Bitcoin

[tw]

Originally Posted by slang

Blockchain: Ultimate guide to understanding blockchain, bitcoin, cryptocurrencies, smart contracts and the future of money.

Blockchain - the reason why Bitcoin cannot scale to what is necessary in the economy. A block chain, that provides secure transactions, is incapable of meeting scale and liquidity demands of today's (and tomorrow's) economies.

[slang]

Originally Posted by tw

Blockchain - the reason why Bitcoin cannot scale to what is necessary in the economy. A block chain, that provides secure transactions, is incapable of meeting scale and liquidity demands of today's (and tomorrow's) economies.

If your quote above was not true, Bitcoin would have gone much higher, IMO. Amazon would be accepting Bitcoin. Or at the least another cyrpto currency.

Is crypto doomed or can a solution for scale be developed? Or has this problem been overcome but it's without a market since the losses were so large with the crash?

I would like to understand crypto currencies without having to lose money experimenting with them.

The Economist - Bitcoin Under Pressure (registration required)

"Bitcoin’s mathematically elegant design ensures that the money supply can increase only at a fixed rate that slows over time and then stops altogether. Anonymity, while not assured, is possible with the right precautions and tools. No wonder Bitcoin is so appealing to geeks, libertarians, drug dealers, speculators and gold bugs."

[tw]

The first and obvious problem with Bitcoin is its block chain. It can only process seven transactions per second. Visa alone processes ten thousand transactions per second. Its structure does not have such limits. That alone makes Bitcoin too limited to become legal tender.

More problems. Money must measure value. A currency that fluctuates wildly does not measure value; cannot be trusted. If Bitcoin is to become money, then 1636 Dutch tulips were also a good currency. 2005 SIVs and CDOs (even backed by sub-prime loans) were also money. Finance people were using those financial instruments to print money - until the inevitable crash happened a few years later.

Bitcoin is rarely used to buy things. Of maybe $2.4 billion transactions, estimates put $0.65 billion just for selling stolen credit cards, drugs, bogus medicines and other illegal transactions. Another $0.87 billion is estimated for gambling. And an unknown majority of that remaining money is believed to be speculation. That is not a healthy currency.

Third, a currency must be able to expand or contract with economy changes. Currencies backed by a central bank, through history, tend to be the most stable. During severe recessions, less currency is required. Bitcoin has no ability to change with economic conditions. So it is more popular as gambling chips rather than money.

And then fraud. For example, Quadrigacx, a Bitcoin exchange, suddenly went bankrupt when its founder (Gerard Cotton) died. Cotton had the only encryption keys. In trying to untangle the bankruptcy, it is now believed that all $165 million in deposits were missing eight months earlier. Bitcoin intentionally makes criminal investigations impossible; makes fraud easy, untraceable, and profitable.

Block chains may have use in other functions. But not as a replacement for legal tender. It was a good try. But, currently, it does not work.

[slang]

Originally Posted by tw

The first and obvious problem with Bitcoin is its block chain. It can only process seven transactions per second. Visa alone processes ten thousand transactions per second. Its structure does not have such limits. That alone makes Bitcoin too limited to become legal tender.

While it seems that it was over hyped by speculators when the price was growing, it does have place in the marketplace, in my opinion. A slower process speed would prevent me from buying a cup of coffee with it but in other uses speed is not the greatest concern, as I’ll attempt to explain below.

Originally Posted by tw

More problems. Money must measure value. A currency that fluctuates wildly does not measure value; cannot be trusted.

This is a great concern to me, yes. A few days ago Bitcoin was trading at about $4000 a coin, now it’s up to nearly $5000 a coin. Although it seems reasonable that I might be more willing to use it when the market price has increased my purchasing power.

On the flipside, a merchant may be less willing to sell their goods or services at a new Bitcoin high, aniticipating that the price would fall.

The opposite might also be true. Merchants may be more willing to sell after a dip in market price of Bitcoin. Adjust their Bitcoin deomonated prices accordingly.

Originally Posted by tw

If Bitcoin is to become money, then 1636 Dutch tulips were also a good currency. 2005 SIVs and CDOs (even backed by sub-prime loans) were also money. Finance people were using those financial instruments to print money - until the inevitable crash happened a few years later.

I’ll have to think on that. Were they money or were they assets in which another derivative was created? Cash.

Originally Posted by tw

Bitcoin is rarely used to buy things. Of maybe $2.4 billion transactions, estimates put $0.65 billion just for selling stolen credit cards, drugs, bogus medicines and other illegal transactions. Another $0.87 billion is estimated for gambling. And an unknown majority of that remaining money is believed to be speculation. That is not a healthy currency.

It’s not a healthy currency for day to day transaction. We agree on that.

See below for my additional comments.

Originally Posted by tw

Third, a currency must be able to expand or contract with economy changes. Currencies backed by a central bank, through history, tend to be the most stable. During severe recessions, less currency is required. Bitcoin has no ability to change with economic conditions. So it is more popular as gambling chips rather than money.

