Bitcoins - anyone else mining? (1 Viewer)

[Jojo the circus boy]

There are 100 million satoshis per bitcoin for a reason. Isn't hyperinflation a typical reason for currencies to fail? Limited supply prevents hyperinflation from happening. Stating that bitcoins need to deflate is a bit disingenuous, for example if price remained stable at 1 bitcoin per 100 USD for so long as the USD didn't hyperinflate then what is the problem? Additionally as bitcoins become more trusted and is seen as a store of wealth replacing gold/silver causing the price to rise, again, what is wrong with that?

What I take issue with is someone demanding bitcoin needs to deflate in order to support motivation by miners to continue to mine since it shows a clear lack of understanding in how the difficulty is set.

 

[Tom Servo]

It doesn't do anything to demonstrate the need for deflation.

That's what I have been posting about for the past day...why you insist on "bitcoins need to deflate or they become worthless" is beyond me, there is certainly no mechanism related to mining that would support that assertion.

It's a basic supply/demand Econ 101 concept. An asset with a finite supply is deflationary by it's very nature. Over time they naturally become worth more and more. On the other hand an asset with an infinite supply is inflationary by it's very nature. Over time they naturally become worth less and less.

Bitcoin is deflationary by it's very design. There is a finite limit of bitcoins that can ever be mined. It's a deflationary asset. If that ever changed, and somehow there was no longer a finite limit of bitcoin mining, then it becomes an inflationary asset, like nearly all fiat currencies. The only people who would choose it over government fiat money are those that distrust the government and banks... And even some of them wouldn't choose if.

Much of bitcoins value today comes from demand for a finite limit asset. Gold and silver are naturally finite, but banking was born out of fractional reserve lending of gold and silver, which is just naked short selling more receipts for gold and silver than the banks actually have, so fractional reserve lending makes finite precious metals infinite thanks to there being no limit on the number of paper receipts you can make for silver and gold (and yes if you own gold/silver investments and don't possess it physically, you're an idiot). People who know this about gold and silver like the finite existence of bitcoins. They like that it is naturally deflationary. Take that away and 99% of the demand for bitcoins disappears. It becomes worthless.

This times 10,000. Well said.

 

[Tom Servo]

There are 100 million satoshis per bitcoin for a reason. Isn't hyperinflation a typical reason for currencies to fail? Limited supply prevents hyperinflation from happening. Stating that bitcoins need to deflate is a bit disingenuous, for example if price remained stable at 1 bitcoin per 100 USD for so long as the USD didn't hyperinflate then what is the problem? Additionally as bitcoins become more trusted and is seen as a store of wealth replacing gold/silver causing the price to rise, again, what is wrong with that?

What I take issue with is someone demanding bitcoin needs to deflate in order to support motivation by miners to continue to mine since it shows a clear lack of understanding in how the difficulty is set.

Did you miss the part where Spock said it was deflationary because of its limited supply? The laws of economics will - not might, WILL - catch up to it. Maybe not today or in the next month, but one day soon.

 

[Jojo the circus boy]

It doesn't do anything to demonstrate the need for deflation.

That's what I have been posting about for the past day...why you insist on "bitcoins need to deflate or they become worthless" is beyond me, there is certainly no mechanism related to mining that would support that assertion.

It's a basic supply/demand Econ 101 concept. An asset with a finite supply is deflationary by it's very nature. Over time they naturally become worth more and more. On the other hand an asset with an infinite supply is inflationary by it's very nature. Over time they naturally become worth less and less.

Bitcoin is deflationary by it's very design. There is a finite limit of bitcoins that can ever be mined. It's a deflationary asset. If that ever changed, and somehow there was no longer a finite limit of bitcoin mining, then it becomes an inflationary asset, like nearly all fiat currencies. The only people who would choose it over government fiat money are those that distrust the government and banks... And even some of them wouldn't choose if.

Much of bitcoins value today comes from demand for a finite limit asset. Gold and silver are naturally finite, but banking was born out of fractional reserve lending of gold and silver, which is just naked short selling more receipts for gold and silver than the banks actually have, so fractional reserve lending makes finite precious metals infinite thanks to there being no limit on the number of paper receipts you can make for silver and gold (and yes if you own gold/silver investments and don't possess it physically, you're an idiot). People who know this about gold and silver like the finite existence of bitcoins. They like that it is naturally deflationary. Take that away and 99% of the demand for bitcoins disappears. It becomes worthless.

This times 10,000. Well said.

You've been awarded 10,000 pom poms

 

[Politician Spock]

Isn't hyperinflation a typical reason for currencies to fail?

