Even rubber-hose methods cannot allow someone to steal your bitcoins as long as you maintain some dummy addresses to give away for this situation. "Give us the bitcoins or we'll beat you!" "OK, here's my keys, blah blah blah" (to yourself): "Enjoy that $100 of throw-away coins, suckers, my actual stash is somewhere else that I'm never going to tell you."

[FSP-Rebel]

[Mordan]

Good video. Dr. Paul and the host make some good points about cryptocurrency but their admitted lack of understanding does limit the validity of their criticisms.

1) Dr. Paul mentions that when he asks how people buy cryptocurrency, they say with a credit card - this is not anonymous, therefore, the government can chase you down, tax you etc.

It is not necessary to use a credit card to buy cryptocurrency. You can buy Bitcoins with straight cash and there are local sellers that do this. Recent headlines aside, this practice will doubtless continue.

Also, once you have purchased cryptocurrency (with a credit card) you can use a mixing service (like CoinJoin) to anonymize your assets. In addition - a point that is often overlooked - all you really have to do is sweep the initial purchase of coins into a new address generated from a "brain wallet". Now, the government has no way to prove that you actually own these coins anymore. "I'm sorry, I paid the coins to some guy in exchange for services rendered and he moved them to that address - it's not mine." In other words, cryptocurrency gives you a feature that no physical commodity can emulate: unconditional deniability. With deniability, you no longer need strong anonymity.

There are also new cryptocoins, specifically Zcash, that enable unconditionally anonymous on-chain transactions. This kind of anonymity is actually stronger than physical anonymity. To pay you a gold coin, I must see you face-to-face which means I could betray you. Not so with an anonymous cryptocoin. The transaction is anonymous on-chain and you and I can remain completely anonymous to each other, as well, removing the possibility of betraying one another to the authorities.

Lightning Networks and other off-chain technologies are going to move the vast majority of transactions off-chain. The records of these transactions will only exist locally on the devices of the involved parties. While this is not as strong a form of anonymity as Zcash, it's pretty good anonymity. We don't have to see each other face-to-face or even exchange personal information. So, if I burn my receipts, there's pretty much no way for the government to prove I transacted with you at all.

2) Dr. Paul points out that the main cryptocoins (Bitcoin, etc.) are not backed by a commodity

This is one of those "damned if you do, damned if you don't" situations. If Bitcoin were backed by a commodity, the backing would have to be auditable, which means it would have to have a public physical location, which means that the authorities could (and would, cf LibertyDollar, e-gold, etc.) shut it down. But remove the backing, and people will say, "it's the same as fiat."

It's not actually true that cryptocoins can be issued in just any amount. To see why this is the case, you have to understand what is actually "backing" Bitcoin. To see this, you have to understand two points about cryptocurrencies (together):

a) The entire pool of cryptocurrency should not be seen as a competing "market" of monies, rather, it is a single money with many extensions or branches; this is true regardless of whether the cryptos are explicitly linked together
b) There will always be one crypto (or maybe two, a tiny number) that acts like gold to all other cryptos; there will always be a crypto that is acting as a de facto reserve currency. Today, this is Bitcoin.

From this, we see that the concept of unbacked digital currency is not so crazy after all. Rather than putting a name on it (such as "Bitcoin") and focusing on that name, try zooming out a bit and realizing that, if it wasn't Bitcoin, it would just be something else. The question is whether this "digital gold" really has the features - or quality of money - required to compete with the fiat monetary regime. I think Bitcoin does have these features (due to Lightning Networks, channel factories and other coming enhancements that are already enabled in the blockchain) and, furthermore, I think that even if Bitcoin were to fail, someone else would succeed. In other words, even if Bitcoin simply "drops the ball" on choosing the right basket of features required for a digital currency to compete with the fiat monetary regime, some other cryptocoin would get it right. So, success is inevitable, short of catastrophe or an unforeseeable backlash (e.g. a monetary scorched-earth response from the global fiat regime).

