The best performing currency

[*T*]

No, not gold... there's a new kid on the block:

chart-1.jpg

It the Bitcoin (BTC).

I'm pretty excited about it. Secure financial transactions, with no intermediary, in a non-inflationary currency. No central issuing authority, supply is limited by the mathematics, and the entire banking cartel is bypassed.

Picture yourself fleeing, say, Argentina pre-hyperinflation. You can convert your money into a hard currency (BTC), email yourself your wallet full of cash (encrypted for security), and convert it into the local currency on arrival. Completely free, pretty much anonymous and a damn sight easier than smuggling gold across the borders.

The best performing currency of the past year isn't Brazil's real, up 15% versus the U.S. dollar, or Australia's dollar, up 27%. It's the Bitcoin. A year ago one was worth half a penny. Thursday morning it hit $10.50. That's a gain of more than 200,000%.

What's a Bitcoin? It's a peer-to-peer system of electronic money that allows payments to be sent directly between two parties without the need for a financial institution. It's related to Bit Torrent, a system for sharing large files like movies, but in this case the "movie" is a file with the currency's entire transaction history. And because users themselves all share that history, "it's more secure than even bank transactions," says Donald Norman, a spokesman for the Bitcoin Consultancy, which is seeking to gain wider acceptance for the currency.

The Currency That's Up 200,000%

Bitcoin triples again

So, what does EJ think about BTC?

[Mega]

Re: The best performing currency

You keep the "Tec Stock".........i keep the Ye old yellow shiney stuff

[DSpencer]

Re: The best performing currency

Picture yourself fleeing, say, Argentina pre-hyperinflation. You can convert your money into a hard currency (BTC),

I don't know much about this. How is it a hard currency?

[pianodoctor]

Re: The best performing currency

Here is the Wikipedia entry on the creator of Bitcoin. It all seems above board to me. ;-)

http://en.wikipedia.org/wiki/Satoshi_Nakamoto
Satoshi Nakamoto

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Satoshi Nakamoto is the creator of an open source project called Bitcoin. Bitcoin is a digital currency. Satoshi first published a white paper on Bitcoin in 2008 and then in 2009 founded an open source project called Bitcoin. The real identity of Satoshi Nakamoto is unknown.

Contents [hide] 1 Identity 2 Quotes 3 External links 4 References

[edit] Identity

Very little information exists about Satoshi. His identity and nationality are in question. In his p2p foundation profile^[1] he said he is from Japan. Some believe Satoshi Nakamoto is a pseudonym to throw-off his true identity and nationality. A discussion thread was created in the bitcoin forum called “Who is Satoshi Nakatomo?”.^[2] Some have even suggested that Satoshi Nakamoto is not just a single person, but a group of people similar to the Anonymous group.
Also adding to the suspicion of his Japanese nationality is his excellent knowledge and use of the English language. His use of the English language can be seen in his 575 entries to the Bitcoin Forum, with his last post on December 13, 2010 at 04:45:41 pm.^[3] This may be the last we ever hear from Satoshi. He has apparently stopped contributing source as well as communicating with the bitcoin project as noted in a transcript from the #bitcoin-dev IRC channel.^[4]
His activities outside of Bitcoin are completely non-existent except for some posts to the cryptography mailing list.^[5]
He has covered his communication tracks very well. His email messages have come from anonymous email accounts (vistomail.com and gmx.com) over the Tor network. Vistomail might have been chosen because it is based out of Tokyo Japan, adding evidence of a Japanese nationality.
The names Satoshi and Nakamoto are common names in Japan. Satoshi is the name of a fictional character in Pokémon whose dream is to become a “Pokémon Master”.^[6]
[edit] Quotes

“It would have been nice to get this attention in any other context. WikiLeaks has kicked the hornet's nest, and the swarm is headed towards us.”^[7]

“Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years.”

“Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.”^[8]

“It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though.” ^[9]

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”^[10]

[c1ue]

Re: The best performing currency

http://kkoolook.amplify.com/2011/06/...money-or-scam/

I haven’t posted for a while because I have been researching Bitcoin, an anonymous form of online “crypto-currency” that has been popping up in the news. Some are calling it the future of money. The most popular answer from a software developer posting on the Q&A site Quora calls it “a scam.” I still don’t fully grasp the mechanics of how Bitcoin works, but the news is piling up. What has gotten the most attention is the use of Bitcoins to pay for drugs through a peer-to-peer network called Silk Road. It was first widely reported on June 1 on Gawker. That attracted the attention of two U.S. senators who are now calling for a federal investigation of Silk Road. The association of Bitcoin with Silk Road is triggering official scrutiny of Bitcoin. Obviously, governments do not like unofficial currency floating around. But it is not clear whether authorities can do anything to end its use. Bitcoin likely will thrive or fail based on whether users remain confident that it has transferable value. I figured that a good way to help me understand Bitcoin is to try and get some for myself. That, however, is not something simple and easy to do.

I found a how-to site that made it seem easy. You can’t buy Bitcoins directly with a credit card or PayPal. You have to make a bank wire transfer, or you can set up an account at the Dwolla website, which works like PayPal buts doesn’t frown on Bitcoin like PayPal does. You can also mail a check, money order or actual cash to a third-party. In the case of the Mt. Gox online trading exchange, checks, money orders, and cash go to one Matthew Courtney in Virginia. He charges a 2 percent commission. Tradebitcoin.com allows you to set up meetings with Bitcoin users in your area to personally trade cash for Bitcoins. So far, I have several accounts on these various sites and am ready to accept Bitcoins. However, I’m now hesistant about testing the waters. Earlier this year, the exchange rate was about 1 dollar (USD) to 1 Bitcoin. When the Gawker article was published, it was reportedly trading at close to $8.70. When I checked this weekend, it had skyrocketed to more than $18. As I write this, it is trading close to $30.