Inflation is a requirement of every stable currency. If it can't inflate, population growth and economic growth will naturally cause it to fail due to natural deflation. You can't have a stable currency that does not inflate to some degree. Hyperinflation is not typical, and is caused by factors above and beyond inflation. To insinuate that inflating a currency leads to hyperinflation of the currency is like insinuating that extending your leg leads to hyperextending your leg. It takes factors above and beyond the act of extending your leg to cause your leg to hyperextend. Likewise, it takes factors above and beyond the act of inflating a currency to cause the currency to hyperinflate.

 

[Jojo the circus boy]

When (not if) the USD inflates in price bitcoin has the advantage of not following in its footsteps, similar to precious metals it can deflate, it is a hedge against the inevitable. No currency lasts forever.

Why on earth would you try to spin this as a bad thing? My only assumption is some people are confusing deflation with hyper-deflation.

Also bitcoin is not pegged against the dollar, there may be a bias to correlate with it since 50% of usage of bitcoin is in the U.S. But just because the USD inflates does not require bitcoin to deflate, this an important distinction.

 

[Politician Spock]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

 

[[icon]]

BITCOIN:
The People's* Global** Currency

* only accessible to mining conglomerates

** only accepted in America

 

[Jojo the circus boy]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

1st of all: nothing in this post disproves anything I posted in my last post.Secondly: When.

Finally: You want to talk about intrinsic value now? Fine.

The non-monetary use of Bitcoin derives its value from its globally distributed, general-purpose ledger. Bitcoin's network also has intrinsic value in the overall computational power of the network married with the security of heavy encryption.. Dollars have almost no intrinsic value, but they do burn, which means they can be used for fuel, and they can be chopped up and used as a medium for paper. Seashells have some intrinsic value, because there are people who enjoy them as jewelry.

Stocks don't have any intrinsic value, they REPRESENT something else.

Silver has intrinsic value, because it is a malleable metal with high conductivity, properties that make it antimicrobial and is the shiniest of the metals.

 

[[icon]]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

 

[Rohn Jambo]

VC firms invest in a lot of companies and expect to hit on a very low percentage of them. stbugs is exactly right. Not sure what a copy and paste of a wiki article on their successful portfolio companies has anything to do with what stbugs said.

First off not all VC firms act the same way and share your strategy. The "copy and paste" showed substantially different investment amounts in a variety of successful startups. You and stbugs ignore the point I made entirely, I stated he chose to invest in bitpay rather than get fixated on bitcoin the currency like the majority of the doom-and-gloom posters have done in this thread.Investing in BitPay was as close to investing in bitcoin the payment network as you can get.

Li Ka-shing gets it, richest man in Hong Kong instead of buying bitcoin he invests in BitPay.

Strategically, investing in Bitpay is better different than buying bitcoins directly. Whitetail Hunter can explain to you that is on page one of Rockefeller's playbook for Standard Oil.

 

[Rohn Jambo]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

1st of all: nothing in this post disproves anything I posted in my last post. Secondly: When.Finally: You want to talk about intrinsic value now? Fine.The non-monetary use of Bitcoin derives its value from its globally distributed, general-purpose ledger. Bitcoin's network also has intrinsic value in the overall computational power of the network married with the security of heavy encryption.. Dollars have almost no intrinsic value, but they do burn, which means they can be used for fuel, and they can be chopped up and used as a medium for paper. Seashells have some intrinsic value, because there are people who enjoy them as jewelry.Stocks don't have any intrinsic value, they REPRESENT something else.Silver has intrinsic value, because it is a malleable metal with high conductivity, properties that make it antimicrobial and is the shiniest of the metals.

I am no math genius soI have another question about the global ledger. Looks like it works by following a chain of transactions. Over time, can the chains get too long?

 

[Tom Servo]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

 

[identikit]

It's the shiniest.

 

[DrJ]

Bitcoin really doesn't behave like gold all that much. And, we already have gold.

 

[Jojo the circus boy]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be.

 

[Slapdash]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

1st of all: nothing in this post disproves anything I posted in my last post. Secondly: When.Finally: You want to talk about intrinsic value now? Fine.The non-monetary use of Bitcoin derives its value from its globally distributed, general-purpose ledger. Bitcoin's network also has intrinsic value in the overall computational power of the network married with the security of heavy encryption.. Dollars have almost no intrinsic value, but they do burn, which means they can be used for fuel, and they can be chopped up and used as a medium for paper. Seashells have some intrinsic value, because there are people who enjoy them as jewelry.Stocks don't have any intrinsic value, they REPRESENT something else.Silver has intrinsic value, because it is a malleable metal with high conductivity, properties that make it antimicrobial and is the shiniest of the metals.

 

[Jojo the circus boy]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

Are you saying two of the largest nations in the world have managed to make access impossible to the decentralized bitcoin network to use/view the non-monetary aspects of Bitcoin that you are referring to in your post? They must have an internet kill switch too?

