Suppose someone wished to sell his house, way back in the 1890’s when gold was used as money, and somebody came to that person and said, “I’ll give you “x” ounces of gold for your house”, and suppose the offer was accepted. This was a commercial operation, where goods traded hands – the owner of a house sold a house, and received gold; the other party delivered some gold and purchased a house.
When, in bygone days, a house was sold for gold coins, all that the seller had to regard was the quantity of gold in the coins offered and whether that quantity was satisfactory or not. Gold was recognized as money!
Now suppose you wish to sell your house today, and someone offers to pay for it in “x” number of Bitcoins. The quantity of Bitcoins – unlike a quantity of gold in yesteryear – would mean absolutely nothing to you. You would have to relate the Bitcoins to something else, namely the dollar. You would want to know for how many dollars you could exchange your Bitcoins. The answer would determine whether or not you sold your house.
It is quite clear that the Bitcoin can only aspire to be a derivative of the dollar. It cannot aspire to anything greater: to have an independent, sovereign value, since, unlike gold, it is not something – something that has a physical existence.
The dollar is presently rising in its exchange value against all other currencies. But no one can deny that the dollar is itself a fiat currency, and that in all history, absolutely all fiat currencies have ended in the total collapse of their value in exchange.
What future awaits the Bitcoin when the fiat dollar finally crashes? Without a dollar to refer to, what is a Bitcoin? It is “the shadow of a dream”.
What I am getting at is that the Bitcoin is a non-thing. It will never be able to have an independent, sovereign value on its own, because it is a non-thing, just like all currencies in the world today are non-things, including the (temporarily) Almighty Dollar, which became an absolute non-thing precisely on Sunday, August 15, 1971.
The creators and promoters of the Bitcoin are perhaps acting in good faith, but they are individuals enthralled with technology. The Bitcoin may indeed be a technological marvel, but the creators and promoters of the Bitcoin do not understand money, and they do not understand that the creation of money cannot be accomplished by technology, no matter how sophisticated it may be. The ignorant public of today is also bewitched by the marvels of technology and has been thoroughly deceived by false economists about what money is and must be, and this opens the way for such fantasies as the Bitcoin.
I stand by my opinion that the Bitcoin is, in fact if not in intention, a fraud; it is an attempt to muscle-in on the enormous scam of universal fiat money, which is a curse upon mankind. And as a scam, it will go to the dust-bin of History, along with the world’s present fiat money system.
BitCoin is for chumps.
So is the dollar.
Bitcoin does have value, its anonymous. I predict when cash becomes illegal the exchange rate of bitcoins will go sky high.
If the exchange rate of a currency is dependent upon electricity, it is worthless.
Also, understand the difference between CURRENCY and MONEY. MONEY has intrinsic value, as gold or silver does to a jeweler; you can make / do something physically useful with it. CURRENCY is only something (currently) useful in commerce; paper dollars (and electronic ones!) are only currently useful to buy and sell real physical assets. If there is a collapse in confidence, paper dollars will not be accepted for commerce, and become worthless (yes, wallpaper, tinder for fires, replacement toilet paper, you get the idea anyway: merchants won’t take them). Bitcoin is CURRENCY, at best.
Bitcoin depends on: electricity, computers and encryption. Any of these fails and Bitcoin fails: if the grid goes down, how will you verify the blockchain (assuming you know how to do so)? If the merchant you want to trade with is a farmer with no computer skills or sceptical of Bitcoin, how will you buy his food? And if someone manages to compromise the blockchain, how will you know and how will you prevent corruption of your Bitcoins (essentially, electronic counterfeiting)?
Too many problems, not enough solutions, Hugo Salinas Price is right.
Every time I am on Amazon watching docs/movies etc, I see on thier toolbar a segment that says “you have 0 coins”. Could someone clue me in as to WTF coins they are talking about? Is this set up for Bitcoin? Is Bitcoin already a done deal? I hope not because I don’t trust this whole Bitcoin fiat scam.
@Jimsky: So can you buy a car with Bitcoin? A home? A loaf of bread? Where exactly are these accepted? For what?
Bea Lever, no, this is an Amazon / Prime deal; when you do certain things you “earn” coins at Amazon you can use for downloads, apps, etc.
Ignore it if you aren’t interested.
Very nice article. It is a “non thing” that only exist in the world of cyberthings.. Take away the cyber and you are left with nothing. At least you can burn FDRs.I think it all really depends on your outlook of the future;
If you believe the world will be like “Star Trek”, then maybe bitcoin has a future.
If you believe technology will cause a reset and we get knocked back a couple hundred years, then bitcoin is worthless.
I believe the latter..
All created money returns to its original value.
ZERO.
Not a fan of fiat but like the matrix, I have to live in it until freed.
Again, the value of a currency–ANY currency–is based solely upon confidence. Therefore future value is impossible to predict…humans are very fickle creatures.
Yes, gold has a very long track record as being money but not universal. The pre-Colombian natives around Bogota had lots of gold and emeralds—which they threw into lakes in religious ceremonies–they used salt as currency. on some reservations, Native American tribes have used bottle caps as currency…weren’t some drug dealers using Tide laundry detergent as currency a little while back?
Bitcoin has some very nice aspects as a currency, but I think that it had too many drawbacks to ever become a major world currency….then again I could be wrong.
