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The strengths of Bitcoin vs. old currencies

By on September 22, 2015 in Bitcoin, Blockchain, Free Markets

So, people say Bitcoin (and Blockchain) is difficult to understand? Well, not if you compare it to our traditional monetary system.

The growth of the number of Bitcoins is foreseeable and limited. At the same time the Fed, the ECB, Bank of England and other central banks can print as much money as they want. And they do, on an unsound scale.

There is a well established procedure for mining Bitcoins. When it comes to the USD, EUR, GBP and other common currencies — they are created out of thin air by central and local banks in an endless debt loop.

The “value” of Bitcoins might be a bit volatile. At the same time old currencies are constantly sliding downhill, with inflation making peoples money and wages worth less. (Thus imposing a stealth tax on the people.) With the limited influx of new Bitcoins (and while being adopted by more and more people and business) their value should steadily increase.

Some argue that there is no underlying value of Bitcoin, but trust. The same can be said about all old currencies. For example, the USD left (what was left of) the coupling to gold in 1973. (Since then inflation has made things ten times more expensive, in absolute terms. During the same time the total money supply has increased 80 times.) And trust is much better upheld in the Blockchain than in banks computers and spreadsheets.

Talking about trust: Bitcoins cannot be controlled or manipulated by banks, central banks or governments. Given that traditional currencies in turmoil obviously results in banks being closed, caps on withdrawals and confiscation of bank deposits (like in Cyprus) — Bitcoins may in some situations be the only usable currency.

More and more people are realising that the old monetary system is questionable and possibly unsustainable. So, I would not be surprised if the Bitcoin Moment will arrive shortly.

/ HAX

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Euro crisis and the case for Bitcoin

By on September 5, 2015 in Bitcoin, EU

The European common currency, the Euro, is in trouble. As usual.

The past week the European Central Bank (ECB) gave a bleak forecast. The BBC reports…

The European Central Bank (ECB) has cut its inflation and growth forecasts for 2015 and the next two years.
It expects inflation in the eurozone to remain “very low” for some years as threats to economic growth increase.
ECB president Mario Draghi said Europe’s economic recovery would continue, “albeit at a somewhat weaker pace than expected”.
The euro fell sharply as Mr Draghi also hinted that the bank could expand its stimulus programme if necessary.
He was speaking after the ECB kept its main interest rate on hold at 0.05%.
The ECB is now forecasting economic growth in the eurozone of 1.4% in 2015, down from 1.5%, and 1.7% in 2016, compared with its previous projection of 1.9%.
However, Mr Draghi said that risks to the outlook for economic growth and inflation had worsened since mid-August, when the latest projections were calculated.

The Euro was doomed from the beginning–and is only kept alive by political prestige and with taxpayers money. But that can only go on for so long.

This ought to be a golden opportunity for Bitcoin.

From Greece and Cyprus we have learned that banks might close or limit withdrawals–or simply take peoples money. When the next crisis hits the Euro (we don’t know when or where, but it will happen over and over again) people simply cannot trust the banking system.

  • Bitcoin provides a firewall between banks, the government and peoples money.
  • Bitcoin provides a free, swift and simple method for payments even when banks are closed.
  • Bitcoin stands free from political manipulation, bureaucratic intervention and national economic meltdowns.

Everyone ought to have at least a few bitcoins. Before you know it, this might be the only workable way to send and receive funds. Seriously.

/ HAX

On the Euro: BBC | The Guardian | The Telegraph | NYT | Bloomberg

A good introduction to Blockchain and Bitcoin, from the BBC (radio) »

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Forking Bitcoin software will only concern miners, not ordinary users

By on August 19, 2015 in Bitcoin

One thing with Internet related stuff is that people seems to assume that you are a tech wizard. I’m not. I’m into this from a political background. (Free information, free speech, civil rights etc.) I understand some very general basics about computing, but that’s all. As most people I use computers and the Internet as tools in my work. I almost never go under the hood.

Now, Bitcoin: a splendid idea! There is a need for a free, non-government controlled method for payments. And again, I get the general idea of how it works. But go into technical details, and I’m completely lost. (However I have great ideas about how to use Bitcoins.)

So, I was somewhat confused as news started to spred about a possible fork in the open source software running Bitcoin. Frankly, all I really understood is that there is a conflict about how best to scale up the system.

There is a lot of information out there. Except one piece of information. What will this mean for me as an ordinary Bitcoin user?

I’m not a miner. I don’t even have the complete Blockchain stuff downloaded to my computer. I just have a Bitcoin wallet with a third party. Like most people, I’m just an ordinary user.

For Bitcoin to gain ground people need to be able to trust the system. And, as you know, there have been some ups and downs in that respect.

So, here I stand, in an ocean of information. But with no answer to how — if at all — I will be affected by the software fork. Will there be two, competing Bitcoin systems? Will I be able to use and receive Bitcoins as usual in the future? Or what?

And I’m not the only one. Trust me.

I have no idea if forking the Bitcoin software is a good idea or not. But I’m absolutely sure that the lack of plain, simple information about what is going on is confusing people. And confusion undermines trust — leading to a slower adoption of the whole Bitcoin concept.

Luckily, I have friends. So I asked Rick Falkvinge. It tured out I don’t need to care. This does not apply to existing Bitcoins. It’s only of interest for miners. Thank you Rick.

But I’m hardly the only one who to have been confused today. In the future, it might be a good idea to keep the broad base of ordinary Bitcoin users informed — before you start to meddle with the system. Especially if it in some way might be controversial.

