Monday, January 8, 2018

Fixing Some Confusion on E-Currencies

Libertarian News rolls in with two comments on e-currencies. At the post, Banksters Are Developing Their Own E-Currency That Could Destroy the Value of Bitcoin and Control Us All!, he (she?) writes:
I don't think you understand how crypto works. Any coin can always be traded for another coin. Coins can't be banned. You can't "ban" bitcoin or shut it down. It's impossible. People will simply buy another coin and then swap it for bitcoin, or navcoin, or zcash, or bitcoin cash, or etc.. etc.. etc.. If the banks release their own coin, that's great. It will make swapping money in and out of the banking system that much easier by trading them for other coins.
The point is not the theoretical tradeability of Bitcoin. I can trade Bitcoins for shoehorns on a theoretical basis for that matter. The point is that it is entirely possible for government to outlaw certain types of Bitcoin transactions, such as retail shopping transactions and transactions to buy Fed coin.

And LN adds this at the post, Peter Thiel Fund Took Massive Position in Bitcoin:
 Improvements are coming to the Bitcoin network that will reduce transaction costs and times. That said, bitcoin is the reserve cryptocurrency that all other cryptos are priced in. Think of it like gold. How much would it cost to ship 100,000 in gold bullion around the world? I'd wager it would cost more than $55.
This is a delusion. Bitcoin and other e-currencies are priced in dollars and other current paper currencies. In no way is Bitcoin a "reserve currency." There might be some platforms that are built on top of Bitcoin but there are plenty of e-currencies that have nothing to do with Bitcoin. This is total confusion about the term reserve currency.

What does the shipping cost of gold have to do with anything? Many of us regularly travel overseas without pockets full of cash and yet we are able to do all kinds of purchases thanks to debit and credit cards, American Express checks, and wire transfers. If gold were to become the medium of exchange the same thing would happen and if for some reason we wanted to take delivery of gold in, say, Switzerland we would just arrange to pick up the gold in Switzerland. Not transfer a specific set of gold bars from New York to Zurich. Gold is fungible.



  1. The bitcoiners keep leaning on how robust the technology is. They don't understand the game they are playing. If the chips are down, the state will send men with guns to kill or imprison people doing things they don't like. Bitcoin does not have a feature that protects against this outcome.

    1. True. Its a bit like Uber. Do you ask permission of the State or just hope the eco system flourishes?

  2. My understanding is that Bitcoin is a little like Petrodollars--it is the only common tradable item on many small exchanges where dollars and other non-crypto currencies are not accepted.