News & Analysis
The Pure Fiat Con: Every Transaction Available for Official Scrutiny – and That's Just the Point?
Bitcoin Exchange Scam – Bitcoins Are Now Worthless ... What do you think? Would you put your life savings into Bitcoin? – NERDr.com
Dominant Social Theme: Use pure fiat and record all your transactions ... just to be sure you stay anonymous!
Free-Market Analysis: In a previous article we examined what increasingly seems to be a monetary con – Bitcoin.
Bitcoin is a pure electronic, fiat currency with no metals backing at all. It is accruing "value" and has huge exposure on such mainstream sites as Reddit.
Supposedly you can make use of Bitcoin anonymous by using Tor. We doubt it. Here's something recently posted at Reddit:
Anything in Tor is completely traceable. This is an important point, so I'll reiterate it in big scary letters:
TOR IS COMPLETELY TRACEABLE
Any low-latency mixnet is. There's no two ways about it. Anyone who can observe a sufficiently large part of the internet over time can correlate your traffic to that of the server and get a pretty good idea that it's you.
I'll observe your IP connecting to an entry node and sending 13981 bytes to it. Then I'll observe an exit node sending exactly 13981 bytes to a server a second later. That's you, with an overwhelming probability. It's a bit of a simplification, but it's really that easy. I just have to be powerful enough to be able to observe large parts of the internet, since Tor nodes are spread around the globe.
Bitcoin may well be one more way of acclimating people to using traceable actions in an electronic environment. What is not traceable may surely be traceable in the future. You just have to store the data.
People remain enamored of Bitcoin despite all the news about its manipulation. It's not like gold or silver that have a history of thousands of years of value.
In fact, Bitcoins have had significant ups and downs – and various charges of manipulation – but is continually promoted in the manner of elite dominant social themes. These are fear-based promotions aimed at pushing middle classes to give up power and wealth to elitist facilities building world government.
In this case, the fear being promoted is of central bank currency – and the solution is UN LETS currencies and pure fiat like Bitcoin.
The idea is apparently to get people used to keeping track of EVERY transaction they make – because that's how these sorts of currencies work.
At the same time as these evil people promoting these currencies – and surely evil is not too strong a word if we are correct in our suspicions this is a psy-op – advance the idea that using gold and silver only enables the power elite.
The pressure to use these ersatz currencies has been building for decades, even centuries – as good elite promotions tend to do. Now there is a virtual frenzy to use these monetary facilities.
There is a great deal of learned talk about "usury" and it suggests that people who want to charge interest to recognize the time value of money are criminals who ought to go to jail.
The Protocols of Zion are invoked by such worthies as the "inventor" of social credit, Major Douglas, and his co-authoritarian partner, Silvio Gesell – of whom Douglas was openly contemptuous for advocating a sinking-money tax beyond what any human had conceived before.
The viciousness and bile is almost endless. But perhaps that should only be expected given that these currency methodologies – criminalization of interest, for instance – were utilized by Adolf Hitler to build his command-and-control war machine.
Poison of Neo-National Socialist Public Banking
And now it would seem the power elite has brought them here – to the modern-day West – for a second run. The elites always do everything twice it seems.
Shame on these paid apologists of the elites – or so they would seem. It is said, for instance, that the use of such currencies will deal a blow to Jewish interests as "all" Jews (and surely every Jew is a Zionist) are interest oppressors. These currencies, then, are positioned as a Christian duty.
Even Ezra Pound finally recanted of anti-Semitism, realizing that to tar all people of a certain type as "evil" was a "stupid suburban prejudice." But that won't stop what appears to be the modern purveyors of hate.
We recently reported on the Socialist Party of Great Britain's posting of an article entitled "Major Douglas rides again: The revival of currency crankism." You can see our article about it here: Currency and Credit Schemes Blow Up ... and Go Green.
If anyone can recognize Fabian propaganda, it's a fellow socialist! The article begins as follows:
In the course of our nearly one hundred years of socialist activity, one of the ideas that we have had to deal with from time to time has been currency crankism—the idea that economic and social problems are caused by some flaw in the monetary system and that what is required to put things right is not to get rid of the profit system that is capitalism but mere monetary reform (of one kind or another, depending on which particular school the currency crank belongs to).
Between the wars the most popular school of currency crankism in Britain was Social Credit, based on the ideas of Major Douglas (as he was known). His explanation for the slump—of poverty amidst potential plenty, of unmet needs alongside idle factories and widespread unemployment, of piles of unsold goods being destroyed—was simple, not to say simplistic: it was due to a lack of purchasing power, to people not having enough money to buy what they needed or to constitute a market worth catering for.
The solution, too, was simplistic: distribute purchasing power free to people in the form of a "social dividend" paid by the government. Douglas believed that banks could "create credit" by the mere stroke of a pen, but that they deliberately kept money scarce so as to be able to charge a higher rate of interest. Hence his solution that the banks should be taken over by the government and their supposed power to create credit exercised but in the general interest, as "social credit".
You see the essentially authoritarian nature of these people. Not only have they figured out what ails the world, they're perfectly willing to force their choices on YOU using government power.
The article also argues that banks cannot "create credit" as they are "essentially only financial intermediaries, borrowing money at one rate of interest from people with cash to spare and lending this at a higher rate to those needing money to spend or invest, their profits coming from the difference between the two interest rates."