As mentioned, the future of Bitcoin is all about the general public understanding and trusting it.

/ HAX

Note: It seems, the fork in the Bitcoin software (regarding the size of the blocks) will only be activated if it is supported by at least 75% of miners.

Some links:
Bigger Blocks Mean More Decentralization for Bitcoin »
The Bitcoin Schism Shows the Genius of Open Source »

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There is a working currency for Greece — and everybody else

By on June 29, 2015 in Bitcoin

The Greek crisis is throwing the country into turmoil. Banks are closed, ATM-machines will only give people small change and coming payments of salaries and pensions are in danger.

Yet there is a working currency, available for all people in Greece. And in the rest of the world: Bitcoin.

Anyone can get a Bitcoin wallet and start accepting payments the very next minute.

Bitcoins may be volatile and there have been problems. But still, Bitcoins are more reliable than the euro for people living in European countries with shaky economies.

Using Bitcoins is also cheeper and quicker than bank transfers.

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PayPal joins the Dark Side?

By on April 25, 2015 in Bitcoin, Copyright, Economics, Intellectual Property, Internet, Rule of law

PayPal just updated their User Agreement – and went barking mad.

The new paragraph at section 1.3 reads as follows:

“When providing us with content or posting content (in each case for publication, whether on- or off-line) using the Services, you grant the PayPal Group a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, sublicensable (through multiple tiers) right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights you have in the content, in any media known now or in the future. Further, to the fullest extent permitted under applicable law, you waive your moral rights and promise not to assert such rights against the PayPal Group, its sublicensees or assignees. You represent and warrant that none of the following infringe any intellectual property right: your provision of content to us, your posting of content using the Services, and the PayPal Group’s use of such content (including of works derived from it) in connection with the Services.”

Whut!?!

And what is “content” supposed to be? PayPal is a payment service. So the only content there is, is the online stuff people and companies sell using PayPal as payment provider. Did PayPal just claim control over all of that?

/ HAX

Links:
• Bitcoin is the Future: PayPal Changes Terms of Service to Take Your Content
• PayPal

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The coming War on Cash

By on March 24, 2015 in Big Brother, Big Government, Bitcoin, Blockchain, Economics, EU, Privacy, surveillance

War on terror has become an convenient excuse for governments to start a war on cash.

Naturally, cash can be used by terrorists. But it will not mainly be terrorists who suffer from tighter control. It will be ordinary people.

One of the real reasons behind tighter cash regulations are convenient is quite obvious: taxation.

If you want support for this theory, take a look at the EU directive against money laundering. Where implemented strictly (like in Sweden) it makes handling of any substantial amount of cash almost impossible.

The latest is the French tightening the regulations on cash. From Mises.org…

“These measures, which will be implemented in September 2015, include prohibiting French residents from making cash payments of more than 1,000 euros, down from the current limit of 3,000 euros. Given the parlous state of the stagnating French economy the limit for foreign tourists on currency payments will remain higher, at 10,000 euros down from the current limit of 15,000 euros. The threshold below which a French resident is free to convert euros into other currencies without having to show an identity card will be slashed from the current level of 8,000 euros to 1,000 euros. In addition any cash deposit or withdrawal of more than 10,000 euros during a single month will be reported to the French anti-fraud and money laundering agency Tracfin. French authorities will also have to be notified of any freight transfers within the EU exceeding 10,000 euros, including checks, pre-paid cards, or gold.”

The whole idea is based on the presumption that people are up to something suspicious. This seems to be the new default mode, replacing the presumption of innocence (that happens to be one of the fundaments of rule of law).

But this is not just about distrusting citizens with their own money. The common European currency, the Euro, is in a precarious state. Cash regulations can (and will) be used to stop people from rescuing their own money when the shit hits the fan. Just see what happened when the Euro-crisis overwhelmed Cyprus. The government confiscated money directly from peoples bank accounts — and most people had no possibility to rescue their savings.

“Coincidentally” mass surveillance is an excellent tool for governments to enforce financial regulations aimed at the general public…

Is this the moment when people finally will have to turn to free digital currencies in a big way? Is this the tipping point?

/ HAX

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Crypto-currency will rule in a decentralized world

By on November 3, 2014 in Bitcoin, Blockchain, decentralization

Via Decentralize, I have just discovered the Ledra Capital blog. This might very well be one of those places where future is being shaped.

One LC post puts words on something I have tried to make understandable (for myself as well as for others) for a long time is: Bitcoin Series 26: the Polemitis Impossible Trinity »

This explains why crypto-currencies such as Bitcoin are just as good as the dollar or the euro. Or rather, it’s not worse than fiat currencies. It’s just a dog with different fleas. Kind of like… gold.

Then, let’s move on to the post: Bitcoin Series 27: Bitcoin – a 6-sided Market and Network Effect »

It’s about Bitcoins “superb setup of market incentives for the first currency to hit escape velocity”. It’s smart. It’s intuitive. It’s plausible. And it’s arousing, kind of.

What first lead me to the Ledra Capital blog was the Decentralize blog post about all the stuff LC has listed as possible to decentralize with Blockchain technology: Anything you can do I can Decentralize! »

Birth certificates, gun permits, wills, contracts, accounting records, car keys, betting records, coupons, trademarks, licenses, vehicle registries, spam control, nuclear launch codes… You name it.

I guess this is what happens when spontaneous order and a truly free market (politicians don’t know about it yet, and they will never understand it) meets with new and disruptive technology. I like it. I like it very much.

/ HAX

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