Bitcoin

Bitcoin Revolution

The government is afraid of competition.

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The big online retailer Overstock.com now accepts payment in Bitcoin. That's good news for lovers of liberty because Bitcoins give us an alternative to government-controlled money. Bitcoins are a currency created by anonymous, private tech nerds, not by government. 

Governments don't like competition, and our government sometimes bans competing currencies. But as more of us use Bitcoins, and more businesses accept payment in Bitcoin, it becomes harder for government to dismiss the currency as illegitimate, or ban it. 

There are two advantages to Bitcoin. 

First, it's harder to trace transactions back to people who make trades. I don't particularly care about that, because at the moment, I don't hide anything from my government.

But I do fear government destroying the value of my dollars by printing more of them, the way governments in Germany before World War II and in Zimbabwe in recent decades did, forcing people to make trades using wheelbarrows of nearly worthless bills. Given how my government spends money, and the way the Fed enables this by buying trillions in government bonds, I fear my dollars may someday be worth pennies. So I bought Bitcoins.

Bitcoins are digitally created—or "mined"—at a slow, fairly predictable rate. An incomprehensible (incomprehensible to me, anyway) computer algorithm limits their number.

"Bitcoins are not controlled by anybody," explained Mercatus Center senior research fellow Jerry Brito on my TV show. "It's a new Internet protocol, like email or the Web … a digital, decentralized currency that allows you to exchange money with anybody in the world fast and cheaply without the use of a third party like PayPal or Visa or MasterCard."

I bought Bitcoins even though I don't understand how Bitcoin mining works. I also worry that someone will hack into my Bitcoin account and steal my money, or maybe hack into the whole system and devalue Bitcoins by creating millions of new ones. 

But risky as this new currency may be, I still trust it more than I trust politicians. When my fellow baby boomers demand our promised Medicare payments and discover that government promised trillions more in benefits than it can ever pay for, I assume politicians will print dollars until they are nearly worthless. 
So, I put my savings into Bitcoins when they sold for $140 each. I was late to buy—smarter people bought for much less. But today each Bitcoin is worth more than $800. So, yippee for me! I'm so glad I put all my savings into Bitcoins.

OK, I didn't really. It's just part of my savings—but it's good to hedge against political venality!

The biggest risk to private currencies may be that governments will become jealous of how well these upstart forms of money work. If people all over the world decide to trade in digital currencies, it will become more obvious than ever that government isn't what makes economic activity happen. 

It will also be harder to trace—and tax—people's economic activity. Government doesn't like to get sidelined. To its credit, the German government announced that it recognizes Bitcoin as a legal alternate currency. 

The U.S. government flexed its muscles by warning that it has the right to regulate Bitcoin transactions. The FBI already shut down a website called Silk Road that accepted Bitcoins as pay for services both legal and illegal (like drugs). Sen. Chuck Schumer, D-N.Y., called Bitcoin "money laundering" and demanded a crackdown. That's not surprising, since Schumer wants to ban lots of useful things, like energy drinks, high-frequency stock trading, free-market wages and 3-D printers that can make guns. 

So I'm glad Overstock.com and other businesses are out there, reminding people that law-abiding citizens use Bitcoins to buy legal things. Last month, I used them to buy Christmas gifts.

But Bitcoin's legitimacy shouldn't depend on whether people do things with it that politicians consider wholesome. When government restricts drugs, online gambling and other popular activities, it just makes anonymous, hard-to-trace currencies more popular. 

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  1. I’ve spent the last few days finally immersing myself in digital currencies and educating myself about what it takes to mine. I’m a little late in the game for mining Bitcoin, as it now takes a large up-front equipment investment to get real returns, but I’ll try to do it on a small scale for educational purposes. I’ve also found the Litecoin and Dogecoin to be attractive opportunities, so I’ll be experimenting with those, too. Meanwhile, I’ve been working a few BTC faucet sites, and I have the equivalent of a handful of change in my wallet. Not exactly a fast track to wealth, but something that can be done without exchanging dollars.

