Thread: Bitcoin, or Bitcon

Originally Posted by Yanis

The gold standard has long been abandoned.

Care to comment why China, Russia and other countries are buying gold hand over fist?

Because gold is essential in the production of modern electronic components.

Originally Posted by DavidG

Because gold is essential in the production of modern electronic components.

That's interesting, I thought that Silver took over that role, in smart phones in particular.

Originally Posted by Yanis

The gold standard has long been abandoned. If I recall Australia was rather lat to the party, sometime in the 80s.

The important and significant difference between a nation's currency and Bitcoin is that a currency has (in simplistic terms) the nation's fundamentals as its underlying value whereas Bitcoin has nothing.

Interesting reading for any one *really* interested. https://en.wikipedia.org/wiki/Gold_standard

To take currency and worth back to the basics it is only what we think it is worth and the value we put on anything at any given time, nothing more or less. I am listening to a book at the moment (The Flash Boys) based around trading on the US share market and it absolutely astounding to hear how the share holders on the stock market are or were (I haven't finished it yet) getting ripped off because some smart guys have arranged things to make money by working in milliseconds when trading.

Originally Posted by Chris Parks

To take currency and worth back to the basics it is only what we think it is worth and the value we put on anything at any given time, nothing more or less. I am listening to a book at the moment (The Flash Boys) based around trading on the US share market and it absolutely astounding to hear how the share holders on the stock market are or were (I haven't finished it yet) getting ripped off because some smart guys have arranged things to make money by working in milliseconds when trading.

it's still going on.

I recall a news item from a year or so ago where the flash traders in Sydney were upset about the ASX trading computers being relocated. The distance from a trading desk to the "market" computer being a relevant factor in a flash trader's profitabity.

Originally Posted by Chris Parks

To take currency and worth back to the basics it is only what we think it is worth and the value we put on anything at any given time, nothing more or less.

Whilst there is an element of "randomness" to the value of a currency this is minor and not the fundamental value of a currency. This is why printing money (literally) can only lead to inflation since it devalues the currency. There are a lot of factors that contribute to the overall value of that currency its traded value is not purely random, it is based on those fundamentals.

This is how it differs from crypto-currency.

Australian Stock Exchange is moving to a Blockchain style system early next year

https://www.businessinsider.com.au/t...nology-2017-12

Bubble, what bubble?
https://finance.yahoo.com/news/bitco...183500758.html

The characteristic of Bitcoin that hasn't been directly discussed here, or much if at all in the popular press, is sovereignty. I'm using the term in the context of state sovereignty, i.e. countries.

In my appreciation, all or the vast majority, of the various country currencies in circulation, are fiat currencies. Fiat currency is defined as currency that is declared legal tender by a sovereign government.

The word fiat derives from the latin verb facio or "do". A usage which is not too obscure is 'Caesar fuit' or 'Caesar wills it (to be done)'. Thus, Caesar said 'you do it' and in the instant case fiat currency came into existence.

In the old days most sovereigns were people, i.e. Caesar, the King, Tsar, Moghul, Pharaoh, Khan, Emperor, Fuhrer or whoever. If the Caesar said 'do it' and you didn't comply you could be pretty sure that Caesar would send some muscle to either make you 'do it' or truss you up to die more or less slowly as an example to anybody else who might have the inclination to question Caesars' will. Money wasn't the only thing created by imperial fiat of course, Peter the Great commanded the creation of the city of Saint Petersburg in 1703 and it got done.

Over time the concept of individuals as sovereigns evolved into the prevalent current practice of bureaucratic sovereign states. This system has some advantages over the systems based on single or small numbers of individuals. For instance, these systems are somewhat less susceptible to being taken over by tyrants. These systems don't die and lead to succession conflicts and so on. However, the bureaucratic sovereign governments still rely on the same old tools of fiat power. They create and assign value to their own currencies. They maintain military forces to bludgeon challengers and they use a variety of additional means such as economic, legal, propaganda, alliances and covert means to exert their will in the community of nations. The blunt instruments of national power IMO can be reduced to three essentials: Military Might, Capital and Energy. I know that there are many other supporting factors such as demographics, educational capital, intellectual capital, geography and so on that contribute to or support these three essentials but really these three are central to the maximum exercise of national sovereignty these days.

Military Might is of course the standing and reserve armed forces, their equipment and it's technical capabilities (smart weapons) but also of critical importance is 'The Bomb'. States possessing The Bomb throw their weight around in the world more freely than those states that lack it. Thus, Bomb owners (with the exception of Pakistan) are more sovereign than those states that lack The Bomb.