ETA: You are clearly misrepresenting China's view on bitcoin.

.

 

[[icon]]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be

Ostrich-boy...You seem to be completely ignoring the fact that China and India have both shut it down, and other nations are sure to follow....

 

[[icon]]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

Are you saying two of the largest nations in the world have managed to make access impossible to the decentralized bitcoin network to use/view the non-monetary aspects of Bitcoin that you are referring to in your post? They must have an internet kill switch too?

.

You apparently don't understand how the internet in China works

 

[[icon]]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be

You must admit, The infrastructure IS a little immature, though.

 

[DrJ]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

1st of all: nothing in this post disproves anything I posted in my last post. Secondly: When.Finally: You want to talk about intrinsic value now? Fine.The non-monetary use of Bitcoin derives its value from its globally distributed, general-purpose ledger. Bitcoin's network also has intrinsic value in the overall computational power of the network married with the security of heavy encryption.. Dollars have almost no intrinsic value, but they do burn, which means they can be used for fuel, and they can be chopped up and used as a medium for paper. Seashells have some intrinsic value, because there are people who enjoy them as jewelry.Stocks don't have any intrinsic value, they REPRESENT something else.Silver has intrinsic value, because it is a malleable metal with high conductivity, properties that make it antimicrobial and is the shiniest of the metals.

I am no math genius soI have another question about the global ledger. Looks like it works by following a chain of transactions. Over time, can the chains get too long?

I don't think chain length is much of a concern, it's more the number of transactions per block. When you decide to participate in the network you have to download the entire chain. For Litecoin that took me a couple hours on a 20 Mb/s connection. If your connection is slower it might take half a day. It's most definitely an inconvenience, but I don't see it as something that might endanger viability.On the transactions per block end, this is something that's been brought up since the early days, as early as the discussions on the Cryptography mailing list. Satoshi's answer to this was something along the lines of "you'll probably be able to download a couple DVD's in seconds in the future". The problem here is that all of these decentralized nodes need to agree on consensus to incorporate a transaction into the chain. Which means every node needs to know about every transaction in the world. These seem to range from a couple KB to a couple hundred KB in size. Right now this isn't a problem because there's almost no transactions happening. 1 per second or so on average whereas just visa is about 2000 a second.

It seems from what jojo has posted, they are introducing clients that don't actually participate in the network in this fashion. Which would make the network a whole lot less decentralized, opening it up to the attacks that can happen if someone or group of someone's take over more than 50% of the network.

 

[Politician Spock]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

1st of all: nothing in this post disproves anything I posted in my last post. Secondly: When.Finally: You want to talk about intrinsic value now? Fine.The non-monetary use of Bitcoin derives its value from its globally distributed, general-purpose ledger. Bitcoin's network also has intrinsic value in the overall computational power of the network married with the security of heavy encryption.. Dollars have almost no intrinsic value, but they do burn, which means they can be used for fuel, and they can be chopped up and used as a medium for paper. Seashells have some intrinsic value, because there are people who enjoy them as jewelry.Stocks don't have any intrinsic value, they REPRESENT something else.Silver has intrinsic value, because it is a malleable metal with high conductivity, properties that make it antimicrobial and is the shiniest of the metals.

I have to admit, I know he is in denial, so my attempts to open his eyes are futile... Yet I continue for the entertainment of it.

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

 

[Tom Servo]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be.

I think you severely underestimate the presence of cell towers in much of Africa. You know, like in 70% of the continent that is comprised of mud huts, dirt roads & goat pens?

 

[Jojo the circus boy]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be

Ostrich-boy...You seem to be completely ignoring the fact that China and India have both shut it down, and other nations are sure to follow....

This is false as well, I haven't read up on India but I can speak about China.Perhaps you can tone down the trolling and educate yourself a little before spreading FUD.

China does not recognize bitcoin as a currency, they recognize it as an asset.

China does not regulate what assets its citizens can and cannot buy, transmitting assets is legal.

Merchants are forced to accept only RMB for goods, they cannot accept USD, they cannot accept bitcoin, you cannot barter for goods (i.e. you cannot trade your eggs for noodles), etc...

It is not illegal to own bitcoin in China.

The Chinese government has stated that buying bitcoin is legal, just like buying eggs, noodles (, etc..) is legal so long as you use RMB.

The halt on deposits was due to the payment providers not following the rules.

The Chinese government is replacing existing third-party payment processors with their own state-sanctioned entities.

You can still buy bitcoin at www.huobi.com, in fact it has been the highest volume exchange for the past week. 7x the volume that MtGox is doing.

source

As far as India, just doing a cursory search - looks like PayPal is pretty much dead in India as well although this link is from 2011, so no shocker they would try to clamp down on bitcoin.

 

[Jojo the circus boy]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be.

