Bitcoin Holds More Value Than the Entire Currency Stock of 20 Nations

Credit: TraderTim / Foter.com / CC BY-SACredit: TraderTim / Foter.com / CC BY-SAAs was noted earlier on Reason 24/7, Bitcoin now holds more value than the entire currency stock of 20 nations.

Granted, the 20 nations in question (which include Bhutan, Guinea-Bissau, Samoa, and the Central African Republic) do not include influential economic powers, but the fact that Bitcoin is now worth over $1 billion is worth noting.

Bitcoin has exploded in value over the past few weeks, with some citing the crisis in Cyprus as the wakeup call that has some in Europe putting their money away from the hands of governments that are wreaking havoc with Europe’s economies.

However, as BitPay.com CEO Tony Gallippi has pointed out, American regulations, which made the legal status of online currencies clearer, have contributed to demand for Bitcoins. From Fox News:

Bitcoin demand has also increased, Gallippi says, because last week U.S. regulators issued the first official guidelines for private digital currencies. Prior to the regulations, the legal status of the currencies was in doubt.

“Now people can see that it's not illegal, that it's not banned,” Gallippi said.

While some might be reassured by the new guidelines over at Business Insider Cullen Roche of Pragmatic Capitalism foresees a potentially gloomy future for those who use Bitcoins:

I think Bitcoin can continue to exist as a subordinate form of money with a very low level of moneyness, but if Bitcoin were to grow to a point where it becomes a highly competitive form of money, but circumvents the laws, regulations and taxation of a system like the US banking system, my guess is that the US government will make it illegal for merchants to receive Bitcoins for payment.  And then 100 FBI agents get a few thousand Bitcoins each, buy something from US based Bitcoin merchants and parade them out on national TV for the entire nation to see why Bitcoin acceptance results in a $250,000 fine and 5 years in prison.  In other words, Bitcoin could very well become a victim of its own success as the US government would never allow another form of money to detract from public purpose due to high levels of monetary competition.  Of course, I am referring to the US government, but this view would likely be embraced by many governments around the world.

So Bitcoin is an interesting and extremely innovative form of money, but probably not a viable form on any grand scale since its inevitable competition with the US banking system will likely render it at odds with the goals of the US government.

More from Reason.com on Bitcoin here

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Tulpa (LAOL-PA)||

    A currency that relies for its value on uninterrupted internet connectivity. What could go wrong.

  • $park¥||

    Could it be as bad as a currency that relies for its value on government say-so?

  • ||

    Don't confuse Tulpa, he's too busy emulating someone with a neural parasite.

  • Pro Libertate||

    Wow, that's surprising. Me, I'm more of a Kirk guy. What would Kirk do? Or maybe Spock when I want to be all stoic and logical. Not so much Lt. Remmick.

  • ||

    Why do you scoff? I modeled my life's mission of leading dangerous alien parasites to Earth after his.

  • Pro Libertate||

    It's kind of a lame parasite. I mean, it's this huge threat to the Federation, then it kind of fizzles and is never mentioned again.

    Me, I'm thinking the spores would be better. Or maybe the flying raviolis.

  • ||

    Well, a lame parasite fits Tulpa perfectly, so there is that.

  • Tulpa (LAOL-PA)||

    The most devastating parasite to the Federation is JJ Abrams.

  • Pro Libertate||

    Don't say such things around Episiarch. He's so excited about the new Star Wars--I mean Star Trek--movie.

  • Randian||

    Alright, Tulpa, I am awarding you One Gold Internets for that one.

  • Tulpa (LAOL-PA)||

    I'll put it in the display case with my withered taints.

  • Tulpa (LAOL-PA)||

    I emulate his pre-parasite personality.

    Much better than your patterning yourself after the "bonk bonk on the head" kid from "Miri".

  • Pro Libertate||

    See, that's where you're wrong. I love that kid.

  • BakedPenguin||

    Has there ever been a good episode of any Star Trek show that had kids on it. Other than the one where the Traveler kidnaps Wesley for sexual abuse, of course.

  • Pro Libertate||

    Well, they had that dwarf without telekinetic powers. I liked him. He's sort of childlike.

