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BitCoin. I first learned
about it in October and wrote about it 17 January 2011 in BitCoin
– The Best Financial Privacy Is Here … Probably. The article was
theoretical not practical. I missed the trade of the year. This was a serious woulda, coulda, shoulda but didn’t moment. I even told a few
friends I was going to put in about $5,000. Today with a completely
non-levered investment that would have turned into slightly over $550,000 in
8 months. $550,000 in a completely anonymous account with neither a paper or
audit trail nor a 1099 and the asset would have been purchased with $5,000 of
physical cash. That is one way to vanish some equity.
But there was a lot of risk to be taken in making that initial
investment. The risk has since decreased but I still think there is a
tremendous amount of upside potential. Perhaps even a thousand percent gain
between now and the end of the year. Regardless of what ultimately happens
with BitCoin I think you will want to know what BitCoin is and the potential for this new type of
technology and its application to monetary science in the Information Age.
WHAT IS BITCOIN?
http://www.youtube.com/watch?v=Um63OQz3bjo&am...player_embedded
WHAT ARE BITCOIN’S ADVANTAGES
BitCoins are merely
some computer bits that are limited in amount. The network for their
generation is decentralized
and bitcoins are transferred between
individual’s via the Internet with extremely low fees, they can be used
anytime or anywhere, the account cannot be frozen and there are no silly or
arbitrary rules such as Know Your Customer, source of funds, limits on
amounts that can be transferred or stored, target="_blank" currency controls, etc.
The entire software is open-source.
That means anyone can read the code, publish opinions and engage in review
within the full view of the marketplace of ideas. There is no
centralized individual, entity or organization that pressure can be applied
towards to force the disclosure of customer records, freezing of funds,
transaction history or any number of other private and sensitive information.
This is a serious attack on the target="_blank" fiat currency
and fractional reserve banking conspiracy.
WHAT ARE BITCOIN’S DISADVANTAGES
The main disadvantage of bitcoins is their
being an illusion.
In chapter 1 of target="_blank" The Great Credit Contraction I
distinguish between money,
money substitutes
and illusions
which can all function as currency.
An illusion is a negotiable that promises nothing and has no intrinsic value.
It is like a silver certificate that promises the bearer no silver.
It has value only because individuals are willing to bear the payment
risk and other risks of the illusion. The bearer usually tolerates the
risks because their cost is lower than the value placed on the utility
derived from the service the currency provides to the market participants.
Consequently, bitcoins have a value history
in target="_blank" The Regression Theorem
like the target="_blank" evaporating Euro. Bitcoins have no intrinsic value and unlike Euros or FRN$
cannot even be used for their combustible or defecation cleaning properties.
But despite this serious disadvantage, which target="_blank" GoldMoney solves, I think because of the decentralized aspect BitCoin may actually be a superior form of transaction currency
to GoldMoney. Together and combined with target="_blank" hawala
techniques these two currencies almost perfectly compliment
each other.
REASON MAGAZINE’S Q&A ABOUT BITCOIN
http://www.youtube.com/watch?v=yYTqvYqXRbY...player_embedded
HELPFUL BITCOIN RELATED SITES
How To Store BitCoins
– You can store the bitcoins in your own
wallet or with a third party.
If you store in your own wallet then I would recomm target="_blank"end Dropbox
and TrueCrypt. If you keep your BitCoin wallet on your computer or in the cloud then you
may lose the file, hav target="_blank"e a TrueCrypt file header get
corrupted, etc. and the bitcoins would be
unrecoverable. Remember, they are like digital
cash.
If you store with a third party then an easy way I would recommend
is MyBitCoin
which is free and much easier to
figure out than trying to setup your own wallet and then using tools like TrueCrypt and Dropbox to
protect it but I suppose the risk is that they could abscond with your bitcoins. So all things considered for now I think MyBitCoin poses a small risk of loss.
How
To Get BitCoins
– A few ideas are that you can use an exchanger, a broker, trade with
someone via the Internet or in person or engage in bitcoin mining.
The
largest exchanger is MtGox. They exchange hundreds of thousands
of FRN$ value of bitcoins for cash and vice versa
per day.
If
you are interested in using cash then I might be willing to help out with
smaller transactions but I am not really that interested. I suppose you will
find a way to contact me if you really want to. I would prefer to refer you
to someone who I have had a positive experience with but there is always
risk. I just know how cautious I am and imagine many of you are likewise very
cautious.
CONCLUSION
BitCoins have sustained a tremendous rally
from about $0.25 to over $30.00 in less than 8 months. I missed this
perceived risky trade because I was too cautious. After a thorough study I
think there is tremendous merit to the BitCoin
project and think it deserves some serious due diligence by holders of
capital and speculators. I would not be surprised to see a triple or quadruple digit BitCoin price by the end of year. There is some serious speculative
potential here.
Trace
Mayer
RuntoGold.com
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might want to receive Trace Mayer’s free email updates.
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