Bitcoin

[slang]

Originally Posted by BigV

@slang

Not bein a jerk, I promise.

0k. I believe you. You have such a polite manner V. It's rare. It's appreciated.

Much of the following commentary will seem strange or wrong to most people. And, my sources are not from the NYT or Scientific American or even the Economist (hat tip - TW).

But probably not from Wired, Reddit and themillenniumreportDcom

Maybe I can articulate some thoughts that I live by. Not specifically with cryptos yet but money, credit and currency. Money, credit and currency are different animals. Different rules for each. Different uses too.

Originally Posted by BigV

What is money? What is a dollar? What is a Bitcoin? They're tokens backed by trust.

They are all backed by trust, that's true.

Let's start with money first. Money is the valuable thing. It's not a derivative. It is valuable alone by itself. But it's not practical to trade with. Conducting trade would be done with currency. Currency is a derivative of money. Currency can be printed or digitized at will. There are no limits to it's expansion. Money is limited as to it's expansion.

The more the currency is expanded, the less worth the existing currency is worth. BUT the money stays essentially the same. It's the real deal. You can't print it. Or digitize it. It's of limited supply. It cannot be expanded on a whim. It takes time and or effort to "make" money.

The paper dollar is currency. The digital dollar too. They can and have been expanded to suit what ever need or want the US gov't has at the moment. They can be manipulated. One year there's a trillion dollars in existence, the next there are 100 trillion.

In my estimation the only reason that there isn't massive inflation is that the dollar currency is mostly used outside the US. 80% by some stats I've seen. The US dollar is the reserve currency. More practical than money and can be used all over the world.

A bitcoin is digital currency that can only be expanded by mining. It's not physical which is technically a requirement of money, but it's limited. "Gov't" "bitcoin" cannot decide one day that it doesn't have enough buying power for it's needs and expand itself by a billion times. And it's decentralized. It's not backed by anything except the faith in the code and the internet.

Now for credit. It's a promise to pay in the future. With certain pre-determined terms. The "currency" for credit does not exist. Nor does the money. It's a ledger entry. Digits added to your bank account.

Yes, it's true that you can still buy what you want with the digits but the more digits in circulation the less buying power those digits have. If you are the US gov't it doesn't really matter though, because they print at will.

Can YOU print a trillion dollars for what ever YOU want to buy? It's a scam. And the world is getting wise. Dollar digits are still convenient, but there are other currencies with expansion limits.

One is bitcoin, though I do not expect it to replace the dollar. I expect it to lead to a crypto that will.

Originally Posted by BigV

Bitcoin is differentiated in that the trust is distributed across the network that maintains the blockchain. This is unlike money which is a token backed by a government (or some other entity).

Some people believe that being backed by the US government is declining in confidence.

The entire world must grow or manufacture things of value for dollars. The US treasury does not. It only needs to tap digits on a keyboard. Nothing of real value supplied. Except currency that is in decline.

Originally Posted by BigV

What is gold? It's a medium that can be traded for other things. Things like money/bitcoins/other cryptocurrencies/goods/services/other currencies/etc.

Gold is different. Gold isn't the promise, it's the delivery. All the work has already been done in mining and refining. There is no future promise with gold. It's in your hand. Not particularly valuable in industry but it's hypnotizing. Beautiful. Rare. Stable. Fungible. Divisible. Physical. It's money, in my opinion as well as many in Asia. Not so much the west because the west has sold or loaned much of their gold into the market to keep the price down. Now that they are out of gold, they use naked shorts on the comex and pay out in...you guessed it, dollars. You ordered gold at the comex specifically because you didn't particularly want dollars, you wanted money.

Every year or so you see some group scamming the comex, sponsored by some mega huge bank. It stays pretty quite on the news and no one understands what's happening anyway so why would I care.

Gold is kryptonite to the dollar. The higher the price of gold goes, the less people think of the "dollar promise". The more that they see inflation. Those same people want something they control. They want gold.

Do you remember when gold was around $275 an ounce? I do. The currency supply was much lower then.

Originally Posted by BigV

It's a fungible medium of transactions, and which you like more or less will be influenced by how much trust you have in the backer of the medium/token.

Yes, I agree. Don't forget the supply, but yes.

Originally Posted by BigV

US Dollars--trustworthy. Venezuelan Bolívares--not so much. The trust *matters*.

US dollar currency, trustworthy but declining. It's still strong on the USDX but gold is going up too. And dollars are available. Other currencies are most likely not. Not in the way dollars are. Because they're everywhere.

Plus the Fed actually keeps track of those numbers on the bills. I've bought things in the Philippines with all cash. Things that aren't cheap. I thought that dollars were as good as gold but I learned something. They are after the Fed verifies the denomination and the serial number. It seems that some other countries like NK want a piece of the printing out of nothing action but they don't have the correct serial numbers.

Now I'd like to add another layer to the confidence component behind the US dollar. Military threat.

The USMC. The military actually but there are always marines off your shore somewhere. And they're pissed off. And they want to break things and kill people. And they're good at it.

Why would you want these guys on your shores for a lack of interest in using the US dollar (for oil purchases)?

People losing faith in the US dollar and using it and holding it destabilizes that expansion concept. It's a big deal.

Can YOU print a trillion dollars on your keyboard at will? It's a big deal.

So that's my take on the issues. I'm not an economist or a finance guy or an engineer or a rodeo clown so I could be completely wrong on all my observations and opinions. That's my take at this time just the same.