The "backing" of Bitcoin, then, is its userbase. This is often called the "network effect." It's a question of arbitrage. When Bitcoin's userbase is sufficiently large and it is used over wide geographic regions with significant demographic variety and for many kinds of uses, localized collapses in demand for Bitcoin (localized to certain demographics, regions, uses) will simply convert over to arbitrage opportunities for someone else in the Bitcoin ecosystem. "US government bans Bitcoin use; classified as a felony, punishable by lengthy prison term on first offense" is no longer a threat to Bitcoin because it just makes bitcoins held by US persons cheaper for non-US persons to acquire.

The supply of bitcoins really is fixed at 21M and this is not going to change. A change to this limit would constitute a "fork" and the main pool of capital has no incentive to follow a fork that devalues its holdings. So, the main pool is always going to forsake scamcoins that fork off and raise the coin limit. The "brother coin" idea - BCash is a living example of this - misses the point that there is always just one cryptocoin acting as the reserve. BCash might survive, but it will in no way "add coins" to Bitcoin. Rather, if it survives, it will become just another branch in the cryptocurrency pool, of which Bitcoin (with its fixed 21M bitcoins) is the root, the reserve-currency.

3) Dr. Paul points out that the key is to get government out of money

This is very true. I had held the view at one point that if government ever did get out of money, cryptocurrencies would collapse because their only reason for existence is to escape government corruption of any physical-based money. But I no longer think this is the case. Cryptocurrency doesn't need a commodity backing because its supply is fixed. This is in contrast to privately-issued paper banknotes, where the backing was a way to warrant that the number of notes in existence is finite and of some fixed exchange ratio with a known good money (gold or silver). There will never be more than 21M bitcoins, so you don't need a backing for that purpose. This means that the "backing" of Bitcoin is really its userbase, as explained above.

4) Dr. Paul says that cryptocurrency does not yet qualify as money

I think he's right but it is a potential money, in the same sense that gold also is not money (because it is not used in hand-to-hand transactions), but is a potential money.

5) Dr. Paul says that the ultimate goal is to live in a free society

Preach it, Ron Paul...

Conclusion

Cryptocurrency is a free-market money. It is different than gold and silver in that it cannot exist without a computer network. It offers some advantages over gold and silver in the form of stronger anonymity and potentially unconditional security and deniability (it can't be stolen and no one can prove that you own it). Even if government were to get out of money, cryptocurrrency would still exist and thrive alongside gold and silver. Many people will never "get" cryptocurrency - you can't touch it, see it, hold it, etc. That's perfectly OK. There's no need for cryptocurrency to supplant commodity money in a free-market in money production because cryptocurrency and commodity money can each do things that the other cannot. So, if that free society we're all dreaming were to come during our lifetime, we could see a world where gold and silver are used as they once used to be and cryptocurrencies are also used, each for the kinds of uses at which they excel.

great write up.

everyone listen to this and buy some bitcoins.. this is the future. 40k end of 2018. 1 millions USD in 10 years

[ccmm]

At the end of 2008, the Fed announced they had opted for a “printing press” cure to the crisis as the first round of the regulator’s asset-purchasing program got underway. No one knows the current value of the M3 money supply in the US. Some members of Congress are long-time critics of the Fed and blame the regulator for turning the dollar into a bubble with no real backing. Bitcoin today you can trader with Cryptocurrencies through brokers that have mt4 platform, CFDS, Binary Option the market has controlled this phenomenon which has triggered a value close to $ 10,500 USD is a madness or bubble that may explode very soon


I agree with this assessment. If you look at the Federal Reserve’s economic projections over the last 5- 6 years, you’ll find that they almost always miss the mark. It’s important to understand that the Fed’s main role is to regulate money supply (by forming monetary policy) to support economic growth (low unemployment and 2% annual inflation). The question is how can the money supply be efficiently controlled when the Fed itself doesn’t know how much money is in circulation (as I’ve stated above, this relates to the M3 money supply)? This is exactly why the Fed’s economic forecasts have been off for the last 10 years as well as why they’ve been unable to adequately conduct monetary policy. In other words, the Fed has become less efficient at its job and the supply of dollars has slipped form their control.

[ClaytonB]

It’s important to understand that the Fed’s main role is to regulate money supply (by forming monetary policy) to support economic growth (low unemployment and 2% annual inflation). print money.

FTFY

[kahless]

Considering it is traceable compared to cash or gold, I am surprised it is so popular here.