Capital IMO encompasses national wealth including fiat currency, the derivative intangible faith (Faith) of others in the value of that fiat currency, various tangibles such as national intellectual prowess, businesses, infrastructure, valuable natural resources (esp. fossil fuels) and so forth.

Energy is obvious. The more oil and gas that a present day sovereign state controls the more powerful it is because the baubles of modern life all are critically enabled by fossil fuels. Note the number of international conflicts going on just now, the vast majority of which exist because sovereign states are contending for access to or control of fossil fuels. For example, the government of Canada is developing corps of elite arctic fighters with stealth snowmobiles in anticipation of preserving control of the fuel deposits that are becoming accessible as the arctic sea ice recedes along it's northern border. The Russian navy recently used a submarine to plant a Russian flag on the sea bed at the North Pole. The Chinese government is building artificial islands/ fortresses to monopolize fossil fuel deposits. The United States and to a lesser extent other countries including Russia have their hands all over the less pliant countries of the Middle East. I remember reading a couple of years ago (don't remember the source ATM) that the United States Air Force is the single largest consumer of liquid hydrocarbon fuel on the planet.

At this point the United States of America has the most Capital in the world, it has the The Bomb, it contains within it's boundaries fairly large reserves of Energy and by dint of it's Military Might it's able to control at least enough additional Energy to satisfy national consumption. In consequence the US dollar has been considered the 'reserve currency' benchmark for many years. Each of these three essentials of national sovereignty serve to backstop and enhance the others. Capital pays for the Military Might and The Bomb. The Military Might guards the prerogatives of Capital with the implied threat of The Bomb. Energy enables Military Might and The Bomb because it creates Capital and they in turn ensure access to Energy to keep the wheels turning. These factors inspire and support a greater or lesser degree of Faith in the other countries of the world.

Getting back to Bitcoin, it has only Faith, that is the faith of those who've bought it. If that Faith wains it will cease to exist because it has no Capital, Military Might, Energy or Bombs.

Further, and perhaps most important among the liabilities of the cryptocurrencies, is the fact that sovereign states are jealous of their powers. Thus, if Bitcoin ever looks like it presents a threat to those entities possessing Capital, Military Might, The Bomb and Energy mere Faith doesn't stand a chance and it's easy to predict the outcome.

Originally Posted by rob streeper

Getting back to Bitcoin, it has only Faith, that is the faith of those who've bought it. If that Faith wains it will cease to exist because it has no Capital, Military Might, Energy or Bombs.

A reverse argument is that there is a growing swell of people who do not have faith in the de jur currency of the country - hence the rise in popularity of cryptocurrencies.

Originally Posted by cava

A reverse argument is that there is a growing swell of people who do not have faith in the de jur currency of the country - hence the rise in popularity of cryptocurrencies.

Indeed, but the people are not sovereigns, they're subjects. Subjects that cross the sovereign are in for a rough go. Mind I don't claim to have foresight but the power dynamics of the world today are what they are. Cryptocurrencies may well pootle along for some time but if they ever get big enough to matter they'll be crushed by the powers that be. If they become conduits for criminal activity they'll be regulated, taxed, outlawed or all of the above. I think that the only way forward for the cryptocurrencies lies in the direction of remaining irrelevant on the world or national scales.

What is hysterical is the recent big crash of BitCon. Oh, excuse me, BitCoin.

I had been thinking that maybe I missed out on the gain. Yeah, I did, partially. But I also missed out on the crash.

Robs description has been one of the very best I've read in a very long time.

I will be asking to use it elsewhere, for it needs to be re-posted.

The essential argument is, that, if people think that a country is going to let its currency be subverted they are severely mistaken. People who know me know my background and how wild I get over these kinds of things, but Governments argument against bitcoin (cryptos) is basic for them to make: Only tax evaders, criminals, pedos and drug dealers use it.

Not true, of course, but repeat it enough and it becomes truth.

It's going to be an ugly fight.

Just had another thought about this issue. All of the cryptocurrencies are tied to the Internet. There are 13 root-name servers supporting the operations of the Internet in the world, 10 are operated by companies or organizations located within the borders of the USA. The other three are located in states more or less allied to the USA. None of the countries hosting the non-US groups have The Bomb, Military Might, Energy or Capital that the US does. If the US government ever feels that cryptocurriences are a liability they're gone.

Also, consider what China did a few months ago when it closed the domestic crypto exchanges. Despite the fact that none of the rns's are on its' territory the price of Bitcoin took a hit. I'm sure that some intrepid individuals continue to trade crypto's in China but waving your little self-styled-sovereign digital finger in the face of the PRC can change one's life status to 'organ donor' with terrifying speed.