Good for the socialists. When it comes to analyzing fraudulent promotions they have a lot of experience and good judgment, too. This was only the end result of continual research into how these currencies worked and who was behind them. Their promoters may have purposefully been brought in from abroad (an old Intel trick).
After continually researching these currencies and finding out just how deeply the UN was involved in them, we realized that the reason for the promotion might well have to do with conditioning people to accept that all their transactions were to be logged and monitored. In LETS programs these transactions may even be made public!
Bitcoin itself is just part of a larger questionable series of facilities based around pure fiat currencies that are being sponsored by the UN and were developed in conjunction with the power elite's Fabian socialists.
In our article entitled "Elites Promote Pure Fiat Currencies – Mutual and Social Credit – for Traceability?" we pointed out what seemed to us the evolution of the con.
One after the other, websites and blogs have suddenly sprung up like mushrooms dutifully prating the idea that people should not be allowed to use interest, that gold and silver were entirely controlled by the Rothschilds (they are not) and that monopoly private banking was the duty of the government (God help us) not private "banksters."
It seems to us, perhaps, to have the signature of a power elite promotion ... [Even] the US government via Lockheed Martin is anticipating the popularity of such systems as well – both Bitcoin and something called Secondlife.
Why the heck would the military-industrial complex search out specialists in such? Understanding the way these currencies work better now, we think we've figured it out.
Traceability! Almost all the modern schemes demand ledgers where transactions are recorded. It surely would be easy enough for "authorities" to gain access to these records, if they wished to.
You don't have to be doing something illegal to want anonymity. With these systems you surely don't seem to get it. Their very operation demands intensive record keeping, sometimes of every transaction.
This is a forensic financial investigator's dream situation. It is possible, perhaps, to reconstruct just about any transaction. It's not like paper fiat where greenbacks are anonymous and gold and silver are traded (often) without identifying signatures ...
When we researched these systems we were astonished to find that the United Nations was a big proponent of them and that one of the top promoters of such systems was Margrit Kennedy − who used to work for UNESCO.
Conclusion: You can see some additional articles here:
Why Is the UN Installing Mutual Credit/Pure Fiat Systems Around the World?
New Book Further Confirms Eco-Affinity of Alternative Currency Proponents
Paper Money and the UN Perfect Together? More Currency and Credit Exchanges Supported by the UN
Are 'Green' Reciprocal Exchange and Credit Systems Part of a Larger Elite Promotion?
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Posted by Danny B on 04/11/13 12:51 AM
A couple more bitcoin articles;
Click to view link
Click to view link
Reply from The Daily Bell
Bitcoin collapsed again today ...
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Posted by Peter_Surda on 12/16/12 04:08 PM
Daily Bell,
the quote you provided talks about demand for money, not money supply. These are two different variables.
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Posted by Danny B on 11/22/12 12:40 PM
The ECB seems somewhat worried about bitcoin.
Click to view link
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Posted by Peter_Surda on 09/23/12 12:28 PM
Just by the way, I doubt that Rothbard said that money supply is affected by hoarding/dis-hoarding, because he says exactly the opposite in America's Great Depression (p. 37-39), but if you can quote, I will look into it.
Reply from The Daily Bell
"Another reason for keeping cash is also a function of the real world of uncertainty. If people expect the price of money to fall in the near future, they will spend their money now while money is more valuable, thus “dishoarding” and reducing their demand for money. Conversely, if they expect the price of money to rise, they will wait to spend money later when it is more valuable, and their demand for cash will increase. People’s demands for cash balances, then, rise and fall for good and sound reasons.
What Has Government Done to Our Money? ... Rothbard (pgs 27-28)
Click to view link
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Posted by Peter_Surda on 09/23/12 11:44 AM
Daily Bell,
you're a fraud. I pointed out the exact inaccuracies in your post, you complain that I didn't. You claim that I claim that Bitcoin is unhackable, which I did not.
I don't have time to waste on delusional ramblings of an emotionally unstable mind. If you ever grow up and address my arguments, we can continue our debate.
Reply from The Daily Bell
"You're a fraud. I pointed out the exact inaccuracies in your post, you complain that I didn't. You claim that I claim that Bitcoin is unhackable, which I did not."
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If you review your SIX statements, you'll see we have answered every point, dozens of them, in detail. We are not concerned about supporting our positions. We will make every honest attempt to do so ...
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Initially we replied as follows to your statement that you did not claim Bitcoin was unhackable ...
You wrote ... PS: I do not recall claiming that Bitcoin is unhackable. Furthermore, the examples presented by DB do not show that Bitcoin is hackable, but that, in principle, any good can be stolen.
We replied ... DB: Please actually read this thread: It is not all about YOU. (And we wrote people "like" - such as - you.) Anyway, the combination of Bitcoin with Tor and perhaps some other overlays is often heralded as virtually unhackable. Sorry!
But then you continued in a later post by noting that "Bitcoin ... issues with implementation, even if they are true today, might become irrelevant tomorrow."
And you wrote this ... PS: Re: "unhackable": ... The fundamentals of the Bitcoin protocol are so far unbroken, and again, so far no better solution to monetary ills has been proposed or implemented.
"In other words, (regarding hacking) the fundamentals ... remain unbroken."
Now you can argue this was a cleverly hedged response full of technical meaning. But to us it seems to imply clearly that Bitcoin remained unhacked.