[ClaytonB]

Considering it is traceable compared to cash or gold, I am surprised it is so popular here.

Bitcoin is not completely anonymous out-of-the-box. But it's pretty anonymous. You'd have to be a pretty big fish or be up to something fairly illegal to have a serious reason to worry. Even basic anonymity measures will suffice for 90% of people.

But there are strong anonymity features available for the determined. You can switch your Bitcoin over to Zcash which provides unconditionally anonymous transactions. There are some technological downsides to Zcash, however. If you set up a Lightning Network on Bitcoin, you can transact off-chain, meaning, nobody but the parties involved in the LN channel can see that the transaction is even occurring. Also, work is being done on a novel form of cryptography, called "Bulletproofs", that will allow you to transact on-chain without revealing the amounts involved in the transaction. This would allow Zcash-style anonymity on the blockchain. One of the easiest ways to identify a transaction is by its amount... even separate transactions that sum to a given amount can identify it... decades ago, the authorities developed technologies for anti-money laundering that can detect these anonymity leaks, so concealing amounts is paramount for unconditional anonymity. The Bitcoin network can be accessed through a Tor tunnel, providing another level of anonymity (transport anonymity).

So, yeah, it's not untraceable out-of-the-box, but the technology is capable of achieving a higher level of anonymity than cash or gold can - with physical currency you must meet the person you are transacting with, face-to-face, not so with cryptocurrency.

[dannno]

Considering it is traceable compared to cash or gold, I am surprised it is so popular here.

Traceable to some extent, it's not like your name is hooked to every wallet address.. but more importantly you can't transfer cash and gold over the internet nearly as easily..

[Mordan]

Considering it is traceable compared to cash or gold, I am surprised it is so popular here.

that's a uninformed statement to make.

besides if you want total privacy Monero or to a lesser extent ZCash and Dash (private send). Monero is the best because privacy is DEFAULT. You can't opt out of it. So the FEDs can't pin you for using a private send in ZCash or Dash. On the flipside, Monero is hard to use. Only the religious elite uses it.

Seriously. Crypto tokens are going to change the world. Do your research.

[kahless]

that's a uninformed statement to make.

besides if you want total privacy Monero or to a lesser extent ZCash and Dash (private send). Monero is the best because privacy is DEFAULT. You can't opt out of it. So the FEDs can't pin you for using a private send in ZCash or Dash. On the flipside, Monero is hard to use. Only the religious elite uses it.

Seriously. Crypto tokens are going to change the world. Do your research.

Monero is not Bitcoin, this thread is about Bitcoin, Bitcoin is certainly less anonymous than cash, therefore an informed statement. US exchanges have to submit to KYC regulations. Any exchange you sign up for in the US requires all your personal information before you are allowed to use the exchange.

Bitcoin transactions themselves are anonymous but not private, identities are not recorded in the Bitcoin blockchain itself, but every confirmed bitcoin transaction is permanently recorded and visible to everyone in the Blockchain. Since all transactions are publicly broadcast in the Bitcoin blockchain, the public is able to see the flow of bitcoins from one address to another, albeit without any information that explicitly links those addresses to anyone in particular. Through exchanges that require the disclosure of personal identities, these users bitcoin holdings and activity become linked to their identities.

If one is not hiding behind a VPN or TOR, one could link the origin of transactions by looking for the IP address of the Bitcoin full node that first broadcast the transaction. How secure is TOR and your VPN provider?

Too long to get into here, there are also several methods through "Transaction Graph Analysis" that can reveal identities.

By diminishing the use of precious metals and paper money all the Bitcoin shills are doing is giving government more control and insight into our lives. Once it is commonly used it will be required payment solution and along the way at some point government will crack down on cryptocurrency privacy. The private transactions they have never been able to get their hands on will finally be revealed for them.

[Brian4Liberty]

The message I got from watching the Ron Paul video is that the government will be taxing Bitcoin, and they could make it illegal if they want to. He was not saying that it is worse than any other opinions, just that Big Brother knows and controls all.