I think you severely underestimate the presence of cell towers in much of Africa. You know, like in 70% of the continent that is comprised of mud huts, dirt roads & goat pens?

So now you are changing your argument from computers to internet access? That may be true today but there are solutions in the works.

 

[DrJ]

If/when the US Dollar dies (and I am on the when side), there are many assets one can own that protects a person from that event. Land, buildings, equipment, vehicles, food, supplies, physical possession of gold and silver... And yes, even owning bitcoins. However, all the above have something bitcoins don't have.... Intrinsic value. They have use above and beyond trade value. There is no use for a bitcoin other than to be traded. So it's worth is always nothing more than the demand that exists for it to be received in trade. This is why it is so important for bitcoin promoters to actually spend bitcoins, and let people see merchants accepting them. Without demand in trade, it's worthless. This is why it is said to be a currency despite the fact by its very design it would fail if it was really a currency.

1st of all: nothing in this post disproves anything I posted in my last post. Secondly: When.Finally: You want to talk about intrinsic value now? Fine.The non-monetary use of Bitcoin derives its value from its globally distributed, general-purpose ledger. Bitcoin's network also has intrinsic value in the overall computational power of the network married with the security of heavy encryption.. Dollars have almost no intrinsic value, but they do burn, which means they can be used for fuel, and they can be chopped up and used as a medium for paper. Seashells have some intrinsic value, because there are people who enjoy them as jewelry.Stocks don't have any intrinsic value, they REPRESENT something else.Silver has intrinsic value, because it is a malleable metal with high conductivity, properties that make it antimicrobial and is the shiniest of the metals.

I have to admit, I know he is in denial, so my attempts to open his eyes are futile... Yet I continue for the entertainment of it.

That's basically where I'm at with it. Plus he does do an okay job of cutting and pasting some of the standard bitcoin loon responses to things so it's at least somewhat useful. I have a lot of his links in my notes.

 

[identikit]

Project Loon!!!

 

[Politician Spock]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

 

[Jojo the circus boy]

More about India, why do you think they love Gold so much?

India has a 6% tax on gold, the people would rather pay a 15% premium to buy gold jewelry than invest in a CD.

If cryptocurrency ever got going in India it would be the end of fiat and the end of the corrupt Nehru-Ghandi Congress party dynasty.

 

[Jojo the circus boy]

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Finally something we can agree on.

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record? And even if they are, what's to stop them from making more loans than they have money like what happened during the housing bubble?

 

[DrJ]

Like, what's the point of currency to begin with? It was tough to trade, because you can't find people with an exact match for what you want. It's tough to accumulate wealth, because just about everything I have requires maintenance or degrades over time (like bitcoin wallets). So gold is great for this, you can accumulate it and it never deteriorates. It's finite and you can't print any of it up out of thin air. Good stuff.

There's some of the problems you mentioned, but that springs up from man's behavior with the gold. People are going to steal it, so you'd like someone to secure it. And now you have to trust the guy holding it. If they engage in risky behavior, secure it poorly, etc there's a chance everything I asked them to hold is gone. Why would man's behavior with bitcoin be different? What is there that prevents them from finding tricky ways to manipulate markets, create products off of their holdings that expose them to risk, secure it poorly, etc?

 

[Politician Spock]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

To me, M2 is basically a future promise. I don't see why I'm even going to bother securing your bitcoins unless there's something in it for me. I need to be able to create some products off of this that make me money. So we'll have to find a way for some future promises to be made that are profitable to me for me to even want to get in this business.

 

[Maelstrom]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

Sure, banks can hold the M1 bitcoin, and release Fiat Notes (BCNotes?) to the users, just like with gold. No need for additional mining or anything complicated, they just repeat the process that made them rich from the gold era. People can then transact with BCNotes, and the banks will hold the actual Bitcoins and release more notes or less as needed to keep the BCNotes value stable. Win-win (except for the poor consumer, who loses any of the actual benefits of owning Bitcoins and is stuck with the exact same financial system we have now except with a different underlying backing medium.)

Don't think that'll happen, but that is how it could happen.

 

[Politician Spock]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

Sure, banks can hold the M1 bitcoin, and release Fiat Notes (BCNotes?) to the users, just like with gold. No need for additional mining or anything complicated, they just repeat the process that made them rich from the gold era. People can then transact with BCNotes, and the banks will hold the actual Bitcoins and release more notes or less as needed to keep the BCNotes value stable. Win-win (except for the poor consumer, who loses any of the actual benefits of owning Bitcoins and is stuck with the exact same financial system we have now except with a different underlying backing medium.)

Don't think that'll happen, but that is how it could happen.

So do people want bitcoins or bitcoin "notes"?

The appeal of bitcoin is the rejection of the "note" currency system.