In other words you strengthened you previous statement and we responded to it by making a stronger statement ourselves. This seem perfectly reasonable.
We do not agree such a response approaches fraud. Generally you seem to have an affection for "strong" statements.
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Posted by runderwo on 09/21/12 10:16 PM
DB, bitcoin balances are tied to wallet addresses which are just cryptographic keys that can be infinitely created and re-created by the user. To "launder" Bitcoins requires merely to pass them through a heretofore unknown wallet address, which can be created for that purpose or through a third party e-wallet site. There is no personally identifiable information tied to a bitcoin address other than what the user himself supplies in conjunction with that address when transacting with a customer or vendor. See Click to view link for a human-readable transaction record.
Reply from The Daily Bell
The issue seems to be the electronic fingerprints left behind and the ability for a retracement if the initial anonymity is ever unraveled. It might be unraveled by supoena, by a determined cooperating party, etc. Additionally, from what we can tell, anonymity can be compromised by user mistakes. You have to know what you're doing. Not everybody does.
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Posted by matonis on 09/21/12 04:56 AM
DB, I would like to point your readers to the excellent James Turk interview with Félix Moreno de la Cova on bitcoin and gold (September 20, 2012) with some excellent comments following the video. http://youtu.be/wfzHC7Pf2fk
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Posted by runderwo on 09/20/12 12:21 PM
If you wanted to bring up real issues you could bring up the fact that most bitcoin mining today is likely being done by botnets, crowding out legitimate free-market miners. Or that controlling greater than 50% of the network's nodes allows one to fork the blockchain and break the rules. Or that some core bitcoin developers have attended intelligence conferences and expressed a desire to work with the government to give it the tools it needs to prosecute Bitcoin users. Or that the government is investing in running TOR nodes, ostensibly for freedom of speech of oppressed third-worlders.
To analyze these issues would require understanding of Bitcoin above and beyond that required to produce the clueless FUD above, which misunderstands the distinction between Bitcoin itself and the multitude of services third parties are building up around it, paints an irrational and unsafe use of TOR through an untrusted third party proxy as the typical usage, and claims that Bitcoin is an unsafe unit of account without identifying the actor who could increase the quantity of Bitcoin in circulation to his advantage or the method by which he could do this.
But I love these kind of articles because repeated FUD keeps the price down while Bitcoin continues to emerge. Even if Bitcoin fails as a currency due to some unforeseen inherent unsoundness over time, it will still be used as a short-term payment mechanism unless governments were to censor it. It is simply too cheap and fast compared to transferring fiat-money via banks to lose in that competition.
Reply from The Daily Bell
If you wanted to bring up real issues regarding DB, you'd first have to understand that we analyze dominant social themes and the article was about pervasive record keeping as it affected fiat systems.
Every single transaction via Bitcoin is logged - and that was what we concentrated on in the article.
It was not a general article about the inefficiencies or difficulties of Bitcoin, though your feedback leads us to ask again if there is a possibility that Bitcoin has been set up to fail, and thus discredit other such systems.
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"Or that some core bitcoin developers have attended intelligence conferences and expressed a desire to work with the government to give it the tools it needs to prosecute Bitcoin users."
This point speaks directly to our concerns.
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Posted by FellowTraveler on 09/20/12 11:40 AM
Bitcoin was never meant to be untraceable. It was meant to be CENSORSHIP-RESISTANT.
If you want untraceable, then add a layer with Chaumian Blinding (such as Open-Transactions.) Then the Bitcoins will be censorship-resistant AND untraceable.
Have you ever wondered why websites such as Silk Road did not become feasible before Bitcoin? This is due to its revolutionary censorship-resistance.
Reply from The Daily Bell
We've addressed these issues below. You have a specific position on Bitcoins but on the popular Bitcoin-Reddit board, hacking and untraceability are big issues. Just this month comes news of another big hack and heist.
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Posted by Peter_Surda on 09/20/12 10:01 AM
DB, my only point is to show that you gather superficial, inaccurate data, fill the gaps with ideological bias and draw wildly speculative conclusions. When the inaccuracies are pointed out, you continue insisting on them. When I object, you accuse me of being unscientific.
If you want to be taken seriously, do serious research instead of making up stuff.
Reply from The Daily Bell
DB, my only point is to show that you gather superficial, inaccurate data, fill the gaps with ideological bias and draw wildly speculative conclusions.
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We asked you to point out our inaccuracies. Instead you insisted on writing that Bitcoin is unhackable (obviously untrue) and claimed that commodity money could only provide a fixed volume in circulation (also, untrue).
You accuse us of making wildly speculative conclusions, when we admit in the article that the points we are making are speculative. If we'd presented everything as fact, then you might have a point.
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Posted by matonis on 09/20/12 10:00 AM
You wrote: "Here, from Wikipedia... Related controversies and hacks"
The conclusion that you draw from those 'security-breach' citations is a common misperception in the media and elsewhere. While it is alarming for a nascent currency, it is not entirely relevant.
A gold bullion depository can be physically breached or a bank's computers can be hacked but that does not necessarily make a statement about the integrity of the gold bullion or the integrity/soundness of a bank's currency unit.
The digital characteristics and cryptographic primitives (elliptic curve DSA, Reusable Proof of Work, SHA-256) of the bitcoin unit itself remain sound and unbreached.