[Raginfridus]

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon made news last week by criticizing bitcoin. Asking a bank CEO what he thinks of bitcoin is like asking the head of the post office what he thinks of e-mail. In a perfect world, Dimon would note the reasons why people use the cryptocurrency along with the dangers, and explain how JPMorgan is working to provide its customers with the advantages that come with bitcoin in safer forms. Instead, he denounces innovation as fraud and threatens to fire any employee who trades in bitcoin. 1

Dimon compared bitcoin to tulips, which is accurate, though not in the way he intended. Popular notions of the 17th century Dutch Tulipmania are derived from an 1841 book “Extraordinary Popular Delusions and the Madness of Crowds,” by a fact- and logic-challenged journalist named Charles Mackay. 2 Mackay confused two distinct eras. He reports stories 3 from around 1610 about high prices paid for individual bulbs. What he failed to realize is that people were not paying for single flowers, but for the entire breeding stock -- or a significant portion of it -- of popular new tulip varieties. People have continued to pay higher inflation-adjusted prices for new tulip and lily bulbs to this day. 4

A quarter century later, a futures market grew up around fractional interests in low-priced, ordinary tulip bulbs. In premodern Europe investment returns were very high, 20 percent or 30 percent per year on low risk investments, but laws and customs prevented anyone not in the merchant class from taking advantage. 5

Holland accidentally created a loophole by allowing contracts for fractional interests in tulip bulbs for the convenience of the industry. These were needed because the price of popular new bulbs was higher than even rich individuals could afford. In the early 1630s ordinary people discovered that these contracts could serve as money to support business and investment. These contracts then became “monetized,” as happens to all assets used as bases for monetary activity. That means their value decoupled from the use value of the underlying asset and became determined by demand for money services.

By 1637, contracts for fractional interests of low-priced tulip bulbs had risen to 20 times the price of the actual bulbs, reflecting the explosion of economic activity they stimulated. 6 In February 1637, the market collapsed; six weeks later it was outlawed.7

Something similar happened with bitcoin. People began using it in 2009 because it solved problems of the existing money and banking system: inflation, expropriation, taxes, use restrictions, financial repression and fees, especially for small and cross-border transactions. 8 The economic value of these services serves as the underlying base of value, just like the value of tulip bulbs supported the tulip futures contracts. 9 But bitcoin became monetized and its value far exceeds the current use value in transactions. Its value is now based on projected future need for protection against the problems it solves. If this be fraud, all money is fraud.

Dimon went on to claim that governments would suppress bitcoin because they like to control their own monetary policy. This is a strange objection. It seems to assume bitcoin will increase dramatically in value, because it would have to in order to be significant in global money supply. 10 (Full disclosure: I own bitcoins and other cryptocurrencies as well as shares of JPMorgan)

A better reason for governments to suppress cryptocurrencies is that they make it easier for people to evade taxes and regulations. Many of the advantages of a cryptocurrency from a user’s standpoint are disadvantages to people who want to control users. Cash is a far better tool for evasion, and no government has yet outlawed cash -- or even stopped printing it. The most financially repressive governments have not taken effective action against cryptocurrencies. Any efforts to suppress simultaneously make cryptocurrencies more valuable.

Bitcoin values may well collapse the way tulip futures did, either on their own or due to government efforts. But the problems cryptocurrencies address will not disappear with that collapse. People will continue to pursue technological innovations to improve financial services. The eventual winners may be traditional financial institutions that innovate or new entrants. But it’s a safe bet they will not be financial institutions that fire employees who take bitcoin seriously and ridicule customers who try to help themselves without waiting for JPMorgan to take notice of their problems.

https://www.bloomberg.com/view/artic...oin-and-tulips

[Zippyjuan]

At the end of 2008, the Fed announced they had opted for a “printing press” cure to the crisis as the first round of the regulator’s asset-purchasing program got underway. No one knows the current value of the M3 money supply in the US. Some members of Congress are long-time critics of the Fed and blame the regulator for turning the dollar into a bubble with no real backing. Bitcoin today you can trader with Cryptocurrencies through brokers that have mt4 platform, CFDS, Binary Option the market has controlled this phenomenon which has triggered a value close to $ 10,500 USD is a madness or bubble that may explode very soon


I agree with this assessment. If you look at the Federal Reserve’s economic projections over the last 5- 6 years, you’ll find that they almost always miss the mark. It’s important to understand that the Fed’s main role is to regulate money supply (by forming monetary policy) to support economic growth (low unemployment and 2% annual inflation). The question is how can the money supply be efficiently controlled when the Fed itself doesn’t know how much money is in circulation (as I’ve stated above, this relates to the M3 money supply)? This is exactly why the Fed’s economic forecasts have been off for the last 10 years as well as why they’ve been unable to adequately conduct monetary policy. In other words, the Fed has become less efficient at its job and the supply of dollars has slipped form their control.

