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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (103646)	11/10/2013 9:16:33 PM
From: Maurice Winn	Respond to of 217711

That was very good too: <I also intend to peruse this article scribd.com > While I gave bitcoin some consideration as a speculative investment, I left it. That was a mistake because in fact I could now bail out with a Qualcomm-sized profit. One factor I haven't seen discussed is the logical value of bitcoin, other things being equal, near enough for government work. The above Chicago Fed article says there is about $1 billion of bitcoin in circulation and about US$1,200 billion of USD on issue. TARPs and whatnots are not so much issues of money as issues of credit which are repayable to the Federal Reserve/Treasury/Electorate. Financial Relativity Theory says that the value of the bitcoins = the value of the transactions transacted per hour. If there's never a transaction, the value of bitcoin will be zero. If there are millions of transactions per minute it will be worth more than the biggest state-run currencies. There are at present about 30 bitcoin transactions per minute and about 200,000 Visa transactions per minute. The bitcoin transactions average about $2000 but the Visa transactions about $80. So the bitcoin transactions are probably speculative gambles and people trying it out. Visa transactions are outright sales [nearly all]. Ignoring the transaction sizes, the Visa transactions are running at 10,000 times the rate of bitcoin transactions. The US$ is a LOT more than just the Visa transactions and those transactions are not cash on issue so much as fractional reserve credits. The total of the whole world's currencies is something like 10 times the US$ [I guess]. But 10,000 times the current value of bitcoin would be $10 trillion which is in keeping with the scale of the US$ though it's way out of proportion to the Visa realm and 10 times the US$ on issue according to Francois Velde. With bitcoin supply constrained to 21 million of them, [half way there already], there's not going to be dilution as there assuredly will be with US$ and all the other "fiat" currencies ["fiduciary" currencies in the phrase of that article by Francois Velde, senior economist, which is a better description]. There has always been fiduciary currency dilution since they were invented out of thin air. That lack of dilution will add to bitcoin's value. One of the criticisms of bitcoin by Francois was the speed of transactions, which take at least quarter of an hour, unlike a credit card transaction which takes only several seconds. But that's not going to be an issue in the longer run because people will lend their bitcoins to banks to earn interest on their deposits, and perhaps for added security. People will spend their stash of bitcoins using Visa or other credit or debt cards denominated in bitcoin rather than some other currency unit, so speed will not be an issue. Another criticism is the open-source nature of the software running bitcoin and exactly who gets to change it and what constraints there are on those people and whether they are any more reliable than a bunch of elected politicians. It's a work in progress. There's gold, there is US$, there was Zimbabwe by the trillion, there was the Assignat, there are all sorts. What works efficiently and who do we trust? Mqurice