Back to the the software developer calling it a scam. One of the features of Bitcoin is that it becomes available based on an algorithm, ultimately reaching 21 million “coins.” That results in built-in deflation. The currency increases in value while the goods for purchase remain the same value.

“If your money is getting predictably more valuable, why would you want to spend it?”

Good question. Not a good formula for a healthy economy. In that scenario, he argues:

“It’s designed to enrich early adopters…that is why it is a scam. Period.”

A counter-argument is proposed by another responder on Quora:

“Sure, early adopters get rewarded more, but so what? That’s true of a lot of things in life. I’d prefer that early adopters are rewarded than the buddies of some unelected bureaucrat are.”

Another Quora responder argued that calling it a currency is wrong:

“Bitcoin is a protocol for online payments and is used in a similar way to PayPal or credit cards, but has several advantages over legacy payment systems for online transaction.”

That makes sense. Unless you set up shop as a business and accept Bitcoins from the start, you will need to buy them with other types of money. Like I said, the debate over Bitcoin is complicated.

Walks like an MLM, talks like an MLM...

[LorenS]

Re: The best performing currency

e-gold was similar, It's basically gone as far as I can tell:

http://blog.e-gold.com/

http://e-gold.com/

I guess the difference is that bitcoin is distributed while e-gold was centralized.

I still don't see good things ahead for this. Somebody is bound to either fail to report income or use this to make an "illegal transaction" (which never happens with cash or credit cards) and the feds will be all over it. At that point quasi anonymous won't be good enough since a decent sized govt effort could probably take a snapshot of the database and ID enough users to break the whole thing open. Every bit-coin to dollar/euro/pound would likely leave a print.

[*T*]

Re: The best performing currency

Walks like an MLM, talks like an MLM...

No, because if the number of users stops increasing, but simply holds steady, it would not collapse. It does not require an ever-increasing number of users to be used as a method of payment.

[cjppjc]

Re: The best performing currency

Somebody is bound to either fail to report income or use this to make an "illegal transaction" (which never happens with cash or credit cards) and the feds will be all over it. At that point quasi anonymous won't be good enough since a decent sized govt effort could probably take a snapshot of the database and ID enough users to break the whole thing open.

There are lots of illegal transactions being conducted with Bitcoin. Congress is already on to this, as well as law enforcement.

[cjppjc]

Re: The best performing currency

No, because if the number of users stops increasing, but simply holds steady, it would not collapse. It does not require an ever-increasing number of users to be used as a method of payment.

A Bitcoin can be broken into fractions.

[*T*]

Re: The best performing currency

I agree, the main risk is government action. The most likely point of failure is the exchanges. It is not possible to confiscate individual accounts (any more than it is possible to confiscate gold coins or cash under your bed) since you store your own bitcoin. Nor is it possible to prevent transfers between individuals, since this is done on a distributed network. There is a lively OTC market already (#bitcoin-otc on irc.freenode.net) so the network is not entirely reliant on exchanges, but realistically, exchanges are a lot more convenient.
Exchanges are legit once identity has been verified -- how would such an exchange be any different to bullionvault for example? The main problem with e-gold was that it allowed transfers between individuals (therefore falling foul of the money laundering regs) -- whereas an exchange can in principle verify your identity via a linked bank account. However, it cannot verify your identity via a linked bitcoin address, and that may be the problem. Then again, if I legally buy and take posession of 1kg of gold, then give it to you, then you sell it, how is that illegal or any different?

[*T*]

Re: The best performing currency

A Bitcoin can be broken into fractions.

This is true, what is your point?

[*T*]

Re: The best performing currency

There are lots of illegal transactions being conducted with Bitcoin. Congress is already on to this, as well as law enforcement.

Ironically, I do not consider this a bad thing. I am sure a large proportion by dollar value of cash transactions are drug money. It is key to a means of exchange being widely accepted.

[lektrode]

Re: The best performing currency

http://kkoolook.amplify.com/2011/06/...money-or-scam/

Walks like an MLM, talks like an MLM...

EJ seems a bit skeptical too, his 1st comment is telling:

Re: What do you think about Bitcoins?

Originally Posted by porter
This alternative currency seems to be gaining steam and is quite intriguing. A few weeks ago they were trading at B$1 = US$7.5. Now they are trading at B$1 = US$31.5. Could this be a potential candidate for diversifying out of treasuries in anticipation of the inevitable debt and currency crisis?

http://www.bitcoin.org/

EJ offers:

"...Well, let's try it.

Send me a few bitcoins and I'll send them back, with interest..."

-------

the discussion is underway presently:
http://www.itulip.com/forums/showthr...about-Bitcoins

[c1ue]

Re: The best performing currency

No, because if the number of users stops increasing, but simply holds steady, it would not collapse. It does not require an ever-increasing number of users to be used as a method of payment.

I don't agree.

The same logic holds for land - even if the same land is bought and rebought over and over again and its value rises, the cause may very well be due to marketing as opposed to economic need.

Secondly the supposedly indestructible algorithm - how do we know there isn't a back door?

I.e. the creator or someone else has created a very powerful algorithm, but one which can be perverted.

[cjppjc]

Re: The best performing currency

This is true, what is your point?

Something along the lines of liquidity.

The whole concept is facinating to me. Something created and has no intrinsic value, backed by nothing. By that definition it is a currency.