 

[Osaurus]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

Sure, banks can hold the M1 bitcoin, and release Fiat Notes (BCNotes?) to the users, just like with gold. No need for additional mining or anything complicated, they just repeat the process that made them rich from the gold era. People can then transact with BCNotes, and the banks will hold the actual Bitcoins and release more notes or less as needed to keep the BCNotes value stable. Win-win (except for the poor consumer, who loses any of the actual benefits of owning Bitcoins and is stuck with the exact same financial system we have now except with a different underlying backing medium.)

Don't think that'll happen, but that is how it could happen.

So do people want bitcoins or bitcoin "notes"?

The appeal of bitcoin is the rejection of the "note" currency system.

I think all the kids are into Pogs these days

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

Sure, banks can hold the M1 bitcoin, and release Fiat Notes (BCNotes?) to the users, just like with gold. No need for additional mining or anything complicated, they just repeat the process that made them rich from the gold era. People can then transact with BCNotes, and the banks will hold the actual Bitcoins and release more notes or less as needed to keep the BCNotes value stable. Win-win (except for the poor consumer, who loses any of the actual benefits of owning Bitcoins and is stuck with the exact same financial system we have now except with a different underlying backing medium.)

Don't think that'll happen, but that is how it could happen.

So do people want bitcoins or bitcoin "notes"?The appeal of bitcoin is the rejection of the "note" currency system.

Over time, who knows. Bitcoin has appeal for a number of groups, some share goals but many of them have conflicting goals. Libertarians and anarchists (anonymity and lack of regulation), tech geeks (cool, my geeky rig is mining for "gold". "Currency of the Internet"), some gold people and anti-fed people (finite supply, no central authority), speculators and greedy people (scheduled hyper deflation, virtual ATM machine in my basement).

When the general public buys into this, who knows. Right now it's a dedicated group of highly vested people that typically fall into one of those groups. General public is going to want ease of use and someone to secure this for them. And there will be (and have already been) a myriad of bank type services. Many of them have cost users what today amounts to millions.

Some might charge you to store your money, others might pay interest if they can loan it out, the list of products could be virtually endless. And now the consumer gets to decide who they trust, and lose all their money if they're wrong.

 

[Tom Servo]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be.

I think you severely underestimate the presence of cell towers in much of Africa. You know, like in 70% of the continent that is comprised of mud huts, dirt roads & goat pens?

So now you are changing your argument from computers to internet access? That may be true today but there are solutions in the works.

Dude... I changed nothing. Access is access, regardless of how you get there. I'm having visions of Omar the Goat Herder taking btc for his prize goat using his iphone with no cell tower for hundreds of miles &

 

[Jojo the circus boy]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be.

I think you severely underestimate the presence of cell towers in much of Africa. You know, like in 70% of the continent that is comprised of mud huts, dirt roads & goat pens?

So now you are changing your argument from computers to internet access? That may be true today but there are solutions in the works.

Dude... I changed nothing. Access is access, regardless of how you get there. I'm having visions of Omar the Goat Herder taking btc for his prize goat using his iphone with no cell tower for hundreds of miles &

Keep saying that to yourself:

And except for anyone without a computer...

I never knew you were so interested in a new currency to come forward to solve the problems of 100% of the people on the planet with zero challenges.

 

[Tom Servo]

The non-monetary use of Bitcoin derives its value from its globally distributed,.

not so fast... except for the two largest nations in the world.....

And except for anyone without a computer...

Good thing people in Africa have smartphones which are "computers", the bar is not as high as you are trying to make it out to be.

I think you severely underestimate the presence of cell towers in much of Africa. You know, like in 70% of the continent that is comprised of mud huts, dirt roads & goat pens?

So now you are changing your argument from computers to internet access? That may be true today but there are solutions in the works.

Dude... I changed nothing. Access is access, regardless of how you get there. I'm having visions of Omar the Goat Herder taking btc for his prize goat using his iphone with no cell tower for hundreds of miles &

Keep saying that to yourself:

And except for anyone without a computer...

I never knew you were so interested in a new currency to come forward to solve the problems of 100% of the people on the planet with zero challenges.

And I never knew the solution to internet access was BALOONS!

 

[Politician Spock]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

Sure, banks can hold the M1 bitcoin, and release Fiat Notes (BCNotes?) to the users, just like with gold. No need for additional mining or anything complicated, they just repeat the process that made them rich from the gold era. People can then transact with BCNotes, and the banks will hold the actual Bitcoins and release more notes or less as needed to keep the BCNotes value stable. Win-win (except for the poor consumer, who loses any of the actual benefits of owning Bitcoins and is stuck with the exact same financial system we have now except with a different underlying backing medium.)

Don't think that'll happen, but that is how it could happen.

So do people want bitcoins or bitcoin "notes"?The appeal of bitcoin is the rejection of the "note" currency system.

