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Bitcoin: Money of the Future or Old-Fashioned Bubble? – Mises

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Anyone who has gone through the ordeal of currently obtaining bitcoins is sure to realize that the ‘foolish masses’ could not yet be involved in this market. It takes a true ideological believer to navigate the informational websites, searching for how the heck you even get one of these magical coins.
Once they can be bought with a credit card and without waiting days for the block chain to be slowly downloaded, then maybe talk of the greater fool will sound more convincing. (Yes I realize there’s easier and faster ways to get the block chain, but only for one familiar with torrents and replacing files in directories) Most people just don’t want to work that hard for cheap easy money. Most people are just not that computer saavy.
All that being said, the author is dead on about parabolic trends. I’d much rather have seen a more linear appreciation…. But I do not share his pessimism regarding bitcoins inevitably doomed fate – due to this brief albeit rapid spike. The potential of this currency alternative is just too great. Over time bad money will always chase good, and there is a heck of a lot of bad money out there.

You only need to download the whole block chain with the reference wallet.
See here: http://bitcoin.org/en/choose-your-wallet
Electrum and Multibit are lightweight clients where you don’t have to download the whole blockchain,
Personally I used blockchain.info web wallet which is super easy to get started. Just make an account, it’s super easy. https://blockchain.info/wallet/

Again I’m not understanding why people don’t think physical bitcoin money substitutes can be issued (in fact they already exist). Technology has nothing to do with bitcoin’s adoption and saleability. I don’t think you insist that we are so far back in the past that we will carry around gold in our wallets. (Valcambi bars seem widely inconvenient IMO). I mean, with digital currencies, there will no longer be any incentive to mug anyone because they no longer physically carry wealth on their person. (I can imagine their could be an emergency passcode you can type in on your iphone that could block access to your wallet for a period of time).
It’s the public ledger (block chain) that is the importan innovation. It essentially creates the perfect money substitute. Since every transaction is public, and each bitcoin is cryptographically unique (satisfying a certain algorithm), counterfeiting is pretty much impossible. Bitcoins are designed to behave like a scarce commodity (the factors of production rise in cost as bitcoins become rarer), so pegging bitcoin to some commodity would be redundant. But who knows what currencies will seem most promising.
And just the transactions are publicly traceable, it doesn’t follow that there is no anonymity. There are no identification requirements for creating a bitcoin wallet, nor are you legally obligated to declare ownership of any given bitcoin wallet. Proxy servers exist too. You can have a service where you have wallet A (buyer), wallet B (seller), and wallet x (proxy wallet). You can have wallet A give bitcoin.1 to wallet x, and then have wallet x give bitcoin.2 (say a bitcoin that has never been used in an illegal transaction) to wallet B (seller). Voila and your money is laundered. It is easy to conceive that wallets could pool legal and illegal transactions and act as a laundering middle man that way too. This can all happen on a TOR browser, or even done via VPN, which would make things pretty much impossible for the government.

Even if you haven’t got any Bitcoin, the world will still benefit if it goes mainstream – simply from living in an economy that hasn’t got a completely screwed up financial system thats rotten to the core and allows tyrannical globalist sociopaths to lever non-existant wealth on a fixed capital base, lend it to whoever they like and ask for it back in real goods and services, trashing entire countries and economies in the process
As the currency appreciates in value (as it has been doing until now) payments for products will be made in smaller units. (So, in a few years, say, you might buy a bike for 250 Satoshis. If Bitcoin ever gets “mainstream” nobody will be trading in Bitcoins, they’ll be using Micro BCT, Milli BCT and Satoshis. (The smallest unit a bitcoin can be broken into is a “Satoshi”. There are 100,000,000 (one hundred million) Satoshis in a Bitcoin)
It was remarked by an Australian business analyst that if only 2.5% of “demand deposits” (thats current accounts around the world, not savings or deposit accounts) went into Bitcoin, its value would reach $700,000. (About 3 quarters of a million dollars per Bitcoin).
Thats no Ponzi scheme though – just simple division. If you have a lot of people sharing a finite amount of something, it gets spread thinner but its value goes up.
You can watch every single bitcoin transaction here as it happens. http://coinlab.com/ You’ll see lots of people buying tiny amounts of Bitcoin – 0.02 BCT and the like. Its not such a dumb thing to do as an “insurance policy” in case it gets big. At least you’ll have a horse in the race!

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