re: Bitcoin is a Ponzi scheme—the Internet’s favorite currency will collapse.

Dude, just shut the hell up. You don't even understand the theory behind what I'm talking about, and it's obvious.

I understand it plenty, a-hole, and your theory doesn't work in the real world.

Now, please GFY. Thanks.

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Why do you care?

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Because it's disingenuous. That's why. It's like if I was selling a truck based on the cool arse tires. Then come to find out the cool tires cause vehicles to roll over. I then switch to saying it's all about the cool arse engine in my truck. Don't worry about those tires that are defective.

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The idea behind all of this is not so much an attack on central banks as it is an attack on the income tax. Of course most schmucks in corporate jobs won't be able to demand that their salaries be paid in Bitcoins, but for those self-employed individualists out there wanting special access to under-the-table transactions, a quasi-currency is all they need. And then the IRS would have no trail to follow. That's the whole game here, fellas.

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Doc, you obviously know a hell of a lot more about economics and currencies than I do, and I have a lot of respect for you as a poster, and in particular your wisdom in this area.





Do you honestly believe that IRS auditors aren't aware of the potential for bitcoin or any cryptocurrency to be used as a means of tax evasion or embezzlement? COM'ON SONNNNNNNNNNNNNNNN. If they consider it a threat, how long do you think it will last? The NSA has computer nerds that eat Satoshi's and shite Nakamoto's, and they'd leave a smoking hole where bitcoin once stood in a matter of days.

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I don't. He's a typical book-learning, lecturer economist.

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Which is why I don't ask him for investment advice, economists typically are horrible investors

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The NSA has computer nerds that eat Satoshi's and shite Nakamoto's, and they'd leave a smoking hole where bitcoin once stood in a matter of days.

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Well, yes, but it's not that simple, because there's no one place to make a smoking hole. It's a distributed network.

The authorities starting going after people who shared music files, and they were able to get pretty good at it, but it's not that easy to target more limited transactions.

If someone's not sharing stuff all the time, but rather is looking for one-time hookups from anonymous locations, then hey, that's not very easy to stop. They will obviously try to attack at the points of conversion into dollars, but how successful will they be?

This is what was written in a recent Bloomberg article ( LINK):

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If Bitcoin remains on the fringes, then the state is safe. The question is, if it shows signs of becoming a widely used currency, what could governments do to crush it?

The Financial Crimes Enforcement Network, the wing of the U.S. Treasury Department that investigates money laundering, said last month that it has the authority to regulate transactions involving both Bitcoin and U.S. dollars under the Bank Secrecy Act. These inter-currency exchanges appear to be the best foothold for regulation. Governments could require records of all purchases and sales of Bitcoin, for instance.

But this approach has severe limits. There are, by design, no direct avenues for government to interpose itself in Bitcoin-only transactions. Government does have some enforcement leverage over the individuals and businesses. Bitcoin transactions have a real-world side. The problem, though, is that the usual mechanisms for detection and enforcement are very weak against Bitcoin. Ask the Federal Bureau of Investigation. Bitcoin presents “distinct challenges for deterring illicit activity,” according to a leaked intelligence assessment that was prepared in April 2012. "Bitcoin is unique because it is the only decentralized, P2P network-based virtual currency,” the FBI’s Cyber Intelligence and Criminal Intelligence Sections wrote. “The way it creates, operates, and distributes bitcoins makes it distinctively susceptible to illicit money transfers.”

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quote: The proponents on this board were pitching it as a currency for the last year. Now they've shifted gears to more of an investment because it suits their needs.

Why do you care?

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I think it matters because if it was originally designed to be a fiat currency, how long can it possibly function as an investment class?

I understand that you're saying it can be both but I think you will end up with something that is both a worthless investment and crappy currency.

Yeah. It was designed to be a fiat currency, but that will only work (especially for a currency that is not legal tender) if it holds relatively steady investment value.

Because the original creators wanted to make money, they weren't so concerned about steady investment value, which is the big flaw with Bitcoins. There is this assumption that it will just reach a relative steady equilibrium sometime in the future, but really, there's no guarantee that this will be the case. It could be forever unstable and chaotic in its price swings, and over time, it could lose enough trust such that people will veer to competing alternatives.

In fact, all of this is likely to be the case, and the odds are against Bitcoin succeeding. I'm just saying, (1) something like it could succeed, and (2) that something would not necessarily have to be used in ordinary retail transactions in order to be successful.

You can't just automatically dismiss the whole idea because you can't walk into a Wal-Mart and buy groceries with Bitcoins. If there were some mechanism to ensure asset price stability, then the main goals of the operation would then be successful, and it could be used by individuals as a form of currency in a limited set of transactions.

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The proponents on this board were pitching it as a currency for the last year. Now they've shifted gears to more of an investment because it suits their needs.

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Are you talking about me?

I believe I've argued that it's a mix of a commodity and a currency.