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.

[slang]

Originally Posted by xoxoxoBruce

I get the block chain protection that you own certain Bitcoins so they can't be (theoretically) stolen, and if you trade them for something you can't say you still have them and use them again.

Yes, pretty secure system it seems. So long as the internet is up and running.

Originally Posted by xoxoxoBruce

I've also seen the price/cost/worth of one Bitcoin vary from a few dollars to thousands of dollars for whatever reasons.

It's my guess that the price went down because so many people were not using the cryptos securely and were hacked.

If I had taken a beating like that it would turn me off to the whole notion of buying them too. Until I learned how to use them effectively anyway.

Originally Posted by xoxoxoBruce

The video says you can do a deal, one on one, with people around the world.

With crypto currencies? That sounds right but I'm not an expert. Peer to peer too I would guess. In that case if there was an agent separate from the vendor it might be feasible.

Let me think about this. I'm in the Philippines now, I log in to the site and execute a sell order that I will be using to pay for something far away. In China, lets say.

First off, you need to make an appointment with Daenerys Crypto at least a day in advance ( know your time zones ) so that they may set up their process to send the crypto.

Ok, I have my appointment...we are in process of the validation for the crypto now and with my other computer or phone, I call or video stream the vendor in China. My Ingrish translator is up and running.There is an additional party there in China to take delivery of the physical item? Or maybe you trust Mr. Lee. You've done business before. He's reliable.

As I ask the Daenerys Crypto people to hold a minute while I'm talking to Mr. Lee, they are assessing my face on the video which is a part of their security process.

They then believe it's me, I execute the transaction to Mr. Lee's bitcoin address. We wait 10 minutes or so for the bitcoin to go through the blockchain.

Then Mr. Lee gets confirmation. I thank the Daenerys Crypto people and end their video transmission.

Mr. Lee has the shipping website up and ready for his confirmation, he's already received it and now over video he gets the tracking number and displays it over video. You make a screen shot and verify that tracking with the shipper.

The "third party" takes the physical item to the shipper and now you must trust someone else for the delivery of your thingy.

You thank Mr. Lee and end his video feed.

But what if the item is faulty? How do I get a return?

Maybe through video feed he can demonstrate the thingy. Maybe he's got a process that is thought through and is sort of a standard "proof".

Or maybe it's such a low cost item that it doesn't really matter. You're getting a huge discount from ordering in China direct, he has a reliable feedback, or you've ordered before and are willing to take a chance for a much lower price.

But as far as I know, there are no charge backs. Not from a third party anyway. Third party certificates but what is that really worth?

The process just described is a bit long and complex. If you were to do a few deals on a small scale it wouldn't take long to get good at it or decide you'd rather use another payment method.

Originally Posted by xoxoxoBruce

How do I discover this person I don't know in Timbuktu, and what they may have for sale?

Alibaba dot com. They have some equivalent of Ebay too but I'm busy typing and don't want look it up on the net.

Originally Posted by xoxoxoBruce

How do I discover a company in China makes something I would want?

Alibaba would be my first go to. Never ordered from them so I can't really detail any results but the prices are good and they seem to get good feedback. It's the site that sells everything that they make in china. Amazon like.

Originally Posted by xoxoxoBruce

If a Bitcoin is worth $1,000 today, how do I buy something worth $200, or $1400?

Bitcoin is divisible. I believe out to like 5(?) decimal places. Promoters were describing that in a few years the price would be so high that the decimal places would be relevant. That hasn't been true yet but maybe someday.

Say a bitcoin price is $3950. Then you would use .05063 of a bitcoin for a $200 purchase. Plus .01 transaction fee of a bitcoin if you used Daenerys Crypto. Larger purchases might make more sense.

Or maybe...proposals we are seeing in the firearms industry now, through political pressure, financial institutions are pressured not to work with gun manufacturers.

If the banks decide they will no longer transact "x" products, bitcoin might make more sense.

Originally Posted by xoxoxoBruce

If I tire of Bitcoin how do I get my money out?

Sell it on an exchange. The price fluctuates but you can cash out. Some exchanges are more newbie friendly than others. If the value does increase as you sell, you'll have a tax liability too.

Link

Originally Posted by xoxoxoBruce

So many questions, and that's just the tip of the iceberg.

Yes, great questions here. We're sorting it out together.

[tw]

Originally Posted by slang

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. ... Money is limited as to it's expansion.