    1. Doesn’t Bitcoin have some risk of having its value diluted by other digital currencies? If a new new crypto currency is emerging every year, like dogecoin, it seems like Bitcoin would cease to be an effective hedge against the dollar. No?

      1. is the euro diluted by the dollar (in a market way, ignore all the BS with the nature of the global currency agreements)

        1. If there were no euro, demand for another currency, perhaps the dollar, would be higher. Higher demand, assuming a limited supply, = higher value.

          I own some Bitcoin, but I’m worried about buying more partially because of the other cryptos. When I finally opened a Myspace account, everybody fucking went to facebook. I couldn’t take that again.

      2. I don’t think so, really, no.

        Bitcoin is the first mover, and unless a new crypto-currency does something radically different that for some reason can’t be folded into Bitcoin, it’s not going to be replaced. It’s a currency, and a network — it’s much more efficient for there to be one.

        Think of it like Facebook — Facebook entirely replaced MySpace. There’s also-rans like LinkedIn that are in niches, but nothing is there as a serious challenger to FB. If FB starts to falter, it’ll likely get nearly completely replaced, rapidly.

        1. Google+ being a good example. As much as it is superior to Facebook, it hasnt dented the “value” of Facebook.

          1. I entirely forgot about Google+. And I even have an account on it from back when it first came out.

            1. I used it more than facebook for a year or two.

              I use neither now. At least not more than rarely.

              1. Isn’t a better example the peer-to-peer networks? In which case, I can point to Napster, Limewire, Morpheus, Kazaa, etc as “first-movers” which didn’t exactly hold up.

                1. Maybe the defining factor is whether or not the network is associated with things not approved by government. If so, Bitcoin’s prospects aren’t good.

        2. So a libertarian dream currency is better off without market competition? Good to know.

          1. No one’s saying that. They’re simply saying that, for an individual, it might not be great to invest in a currency which could face downward pressure from competing currencies.

            Last I checked, there’s nothing inconsistent about being libertarian and no being a speculator.

      3. Because it is backed by nothing, the value of BTC will eventually go to zero, just like with the dollar and the euro and etc.

        One day, no one will use any of the 3 as currency.

        But that day might be 500 years from now.

        1. However, the supply of Bitcoins has an upper bound, guaranteeing that as more assets are denominated in BTC, each BTC will be worth more.

          1. That just means the value wont be killed from overprinting.

            Doesnt change the fundamental problem of lack of backing.

            1. I started off concerned about the lack of backing. I realized the big issue with that, though. If it’s backed by something, that something has a physical presence, which can be seized, shutdown, or otherwise controlled.

              Nothing backing it is the only way to make sure it is uncontrollable. The fixed supply is for the same reason, I think. If the supply increased indefinitely (at a slow, fixed rate), then hey, why not just change that rate a little? Why not let some foundation figure out what the rate should be?

              1. Ya, I think Bitcoin isn’t backed by nothing as much as it’s backed by nothingness, which is actually an advantage over somethingness in some ways. If that makes any frikkin sense.

                None of that constitutes disagreement with robc’s position though.

              2. Actually you can just as easily have a fixed (and unchangeable) inflation rate as a fixed (and unchangeable) supply. In fact some clones do exactly that.

                It’s just that Satoshi wanted to approximate the supply behaviour of precious metals.

            2. It’s still fiat money but whatever you would back a currency with only has value because you believe it does.

              Unfortunately the US has moved it’s currency to the lead standard, they back all of their bills with bullets.

              1. Right, Gold is useful as a conductor, but really our idea of gold having value is pointless, because it really does not have value beyond it’s industrial qualities.

