41–50 of 152 posts
pdf: http://www.wired.com/images_blogs/threatlevel/2012/05/Bitcoi...
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People do not trust "Federal Reserve notes" (or any other official currency) - they are forced to use it, since they must pay taxes in it. That doesn't explain why people continue to accept official currency in excess of their anticipated tax bill, or why criminals who aren't expecting to pay tax at all still deal in official currency.
Because it's easy to spend since others accept it. Money itself has absolutely no value at all. It's more a promise that somebody will accept it when you want to buy something with it.
Nice document. It shows well the way of thinking of our governments. "detecting suspicious activity, identifying users, and obtaining transaction records is problematic for law enforcement." - That must deeply hurts FBI people :) "Despite the virtual nature of Bitcoin, users value the currency for many of the same reasons people trust Federal Reserve notes: they believe they can exchange the currency for goods, servi…
You would tax Bitcoins in the same way you tax transactions in USD, EUR, and so on. There really is no difference, once you stop to think about it.
Even with the USD, taxation does not work by the government subpoenaing your bank's records. Instead, it is your (or your employer's) responsibility to report your income and related data according to the legal requirements. The same applies to Bitcoin transactions.
Obviously there are some differences in the investigation of tax evasion. But there will still be records somewhere, and prosecution is used to deal with similar problems when transactions are cash-only.
pdf: http://www.wired.com/images_blogs/threatlevel/2012/05/Bitcoi...
Thank you very much for the direct pdf link, I hate does sites that try to simulate ell established office tools like a pdf viewer in a browser, fail with this and still want to collect your data like email address to give you the real thing. Unfortunately too many people out there are using this crap sites.
Nice document. It shows well the way of thinking of our governments. "detecting suspicious activity, identifying users, and obtaining transaction records is problematic for law enforcement." - That must deeply hurts FBI people :) "Despite the virtual nature of Bitcoin, users value the currency for many of the same reasons people trust Federal Reserve notes: they believe they can exchange the currency for goods, servi…
LOL. Most people do trust cash, within certain limits, because they're not crazy libertarians. The value of bitcoin is every bit as illusory and consensual as paper money. That it's not under central control and has a fixed supply is interesting, but doesn't give it intrinsic value.
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There are two obvious ways in which expanding the money supply can go wrong. 1) Bernake et al. are feckless idiots and will leave the money presses running long after inflation rears its head, a la Zimbabwe, causing hyper inflation and the destruction of the world economy 2) The economy picks up a bit and they stop printing. However, that huge pool of money they have created is enough to drive inflation so high that…
1) is not plausible unless it happens. Hyperinflations tend to happen only once in a history of a fiat currency. It sounds a little bit crazy to propose that hyperinflation would happen to one of the really big world currencies (euro, dollar, yen...). But I don't see any technical reasons why it couldn't happen at some point in the future.
The tl;dr version: The root cause of hyperinflation has never in history been runaway printing of money. Rather, the root cause is always some mixture of foreign-currency denominated debt, political chaos, and collapse of a country's productive capacity.
To give a bit more detail: This analysis applies to both the Weimar republic hyperinflation (excessive reparations demanded by the victors of World War I denominated in real goods and foreign currencies, combined with a military occupation of Germany's steel and coal industrial center) and the recent Zimbabwe hyperinflation (high USD-denominated government debt combined with a collapse of domestic production due to stupid economic reforms).
The hyperinflation is simply a result of such untenable economic situations. They tend to be "cleansing fires" in some sense: especially in the Weimar republic case, the hyperinflation made it very obvious to everybody that the war debts need to be backed off.
Read it: http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes20121...
Edit: BTW, if you are interested in international monetary policy you can find many important publications on the ECB site:
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You need a police force to enforce contracts and there is no system of exchange that can survive without contract.
No...you need a justice system to enforce contracts: contract law and dispute resolution pre-dates the idea of a police force by hundreds of years. Breaking a contract is a purely civil matter. The police usually don't investigate tort law, only criminal law. When the police do get involved in civil law disputes it can get quite controversial.
So does centrally controlled currency...
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Doesn't Germany hold a huge amount of gold? Additionally, the only euro country not collapsing on itself?
The US Dollar area (i.e. the US) has come closer to default than the Eurozone.
However, since the US government cannot be forced into default - after all, the US government runs the USD system, and all its obligations are denominated in USD - this is all just political posturing.
It's kind of depressing how effective this posturing is. It's a testament to the terrible state of public education about fundamentals of our monetary systems.