Ultimately, currency is a medium of exchange for real wealth. Wealth at its most basic (primary) level consists of 4 things and only four things: land, energy, time and intelligence. Literally EVERYTHING mankind has created in history has been through a combination of these 4 elements.
You want to predict the future–it is a ridiculous game where everyone is wrong—but think at this most basic level and you can never go wrong.
I heard Ann Barnhardt describe money as the measure of a man’s labor, in ‘labor-hours’. Anything that is used to represent that labor is fiat, including gold.
Seems to make sense to me, but I don’t hold any degrees in finance.
One thing Collins said stuck, money is a unit of energy – the time and effort used to acquire X. The fact that the ‘whoever’ was able to con a man into believe their unit of X….or fiat, was the unit of exchange worthy of an individual’s energy – that same time and effort, was just the magic those sick assholes laugh about to this day. I mean, who wouldn’t, right? If you were able to get the world to value your widget that you conjured up and it would buy or represent real things…….and they ‘bought it’!!!!!!
Isn’t that the case with all “money?” One must exchange the Bitcoins for USD simply because Bitcoin is not widely accepted. That is to say, if workers were paid in Bitcoins and they were able to exchange these for good or services there would be no need to convert them into another “money”. Throughout US history gold was tied to paper “money” so there isn’t much difference in that regard.
Bitcoin is something, just not something tangible that you can touch. It is a private key, that is worth what people are willing to pay for it / or exchange for it. Gold is no different. If there was no demand for gold, or people had no desire to possess it, it would be worthless. Tangible or not, “money” is only worth the value that society assigns to it.
Price seems to not understand money and value. In order for a thing to have value, it need not be material, it only needs to be scarce (greater demand than supply). If Bitcoin has no value, neither does an MP3 or e-book, an idea (patent), a work of art (copyright), or fishing or water use rights, among other non-material things. Further, Bitcoin is not fiat because it can’t be produced at will, it requires effort (in the form of computational power) to produce them.
I’m not sure with all the competing claims but I still would like to have a couple million bitcoins to play around with.
Of Quatloos or Bitcoins…… Neither can exist as stand alone currencies until the taxman has his due
Sorry, guys, try this:
On one anvil put your Bitcoin wallet in whatever form (hard drive, thumb drive, whatever)
On the other anvil put an ounce of gold
Smash each with a hammer.
Try to sell each.
See the difference?
Europe Cracks Down On Bitcoin, Virtual Currencies To “Curb Terrorism Funding”
Submitted by Tyler Durden on 11/20/2015 08:10 -0500
In the past we have explained why when it comes to circumventing capital controls, primarily in the context of China, there are few as simple and as efficient alternatives to Bitcoin – contrary to what Bernanke may think, gold is concentrated money (and in India it now pays interest) but when it comes to transferring it across borders, it tends to be rather problematic. And now Europe appears to have figured this out, and as Reuters reports, European Union countries are preparing to crackdown on virtual currencies such as bitcoin, and anonymous payments made online and via pre-paid cards “in a bid to tackle terrorism financing after the Paris attacks, acording to a draft document.”
Just a week after the Paris terrorist attack, showing a dramatic ability for coordinated work by a continent that is known for anything but, today EU interior and justice ministers are gathering in Brussels for a crisis meeting called after the Paris carnage of last weekend. This happens days after the European Commission already announced it would make procurement of weapons across Europe virtually impossible, if only for citizens who wish to obtain protection legally.
According to Reuters, the justice minister will urge the European Commission, the EU executive arm, to propose measures to “strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards,” draft conclusions of the meeting said.
Conveniently, Reuters reminds us that “Bitcoin is the most common virtual currency and is used as a vehicle for moving money around the world quickly and anonymously via the web without the need for third-party verification. Electronic anonymous payments can be made also with pre-paid debit cards purchased in stores as gift cards.”
But no more: “EU ministers also plan “to curb more effectively the illicit trade in cultural goods,” the draft document said.”
And with all of Europe sliding ever deeper into negative rates, and where a ban on cash bank notes is an all too realistic possibility, the easiest mechanism to evade the ECB’s creeping financial oppression is about to be made illegal.
Finally, there was no word about the true source of terrorism funding: those mysterious “third parties” which keep pumping the Islamic State with hundreds of millions in cash in exchange for its crude oil. Perhaps Europe is so unwilling to dig down into this most important question (which as we said last night nobody is willing to ask) because it either already knows the answer, or realizes that the people implicated just may be some of the wealthiest and most respected Europeans, and the resulting stench could spread all the way to the various unelected politicians and ex-Goldmanite central bankers?
Hugo Salinas Price is a brilliant man. A visit to his web site is enough to settle the issue. If you do not read Spanish, the English version is available. If you still do not understand, God bless.
@anarchopagan
The dollar is still dependent on the printing press. When it is not, then it is an electronic currency. Bitcoin attempts to be the same only free of nationality. When it achieves independence from national exchange rates, it will become the reserve currency. No one will fret that their country is overprinting as long as they can measure their currency’s value against Bitcoin.
@jamesthewanderer,
A Bitcoin is pure information, a correlation between a particular fraction of a Bitcoin and a cryptographic key; it’s usually stored in a computer, but can be stored on paper or in your head. Further, the blockchain is distributed, if it survives on any one computer, then the integrity of the blockchain can be verified by any other computer. Very hard to destroy. Stefan Molyneux, a former computer techie, explains it very well.