                BitCoin is backed by the labor pool that goes into the transactions, just like any money really is. It takes an agreement between two people, your 1 hour of electrical work is worth my 5 hours of selling fries, we agree that a bit coin is equal to both of those things, and that is what we trade because it is too difficult to barter certain services on a person to person basis.

                1. That being said, I’d rather invest in companies that actually add value. Once you own a stock, it does not matter which currency you use, that stock is backed directly by the labor pool. There is no belief or disbelief in the idea that AAPL is worth something to someone else. It IS worth something to something else, and that worth is pretty much not dependent on inflation or devaluation of any currency.

                  So yeah, Bitcoin has the same problems as any other currency, but that includes gold or silver as well.

                  1. How is BTC fiat currency? I can’t imagine any libertarian (especially those educated in Austrian insights) to take the third definition of fiat money (no intrinsic value) seriously. It should be obvious that nothing has intrinsic value outside of how an individual values it; there is no such thing as intrinsic value.

                    Given that, we’re left with fiat money as that which is declared valuable by a government. Not the case for BTC.

      4. I basically see them as gold, silver and bronze, comparatively. I also know the mining opportunities won’t last very long, so I’ll just enjoy the educational experience and see what I end up with.

      5. There already is a competing currency,
        Litecoin
        . Its new feature is that mining can’t be gamed with graphics procesors.

        1. That’s old news — you can mine LiteCoin on GPUs today, and ASIC hardware is probably going to hit in the 1st or 2nd quarter.

        2. There’s also “Dogecoin” (my favorite), and “Coinye West”.

          1. Kanye West is a cunt. Doge-forever.

            1. Coinye West is also, fittingly, a scam. The creators mined a shit-ton of them before releasing them, and then claimed they hadn’t.

              1. Yeah. The altcoins are fun and all, but it’s the size and network of bitcoin that make it more difficult to be a scam. And hey, you can still buy drugs with it!

              2. Is a shit-ton a metric measurement or industry lingo?

                🙂

                1. A shit-ton is an Imperial measurement.

                  The metric version is the shit-tonne (or metric shit-ton).

                  =P

        3. I wonder if the Winklevoss’s are going to invest in quantum computing?

    2. Is John Stossel now liable to the IRS for the increase in value for the BTC he bought?

      1. without a doubt. He’s also a high profile target for anyone needing a patsy to make an example of.

      2. No current tax liability here. A taxpayer will not recognize a gain or loss until the asset is sold or disposed of. I.R.C. Sec. 1001.

        However, once he sells the BTC, he is the IRS’s biatch (unless, of course, the prices crash and he recognizes a capital loss).

  2. Have I mentioned I like Stossel?

    1. Really, even this week? This article is kinda phoned in. It’s just, “I bought some bitcoins, hooray for me!”. I don’t dislike Stossel, but I do think he’s had better material. It’s always lightweight stuff.

      1. Stossel’s writing is very generic.

      2. The guy names himself after a character in Atlas Shrugged and thinks he’s hot shit instead of being embarrassed. Of course he likes Stossel.

        1. Criticism from an immoral pig…I’m crushed.

          1. He’s too stupid to be immoral. He’s amoral. Like a dog. He doesn’t know better.

  3. But Bitcoin’s legitimacy shouldn’t depend on whether people do things with it that politicians consider wholesome.

    Like hiring hitmen or purchasing child pornography.

    1. Which nobody ever does with dollars.

      LOL! You are such a moron!

      1. Well done, tarran. I’m sure Tony will never again darken our comments section now that you’ve fallen for his obvious and retarded trolling.

        1. Tony is oblivious to facts, logic, history, and is a very superstitious cretin.

          I lack the power to drive him off.

          I can, however, amuse myself mocking him.

          1. If you mock a person who doesn’t exist, who is it that is truly being mocked? I’m going to go with your mom.

            1. It’s a good thing the act of pointing something out doesn’t make one a hypocrite!

          2. It may be amusing to you, but he’s an annoyance to the rest of us. If you keep feeding him, you’re just encouraging him to come back.