  • Tulpa (LAOL-PA)||

    dwarf without telekinetic powers

    Do most dwarves have telekinetic powers?

  • Pro Libertate||

    On the Planet of the People with Telekinetic Powers who Oddly Worshiped Some Guy from a Planet Hundreds of Light Years Away Thousands of Years Ago, I don't know. He was the only one without him, but we didn't see everyone. Maybe there was a telekinetic dwarf there, living the life of leisure.

  • Rights-Minimalist Autocrat||

    DS9, "Nor The Battle To The Strong." Although by that point, Jake isn't really a kid.

  • Pro Libertate||

    Ditto "The Visitor," which is one of the best DS9 episodes--mostly not a kid.

  • ||

    It's good that you can admit that your objective in life is to be a humorless anal scold with no social skills and stupid bureaucratic compulsions.

    Because you've achieved that.

  • Tulpa (LAOL-PA)||

    As the linked article discusses, BTC depends on govt say-so (or at least indifference) for its value.

  • $park¥||

    You really see no difference between government say-so and government indifference?

    Sorry, that was a rhetorical question. You're Tulpa, of course you see no difference.

  • Tulpa (LAOL-PA)||

    If it was likely that our govt would become more libertarian, there would be a big difference.

    Unfortunately, our current govt is only indifferent toward things of which it is unaware.

  • some guy||

    A currency that relies for its value on uninterrupted internet connectivity.

    Connectivity can be interrupted for individual users so long as the interruption isn't too long or too widespread. If the user base were focused in a single jurisdiction this would be a problem, but so long as it remains worldwide there shouldn't be any issues.

  • Tulpa (LAOL-PA)||

    I should have been more clear; for the currency to have trade value the trading partners must have internet connectivity at the time of the trade.

    ie, during a power outage BTC is worthless.

  • ||

    When you can't access your money, you can't buy things with it? Who would have thought!

  • ||

    Who cares? You can't actually buy anything with Bitcoin anyway.

    Oh except Ebooks and Reddit subscriptions. Woot!

  • ||

    There have already been some BitCoin transactions, and with it being declared legal we'll probably see more as time goes on.

  • ||

    Almost all bitcoin transactions fall into three categories.

    1. Buying bitcoins with dollars.
    2. Selling bitcoins for dollars.
    3. Gambling.

    Name a tangible good that you can purchase with bitcoins.

  • ||

    What goods? It would be better to ask what businesses or venues accept bitcoins. There are in fact companies that already accept bitcoins as a currency.

    https://www.spendbitcoins.com/places/

    That they aren't as widely used as other currencies today doesn't mean they will never see expanded use. I'm predicting we'll see more and more venues accepting bitcoins (and likely other digital currencies) as time goes on.

  • MisterDamage||

    I wonder how depositors in Cyprus banks felt about their totally official money last week.

  • Randian||

    I cannot understand your negativity on this.

  • ||

    He's just smarter than everyone else. CAN'T YOU SEE???

  • ||

    How can everyone fail to recognize Tulpa's obvious greatness?

  • Tulpa (LAOL-PA)||

    I just don't see a use case for BTC. It's just as worthless in a deflationary economic collapse as precious metals, and it's unusable during a power outage/internet breakdown. Plus if the feds want to monetize the debt and tank the dollar they'll be sure to outlaw transactions in BTC first. "Good, bad, I'm the guy with the gun," as Mr Bruce Campbell said. Coercion is the ultimate currency.

  • Pro Libertate||

    Wait a second. I think I have a cunning plan. A coercion-based currency. Openly based on the level of coercion in the entity backing the currency.

  • Tulpa (LAOL-PA)||

    It's not exactly a new idea, unfortunately. "I propose a deal: you give me your widget, and I don't burn down your house"

  • bmp1701||

    We already have one. It's called a "dollar".

  • Pro Libertate||

    I was thinking even more openly coercive. Kind of a protection racket-based currency.

  • ||

    Again, this the $

  • bmp1701||

    Plus if the feds want to monetize the debt and tank the dollar they'll be sure to outlaw transactions in BTC first.

    Christ, the government can't even successfully ban transactions involving prohibited physical items, which at least have a tangible presence. How is it going to successfully ban a digital currency?