Over time, who knows. Bitcoin has appeal for a number of groups, some share goals but many of them have conflicting goals. Libertarians and anarchists (anonymity and lack of regulation), tech geeks (cool, my geeky rig is mining for "gold". "Currency of the Internet"), some gold people and anti-fed people (finite supply, no central authority), speculators and greedy people (scheduled hyper deflation, virtual ATM machine in my basement).When the general public buys into this, who knows. Right now it's a dedicated group of highly vested people that typically fall into one of those groups. General public is going to want ease of use and someone to secure this for them. And there will be (and have already been) a myriad of bank type services. Many of them have cost users what today amounts to millions.

Some might charge you to store your money, others might pay interest if you can loan it out, the list of products could be virtually endless. And now the consumer gets to decide who they trust, and lose all their money if they're wrong.

The banks would have to charge a fee for bitcoin storage, unless they plan to fractional reserve lend them out for interest, and share that interest with the bitcoin depositors. The question then would be what would the interest rate be for a currency where M1 is naturally deflationary, compared to interest rates for a competing currency where M1 is naturally inflationary. Given the natural deflationary nature of M1 bitcoins, in the future they will have more purchasing power than they have today, thus M2 bitcoin would naturally have lower interest rates than borrowing US Dollars. The M2 issuance of bitcoin would have to be at such a ridiculously high pace to produce a competing interest rate that the inducing bank run, and eventual closing of the bitcoin exchange window, would happen far early than Nixon closing the gold exchange window. Bitcoin notes would have no more tie to bitcoins than the dollar has a tie to gold.

Asset backed notes systems in a fractional reserve lending system are only temporary systems. Eventually the exchange window has to close.

 

[Jojo the circus boy]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

What's the point of putting gold in a safe for 100 years? Does that require 0 maintenance? You have no fear of theft? Certainly there are very expensive storage and security costs to secure your gold, you cannot draw a comparison with bitcoin unless you do so fairly. The costs to maintain your bitcoin is a fraction of what it costs to secure your gold and you can transact with it infinitely easier. When was the last time someone bought a car with gold or bought internet access by the minute with gold? If someone had cash and wanted to convert it to gold and then find a dealer that would accept your transaction and then pay with gold I could only imagine how much of a premium you end up paying at the end of the sale between converting cash to gold and then having to worry about taxes on the sale of the gold, etc... Then you have the authenticity issue with 100k worth of gold, you either pay a premium for easily verifiable gold units and then take a loss on the sale due to the spread or you buy lump gold and pay some fee for the buyer to authenticate that gold is legitimate - no such costs with bitcoins.

The mining of gold is similar to the mining of bitcoins, as more is discovered the difficulty to mine the resource at the same rate increases and the costs associated with said mining also increases. So exactly what you have been complaining about with bitcoins has the same issues with other finite resources, imagine that!

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

What's the point of putting gold in a safe for 100 years? Does that require 0 maintenance? You have no fear of theft? Certainly there are very expensive storage and security costs to secure your gold, you cannot draw a comparison with bitcoin unless you do so fairly. The costs to maintain your bitcoin is a fraction of what it costs to secure your gold and you can transact with it infinitely easier. When was the last time someone bought a car with gold or bought internet access by the minute with gold?

The mining of gold is similar to the mining of bitcoins, as more is discovered the difficulty to mine the resource at the same rate increases and the costs associated with said mining also increases. So exactly what you have been complaining about with bitcoins has the same issues with other finite resources, imagine that!

Actually, that's not entirely true. Unlike your patently false assertion that technological improvements will make it cost less to mine for bitcoin when the exact opposite is true, this does hold true for gold. Technological advances make it easier to mine, will allow us to uncover and retrieve deposits that were unavailable in previous times, help us get the stuff that was lost at the bottom of the ocean a few centuries ago, etc. There are other natural feedback mechanisms in place - when gold deflates people have a lot more interest in mining it and as a result more comes onto the market helping to ease this a little. When it inflates, people stop mining and it goes in the opposite direction. As an example here, a co-worker has some mineral rights that have oil on them. When the price shoots up, the rigs start pumping. When it goes down, they turn them off. In the bitcoin world people will throw more power at it as it deflates, but the same amount hit the market. And when it inflates people drop off. But the same amount still hit the market.

 

[Fennis]

More about India, why do you think they love Gold so much?

India has a 6% tax on gold, the people would rather pay a 15% premium to buy gold jewelry than invest in a CD.

If cryptocurrency ever got going in India it would be the end of fiat and the end of the corrupt Nehru-Ghandi Congress party dynasty.