            1. I don’t believe engaging or not engaging makes any difference to Tony. He’s like RishJoMo or LardoSardo or whatever Anonbot calls himself at the moment; he’s here to disseminate leftist bullshit, and that’s what he’s going to do. Hate, indifference, concurrence – none of it makes a difference to Leftbot.

              1. To Douche or not to be a douche, that is Tony’s question…

            2. You know what else is annoying? People who appoint themselves the troll police, that’s what.

          3. You’re throwing around a lot of insults for someone who just crapped out a laughably ignorant Ron Paul talking point indicating absolute proof that you have no idea what the fuck you’re talking about.

            1. I read that and all that I got from it is: My name is Tony and I am here to lick statist boot heel.

      2. Even if I were only talking in theory, and I’m not, the point is John Stossel is a simpleton who lacks the ability to think through the implications of his childlike thoughts.

        1. Ad hominem for the win!

        2. That’s not the point of the article at all. The point was bitcoins are new, fun, and can be used to buy child hitman pornographers. Stossel and his mustache are just enjoying the new. Why do liberals deride bitcoin? It’s so strange.

          1. Because it’s doomed to fail and seems to have a nefarious political agenda behind it.

            1. That sounds superstitious and paranoid. C’mon you’re more reasonable than that.

              1. Actually the former can only do damage to the latter, so as I said, Bitcoin does have at least one use.

              2. That sounds superstitious and paranoid. C’mon you’re more reasonable than that.

                No! I’ve observed that superstitious, paranoid, envious, and very greedy explain about 95% of Tony’s political positions.

              3. C’mon you’re more reasonable than that.

                BWAHAHAHAHAHAHA!!!!11!!!!! Good one!

            2. It sounds like some jokester ganked the Tony handle again.

            3. Using a monetary incentive to entice people to invent faster processers and larger networks is real nefarious.
              /rolls eyes

          2. Why do liberals deride bitcoin? It’s so strange.

            Because it’s not controlled. Everything must be controlled.

        3. The voice of experience I see.

  4. Bitcoin serves one useful purpose, in theory: giving the naive a valuable lesson on the risk and pointlessness of unregulated currency. It’ll turn you guys into Fed lovers faster than any Krugman lecture ever could.

    1. LOL!

      Because regulated currencies are never run into the ground by the regulators! And the USD hasn’t lost 95% of its purchasing power since the Fed was created!

      You are *such* a moron!

      1. Why is that bad, as long as purchasing power is beating inflation (as it has been for most of that time)? You know what’s generally going on when the dollar is gaining value? A recession.

        1. Why is it bad to give people more choices for how to store and exchange value?

          1. It’s not as long as the inevitable negative consequences are contained to those people who choose to take the risk. We’ll just sidestep the inconvenient fact that the electricity used to mine bitcoins has a carbon footprint that nobody is paying for.

            1. Only if they are stealing the electricity. If they pay their utility bill then so what? The mining process gets more efficient because people are cost sensitive about electricity.

              1. And who’s checking to make sure they’re using their own electricity? (They’re still not paying for the environmental harm, because nobody is.)

                1. Have you ever stolen electricity to run a computer? I haven’t. Maybe if you ran your miner out of an apartment or university where you don’t pay the utilities. But if you are using that much juice to cause a price jump someone will notice.

                  People respond to price. Anyway, it’s really strange and perverted of you to dislike bitcoin for ideological reasons. Being so small and petty must really darken your life.

                  1. Paul Krugman told liberals to dislike Bitcoin. Citing a sci-fi author’s poorly-sourced (papers/hit-pieces from 2011) screed on it.

                    What other reason do they need?

                2. that’s a bit out there even for you.

                  Why does anyone need to check? It’s none of your business and none of mine unless they’re using our electricity.