Using that definition, then how is money related to liquidity?

Is a debit card in the category called currency?

Is a credit card classified as both credit and currency - since it does both functions?

[slang]

Originally Posted by tw

Using that definition, then how is money related to liquidity?

If one has a good amount of money (gold, silver, house) but still cannot transact I would call that cash poor. You're worth a million dollars but still can't pay the electric bill.

That's a good question though. Having money isn't always the best situation. Currency is good to transact but varies in value. Slightly in the case of the USD.

Originally Posted by tw

Is a debit card in the category called currency?

I would say yes. Times 2. Your digits in the bank fund the electronic transfer currency, the card.

The debit card is unique in my opinion because it doesn't incur debt. There's no interest. It finalizes a purchase. It's paid. No further payments are required.

The problem with that debit card is that it's tied to the bank. That's it's upside and downside at the same time.

My bank has put a fraud suspicion block on my card 1 or 2 times a year for the last 10 years. It's a stable system but I don't count on it. Regardless of what the balance is, it still might not work when I need it.

On the upside though, I do like it. Dragging large amounts of cash around is often dangerous. Either by theft by steet criminals, or by theft of law enforcement.

Originally Posted by tw

Is a credit card classified as both credit and currency - since it does both functions?

Yes on both. But with the downside ( to me anyway ) of having to pay interest.

But there is also the benefit of challenging suspicious or fraudulent charges. This is a big benefit. It instills it's own form of confidence.

Once you transact in crypto or bullion, it's done. Most of the time that's the point of using these. No further payment required. It's paid for.

[xoxoxoBruce]

I don't pay interest on my credit card. They make their money from making the vendor discount the price. Of course I pay in elevated prices eventually but that's not interest.

From your link...

The fast-moving ionised particles blasted copper atoms off the target. The atoms cooled down and condensed on the surface of a collecting device, producing a thin layer of sand.

It may act like gold chemically, maybe even like gold electrically, but it sounds like with a thin coat it couldn't be used anywhere there's abrasion, like switches.

[slang]

Originally Posted by xoxoxoBruce

I don't pay interest on my credit card. They make their money from making the vendor discount the price. Of course I pay in elevated prices eventually but that's not interest

Point taken.

I was issued a rather high limit gold card many years ago and got so far in debt that digging out was very difficult. Since then, credit cards are of very little interest to me.

That was years ago though and now learning their utility hasn't been a priority. Maybe it should be.

Originally Posted by xoxoxoBruce

From your link...

It may act like gold chemically, maybe even like gold electrically, but it sounds like with a thin coat it couldn't be used anywhere there's abrasion, like switches.

Yes. The concern is that some clever country or corporation will develop technology that changes lead to gold, or mines gold out of ocean water, or the like. Increasing the gold supply.

Rumors from Wiki, Reddit and TheMillineumReportDcom describe the technology existing now. They are allegedly not practical because of energy consumed in the process.

[tw]

Originally Posted by slang

Having money isn't always the best situation. Currency is good to transact but varies in value. Slightly in the case of the USD.

So are you saying that liquidity is unrelated (ie partially) to both money and currency? I suspect you are trying to 'measure' (characterize) money and currency using a standard called liquidity.

[slang]

Originally Posted by tw

So are you saying that liquidity is unrelated (ie partially) to both money and currency? I suspect you are trying to 'measure' (characterize) money and currency using a standard called liquidity.

Running a bit late here, sorry Sir.

Yes. You're right. Liquidity.

It's important. How much currency do you need for your obligations? How much exposure do you want to the banking system or dollar currency system? Or your institutional investments?

How much money do you want to hold back while the currency is expanding?

Very good point, Mr. TW. One needs a combination of all mentioned.

[tw]

Originally Posted by slang

It's important. How much currency do you need for your obligations? How much exposure do you want to the banking system or dollar currency system? Or your institutional investments?

Which is only questions that says nothing about a relationship between liquidity and money or currency.

How do money relate to liquidity?. What is the relationship between currency and liquidity?

[slang]

Originally Posted by tw

...How do money relate to liquidity?. What is the relationship between currency and liquidity?

Money often doesn't support liquidity. I'll probably not break off a piece of my house and give it you for payment of the electric bill.

Currency would more likely support liquidity. Currency being money converted to a more payment friendly form.

Credit with my house as collateral might be a good solution. Or a bank account that holds my salary without credit or collateral involved.

Am I getting close?

What are your thoughts?