The Fed quite tracking M3 money supply because they felt it did not give them any additional information useful for determining monetary policy compared to what M2 provided.

So what is in M3 that is not in M2? Large (balances of over $250,000) certificates of deposit, EuroDollar accounts (US dollar denominated bank accounts held in Europe), repurchase agreements, and institutional money market funds. M2 continues, as it has been, the most commonly used measure of money supply.

Some websites like Shadowstats attempts to calculate their own version of M3. Their chart does not show that M3 has been soaring:


http://www.shadowstats.com/alternate...-supply-charts

[ClaytonB]

The message I got from watching the Ron Paul video is that the government will be taxing Bitcoin, and they could make it illegal if they want to. He was not saying that it is worse than any other opinions, just that Big Brother knows and controls all.

The US government has already classified Bitcoin as taxable property. What this means is that when you convert out of Bitcoins back into USD, you owe taxes on the capital gains (if any). You could also write off losses, if applicable.

The reaction from the Bitcoin community (the people that actually use it) was a shoulder-shrug. Why? Because they have no intentions of ever moving back into USD. Bitcoin is a digital currency. This means you do not need to convert it into USD to pay for things, you can just pay directly with it. If anything, the tax rules are only going to add momentum to Bitcoin's growth as more and more people choose to "make the plunge". It's like leaving the US and refusing to pay your "exit taxes". The US government can't actually enforce the tax it levies on you but it can snarl, "Don't ever come back to the US!" Most expats respond, "Don't threaten me with a good time!"

The government's theoretical power to outlaw things and its actual power to outlaw things are completely separate - just look at the drug war. Using drugs can land you with a lengthy jail sentence. Yet, somehow, untold billions of drugs flow into and through this country. I don't use drugs but I could be in possession of just about any illegal drug I like within 15 minutes from typing this sentence. So, I say let them make Bitcoin illegal... I expect nothing better from the clowns running our country into the ground.

Lionizing the State is dangerous. The State wields an unbelievable amount of power - particularly unbelievable given its incompetence and obvious lack of true legitimacy. But the State is not something that deserves fear. Fear God. The State is comprised of a bunch of Keystone Cops laboring under massive delusions of grandeur. They're nincompoops, the butt of jokes everywhere in the world, the shame of our country on the global stage.

If you (generic) are thinking about trying out Bitcoin, just buy a small amount, like $100, to get the feel for it. Even in the worst-case scenario that you decide to cash out, report it and pay taxes on any gains, you're looking at one extra line item on your taxes, hardly a reason to hesitate getting involved. And, of course, you can just hold onto that $100 of Bitcoin for as long as you like, deferring the need to file anything about it on your taxes. No one should feel afraid to try out a new technology for fear of the Big Bad Government.

[kpitcher]

https://www.washingtontimes.com/news...out-officiald/

The End of Government Monopoly Money
By Richard W. Rahn
Published December 5, 2017


After two centuries of government monopoly money, private monies are re-emerging and will likely come to dominate ultimately. Back in 1976, Nobel Laureate F.A. Hayek published his little classic, “Denationalization of Money.” In essence, Hayek argued that money is no different than other commodities, and it would be better supplied by competition among private issuers than by a government monopoly. His book detailed the problems with government monopoly money and how most of these problems could be overcome with private competition.

Even though many agreed with Hayek’s argument, it was not clear until now how the government monopoly on money would be broken. As with so many other things, technology has come to the rescue. We are now witnessing the beginnings of the development of practical, private, digital cryptocurrencies, the best known being bitcoin. Bitcoin and most of the other new currencies enable users to make transactions from person to person without going through a bank or other intermediary. This is accomplished through the use of a “blockchain.” Before the development of the blockchain, those who had developed cryptocurrencies were not able to solve the double-spending problem to keep people from copying or counterfeiting the digital coin, and the “Byzantine general’s problem” of how to keep a malicious party from intercepting and changing the transaction before it reached its intended recipient.