              2. The electricity usage/carbon footprint argument is my favorite, because no electricity is used to run computers for banks, payment networks, POS devices, servers for online shopping, etc.

                It tends to be the most hysterical/luddite complaint, except maybe the Four Horsemen of the Cryptopocalypse (drugs, assassinations, child porn, and terrorism).

                1. All the government computers and printing presses run on rainbows and farts.

            2. We’ll just sidestep the inconvenient fact that the electricity used to mine bitcoins has a carbon footprint that nobody is paying for.

              BWA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA! HA!

              Nobody could be *this* stupid for real. Episiarch! Is this you?!? Did you task some lowly entry level programmer to write this sort of idiocy for your amusement?!?

              Are you making the puppets dance?

              1. Even I cannot achieve that level of banality, tarran.

                1. THAT’S NOT A DENIAL!

            3. We’ll just sidestep the inconvenient fact that the electricity used to mine bitcoins has a carbon footprint that nobody is paying for.

              I’ll just assume you live completely off of the electricity grid and power your home (you built from your bare hands using only material you acquired with your bare hands) using some sort of windmill built all from wood using copper wire you dug up yourself with your bare hands. And that somehow you are commenting on here without.. oh nevermind mind. We’ll just sidestep the inconvenient fact that the electricity you used to make that asinine comment above has a carbon footprint you are not paying for.

              1. You’re absolutely right. Me getting a free lunch and caring about it is not worse than you getting one and not caring.

                1. I chose my electricity from the first company that didn’t make me press 1 to speak English.

                  It turns out that they use 100% wind generation.

                  Would my BTC be carbon neutral ?

                2. perhaps it’s not worse but it certainly isn’t any better either.

                3. Here’s Tony with all of the negative externalities commentary again. Tell me, Tony, did you pay for all of the positive externalities associated with the carbon emissions you deride? Like a longer lifespan, plenty of food, access to advanced medical care, electronics, etc, etc, etc? No? Until you face up to these positive externalities, spare me the jibes about the negative ones.

                  1. I expect payment to offset my advanced technology emissions.

        2. Why is that bad, as long as purchasing power is beating inflation (as it has been for most of that time)? You know what’s generally going on when the dollar is gaining value? A recession.

          A wonderful example of how the people on the left are willfully ignorant of all things related to economics! Bravo!

    2. A person of intelligence would use clay disks as currency before turning into a Fed lover.

  5. I propose we all begin trading on the Diablo III in-game currency auction site.

    1. Dude, nothing is more pathetic than using a virtual currency to purchase virtual sexual favors for your virtual character from an orc.

      1. I wish I could do that. Man, that game was the 12-year disappointment of the decade.

        1. Would you be interested in my copy of Duke Nukem Forever?

          1. Hell no.

    2. It’s being shut down soon.

  6. I would like to see a currency backed by stocks or something similar.

    A SPY backed currency, for example.

    A $pidey could be 1/100th of a share of SPY.

    So, currently, $1.847 dollars. I figure the backing agency could keep the dividends as the holding fee. Currently at 1.8%.

    1. So just buy a basket of stocks or an ETF then. Unfortunately you’ll only be able to exchange it for dollars in the future.

    2. robc

      Put your savings into an index and only take it out when you need the liquidity. I’m pretty sure some investment firms will allow you to do this with very low fees for your accounts, and you can even write checks with them and have a debit card. If I remember correctly, my old Optionshouse account would roll over any unused funds into an index automatically. And I could even choose which index I wanted.

      I need to get back into active investing, damned getting married and buying a house sucked me dry for a while.

  7. There’s been an interesting new development that allows for stealth wallet addresses. http://sourceforge.net/mailarc…..d=31813471

    Essentially it allows you to provide a public address that hides your transactions. This will make bitcoin that much more anonymous and harder to trace.

    1. It’s actually more convenient, rather than more stealthy.

      In theory, you make a new address for every payment, making it tricky for outsiders to figure out what you own.