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Posted by Peter_Surda on 09/20/12 05:45 AM
Re: "credit" card: the problem is not the relaying of misleading information, but interpreting it in an unsubstantiated way and drawing widely speculative conclusions. If you had spent time analysing the concept of the said card, or even talked to Charlie, your mistake would have been easily prevented. Even now, after the whole alleged connection to "credit" has been debunked, you have yet to admit your original argument was completely bogus.
Re: "untraceable": Tor is not perfect and neither is Bitcoin, but the method described by you is not a realistic attack vector, even if the claims underlying it were correct. You're attempting to present a fringe situation in a sensationalist manner. Bitcoin is still vastly superiour to any other alternative, and merely pointing out that it's not perfect does not change that. Bitcoin is under heavy development, and issues with implementation, even if they are true today, might become irrelevant tomorrow.
Re: "unhackable": here you resort to senationalism too. Anything can be stolen. The fundamentals of the Bitcoin protocol are so far unbroken, and again, so far no better solution to monetary ills has been proposed or implemented.
Re: identity of Satoshi. Here you present some sort of appeal to authority fallacy. The fundamentals of the calculus are recognised not due to the reputation of Newton or Leibnitz, but because calculus is what we now call open source. The calculus is open for anyone to analyse and scrutinise, and many a people have done so and found it logically sound. Similarly, Bitcoin is an open protocol with multiple open source implementations written by different people, some of them completely unrelated to Satoshi (e.g. libbitcoin is managed by Bitcoin Consultancy, or bitcoinj by Mike Hearn). Even the original Satoshi client nowadays being developed by a team of people with publicly known identities. Many of the people involved in all three projects were physically present at the Bitcoin Conference last weekend and I spoke to them in person (I also spoke to some developers of lite clients, such as Jim Burton from Multibit or Jan Moller from BitcoinSpinner). You could have too, if you had spent your time in a more productive way.
Re: "fiat": economic books define fiat money as money that arose due to its legal position, not by its intrinsic value, at best that's mentioned as an auxiliary feature. Bitcoin arose due to the actions of market participants. But the fundamental economic distinction is elasticity of supply. George Selgin uses elasticity to distinguish between fiat money and quasi-commodity money, and Detlev Schlichter argued several times on his blog, Click to view link, that elasticity is the distinguishing factor. But the most eloquent explanation comes, as usually, from Ludwig von Mises in The Theory of Money and Credit:
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If a country has a metallic standard, then the only measure of currency policy that it can carry out by itself is to go over to another kind of money. It is otherwise with credit money and fiat money. Here the State is able to influence the movement of the objective exchange-value of money by increasing or decreasing its quantity.
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With fiat money, the issuer can always decide to create new money without significant cost, whenever they feel like. Commodity (or quasi-commodity) money has a predetermined supply, that cannot be altered arbitrarily by anyone. It is so with Bitcoin. It is logically impossible to create Bitcoins in other ways than predetermined by the algorithm. This makes it even superiour to metals, as the supply of metals is primarily restricted by our technological abilities and can, in the future, be increased, for example by extraterrestrial sources or nuclear reactions.
Re: argument from failure: paradoxically, while you yourself resort to sensationalism, you appear to fall prey to sensationalism of others as well. You have not done a lot of investigation and are relying on secondary, unscientific sources. The high concentration of anarchists and minarchists in the Bitcoin economy is a clear contradiction to your conspiracy theories. One of the speakers at the conference, Frank Braun, basically said "fuck the state, they're going to get after us anyway, don't cooperate with regulation, instead make sure Bitcoin resists it and is spread in anonymous ways".
Re: LETS: LETS is merely a new way of increasing the money supply, which does not require credit expansion by banks. LETS is not a new money, it is technically a money substitute: it needs to be pegged to an existing currency, even if the unit has a different name (I would even go as far and say that the use of a different name is a way to avoid legal problems as they were in Woergl in the 1930s when the Austrian central bank stopped the "rogue" Schilling). LETS issue also needs to be centrally managed (e.g. by creating credit limits), otherwise its supply would spike and it would collapse. Bitcoin, on the other hand, is produced decentrally, and is a commodity on its own, its price not being pegged to anything and determined purely by supply and demand.
Re: challenging one's beliefs: if you feel your beliefs challenged and can't handle it without emotions, maybe you can contact a psychologist. I cannot help you I am afraid.
Reply from The Daily Bell
PS" Re: "credit" card: the problem is not the relaying of misleading information, but interpreting it in an unsubstantiated way and drawing widely speculative conclusions. If you had spent time analysing the concept of the said card, or even talked to Charlie, your mistake would have been easily prevented. Even now, after the whole alleged connection to "credit" has been debunked, you have yet to admit your original argument was completely bogus.
DB: We just noticed Shrem was now apparently advertising a "credit" card online, so we retract our previous statements. Don't take it up with the article writers, take it up with Shrem.
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PS: Re: "untraceable": Tor is not perfect and neither is Bitcoin, but the method described by you is not a realistic attack vector, even if the claims underlying it were correct. You're attempting to present a fringe situation in a sensationalist manner. Bitcoin is still vastly superior to any other alternative, and merely pointing out that it's not perfect does not change that. Bitcoin is under heavy development, and issues with implementation, even if they are true today, might become irrelevant tomorrow.
DB: You seem better at writing than reading. The article was about centralized alternative money systems generally. You believe the UN's pervasive support of LETS systems with their eco-fascism and centralized bookkeeping is a good thing? We don't. Pointing it out is not sensationlistic. Or are there some things that simply shouldnt be mentioned?