Indian weddings

http://www.businessinsider.com/gold-smuggling-spikes-in-india-2013-12

 

[Jojo the circus boy]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

What's the point of putting gold in a safe for 100 years? Does that require 0 maintenance? You have no fear of theft? Certainly there are very expensive storage and security costs to secure your gold, you cannot draw a comparison with bitcoin unless you do so fairly. The costs to maintain your bitcoin is a fraction of what it costs to secure your gold and you can transact with it infinitely easier. When was the last time someone bought a car with gold or bought internet access by the minute with gold?

The mining of gold is similar to the mining of bitcoins, as more is discovered the difficulty to mine the resource at the same rate increases and the costs associated with said mining also increases. So exactly what you have been complaining about with bitcoins has the same issues with other finite resources, imagine that!

Actually, that's not entirely true. Unlike your patently false assertion that technological improvements will make it cost less to mine for bitcoin when the exact opposite is true, this does hold true for gold. Technological advances make it easier to mine, will allow us to uncover and retrieve deposits that were unavailable in previous times, help us get the stuff that was lost at the bottom of the ocean a few centuries ago, etc. There are other natural feedback mechanisms in place - when gold deflates people have a lot more interest in mining it and as a result more comes onto the market helping to ease this a little. When it inflates, people stop mining and it goes in the opposite direction. As an example here, a co-worker has some mineral rights that have oil on them. When the price shoots up, the rigs start pumping. When it goes down, they turn them off. In the bitcoin world people will throw more power at it as it deflates, but the same amount hit the market. And when it inflates people drop off. But the same amount still hit the market.

you are so bad at this.

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

What's the point of putting gold in a safe for 100 years? Does that require 0 maintenance? You have no fear of theft? Certainly there are very expensive storage and security costs to secure your gold, you cannot draw a comparison with bitcoin unless you do so fairly. The costs to maintain your bitcoin is a fraction of what it costs to secure your gold and you can transact with it infinitely easier. When was the last time someone bought a car with gold or bought internet access by the minute with gold? If someone had cash and wanted to convert it to gold and then find a dealer that would accept your transaction and then pay with gold I could only imagine how much of a premium you end up paying at the end of the sale between converting cash to gold and then having to worry about taxes on the sale of the gold, etc... Then you have the authenticity issue with 100k worth of gold, you either pay a premium for easily verifiable gold units and then take a loss on the sale due to the spread or you buy lump gold and pay some fee for the buyer to authenticate that gold is legitimate - no such costs with bitcoins.The mining of gold is similar to the mining of bitcoins, as more is discovered the difficulty to mine the resource at the same rate increases and the costs associated with said mining also increases. So exactly what you have been complaining about with bitcoins has the same issues with other finite resources, imagine that!

And on your first paragraph, congratulations, you've successfully grasped the concept that it doesn't behave like gold.

 

[DrJ]

What happens when I put my gold in a safe, come back 100 years later, and open it? Well, I'll be damned. It's still gold. How about bitcoin? Oh crap, I've endured bit rot and the client is outdated, all my bitcoins are lost!!

What happens if it's on a boat that sinks to the bottom of the ocean? Yep, still gold. What happens when your cold storage holding bitcoins sinks to the bottom of the ocean. Oh no, all my bitcoins are lost!!!

It has some similarities to gold in the sense of finite supply, but even there it barely behaves like gold. Oh no, we've mined all the gold in the world, what will we do? The act of mining lacks certain feedback mechanisms that you see with gold or silver.

This doesn't act like gold almost at all, in any way. Maybe closer than fiat currencies that can be printed up out of thin air, but still not all that close.

Very true!Bitcoin does have a significant advantage over gold in that it can't be manipulated by the banks.

Banking as we know it today was born from gold storage services. People had gold at home, which is a risky place to hold it. Entrepreneurs built vaults and charged people a fee to store their gold for them, a deposit of gold would be exchanged for a receipt of that gold. Eventually the receipts became "as good as gold" because it could be exchanged for the gold, so the receipts became the item exchanged for goods and services instead of the gold, that rarely ever left the vault.

Seeing that the gold rarely ever left the vault, bankers saw that they could print up more receipts for the gold on deposit than actually exists, and "lend out" the additional receipts. The borrower could then use those receipts just like all the original receipts for goods and services, but over time has to get all those receipts back, plus some more, to pay the loan back plus interest. The question being how many receipts can be printed and spent in to the economy without triggering a bank run, where people want to exchange their receipts for the gold before everyone else, and more importantly before the bank runs out of gold and those still holding receipts now have worthless paper that a day ago was believed to be "as good as gold". But people willingly took this risk because the interest the banks earned from this process was shared with them. Instead of charging people to store their gold in the vault, the bank would share the interest from this system with them. Storing your gold in the vault would actually earn you more.