The blockchain, by using what is called a distributed ledger, solved those problems. As a result, developers of cryptocurrencies now have the capability to exchange value in a frictionless way, without regard to national borders, censorship and other laws, or institutions. It re-establishes much of the financial freedom, which has been lost, to the consternation of those who want more government control.

What really frightens the government regulatory class is that blockchains also allow and make unstoppable the development of “smart contracts.” A smart contract refers to computer code that will automatically execute contractual duties when a trigger occurs. As an example, if collateral of some sort is kept in a blockchain network, and if the debtor has not paid by a certain date, the computer will automatically transfer the collateral to the creditor, which guarantees certainty of performance. The smart contract can remove all human discretion in the execution and enforcement of contractual duties, and cannot be interfered with by third parties, including officers of court.

Bitcoin is not money in the true sense of the word, because it is only unit of account and a method of exchange, and not a store of value. Combining claims on real assets such as gold, silver, aluminum, wood, wheat, oil and other commodities with blockchains will create true cryptomoney. Some of these are likely to be superior in a number of ways to government monies, particularly those that are afflicted with high rates of inflation or overregulation.

Government officials who are concerned about money laundering and other illegal activities fear the new blockchain cryptocurrencies, because they enable a much higher degree of anonymity than traditional account-based transactions. That, coupled with the near instantaneous settlement of transactions, makes it almost impossible to know who has sent and who has received payment. There is no obvious way for regulators to overcome these problems without destroying the open internet.

At present, the burden of almost all financial regulation, including anti-money laundering requirements, is placed on banks and other financial institutions. They are responsible for “knowing their customer” and the parties to a transaction. If they are suspicious of a transaction, they must report it to government authorities and not execute the transaction. Banks are also required to report all cash deposits and withdrawals above $10,000. The cost, both to the financial institutions and to the government of these tens of millions of reports (almost all of which are on innocent people and transactions) and related regulations, is enormous and places a much bigger relative burden on small financial institutions. This has caused banks to be much more restrictive in allowing people to open bank accounts and for fees to rise to a discouraging level. As a result, many, particularly low-income people, can no longer obtain bank accounts and other bank services and are forced to go elsewhere, often to black markets. The regulations have also slowed down many transactions, particularly foreign ones.

When there is a market need, entrepreneurs always step in to try to solve the problem, either through legal or illegal ways — that is what is driving much of the effort to develop the best cryptocurrency. The energy and the intelligence are on the side of the entrepreneurs, not on the side of the government regulators. Ultimately, government central banks and financial agencies are going to lose this battle. They will be forced to go back to traditional methods of law enforcement that will still enable them to catch bank robbers, kidnappers and terrorists — as they did before 1986 when Congress passed the first anti-money laundering law.

The courts are increasingly ruling that many of the invasive financial and other regulations violate the Fourth Amendment (“against unreasonable searches”). The choice is a world with much greater financial freedom and efficiency as a result of private cryptomoney, or a poorer and more oppressive world.

Richard W. Rahn is chairman of Improbable Success Productions and on the board of the American Council for Capital Formation

[Mordan]

Monero is not Bitcoin, this thread is about Bitcoin, Bitcoin is certainly less anonymous than cash, therefore an informed statement. US exchanges have to submit to KYC regulations. Any exchange you sign up for in the US requires all your personal information before you are allowed to use the exchange.

Bitcoin transactions themselves are anonymous but not private, identities are not recorded in the Bitcoin blockchain itself, but every confirmed bitcoin transaction is permanently recorded and visible to everyone in the Blockchain. Since all transactions are publicly broadcast in the Bitcoin blockchain, the public is able to see the flow of bitcoins from one address to another, albeit without any information that explicitly links those addresses to anyone in particular. Through exchanges that require the disclosure of personal identities, these users bitcoin holdings and activity become linked to their identities.

If one is not hiding behind a VPN or TOR, one could link the origin of transactions by looking for the IP address of the Bitcoin full node that first broadcast the transaction. How secure is TOR and your VPN provider?