  • $park¥||

    I'm willing to bet the first thing they try is the "stop it or we'll kill you" method.

  • bmp1701||

    Which has stopped the marijuana trade, the alcohol trade, the cocaine trade, the pictures-of-naked-women trade, etc...

  • Tulpa (LAOL-PA)||

    You don't need to be connected to the internet to swap a bag of weed for a C-note.

  • ||

    Right now BTS is mostly limited that way, but with it's legal status being clarified we'll probably start to see more in the way of BTC debit and credit systems, which already exist in a limited form.

  • Tulpa (LAOL-PA)||

    Debit/credit cards also require a network connection.

  • ||

    Yeah, yet they aren't worthless. That was my point.

  • Tulpa (LAOL-PA)||

    If G wanted to ban them and/or the power went out, they would be.

  • ||

    Yeah, so?

  • Tulpa (LAOL-PA)||

    The digital currency requires a physical network to be worth anything.

    Kind of my basic point.

  • ||

    So? Any money is worthless when you don't have access to it. When I buy things, I almost always use my debit card, which would also be worthless if the system it runs on was down. That flaw doesn't make my debit card useless.

  • Tulpa (LAOL-PA)||

    Debit cards are useful because they make for faster, lighter transactions with less danger of being robbed. They are, of course, backed by dollars anyway.

    Bitcoin has no advantages that I've seen in normal times.

  • Randian||

    Bitcoin has no advantages that I've seen in normal times.

    How about easily keeping your wealth away from capricious actions by government and/or the Fed?

  • Tulpa (LAOL-PA)||

    Precious metals and other commodities are far more useful for that purpose. And they don't vanish during a power outage.

  • np||

    Except that physical commodities can easily be confiscated and easily subjected to capital controls.

  • Tulpa (LAOL-PA)||

    And post-Cyprus, it's probably not a bad idea to keep a significant amount of money away from a bank.

  • crazyfingers||

    Don't forget litecoin, I've more than doubled my investment in less than a week and there's no sign of it slowing down.

  • some guy||

    How many other copycat currencies have popped up since Bitcoin? I foresee a great deal of competition in this market...

  • crazyfingers||

    There's quite a few, such as namecoin, PPcoin, novacoin (which supposedly is a scam).

    You can find out more here: https://bitcointalk.org/index.php?board=67.0

  • ||

    Excellent, more virtual currencies that nobody will actually accept in exchange for goods and services.

    Well, I suppose I could always wait until the price of a litecoin to go up and then sell it in exchange for dollars.

  • ||

    Wrong, some BTS transactions have already happened. We'll probably see more as time goes on.

  • Rights-Minimalist Autocrat||

    If you wanted to create a couple of paragraphs for the express purpose of pissing me off, you couldn't do much better than that second blockquote.

  • bmp1701||

    Yeah, people are always insistent that the government will be able to ban stuff. Problem is, BitCoin might be much harder to control than any prior attempt to create an alternative currency, precisely because BitCoin is digital and anonymous.

  • np||

  • Raston Bot||

    But couldn't the vendors also be anonymous if it's all oniony TOR*?

    *I have no idea what I'm talking about

  • bmp1701||

    It's much easier to sell anonymously through TOR-systems. You can receive a shipping address from the purchaser, then you effectively dead-drop your item through FedEx or UPS. Basically, you figure out a scheme so that there is no return address on the package, thus foiling attempts to discover who has shipped the item.

    Hooray for SilkRoad.

  • ||

    Bitcoin isn't anonymous. An inherent feature of the currency is a log of every past transaction that a coin has been involved in.

  • np||

    Transactions are public but your identity remains effectively anonymous. Maybe a better term is privacy. X - Y. You have no idea who X is or what the transaction to Y was for.

    There are also mixing services that obscure the transactions (like Tor) by mixing funds to scramble the history

  • entropy||

    If you want to own bitcoins it's because you're compensating for having small tits. /Mark Karlin

  • 0x90||

  • Fist of Etiquette||

    Who runs Bitcointown?

  • some guy||

    What's the first rule of Bitcoin Club?

  • crazyfingers||

    This might just be the greatest video in the history of youtube: https://www.youtube.com/watch?v=NG1qooBzE2w

  • ||

    As I've said before Bitcoin is in a speculative bubble.