Then, people found they had too many receipts for gold at home, which is a risky place to hold it. So people began depositing their receipts for gold in the vaults too. Instead of getting a receipt for the receipt, the bank and depositor would hold an account of what was on deposit. And bank accounts were born. The banks would do to the receipts exactly what they did to the gold it self, which is loan it out with a fraction held in reserve. Again, this produces interests from the borrowers, which is shared with the depositors.

I'm not going to going into more detail than that, other than to point out that a major demographic aberration, such as the baby boom generation, can can cause a a MAJOR amount of natural inflation followed by a major amount of natural deflation when 90%+ of dollars in existence are born into existence (and eliminated from existence) with this fractional reserve lending method. The 80's and 90's saw huge economic benefit because of this. The 00's were the transition... The turn, which occurred in 08. The 10's and 20's will SUCK until the baby boom generation is purged from the system, or the dollar system is replaced.

Banks can't do #### with bitcoin. It can't fractionally reserve lend them out like it can to gold. So there IS a huge benefit to bitcoin over gold in that the banks can't #### with it. So believe me I understand why so many people find it appealing. But that is exactly why I would avoid bitcoin like the plague. The banks HATE bitcoin. They would like nothing more than to see it die, and they have the power to make that happen.

Why can't a bank do the exact same thing with bitcoin? Are the loans they make off of them going to be public record?

How can you make M2 bitcoins from M1 bitcoins on deposit? To spend a bitcoin, it has to mined with a unique number. That produce M1. How do M2 unique numbers come into existence?

Sure, banks can hold the M1 bitcoin, and release Fiat Notes (BCNotes?) to the users, just like with gold. No need for additional mining or anything complicated, they just repeat the process that made them rich from the gold era. People can then transact with BCNotes, and the banks will hold the actual Bitcoins and release more notes or less as needed to keep the BCNotes value stable. Win-win (except for the poor consumer, who loses any of the actual benefits of owning Bitcoins and is stuck with the exact same financial system we have now except with a different underlying backing medium.)

Don't think that'll happen, but that is how it could happen.

So do people want bitcoins or bitcoin "notes"?The appeal of bitcoin is the rejection of the "note" currency system.

Over time, who knows. Bitcoin has appeal for a number of groups, some share goals but many of them have conflicting goals. Libertarians and anarchists (anonymity and lack of regulation), tech geeks (cool, my geeky rig is mining for "gold". "Currency of the Internet"), some gold people and anti-fed people (finite supply, no central authority), speculators and greedy people (scheduled hyper deflation, virtual ATM machine in my basement).When the general public buys into this, who knows. Right now it's a dedicated group of highly vested people that typically fall into one of those groups. General public is going to want ease of use and someone to secure this for them. And there will be (and have already been) a myriad of bank type services. Many of them have cost users what today amounts to millions.

Some might charge you to store your money, others might pay interest if you can loan it out, the list of products could be virtually endless. And now the consumer gets to decide who they trust, and lose all their money if they're wrong.

The banks would have to charge a fee for bitcoin storage, unless they plan to fractional reserve lend them out for interest, and share that interest with the bitcoin depositors. The question then would be what would the interest rate be for a currency where M1 is naturally deflationary, compared to interest rates for a competing currency where M1 is naturally inflationary. Given the natural deflationary nature of M1 bitcoins, in the future they will have more purchasing power than they have today, thus M2 bitcoin would naturally have lower interest rates than borrowing US Dollars. The M2 issuance of bitcoin would have to be at such a ridiculously high pace to produce a competing interest rate that the inducing bank run, and eventual closing of the bitcoin exchange window, would happen far early than Nixon closing the gold exchange window. Bitcoin notes would have no more tie to bitcoins than the dollar has a tie to gold.

Asset backed notes systems in a fractional reserve lending system are only temporary systems. Eventually the exchange window has to close.

Until we actually regulated said banks and forced them all the behave under a certain set of parameters, none of us can have any real degree of certainty how they will behave. There won't be a lot of uniformity. Some will do some fractional lending, others will charge a fee, others will come up with some fancy products. Others will just take off with your bitcoins in the middle of the night because they feel that's what's in their best interests. Or claim some hacker stole them. Most of these have already happened in some form or another.

And you the consumer get to figure out which banks and which systems you trust. And again, possibly lose it all if your trust was misplaced.

Bitcoiners do realize this. As a result of this and the various scams and hacks that have taken place the current atmosphere is pretty much "don't trust anyone" and users prefer to assume the responsibility of securing this themselves. That's not going to work for the general public though. It doesn't always work for very technical users, many of whom have lost bitcoins to theft, hardware failure, and other misc causes.

The "don't trust anyone" atmosphere is also slightly amusing considering some elements of the system depend on "simple altruism" to actually function. People don't play nice and the whole thing breaks down. And there's also the fact it holding any value whatsoever actually depends highly on trust.