      In practice, no one does this except payment processors.

      So to fix the problem, they’ve made an address that encodes a way to pay someone multiple times without tying all those payments together.

    2. Because nobody is monitoring your internet activity…

  8. I bought some sexy lingerie with bitcoin between Christmas and New Year’s Day. I got way more than my dollar’s worth.

    I like bitcoin.

    1. You look great in it, too.

      1. Oh you’ve seen my webcam show? Once I started accepting tips in bitcoins it really took off!

        1. Pics or it didn’t happen.

  9. Apparently, BTC operations are resuming in India after the scare they had over there.

  10. Eventually the U.S. dollar will be worthless–“ShitCoin”…because you’ll literally be wiping your ass with it.

    I read somewhere that most dollar bills have trace amounts of fecal matter on them anyway.
    Bernanke must have had his hand in the cookie jar A LOT!

  11. my neighbor’s aunt makes 68 dollars/hour on the laptop. She has been out of a job for nine months but last month her pay check was 15377 dollars just working on the laptop for a few hours. read the full info here

    ++++++++++++++++++++++++++
    http://www.tec30.com
    ++++++++++++++++++++++++++

    1. Only if your “neighbor’s aunt” made 68 bitcoins/hour…

  12. Are you now liable for taxes on the increase in value of the bitcoin you bought ?

    1. If you sell them.

  13. There are two advantages to Bitcoin. 1, it’s harder to trace. 2, um, let me ask Rick Perry…

    Cash is hard enough to trace but yes it is controlled by a munch of retarded primates with a printing press and no sense.

    There are disadvantages to Bitcoin too that people overlook.

    Yes there’s the potential for your account or the whole system to get hacked but more importantly you cant buy the necessities with them. I cant buy groceries or fuel with them, I cant pay any of my bills like a mortgage or utilities with them and neither of these are likely to change any time soon. Also if you think your bitcoin transactions are anonymous you might need to pay more attention to the news and realize that nothing on the net is truly anonymous. I cant use bitcoin to trade with anyone who isn’t reasonably tech savvy or trend following.

    Bitcoins have a long way to go before they become a practical alternatives and if they could be traded offline I’d say they had a bright potential future ahead of them. At the moment though I’m sad to say they aren’t any more of a sure bet than government currencies and they’re less useful to boot.

    1. The problem of the whole system being hacked is likely imaginary.

      The problem of your account being hacked exists, but it comparable to the risk of your house being broken into.

      The shortage of people to trade with is likely a temporary problem.

      And BitCoins aren’t anonymous. They just aren’t. At best, they’re pseudonymous.

      1. I understand that bitcoin being hacked isn’t likely but it isn’t impossible either.

        The significant difference between your house being robbed and your bitcoins being stolen online is that it will happen before you can bat and eye, likely long before you know about it and you’ll have no recourse except to count all that lost value.

        people think bitcoins are anonymous but you’re right they aren’t.

        I’m not some anti-tech fanatic, i’m generally a tech fan and generally in the mix of it with whatever’s new but I’ve been watching digital currencies for a while and they just haven’t convinced me they’re as safe as, much less safer than, other currencies. They’re a risky bet especially when their use is so limited. and believing that their limited use is only temporary is optimistically hopeful and I wish you luck with that.

  14. An incomprehensible (incomprehensible to me, anyway) computer algorithm limits their number.

    Don’t say that. The entire protocol is comprehensible to any reasonably intelligent person who is willing to spend an hour or so studying it.

    1. it will sell better if it’s a bit mystic and only understandable by Top. Men.

  15. John Stossel is an idiot. Even his name sounds stupid.

    http://www.AnonGlobal.tk

  16. learn how people are making a ton from mining bitcoins then learn from a real bitcoin millionaire that is now giving away his mining software for literally nothing http://318tae.bitcoin.clicksurecpa.com

  17. niceeeeeeeeeeeee

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