The Federal Reserve inflates MUCH more than they deflate. So they inflate by 100, then deflate by 10.

They still end up with most of the free currency that they create and are able to spend or loan it before prices rise. Win win for the Fed.

Sure, the American people benefit, but only as a by product. The American people ( or dollar holders ) can’t type on a keyboard to create another trillion dollars on a whim to pay their electric bill.

It’s a BIG bill. I’m mining Bitcoins.

You and your gambling chips man, you’re killing me.

Originally Posted by tw

And then fraud. For example, Quadrigacx, a Bitcoin exchange, suddenly went bankrupt when its founder (Gerard Cotton) died. Cotton had the only encryption keys. In trying to untangle the bankruptcy, it is now believed that all $165 million in deposits were missing eight months earlier. Bitcoin intentionally makes criminal investigations impossible; makes fraud easy, untraceable, and profitable.

Wow, it sure does seem to. But what about traditional online and banking systems? Let’s take a look.

The following quotations are in regard to cash but are relevant in my point as they show the corruption of the banking system as it is now.

The War Against Cash: The Plot to Empty Your Wallet and Own Your Financial Future – And Why You Must Fight It.-Nov2017 – Ross Clark (Britain)

$3.00 on Kindle. It's good. Buy and read it.

“…Rogoff’s case would be stronger were it not for the astonishing amount of fraud which takes place online, involving electronic money. Where, in the argument that associates cash with crime, fits the shocking statistic that in 2015 British bank customers lost a total of 755 million [$1.3 Billion] pounds in fraud involving payment cards, online banking and (the last making up a very small proportion of the total )cheques.“

“…But these assets weren’t bought with banknotes. No one can walk into a London estate agent and buy a property with bags full of cash; the estate agents are under legal obligation to report anyone who tries to do this. These properties were bought via large cash transfers from overseas banks: electronic money.

Maybe criminals should not have been allowed to open these bank accounts; perhaps someone had not done their due diligence and check the provenance of the money in these account, or possibly there are criminals working inside the banking system who facilitate them. Yet the fact is that they did open them. So long as criminals are able to open bank accounts with impunity, eliminating cash [or Bitcoin] from circulation is going to make minimal difference to the amount of crime.”
…
“…The $200 million of banknotes found at El Chapo’s home is small beer compared with the vast quantities of money which are being laundered through bank accounts. In 2012 HSBC ( Hong Kong -Shanghai Banking Corporation ) was fined $1.9 billion after a US Senate

Investigation concluded that the bank had been a “conduit for drug kingpins and rogue nations”. Among it’s failures were allowing Mexican and Columbian drug cartels to launder $881 million through accounts, and to allow a Russian gang posing as second-hand car dealers to transfer $290 million.

According to the Organized Crime and Corruption Reports Project, 17 UK-based banks between them unwittingly processed $738 million worth of transactions on behalf of Russian criminal gangs. They didn’t need to move banknotes around in bags [or use Bitcoin]: they processed the money electronically through anonymous companies which they then dissolved.

I guess El Chapo was really just the criminal world’s equivalent of your granny: he stuck with cash because that's what he knew. Meanwhile younger rivals have had little trouble mastering the banking system to their advantage.”

So as I’ve said many times to many different audiences, when billions of dollars are accidently discovered in all sorts of criminal and corrupt activities, nobody knows anything.

But when the system can’t reconcile a piece of chewing gum that I bought, it’s a problem they must solve by some additional dumb assed thing I must now do, attest to, sign or report.

Hello Litecoin! And gold. And tulip bulbs.

[slang]

Originally Posted by tw

Block chains may have use in other functions.

Some possibilities may be;

• Identity management and digital identities
• Digital voting – seems unlikely now but let’s see
• Healthcare and medical records
• Academic certificates
• Music
• Cloud storage
• Car leasing rentals
• Ride sharing
• Property
• Apartment rentals
• Travel Industry
• Loyalty reward programs
• Prdictions and gambling
• Smart contracts

Not with Bitcoin but the blockchain as you noted in your quote.

Those possible uses above are from the book Blockchain: Ultimate guide to understanding blockchain, bitcoin, cryptocurrencies, smart contracts and the future of money.

$3.00 on Kindle. Buy it. It's good. Certainly worth $3.

It’s a bit outdated now at a year and a third old but still very helpful in describing the technology and issues surrounding it’s use and possible uses.

From page 10.

“Billions of people in the world live in countries where they can’t trust intermediaries such as banks, governments, and legal systems for transactions or accurate record keeping. Blockchains are particularly useful in these cases to help provide trust and assurance to people when transacting with each other.”

It’s not just the book “Blockchains” that also see an opportunity to do something legal and useful with this technology, aside from it's use for buying gambling chips.

Kiva.org is hiring - See 1 Kiva.org jobs. Kiva.org Blockchain and Cryptocurrency company. Blockchain Protocol Architect/Director and more...


Now, having a general understanding of cryptos and their potential uses, I’m pondering how rural people here in the Philippines might cut their middle men out completely or in part by using them.

Maybe not “all in” today but it appears to be an opportunity for a grower to deal directly with a seller. The middle men here in the Philippines often get more than either the seller or the grower for products.

Most of their utility is in the delivery and payment between the two parties.

Originally Posted by tw

But not as a replacement for legal tender. It was a good try. But, currently, it does not work.

As legal tender, you’re right. But what about other legal useful possibilities? Maybe.

[tw]

Originally Posted by slang

As legal tender, you’re right. But what about other legal useful possibilities? Maybe.

Review the origins of 'plastic'. Diner's Club was created in 1949 when its founder paid for a restaurant meal with a cardboard charge card. That is all it was. A new version of 'letter of credit'.

From that was spawned something different - a credit card. The credit card was not just a 'letter of credit'. It was also a bank loan.

And then something different, called a debit card was created maybe twenty years later.

None of this is replacement for currency. It simply expands and enhances a flexible currency.

Unfortunately for Bitcoin, it has not really done much to enhance 'legal' activity. And its speculation does not address another important concept in productive economics - investment.

Where as a stock, bond, or derivative is a speculation to create new products or provide financial stability, Bitcoin speculation is only gambling. Nothing productive is generated (financed) by Bitcoin speculation.

Whereas Diner's Club was created to address a need - addressed a liquidity problem. Bitcoin has not really enhanced the currency.

Other electronic payments systems (ie Apple Pay, Paypal) do enhance the liquidity of currency. We can expect those the be enhanced / innovate / expand into new forms of economic / financial activity.

Too many foolishly see all government as evil. Some governments are. In productive societies, government is always part of a solution. Federal Reserve bank is a perfect example. Countries with the most stable currencies all over the world have Central Banks.

When the Central Bank is run by people who know, well, we all recently learned the value of a Central Bank. In 2007, we were facing symptoms of a second Great Depression. And this time, the Central Bank addressed the problem. Unlike in 1929 when the Central Bank made the problem worse.

We came that close to what would have been unemployment numbers of maybe 20%. Many today do not realize what was meant by the statement back then, "You have eight hours to save the economy." We know it was that bad. Disaster did not happen because our Central Bank, in coordination with others, properly addressed a major liquidity problem. What other 'currency' could address such problems? Even gold could not address that near disaster.

BTW, another factor essential to a stable economy - open markets.

[slang]

Originally Posted by tw

...Too many foolishly see all government as evil.

Yah, that's me. I'm that guy. Am I a fool? Maybe. A guy in Tampa called me a fool months ago. Actually he called me a foo.

Not evil but corrupt. Here are the rules. They are for YOU but not for the government. These rules are for the benefit of society. Except when they make government people rich. Then they're just rules you have to follow while I'm looting the country and smiling on TV. Talking about how much I'm doing for YOU?

But I could do more if only you'd give me more money.

Originally Posted by tw

Some governments are.

Like Russia.

Originally Posted by tw

In productive societies, government is a̶l̶w̶a̶y̶s̶ never part of a solution.

There we go. That's better.

Originally Posted by tw

..Federal Reserve bank is a perfect example. Countries with the most stable currencies all over the world have Central Banks.

Does Zimbabwe have a central bank?

Originally Posted by slang

..It's amusing to me that every government is "concerned" about fraud. Government is the source of fraud. They invented fraud. They don't want to lose control of the game that they rigged in their favor. That's every government to some degree.

I wrote that. It's a slang quote, not out of a book. Not yet anyway.

When I wright a book, I'll put that quote in it. It's a good quote. That's a good quote for China. Maybe it can be translated for my Chinese version of my book.

There is an ATM in Manila that sells Bitcoin and Litecoin for peso notes. It's the only one in the country so far. It doesn't buy coins, just sells.

500000P limit per day. No ID required either.

Do you think Trump's an asshole for wanting to dismantle the Fed?

Do you think Trump has some Bitcoin? That Putin gave him. With no traces to it? So he can pay for some TitBounce?

I wonder what you might pay for in Bitcoin in Manila. Legal stuff, I mean.

I wonder if you can pay a woman for an NDA in Bitcoin? Would it be enforceable?

How much Viagra could you buy with a whole Bitcoin? Not that I need that stuff, just wondering.

I wonder if you jammed a Bitcoin up a horses ass what the process time would be? Would it get faster or slower than normal? What would the blockchain do differently? Could you buy some gambling chips with it?

Does wifi even work from inside a horse's ass? Now there's a good question. That might be a good place to hide your Bitcoin. You might call it Horasscoin or maybe just asscoin. But what problem would it solve?

Maybe someone is working that out now. I'll look on the exchange for it.