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PS: Re: "unhackable": here you resort to senationalism too. Anything can be stolen. The fundamentals of the Bitcoin protocol are so far unbroken, and again, so far no better solution to monetary ills has been proposed or implemented.
DB: Whatever one thinks of the fundamentals, the rash of thefts continues and now lawsuits are being filed. You are sure of the fundamental security of the system. Others are not.
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PS: Re: identity of Satoshi. Here you present some sort of appeal to authority fallacy. The fundamentals of the calculus are recognised not due to the reputation of Newton or Leibnitz, but because calculus is what we now call open source. ... Even the original Satoshi client nowadays being developed by a team of people with publicly known identities. Many of the people involved in all three projects were physically present at the Bitcoin Conference last weekend and I spoke to them in person (I also spoke to some developers of lite clients, such as Jim Burton from Multibit or Jan Moller from BitcoinSpinner). You could have too, if you had spent your time in a more productive way.
DB: An "authority fallacy!" Wow. How about this. Conferences are everywhere. Central bankers have conferences. Eco-facists have conferences. The UN has the largest conferences of all. Having a conference has little or nothing to do with the truth and appropriateness of a particular solution. This is what is known as a "logical fallacy."
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PS: With fiat money, the issuer can always decide to create new money without significant cost, whenever they feel like. Commodity (or quasi-commodity) money has a predetermined supply, that cannot be altered arbitrarily by anyone. It is so with Bitcoin. It is logically impossible to create Bitcoins in other ways than predetermined by the algorithm. This makes it even superiour to metals, as the supply of metals is primarily restricted by our technological abilities and can, in the future, be increased, for example by extraterrestrial sources or nuclear reactions.
DB: Glad you are using the term fiat properly. But this is a statement otherwise of absolute lunacy: "Commodity (or quasi-commodity) money has a predetermined supply, that cannot be altered arbitrarily by anyone." As Rothbard as pointed out, the circulating supply of gold (and silver) - the only supply that counts within the context of monetary utility - can be affected by hoarding and dis-hoarding deponent to value. Others have made the same argument regarding the price sensitivity of mining.
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PS: ... The high concentration of anarchists and minarchists in the Bitcoin economy is a clear contradiction to your conspiracy theories. One of the speakers at the conference, Frank Braun, basically said "fuck the state, they're going to get after us anyway, don't cooperate with regulation, instead make sure Bitcoin resists it and is spread in anonymous ways".
DB: Again with the lunacy. Because "anarchists" and "minarchists" appear at a conference, we are to believe that this constitutes "scientific" proof of Bitcoins free-market credentials and the validity of its laissez-faire solutions? Braun says one thing but many other influential Bitcoiners say regulation is coming in a big way. We would like to believe Braun, but we are not so sure of the "science" of his comments as you.
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Re: LETS: LETS is merely a new way of increasing the money supply, which does not require credit expansion by banks. LETS is not a new money, it is technically a money substitute: it needs to be pegged to an existing currency, even if the unit has a different name (I would even go as far and say that the use of a different name is a way to avoid legal problems as they were in Woergl in the 1930s when the Austrian central bank stopped the "rogue" Schilling). LETS issue also needs to be centrally managed (e.g. by creating credit limits), otherwise its supply would spike and it would collapse. Bitcoin, on the other hand, is produced decentrally, and is a commodity on its own, its price not being pegged to anything and determined purely by supply and demand.
DB: Well it is good to know you are not a LETS fanatic. The system being implemented in Germany with some success uses currency that depreciates on purpose over time. And you have to get a government stamp to re-certify your money. Major Douglas pointed out that such Gesellian systems constitute one of the most terrible taxes ever invented. It's incredibly authoritarian, too. Your statement that Bitcoin's "price" is determined by "supply and demand" leads you to the conclusion it is a commodity provides yet more astonishment. In the sense you are using it, it means: "A raw material or primary agricultural product that can be bought and sold, such as copper or coffee." Again, reading is an endeavor that can usefully accompany writing.
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PS: Re: challenging one's beliefs: if you feel your beliefs challenged and can't handle it without emotions, maybe you can contact a psychologist. I cannot help you I am afraid.
DB: We speculated that like LETS systems, Bitcoin was initially created and cultivated for purposes other than those that are immediately apparent - not an emotional argument but a speculation based on the mission of this modest website. And we never asked for your help, though you are welcome to continue to "contribute."
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Posted by matonis on 09/20/12 03:31 AM
Very difficult to read this coming form The Daily Bell, but it does point out the enormous uphill educational battle for cryptography-based value and cryptocurrencies, in general. "In Math We Trust" may not be enough for a lot of people.
If one understands the historical context of e-money and the specific problems that bitcoin addresses related to the double-spend issue, it becomes clear why a decentralised public ledger was the solution. Of course, it's not ideal but the alternative is a centralised e-gold system that can be shut down because it lacks resiliency (that's the trade-off people... .deal with it). For more on the historical context of bitcoin as a digital currency, please see:
The Evolution of E-Money
Click to view link or
Bitcoin: Timing is Everything
Click to view link
The fact remains that, for the prepared, non-centralised digital cash will usher in a massive transfer of wealth that dwarfs the transfer of wealth presently occuring in the precious metals sector. Incidentally, this wealth transfer was recognized in a book that is surely respected by The Daily Bell: Click to view link
Reply from The Daily Bell
"Of course, it's not ideal but the alternative is a centralised e-gold system that can be shut down because it lacks resiliency (that's the trade-off people... deal with it)."
Another solution is obtaining and storing physical gold and silver. However, people are tool-using creatures and thus it is inevitable that the Internet will be used for money.
But that does not mean the current Bitcoin system is secure or that it will not with its agreed-upon flaws pose a liability to those in support of freedom.
What we see as a possibility is that once regulated, its record-keeping features will act against its "anonymity."
We see more and more the pervasiveness of elite-directed history, and certain aspects of Bitcoin seem troubling to us, as stated. On the other hand, there seems no doubt that people like yourself are motivated by free-market thinking and by building a better life for yourself, your loved ones and your community.
Perhaps Bitcoin will prove a valuable tool in that endeavor. Here's hoping so. Thanks for the references.
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You wrote: "Very difficult to read this coming form The Daily Bell, but it does point out the enormous uphill educational battle for cryptography-based value and cryptocurrencies, in general. "In Math We Trust" may not be enough for a lot of people."
Here, from Wikipedia ...
Related controversies and hacks
In June 2011, Mt.Gox, the most popular BitCoin exchange at that time, has been compromised, affecting accounts with equivalent of more than USD 8,750,000. It has resulted in a severe drop in Bitcoin exchange rates.
In July 2011, Bitomat, the third largest Bitcoin exchange, has announced that they have lost access to their wallet.dat file with about 17,000 BitCoins (roughly equivalent to 220,000 USD at that time). It has been announced that the service is for sale for missing amount, aiming to use funds obtained from the sale, to refund their customers.
In August 2011, MyBitcoin, one of popular Bitcoin transaction processors, has declared that it has been hacked, which resulted in it being shut down, with paying 49% on customer deposits, leaving more that 78,000 BitCoins (roughly equivalent to 800,000 USD at that time) unaccounted for.
In early August 2012, a lawsuit has been filed in San Francisco court against Bitcoinica, asking for about 460,000 USD from the company. Bitcoinica has been hacked twice in 2012, which has led to allegations of neglecting the safety of customers' money and cheating them out of withdrawal requests.
In late August 2012, Bitcoin Savings and Trust, operated by anonymous user known as 'pirateat40' under promises of up to 7 percent a week, has been shut down by the owner, allegedly leaving around 5.6 million in debts; this has led to allegations of the operation being a ponzi scheme.
In September 2012, Bitfloor Bitcoin exchange has reported being hacked, with 24,000 BitCoins (roughly equivalent to 250,000 USD) stolen. As a result, Bitfloor has suspended operations, initiating "account repayment using available funds".[
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Posted by BladeMcCool on 09/19/12 06:54 PM
@DB sorry I missed that you already stated you are aware of how the Bitcoin ecosystem is composed. I didnt mean to accuse, I was just responding to that one comment without re-reading the article again. I have a lot of work to do all over the web correcting any errors I see with regards to folks' (mis)understanding of the bitcoin system as it can be very confusing for new people and I like to try and help make sure everyone knows how things really work.
Regarding Satoshi Nakamoto and his creation ... If you were unleashing a piece of software upon the world which was capable of giving humans (finally) the tools they need to utterly destroy the very foundations of nationalism and central banking, would you want the world to know your face? I know that I wouldnt. Who he is doesnt really matter when you take the time to read the source code and see what it does. This has been done by many and in fact some have implemented their own versions that follow the same rules (libbitcoin, bitcoinj). In the end it is just a protocol for writing in a ledger, just a set of rules. Rules that IMO are far better than anything ever offered to us by a central bank. IMO, promoting bitcoin and silver and gold is one of the best strategies to achieve liberty. If Bitcoin is developed as an 'elite dominant social theme' then they've already lost control of it. Any attempt to stop bitcoin at this point will go about as well as attempting to stop heroin.
Reply from The Daily Bell
OK, point taken ... We often propose that in the Internet era, certain false flags that the elites introduce tend to backfire due to the superiority of the "group mind" of the Internet itself.
However, even assuming Bitcoin is exactly what it seems to be, we'd caution the game is not over yet and in some quarters the knives are already out. The record-keeping elements alone are in a sense a tax agents dream ...
... But here's hoping Bitcoin DOES take down our current form of monopoly central banking. That would certainly be a welcome miracle.
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Posted by Peter_Surda on 09/19/12 05:42 PM
Shoddy journalism, I am appalled.
Shrem said they were launching a debit card. Someone reporting it misrepresented it and used the word "credit", and DB now uses this as an "evidence" that there is a secret plan of Bitcoin credit expansion (which, as I already said, is borderline impossible irrespective of what Shrem or some reporter claims).
I do not recall claiming that Bitcoin is unhackable. Furthermore, the examples presented by DB do not show that Bitcoin is hackable, but that, in principle, any good can be stolen.
I do not recall claiming that Bitcoin is untraceable. Yet, as far as I know, apart from the unclear Zhou Tong / Chen Jianhai situation, no Bitcoins were traced without cooperation of the possessor thereof.
The identity of Satoshi is irrelevant, similarly as the validity of calculus is not influenced by whether it was Newton or Leibnitz who first discovered it.