Too long to get into here, there are also several methods through "Transaction Graph Analysis" that can reveal identities.

By diminishing the use of precious metals and paper money all the Bitcoin shills are doing is giving government more control and insight into our lives. Once it is commonly used it will be required payment solution and along the way at some point government will crack down on cryptocurrency privacy. The private transactions they have never been able to get their hands on will finally be revealed for them.

well sorry. for me Bitcoin is king of crypto and has become a synonym with crypto currencies at large.

You can't ignore the alt crypto anymore. Bitcoin and Monero with atomic swaps and decentralized exchanges and Kovri will give us total freedom. You can force people using a transparent ledger when required. i.e for public funds. And citizens can use monero to move funds away from prying eyes.

The future is Crypto. Bitcoin is king. Moon landing in a few years.

[specsaregood]

The reaction from the Bitcoin community (the people that actually use it) was a shoulder-shrug. Why? Because they have no intentions of ever moving back into USD. Bitcoin is a digital currency. This means you do not need to convert it into USD to pay for things, you can just pay directly with it. If anything, the tax rules are only going to add momentum to Bitcoin's growth as more and more people choose to "make the plunge". It's like leaving the US and refusing to pay your "exit taxes". The US government can't actually enforce the tax it levies on you but it can snarl, "Don't ever come back to the US!" Most expats respond, "Don't threaten me with a good time!"

That is still a taxable event according to the IRS. It is bartering and you owe taxes on the USD equivalent of the transaction. I linked to it the other day somewhere around here. just fwiw.

[Mordan]

That is still a taxable event according to the IRS. It is bartering and you owe taxes on the USD equivalent of the transaction. I linked to it the other day somewhere around here. just fwiw.

how will taxes be collected if you don't own dollars? BTC and other cryptos flowing in their own loop. no more fiat.

my bet the gov will collect taxes in Bitcoin because everyone will value it more than any other currencies.

[specsaregood]

The irs has plenty of ways of collecting.

[Brian4Liberty]

That is still a taxable event according to the IRS. It is bartering and you owe taxes on the USD equivalent of the transaction. I linked to it the other day somewhere around here. just fwiw.

Sales tax?

how will taxes be collected if you don't own dollars? BTC and other cryptos flowing in their own loop. no more fiat.

my bet the gov will collect taxes in Bitcoin because everyone will value it more than any other currencies.

Or to make it even more of a nightmare, imagine that they make every purchase made with bitcoin a taxable event with regard to the bitcoin itself, i.e. require taxes on capital gains (or losses) on the bitcoin. All of that on top of the sales tax they will want.

[Suzanimal]

how will taxes be collected if you don't own dollars? BTC and other cryptos flowing in their own loop. no more fiat.

my bet the gov will collect taxes in Bitcoin because everyone will value it more than any other currencies.

I read a thread not too long ago about a local government accepting Bitcoin.

[specsaregood]

Sales tax?

Nope, income tax or capital gains. Although some states also require you to pay sales tax.

https://money.howstuffworks.com/bartering4.htm

After bartering groups exploded in popularity in the 1970s, the IRS formalized its rules on taxing bartered income [source: Risen]. Now, the IRS taxes barter transactions in dollars and cents, even though no money changes hands. This means you have to keep tabs on the trades you make and keep good records of them so they can be properly taxed. The IRS measures bartered exchanges by using the market price of the goods or services someone receives. In a swap, both parties have to list the market value of what they received as taxable income. This means that commercial and corporate bartering exchanges require filing a tax form -- a 1099-B, "Proceeds from Broker and Barter Exchange Transactions"

so if you pay 100 for bitcoin and it goes up to 1000 and you buy $1000 goods with it, you are on the hook for paying taxes on that $900 profit, even if it never became USD.

I'm no hater, but if one thinks that going to bitcoin is some magic bullet against paying taxes, they are prone to sharing a cell with Mr. Schiff or losing their home if they get caught. And it might be worse than actual physical bartering or paying cash since as others have pointed out their is a public record of the transactions. And IMHO there is no way that the IRS is going to ignore all that money from the people that profited off bitcoin.