re: Winklevoss Twins Plan First Fund For Bitcoins

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How are you going to continue to claim independence from governments and central banks if by it slowly gaining legitimacy it becomes monitored more and more by regulatory authorities?

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Because regulation at exchange points is completely irrelevant in the grand scheme of things. I welcome the regulation to get people into bitcoin. Once people are in bitcoin, then the regulation is powerless.

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Once people are in bitcoin, then the regulation is powerless.

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This is evidence of how clueless you are about governments, and their ability to control the behavior of citizens. If acquisition of a Bitcoin is a registered event how do you escape regulation? At some point you will be asked to account for the Bitcoins you were registered as owning. Remember, Bitcoins are considered commodities by the U.S. government. Any transaction conducted in Bitcoins will have to be reported as a barter transaction for tax purposes since the value of the Bitcoins are expected to change between acquisition and disposition.

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I'm going to attempt to liason between Wiki and everyone on this in an attempt at smoother communication. His point is that once everyone trades in bitcoin, due to the nature of the code, tracking transactions between two bitcoin users becomes extremely hard. So him saying in the grand scheme it doesn't matter and regulators are powerless has a degree of truth......in theory.

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Thanks Benny for understanding where I'm coming from.

To expand on what you said, I'm not talking 5 or 10 years from now, I'm talking 20 and more.

Go check out Cryptsy.com. It's an exchange for a variety of digital currencies. I counted 32 listed on their front page that can currently be exchanged for bitcoins.

Most of those will probably die off eventually, but the point remains that the barrier to entry for creating a new currency is very small.

Now, with that being said, what I'm really trying to ultimately say is that once people are in a digital currency (and it doesn't have to be bitcoin - it could be a government created one like Canada's MintChip*) - but once people are in it and the ability to perform transactions between these currencies becomes easy, then it's all over for states, at least when it comes to their ability to inflate, which is what they are dependent on anyway.

I like to post this quote by Alan Greenspan from an essay titled Gold and Economic Freedom (1966):

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In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

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Now I could give 2 shits about gold, but the concept he discusses is an important one, and relevant to crypto-currencies.

So while Poodlebrain obsesses over the minutia of income tax collection on barter transactions, he misses the greater point that the power to tax via inflation will be taken away.




(*Interestingly enough, when Canada petitioned for ideas on how to use the MintChip, one of the most popular responses was to use it as an easy method to buy bitcoins, due to its protection again reversing transactions.)

Only in wiki's convoluted world of logic is it an advantage for a customer who does not receive what he paid for to not be able to get his money back.

See below.

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Now, with that being said, what I'm really trying to ultimately say is that once people are in a digital currency (and it doesn't have to be bitcoin - it could be a government created one like Canada's MintChip*) - but once people are in it and the ability to perform transactions between these currencies becomes easy, then it's all over for states, at least when it comes to their ability to inflate, which is what they are dependent on anyway.

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So they would do exactly the same as most banks do with your current "wealth" or your idea of " inflation" or "deflation"? People say the Fed prints money, but it's all book entry to primary dealers balance sheets. Do you think most of the the "wealth" around the world isn't created electronically and recorded in some sort of electronic balance sheet?

I know your end result is no dilution of your purchasing power, but no matter what the mining code the valuation of bitcoin will still be dependent on how attractive it is compared to other alternatives. You may say when everyone gets in bitcoin it won't matter, but everyone won't get in bitcoin, there will always be alternatives. The value could inflate or deflate dependent on attractiveness. No matter what code bitcoin has, thats not the biggest fundamental driver of its value. I'm sorry, I know you'll disagree but it has nothing to do with the code. It may control the "supply" (which seems contradictory to the fact it is infinitely divisible) but its value has and will always depend on the amount of demand for it....so then how is it different that what is going on currently? People always point to inflation as a tax which you do below here.

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he misses the greater point that the power to tax via inflation will be taken away.

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They started keeping track of the dollar index in 1967. Think about these figures:

- Over that entire time period (1/31/67 to 7/3/2013) the dollar index has declined an annualized 0.77%.
- The dollar was worth the most on 2/25/1985 (well past when central banks came in the picture and we left the gold standard) and the lowest on 4/22/2008 (-3.21% annualized).
- Since the low in 2008 that dollar has appreciated an annualized 2.92% and since the first QE announcement in 2010 it's appreciated an annualized 3.00%.
- I mean hell its basically worth the exact same as it was at the end of 1990.

If inflation is a tax on individuals by the central bank as you say, then that central bank has been paying you ~3% a year in purchasing power since the crisis. You may say they've been taking ~1% a year since 1967, but why are you so mad about that compared to MUCH higher sales, income, capital gains, and dividend taxes? Not bad for an entity you consider an "evil scourge". This is what I keep harping on with the difference between rhetoric and substance. If you watch the news or read the Poli board you'd think the dollar is in the tank, but the truth is the opposite. A small number of people in the media and nobody on the Poli board have a single fricking clue as to what is actually going on with finance, the dollar, purchasing power, etc.. If they did they wouldn't look at CPI or any alternative and think this alone has an affect on purchasing power. It has to be looked at with all other factors.

Now for the gold standard bit, or any standard that places a value on any sort of "real" asset but we'll just call it the gold standard. BTW nice cherry pick, Greenspan himself stated several times that the gold standard is no way to run monetary policy. So a country can enter into or leave the gold standard at any time, this is true. A country can join the gold standard if they want to raise the value of their currency based on relative value of their currency (England 1908) or finally leave if they don't want to defend their currency positioning (US in 1971, it didn't end until Nixon publicly said "we won't defend the dollar"). Politicians have used gold standards as a way to artificially adjust their currency in massive degrees, so in essence the gold standard has been the biggest fiat tool for countries, especially politicians. I know your point is that countries must STAY on the gold standard, but history has proven that an operational nightmare that strangles credit/lending and in turn innovation/entrepreneurship. It also straight buttfricked emerging nations due to their lack of capital to own gold, so simply by the US holding gold we could hold down the middle class in these countries and not let international finance take over.

This is my entire point: The dollar devaluation from the mid 80's through the 2000's has made foreign companies open up factories in the US due to relative cheapness. Currencies appreciate and depreciate back and forth, that's international finance. There isn't some big bad central bank taxing away your purchasing power. The central bank is there to smooth volatility (Which I've gone over many times with you, there were more recessions that were more volatile before 1913. That's a fact) which benefits employment, as well as keeping the value of the currency stable. I've pointed out that the value of the dollar has been held pretty damn stable since 1967, which is very surprising considering international trade would lead you to believe that it should be devalued much more based on how currencies appreciate/depreciate based on cheaper/more expensive goods and labor.

So since bitcoin's value is dependent on outside demand, hence your purchasing power can increase or decline based on external factors, and it will likely be regulated and taxed, how again is it different than what we currently have?

If your answer is that it isn't controlled by an evil central bank and eventually regulators can't tax it, then that would mean it doesn't have an entity that can and has smoothed out volatile movements in its value. It also wouldn't have recourse, which leaves you more open to get screwed. So then how is that better in any way than what we currently have?

Ever notice how Wiki says shite like "Thanks Benny for seeing it my way", "Thanks Broke for not being one of these monumental douches who disagrees with me about everything.". It seems that if there is even one iota of affirmation of anything on his side, he takes it to the endzone and claims he scored. Even if it's the wrong endzone.

Statist Bastard™