Based on the abstract, the paper you reference, "Private fiat money with many suppliers", appears to assume that each money is issued monopolistically (i.e. that copying is labeled "counterfeiting" and is illegal). Whether this is called fiat money or not, it is not representative of Bitcoin, at best it is similar to what Hayek proposed. While not exactly central planning, in Hayek's proposal, the production is determined for each money centrally, either by a peg to a commodity basket, or credit. Bitcoin is produced by competing producers, and the production equilibrium is determined by marginal production costs compared to the market price. This is the same with how commodity money is produced. It is not determined by a peg, by credit, or by a central planner. Copying has no effect on the money supply so there is no reason for the legal system to address it. Arbitrarily labeling Bitcoin "fiat" and then deducing its evilness is again just a rhetorical trick.
Bitcoin is more resistant to interference, either by the states or by the banks, than the alternatives. Presenting this as a new world order plot is completely baseless. Quite the opposite, it is the greatest threat to NWO.
I don't blame you for ignorance, I blame you for parading your ignorance as wisdom.
Reply from The Daily Bell
PS: Shrem said they were launching a debit card. Someone reporting it misrepresented it and used the word "credit", and DB now uses this as an "evidence" that there is a secret plan of Bitcoin credit expansion (which, as I already said, is borderline impossible irrespective of what Shrem or some reporter claims).
DB: We relayed what was being reported. It is done millions of times around the world every day. Seek perfection in journalism somewhere else. Or go complain to the writers.
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PS: I do not recall claiming that Bitcoin is unhackable. Furthermore, the examples presented by DB do not show that Bitcoin is hackable, but that, in principle, any good can be stolen.
DB: Please actually read this thread: It is not all about YOU. (And we wrote people "like" - such as - you.) Anyway, the combination of Bitcoin with Tor and perhaps some other overlays is often heralded as virtually unhackable. Sorry!
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PS: I do not recall claiming that Bitcoin is untraceable. Yet, as far as I know, apart from the unclear Zhou Tong / Chen Jianhai situation, no Bitcoins were traced without cooperation of the possessor thereof.
DB: Hm-mm ... Leaving aside the larger argument, we have this: Because they have not been traced, they shall not be ... A tautology.
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PS: The identity of Satoshi is irrelevant, similarly as the validity of calculus is not influenced by whether it was Newton or Leibnitz who first discovered it.
DB: It is not irrelevant. Newton's and Leibnitz's backgrounds seem fairly well known.
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PS: Based on the abstract, the paper you reference, "Private fiat money with many suppliers", appears to assume that each money is issued monopolistically (i.e. that copying is labeled "counterfeiting" and is illegal). Whether this is called fiat money or not, it is not representative of Bitcoin, at best it is similar to what Hayek proposed.
DB: We merely pointed out it is "fiat." It is "proclaimed" to have value. Selgin used the same term in the same way, while also speculating Bitcoin has some commodity like qualities. But people CAN do THINGS with commodities. We're not sure what else you can do with a Bitcoin than use it for its perceived purpose.
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PS: Bitcoin is produced by competing producers, and the production equilibrium is determined by marginal production costs compared to the market price. This is the same with how commodity money is produced.
DB: The "production" is generated by solving mathematical problems. If you wish to compare this to mining gold and silver, go ahead.
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PS: It is not determined by a peg, by credit, or by a central planner. Copying has no effect on the money supply so there is no reason for the legal system to address it. Arbitrarily labeling Bitcoin "fiat" and then deducing its evilness is again just a rhetorical trick.
DB: Arbitrarily taking our words out of context is also a rhetorical trick. We regularly argue for competing currencies including pure fiat along with gold and silver. Our argument in the article was a GENERIC one - that these systems including Bitcoin seem to demand a very precise level of record-keeping. In discussing these issues, and perceiving the level of ONGOING theft (and the steady stream of articles calling for Bitcoin and its vendors to somehow be regulated like banks) it occurred to us that one could hypothetically speculate a currency like Bitcoin might have been set up to fail by those that wish to attack the Internet and its products while promoting 'Net regulation. You seem to believe the Internet can provide strong encryption. This may be a misundertanding. What the Internet surely provides is strong INFORMATION.
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PS: Bitcoin is more resistant to interference, either by the states or by the banks, than the alternatives. Presenting this as a new world order plot is completely baseless. Quite the opposite, it is the greatest threat to NWO.
DB: We didn't "present" Bitcoin as NWO plot. We pointed out the amazing level of UN involvement in LETS systems and speculated that both Bitcoin and LETS systems could be offered with ulterior motives - to get people used to the idea of detailed record keeping for every transaction. The mystery of the founder of Bitcoin plays into this speculation. In fact, that's what we do: analyze elite dominant social themes and speculate about them. If this upsets you, sorry.
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PS: I don't blame you for ignorance, I blame you for parading your ignorance as wisdom.
DB: It is always unpleasant to perceive a challenge to one's beliefs, even if only speculatively. If we were to blame YOU for anything, it might be for confusing familiarity with certainty.
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Posted by BladeMcCool on 09/19/12 03:13 PM
@DB re: 'By "author" you must mean Bitcoin CEO Charlie Shrem' ...
please ... PLEASE telle this was an honest slip and that you dont really think 'Bitcoin' has a CEO. Mr. Shrem is CEO of BitInstant, a service that makes use of the bitcoin system. Bitcoin has no CEO, no board to arrest, no office to raid, and no server farms to destroy. Its just a piece of open source software. A super cool one that will kill central banking dead.