    There still isn't much you can buy with a Bitcoin aside from spending it gambling on online websites.

    The largest Bitcoin-demoninated stock is in Satoshi Dice, an online gambling websites.

    What does it say about a currency when it's in a speculative bubble and the primary users of it are gambling addicts?

  • crazyfingers||

    So are you saying Bitcoin users should be forced to buy insurance? lol

  • ||

    What does it say about a currency when it's in a speculative bubble and the primary users of it are gambling addicts?

    Are you talking about Satoshi Dice and Bitcoin or Fanny May and the US Dollar?

  • np||

    That's idiotic if you think everyone is using it just to gamble.

    links (highlight and right-click in firefox to follow)

    First there's:
    * Amazon
    * Wordpress (bypassing over 60 sanctioned countries that Paypal/CC-co's won't serve)
    * Reddit
    * Many Web Hosting and VPN services (in fact the ONLY way to ensure your security is to find one that uses bitcoins)
    * File/Cloud hosting like Mega (censored by Paypal)
    * person-to-person transactions (when censored by Paypal)

    Others:
    bitcoinstore.com (tons of electronics)
    cupsandcakesbakery.com (food)
    mandrik.com (food)
    forbitcoin.com (marketplace)
    spendbitcoins.com (marketplace)
    agoristmarketplace.com (listing)
    bitmit.net (BTC eBay)
    coindl.com (marketplace)
    ogrr.com (for gamers; trade in-game items)
    gamerkeys.net (buy games; BTC and LTC (litecoin))
    rideaclass.com (limousine, transportation)
    stripcoin.com (peer-to-peer livecam stripping)

    amagimetals.com (gold/silver)
    mybitcoinmint.com (gold/silver)
    coinabul.com (gold/silver)
    casascius.com (silver/coins with real BTC key)
    bitbills.com (BTC cards)

    betsofbitco.in (BTC version of InTrade)
    icbit.se (BTC Derivatives Market and Exchange; gold, crude, futures, etc)
    cryptostocks.com (BTC stocks)
    glbse.com (BTC stocks)
    exante.eu (serious BTC hedge fund in Malta)

    localbitcoins.com (local person-to-person exchange)

  • np||

    Furthermore, third party servcies allow otherwise traditional retailers to easily accept bitcoins like Bitpay did for Amazon. BitInstant is another one that allows physical payment and real-time conversion and in-person transfer of cash or funds to another remotely (an exchange or BTC wallet) at locations like CVS, Wallgreens, Albertsons, Walmart, etc. The stripcoin.com girl shows how:
    http://blog.bitinstant.com/blo.....bytes.html

  • np||

    and:
    Argentines escaping currency controls with Bitcoins
    My friend Sir Charles at PricedinGold.com wrote me this morning from Argentina’s Salta province (near Doug Casey’s lovely property in Cafayate) and told me that TEA Turismo, a local tour operator and rental car agency there has started accepting BITCOINS.

    More in EU now are resorting to it for this reason or fears of it

  • np||

    But if you are into gambling, then pure BTC gambling systems have an advantage for the gambler:
    BitZino And The Dawn Of 'Provably Fair' Casino Gaming
    (applies to SatoshiDice, etc)

  • ||

    Does Amazon sell physical goods in bitcoin, or just ebooks and viedeos?

  • ||

    Here's a good list for you, np:

    https://www.spendbitcoins.com/places/

  • Jam||

    this, or something like it, is the beginning of the end of nation-states as we know them.

  • Tulpa (LAOL-PA)||

    Anything big enough to destroy nation-states is big enough to destroy the Net.

  • Cytotoxic||

    And Tulpa gets closer to filling his 'totally unsupportable BS statement' quota.

  • Tulpa (LAOL-PA)||

    One could never hope to compete with you in that regard. Shouldn't you be off confusing Shinto and Buddhism somewhere?

  • Cytotoxic||

    Shinto and Buddhism are synretic in Japan.

    http://en.wikipedia.org/wiki/S.....h_Buddhism

    Get fucked.

  • ||

    at odds with the goals of the US government.

    which is to say it would make it harder for the US government to steal people's savings through inflation

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement