Who knows about Bitcoin?

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iamse7en
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Re: Who knows about Bitcoin?

Post by iamse7en »

I was actually listening to K-Talk the other morning and they were discussing BitCoin. I don't know enough, but this is my initial take: you have to applaud spontaneous efforts to start private currencies, but from the little I learned about it, it doesn't hold the basic characteristics that money needs to have: tangible/real, extremely difficult to duplicate/fake, durable, valued by the people, etc. But I'm all for competing currencies and innovative ideas, so I applaud the idea, but my personal thought is there is a reason markets in our history have always chosen gold and silver as money. But let local, private banks compete and innovate, and the market will determine the best money with the best service. Free markets is a pipe dream, but it's at least fun to speculate what liberty would be like. :)

jonesde
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Re: Who knows about Bitcoin?

Post by jonesde »

Bitcoin is based on some very reliable technology. There is a good description of it on WikiPedia:

http://en.wikipedia.org/wiki/Bitcoin" onclick="window.open(this.href);return false;

Bitcoin is valuable as an anonymous and fairly safe medium of exchange. It is quite difficult to falsify a transaction or fraudulently transfer money out of a "wallet". If you have access to the private key for the wallet you can easily transfer out of it, so like cash you have to keep that private key very safe. How much money is associated with each private key is well-known on the network (that is part of the trust aspect of the currency), and it is easy to get the "public key" for the wallet, but it is not mathematically easy to determine the private key from the public key.

That's probably not the best description of it, but basically the value of it is that it is pretty reliable/secure, and can be used to transfer value remotely without physical contact or transportation of physical material.

The flip side is that it does not represent ANY real value other than what people give it because of the two properties I just mentioned. So, if there are better alternatives or government regulation (which would be difficult to enforce) or if people even just lost interest in it, the market in bitcoins would fall apart.

So, it doesn't represent anything real and I wouldn't rely on it for a long-term store of value, and it would be highly risky to invest in it for anything other than a hopeful short-term return, but using it for transactions is interesting.

Another thing to note is that the built-in limit for bitcoins is 21 million, with less than a third of them "mined" yet (done with the bitcoin software, but it intentionally takes a lot of processing power and time to avoid inflation). The problem with those limits is that if lots of people get interested in bitcoin the value of bitcoins will go up fast for a while, but just because it is limited. In other words there is no way to scale the supply in response to the demand, so the market will response with an increase in price. That doesn't represent real value of any sort, it just represents pure demand.

If it goes the other way and people lose interest in it, which would happen FAST if someone did figure out a way to falsify transactions or "forge" bitcoins instead of "honestly" mining them, then interest in it would probably go down very fast and its market value would crash in a short amount of time (ie no one would want to buy them... lots of people would want to sell them).

It's a very interesting concept, and could be a way to safely transfer money without the need for government controlled intermediaries (ie banks, money transfer companies like Western Union, etc). However, it surely won't be used for just that. In fact, it might be used more for speculation than to facilitate trade, which for an intentionally limited currency would corrupt it VERY fast.

So, use if it you find it useful... but watch out for long-term preservation of value.

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Re: Who knows about Bitcoin?

Post by jonesde »

You're right, that's absolutely true about US dollars, they do not have any real value behind them.

There are some big differences between bitcoin and USD (not that one or the other is better, IMO, but they are different in nature):

1. Monetary Inflation (not to be confused with price inflation):
- bitcoin has a fixed limit and intentionally slow "inflation" with no mechanism for deflation
- USD has no limit and by using it we implicitly trust the Federal Reserve banks to inflate/expand and deflate/contract the money supply in a way that is best

2. Voluntary Use and Enforcement
- bitcoin use is purely voluntary; there is no organization threatening violence for not using it or for competing with it; there is no organization using force to prevent counterfeiting
- USD use is mandatory within the United States and competing with it is not allowed, which is enforced by the US Govt who also works to prevent and prosecute counterfeiting

3. Regulation and Taxation
- bitcoin is anonymous and transfer is "peer-to-peer", meaning it does not go through an organization that is licensed and regulated by the government, and therefore is very difficult to enforce a tax on (which is why use of cash is discouraged, and AML laws are so prevalent in spite of being quite onerous)
- USD can be anonymous through cash, and can be transferred peer-to-peer (though safely only face-to-face), but it's use is for the most part highly monitored and goes through organizations that are highly regulated, and with AML and related laws it is fairly easy to enforce taxes based on it

There are probably lots of other interesting comparisons between bitcoin and USD, but those are just some off the top of my head. I'm working with some clients in the financial industry right now and it has been interesting discussing some of these things with them.

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iamse7en
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Re: Who knows about Bitcoin?

Post by iamse7en »

JulesGP wrote:
jonesde wrote: The flip side is that it does not represent ANY real value other than what people give it
Doesn't that pretty much describe the USD though??
Essentially, you could say that's true about gold as well, but gold has certain characteristics that has always made the preferred money since the beginning of time.


Samuel the Lamanite
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Re: Who knows about Bitcoin?

Post by Samuel the Lamanite »

IMO, BitCoin is just another method for wild specualtion as can be seen in the rapidly rising price. Others can get involved but I'll stick with Gold, Silver, Oil and other real assets.

AllTen
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Re: Who knows about Bitcoin?

Post by AllTen »

"It's the first Decentralized Digital Crypto-Currency that utilizes a global peer-to-peer network"
BitCoins are very cool.
I'm in full anticipation for them to be demonized by the MSM.
Money for drugs, prostitution, and of course terrorist will be the propaganda.

Whatever your thoughts be, you could mine some bitcoins for me with your extra CPU power while you browse online:
Just go here (requires java). If you start your own account and mine for yourself then that's awesome too.
http://www.bitcoinplus.com/generate?for=949166

THANKS

Samuel the Lamanite
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Re: Who knows about Bitcoin?

Post by Samuel the Lamanite »

FYI, the US Senate is thinking about banning BitCoin.

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iamse7en
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Re: Who knows about Bitcoin?

Post by iamse7en »

Austro-Economist-Historian David Kramer on BitCoin:
Bitcoin: Just Another Bogus Medium of Exchange
Posted by David Kramer on June 9, 2011 03:00 PM

I'm sure by now many of you have heard about Bitcoin. The fact that it's called "virtual currency" gives you an idea about its actual value as a real medium of exchange. While many people who are touting it on Facebook are enamored with the fact that it was voluntarily created by the marketplace (i.e., is not forced down our throats by a private central bank), I'm afraid that those people are losing sight of how a real medium of exchange arises in a free market. A medium of exchange arises from something that had a material use/value in the market prior to becoming a medium of exchange, i.e., it was also a good being bartered for other goods and services. Over the centuries, gold and silver won out as the two most preferred mediums of exchange—with gold holding the number one position due to it being more scarce than silver.

What was Bitcoin's prior material use/value? Zero. It is just bits in a computer. And what's with the "fixed" amount of Bitcoins? Who determined the "proper" amount? A computer programmer? Only the free market can voluntarily determine how much of a real medium of exchange is needed in the marketplace over time. While the idea of attempting to get rid of the Bankster monopoly on creating money out of thin air is commendable, Bitcoin is also money created out of thin air. Bitcoin is just substituting one bogus medium of exchange for another.

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iamse7en
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Re: Who knows about Bitcoin?

Post by iamse7en »

A Clear, Concise Look at Bitcoin
JUNE 15, 2011 by JUSTIN PTAK

BitCoin, the world’s “first decentralized digital currency”, was devised in 2009. Unlike other virtual monies it does not have a central clearing house run by a single organization. Nor is it pegged to any real-world currency yet it can be used to purchase real-world goods and services however it is also just as fiat as it is not pegged to any solid commodity.

Inflation is a central point for the next 20 years as 300 coins are mined every hour on average. “Every four years, though, the minting rate is set to fall by a half. It will drop to 25 coins per block in 2013, to 12.5 coins in 2017, and so on, until the total supply plateaus at 21m or so around 2030.” The very definition of inflation until the plan of their plateau becomes a reality perhaps 20 years hence. Ceteris paribus even though it never is.

The instability is also key at this moment as just this last Friday Bitcoin suffered a massive crash from falling from just over $32 to just over $10 for each Bitcoin. Congratulations to all those profit takers, I expect more of the same due to this small and fragile market.

Not to mention a Bitcoin developer admitting that with sophisticated software the system is not so anonymous anyway and the Silk Road folks signaling their willingness to work with “authorities” if necessary.

Caveat emptor.

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iamse7en
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Re: Who knows about Bitcoin?

Post by iamse7en »

Doug Casey on bitcoin.

AllTen
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Re: Who knows about Bitcoin?

Post by AllTen »

iamse7en wrote:Doug Casey on bitcoin.

Here's a different point of view from Doug's article

http://www.infowarhorse.com/the-economi ... wrong.html" onclick="window.open(this.href);return false;


After a very difficult week and lot's of bad press, the new Decentralized Digital Crypt-o-currency is still trading at a descent level (~$15+).


I am now supporting the the BITCOIN network with my own computer and backing its worth with my CPU/GPU power.

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iamse7en
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Re: Who knows about Bitcoin?

Post by iamse7en »

Doug Casey responds to his Bitcoin critics.

AllTen
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Re: Who knows about Bitcoin?

Post by AllTen »

Well, Doug sure doesn't like it and that doesn't bother me. No body is forcing anybody to be a part of this.
That is probably why I like it so much. It's true free market in action and It's been a play ground where I have felt free.

My computer has mined over a $100 dollars in BTC so far (been running for 5 days). That doesn't count the electricity cost.

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iamse7en
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Re: Who knows about Bitcoin?

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http://arstechnica.com/tech-policy/news ... e-peak.ars" onclick="window.open(this.href);return false;

Silver
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Re: Who knows about Bitcoin?

Post by Silver »

I believe this thread is the oldest on LDSFF discussing bitcoin. The topic came up again a few months ago in one of my silver contest threads. When this thread started, the only talk was of bitcoin. Now there is bitcoin and bitcoin cash and litecoin and ether and ripple, etc. up to somewhere around 1,000 different types.

In retrospect, which is not being used to ridicule the comments made nearly six years ago, much of what is written, along with the in the articles linked, has been proven wrong.

Virtual currencies are too big to ignore now. Let's discuss.

nvr
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Re: Who knows about Bitcoin?

Post by nvr »

I've shared my background with Bitcoin before, but here's a few thoughts I've had recently after listening to some of the debate given its recent price gains:
It's not really private - a record is kept of every transaction made. If an institution or government had the interest and resources, you and your purchases could be identified from the blockchain.
It's not tangible - the network that recognizes the value relies on power grid to operate and would be useless in aftermath of war / emp attack.
It's not really secure - I had all my bitcoins stolen by malware (or Microsoft engineer) which had somehow found the bitcoin wallet on my pc, grabbed my private key and sent all 24 bitcoins to themselves
This last point was probably more my fault since I didn't encrypt the folder. But compared to precious metals stored inside a building, a bitcoin wallet held by lay users is in general much more vulnerable to virtual theft attempts. The right way to have done it would have been for me to have written down or printed off the private key (paper wallet) or at least stored it on a usb drive disconnected to internet. But then that is not very convenient when desiring to spend it.

Silver
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Re: Who knows about Bitcoin?

Post by Silver »

https://www.coindesk.com/information/

A Beginner's Guide to Blockchain Technology
Bitcoin is a digital currency that is being used increasingly all over the world since its inception in 2009. In the years since, many other assets and forms of blockchain technology have been developed. Find out more about bitcoin, ethereum, blockchains, and enterprise distributed ledger technology and how they are being used and evolving with our straightforward guides.

GUIDE INDEX
What is Bitcoin?
It's a decentralized digital currency
Why Use Bitcoin?
It's fast, cheap to use, and secure
How Can I Buy Bitcoins?
From an exchange or an individual
How to Buy Bitcoin in the UK
Buying bitcoin in the UK
How to Store Your Bitcoins
Use a digital or paper wallet

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BeNotDeceived
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Re: Who knows about Bitcoin?

Post by BeNotDeceived »

iamse7en wrote: June 6th, 2011, 8:38 am
JulesGP wrote:
jonesde wrote: The flip side is that it does not represent ANY real value other than what people give it
Doesn't that pretty much describe the USD though??
Essentially, you could say that's true about gold as well, but gold has certain characteristics that has always made the preferred money since the beginning of time.

{flash=480,270}http://www.youtube.com/v/r-o79vfBDJ4{/flash}
Hey cool, :ymapplause: but flash code won't work for me. :-( oh, well.

Gold is finite, but prolly abundant deep within the Earth = bad.

Energy applied over time is called work and is of real value. Cryptos represent work, but unfortunately they represent the waste thereof.

IF ... then we will have developed the perfect currency ... http://www.theperfectcurrency.org/main- ... y-currency

In lieu of storage there's certified capacity to produce.

That's from Silver's thread.

The recent hurricanes bore surprising and timely similarity to financial indicators such as GDP. Prosperity didn't have a rigorous definition, so I patterned after that of a recession.

Psychosis and Neurosis are similar with one being a greater condition than the other. Tropical storms have more tangible definitions. So too, should financial conditions. Depression applies to all three. Good weather and good financial conditions aren't so well defined.

Fusion is what powers the sun and is several orders of magnitude greater than our earthy (terrestrial) experience of chemical energy. Were we to harness fusion we would have something of amazing (celestial) value.

Joules are an aptly named unit of work, but are really small. Food Calories are actually 1000 calories. 1000 years is as a day. These are example of things that differ in orders of magnitude, which is loosely defined to mean 1000 times greater.

Energy consumption is the best indicator of a wealthy nation. Cold Fusion would make fossil fuels practically worthless, so its best to define a currency on what it can do. That way we don't get stuck with a worthless stockpile. Kinda like having a ginormous collection of cassette tapes, although vinyl records are making a comeback.

Just some random thoughts that may come in handy when the debt bomb finally does go boom. Here's what I think would make for a new coin based on the energy dollar:

Image ImageImage Image ImageImage Image

Here's our two cents ;) Image ImageSun Shining. Go Caching. Be Smiling!

Same size as what's on the 1$ bill, with a value = 1 GigaJoule. Image

Image

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harakim
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Re: Who knows about Bitcoin?

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Silver
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Re: Who knows about Bitcoin?

Post by Silver »

http://www.zerohedge.com/news/2017-09-1 ... currencies

The idea for Blockchain has been around much longer than I realized.

http://kk.org/mt-files/outofcontrol/ch12-b.html


Encryption always wins because it follows the logic of the Net. A given public-key encryption key can eventually be cracked by a supercomputer working on the problem long enough. Those who have codes they don't want cracked try to stay ahead of the supercomputers by increasing the length of their keys (the longer a key, the harder it is to crack) -- but at the cost of making the safeguard more unwieldy and slow to use. However, any code can be deciphered given enough time or money. As Eric Hughes often reminds fellow cypherpunks, "Encryption is economics. Encryption is always possible, just expensive." It took Adi Shamir a year to break a 120-digit key using a network of distributed Sun workstations working part-time. A person could use a key so long that no supercomputer could crack it for the foreseeable future, but it would be awkward to use in daily life. A building-full of NSA's specially hot-rodded supercomputers might take a day to crack a 140-digit code today. But that is a full day of big iron to open just one lousy key!

Cypherpunks intend to level the playing field against centralized computer resources with the Fax Effect. If you have the only fax machine in the world it is worth nothing. But for every other fax installed in the world, your fax machine increases in value. In fact, the more faxes in the world, the more valuable everybody's fax becomes. This is the logic of the Net, also known as the law of increasing returns. It goes contrary to classical economic theories of wealth based on equilibratory tradeoff. These state that you can't get something from nothing. The truth is, you can. (Only now are a few radical economics professors formalizing this notion.) Hackers, cypherpunks, and many hi-tech entrepreneurs already know that. In network economics, more brings more. This is why giving things away so often works, and why the cypherpunks want to pass out their tools gratis. It has less to do with charity than with the clear intuition that network economics reward the more and not the less -- and you can seed the "more" at the start by giving the tools away. (The cypherpunks also talk about using the economics of the Net for the reverse side of encryption: to crack codes. They could assemble a people's supercomputer by networking together a million Macintoshes, each one computing a coordinated little part of a huge, distributed decryption program. In theory, such a decentralized parallel

Silver
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Re: Who knows about Bitcoin?

Post by Silver »

Look at this list! I think this is getting too big to ignore. I'm not sure if there is anything nefarious lurking behind all this, but it wouldn't hurt to be aware of what is happening.

https://coinmarketcap.com/all/views/all/

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iWriteStuff
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Re: Who knows about Bitcoin?

Post by iWriteStuff »

Silver wrote: September 11th, 2017, 3:18 pm Look at this list! I think this is getting too big to ignore. I'm not sure if there is anything nefarious lurking behind all this, but it wouldn't hurt to be aware of what is happening.

https://coinmarketcap.com/all/views/all/
Allow me to play Devil's Advocate!

A) Bitcoin is a misnomer. There is no coin, per se, just a transferable credit. This presupposes that someone wants to accept payment in digital credits.
B) Where'd all the talk about Constitutional Money go? What's constitutional about cryptocurrencies? They seem more like a super fiat - medium of exchange backed by nothing, created by an independent party, sold by an independent party, and useful in only a limited number of economic transactions.
C) I only buy things with intrinsic value. Example:
1) Gold/Silver/Copper - they can be used for things other than as a medium of exchange.
2) Stocks - designates ownership in a business entity - entitles one to voting rights.
3) Bonds - corporate debt - in the event of default of said corporation, I am entitled to a percentage of their assets.
4) Treasuries - promises to pay backed by the U.S. Government
5) US Dollars - I like these the least, because they are fiat (backed by nothing but the "good faith and credit" of the U.S. govt, BUT they are the only thing accepted as payment of taxes. THAT is their intrinsic value, outside of their primary function as a medium of exchange.
D) ICOs are coming under increased scrutiny by the U.S. Govt (specifically SEC at the moment and eventually Dept of Treasury). The Ledger ties you to activity with a medium of exchange that could be made illegal at some future point. Your info is tied to the transactions. In short, they are designed to track you. I like this less. At least with cold, hard cash I can buy things anonymously.
E) If I can't hold it in my hand, I don't own it.

Them's my thoughts, but I'm open to edumacation!

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iWriteStuff
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Re: Who knows about Bitcoin?

Post by iWriteStuff »

Oh, and

F) They are currently the most speculative investment out there. Speculators are not the same as investors. I know there are some investors in Bitcoin, LiteCoin, Ripple, etc, but they are vastly overwhelmed by people pumping money in there just because they are "hot" at the moment. The minute the momentum shifts, the value plummets and you have to convert back to US Dollars. This is why there are swings of 20% up and down almost every day. That's a sign of speculation, not investment.
G) Smarter minds than mine have referred to the cryptocurrency market as a "bubble". And sometimes "super bubble". This is linked to the observation in F, that they are mostly pumped by speculators.
H) Cryptocurrencies are purchased using government-backed currencies (ie: USD, Yen, Yuan, Euro, etc). All a central bank needs to do to blow up the currency is create a department to 1) buy a massive load of said digital currency and then 2) dump it during thin market hours. This is the same thing they do with Gold and Silver futures contracts at the Comex now, but they can do it much easier with Cryptocurrencies given the clandestine nature of their markets. In short, any Central Bank can kill them any time they want because they have unlimited resources to destroy them. Heck, they could even pump and dump as a source of revenue for the bank's balance sheet.
I) Referring back to H, since Cryptocurrencies are denominated in value based on a government-backed currency, which is ultimately more important? The product or the currency in which it is denominated? If you're saying "Yeah I booked a 20% profit when I sold my Bitcoins", you're saying you valued the US Dollar more than the Bitcoin - hence you sold. Doesn't that imply that you're really more interested in obtaining profits on the US Dollar? What, then, does that say about the intrinsic value of the Bitcoin?

I'd add that I think the future of currency in general is going towards cryptocurrencies. You'll know the "official" cryptocurrency because it will be the only one the government accepts as payment for taxes. All others will have to weigh their value in comparison to that currency (which hasn't been introduced yet). Even other cryptocurrencies will be available for purchase in transactions denominated by this main government-sponsored cryptocurrency. Banks will love it, too, because it will be available for them to create out of nothing (like current fiat) and the government will love it because they can also track all your purchases due to the ledger feature.

Could also be that I'm missing out on the opportunity of a lifetime.

Silver
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Re: Who knows about Bitcoin?

Post by Silver »

All good points, IWS. Thanks for sharing them.

It's time for full disclosure. Although my posts above have been intended merely to inform and not necessarily to support cryyptocurrencies, I admit that I have recently purchased some. I now own Bitcoin (BTC), Litecoin (LTC) and Ether (ETH). I intend to diversify into a few other currencies, but only in small amounts. For me, for now, this is an educational process.

I feel confident that I'm not doing anything illegal or unconstitutional by merely owning cryptocurrencies. Since they are not issued by a government entity (as far as I know), I equate them to stocks. The issuers of these coins have some technology/trade secret/network that has some value. Are they possibly overvalued? Without a doubt. Are they all -- every single one of them -- overvalued? I'm not sure. Again, in order to force myself to learn more, I have purchased a small amount.

Whenever I recommend precious metals to someone for the first time, I always add: Don't buy them with your grocery money, or your rent money. The same advice applies to cryptocurrencies. I only buy with money that I do not need to survive.

As you know, travel to a foreign country always provides an encounter with a nosy question from the government authorities at the border. You are required to supply an answer as to whether or not you are carrying on your person US$10,000 or its equivalent. With your cryptocurrency wallet and password, you can cross a border with nothing in your hands or pockets and still possess many multiples of that amount while truthfully answering the question with a "No." Like a debit card, I guess. Only you don't even need to have a card.

Finally, anyone who knows the truth of what happened at Jekyll Island all those years ago, knows that there is no currency more cryptic and evil than the Federal Reserve note (well, soon to be replaced by SDRs). Whenever you listen to some of the creators of the cryptocurrencies, they speak of "fiat" and they speak of technology. That's refreshing to me. There is a growing segment of our population who are learning, for the first time in many cases, the truth about government-issued debt instruments like Federal Reserve Hiney Wipes. Only Jesus Christ will ultimately abolish the Gadiantons of our day, but if we can expose them now, even in a small way, I'm on board.

Silver
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Re: Who knows about Bitcoin?

Post by Silver »

http://www.zerohedge.com/news/2017-09-1 ... all-street

It's Official: "Long Bitcoin" Is The Most Crowded Trade On Wall Street

Tyler Durden's picture
by Tyler Durden
Sep 12, 2017 7:48 AM

... at least according to BofA's latest, just released monthly Fund Managers Survey, in which 181 participants with $549bn in AUM responded to dozens of questions, among which "what do you think is the most crowded trade." In September, for the first time ever, the top answer, per 26% of respondents, was Bitcoin, (which as BofA handily reminds us was up as much as 344% YTD), #2 was "long Nasdaq" (up 20% YTD) according to 22% of fund managers, while the "Short US Dollars" (-11% YTD) was third at 21%. Note: long US$ was most crowded trade as recently as Mar'17.

Of course, this does not mean that everyone is long bitcoin; it just means that everyone thinks everyone else is long bitcoin...

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