Reply from The Daily Bell
Reply from The Daily Bell
Yes, sorry ... we know what Bitcoin is (see our explanation in article) ... and we know who BitInstant's Shrem is ... (see our response - previous - in thread below) ...
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We noticed a trend here ... One person writes in that we misused the word fiat (we didn't). Another that it was erroneous to mention a Bitcoin-based credit-debit card though BitInstant (as we mentioned below) is reportedly creating just such a card. You apparently wish to accuse us of mis-stating Shrem's affiliation, though we have previously described Shrem's company and title in this thread.
None of these accusations, even were they accurate, are going to do anything to explain away what some would perceive as some difficulties with Bitcoin, as we've discussed in this article and in this thread.
Who founded Bitcoin? What if the powers-that-be helped develop Bitcoin with certain flaws in order to ensure a pressure for further regulation down the road? ... or to delegitimize electronic currencies altogether. We speculate on elite dominant social themes. Should Bitcoin be exempt?
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Posted by when on 09/19/12 12:32 PM
Um, "fiat currency" means that the money has value because a government says it has value - "you must pay taxes in X currency or we will kill you."
Bitcoin is therefore by definition not fiat as no government mandates its use nor accepts it for taxes.
If an article gets such a basic fact wrong it is seriously not worth reading the rest.
Reply from The Daily Bell
Um, the term "fiat" has evolved in literature well beyond the definition you cite. "Fiat" in fact can generically refer to unbacked currencies - not just currencies inflicted at the barrel of a gun. (It is true in the modern era government has mostly issued "fiat" - but that may change in the 21st century.)
[Fiat: Medieval Latin, from Latin, "let it be done."]
Noted economist George Selgin has described Bitcoin as partially "fiat" - in our sense.
We would refer you among many examples to an article promoted at "IDEAS" (at the Research Division of the Federal Reserve Bank of St. Louis) and published by Elsevier in its journal Journal of Monetary Economics entitled ...
"Private fiat money with many suppliers"
Click to view link
In the abstract: "each supplying its own brand-name currency." A form of "private" fiat.
Now you may recommence reading ... even if the content upsets your preconceived notions. Pay special attention to the idea that Bitcoin is neither untraceable nor unhackable.
And here is a question for YOU now:
Who is Satoshi Nakamoto? Intrepid entrepreneur? Mysterious genius? Or, hhhm ... something else?
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Posted by Peter_Surda on 09/19/12 11:51 AM
Referring to the card being launched by Bitinstant as a "credit" card is a misnomer. It's a prepaid card, with base units denominated in fiat, and is loadable with Bitcoin. At some stage before being spent (based on the publicised information, the relative timeframe has not been yet decided), the Bitcoin will be converted into fiat at market price, BitInstant pocketing a fee. The advantage is that preloading is doable at Bitcoin-speed, i.e. between instant and an hour. The purpose of the product is to increase comfort and create a wider choice for Bitcoins to be spent, as debit cards are accepted almost everywhere. The purpose is not to extend credit with Bitcoin, which would be extremely difficult, most likely impossible.
Tis is just one of the imprecisions in the post. If the author is not able to navigate in the increasingly complex Bitcoin ecosystem, I recommend to interview one of the people who did some economic research of Bitcoin, for example Jon Matonis, Michael Suede, Trace Mayer, or even me. I have been writing a book about economics of Bitcoin and had a presentation about some of the topics at the Bitcoin Conference last weekend. The conference, by the way, had a very high representation of anarchists, possibly only exceeded by the activities of the Mises Institute or Porcfest.
Reply from The Daily Bell
By "author" you must mean Bitcoin CEO Charlie Shrem as he is the one who referred to a "credit/debit" card - or so it was reported.
By "imprecisions" do you mean the certainty expressed by people like yourself that Bitcoin is unhackable and untraceable? Were such assertations expressed at a conference full of "anarchists?"
You know, as a publication, DB is actually generically supportive of the Bitcoin concept. We support competing currencies. But the knee jerk reactions in favor of Bitcoin are not very impressive. There are plenty of questions about Bitcoin's security, untraceability and its mysterious founder.
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Posted by dave jr on 09/19/12 07:50 AM
The socialist says,
"banks cannot create credit as they are essentially only financial intermediaries, borrowing money at one rate of interest from people with cash to spare and lending this at a higher rate to those needing money to spend or invest, their profits coming from the difference between the two interest rates."
Well, that is the way it is supposed to be, but that is not what we have today and that is the problem. Central banking is rigged in favor of a high and widespread monopolized system of criminal activity.
Bytes in, bytes out. Bytecoin assigns value to certain bytes in and out of your machine. It is monitored, it has to be. If not, then what exactly is reportedly worth 100 million dollars? The monitoring ability. Maybe no member is personally identified but each member machine and/or each leased operating sytem must be... seems to me.
So if the IRS can kick down your door and confiscate your machine on a whim... I'm just say'in.
Remember, the federal reserve note started out as a legitimate, redeemable in gold, currency. Over time the criminal members of the elite encroached and morphed the system, using crises after crises, into the banking system of today. They know after 100 years, their jig is almost played out.
So what do I have against bitcoin? Absolutely nothing. Just don't tell me it is a perfectly safe way to make private transactions. I do not believe it is immune from the information gathering, control freaks, of a criminal class of elitists.
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