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Old December 10th, 2017, 01:58 PM   #21
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Originally Posted by senor boogie woogie View Post
Pardon my ignorance, but people now use their phones to pay for transactions all the time now/ I know, I am the guy behind the person (usually a woman) fiddling around with her phone to get to the place (with a barcode) to buy something, and no one uses money anymore.
Using a phone is unrelated to what the type of medium of exchange is, just like using cash, checks, or credit cards to pay for something. That cash, check, or credit card could be for fiat money, money backed by gold or silver, or debt based intereste bearing notes issued by a private central bank.

This is not the most appropriate way to think of what a cryptocurrency such as bitcoin is, but the easiest way to think of it is as "virtual gold" or "virtual silver", and it is neither a fiat currency nor a debt instrument.

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Originally Posted by senor boogie woogie View Post
Why would Bitcoin be different?
Whether or not it is different depends on what you're referring to. You can use a phone to pay for something, which explains what the technical medium is that you're using, but that doesn't specify what the medium of exchange is that you're using.

You can't just buy a phone and suddenly have something to pay for anything. When people are using their phone to pay for things in US dollars (as an example), they also have to have either a bank account, a "credit card" account, or other source for payment (and they have to have their phone set up to be able to use it with that). They cannot be empty (or in the case of credit you have to have enough available from your limit); there has to be enough dollars available from them in order for you to be able to use them.

It's essentially the same with cryptocurrencies. You have to have a cryptocurrency wallet, and it cannot be empty. If you don't have enough bitcoins, or litecoins, or whatever cryptocurrency, you still won't be able to buy stuff with it. If you have a cryptocurrency wallet with some bitcoin (or litecoin, etc.), then you can set your phone up to pay for things just like you can with a bank account or credit card account.

Quote:
Originally Posted by senor boogie woogie View Post
I am sort of ignorant on Bitcoin.
Don't feel bad; you're certainly not alone. Your mere awareness of the word "bitcoin" probably puts you way ahead of 90% - 99% of the rest of the world.

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Originally Posted by senor boogie woogie View Post
To me it is an alternate currency from government money, and as such is disliked by the powers that be.
Yeah, I suppose you can say that's what it is.

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Originally Posted by senor boogie woogie View Post
I can use Bitcoin instead of Federal Reserve Notes, which decline in value over time.
It's becoming easier over time to use bitcoin instead of FRNs. I think one of the main reasons people like cryptocurrencies is because they don't have the same problem that FRNs do which cause them to decline in value over time. FRNs can decline in value because of inflation. Bitcoin's supply is controlled; it's limited to no more than 21 million.

Another problem with FRNs is that as soon as they're loaned into existence, already there's more owed back than there is in circulation. All the FRNs in circulation can be used to pay back loans which would result in taking all of them out of circulation, yet there will still be unpaid loans. The Federal Reserve is essentially a Ponzi scheme granted a monopoly by the US government (I think they're also exempt from having to pay taxes).

Quote:
Originally Posted by senor boogie woogie View Post
I think another reason the government hates it is simply it (seemingly) makes it easier to evade taxation.
I don't know about that. If anything I would consider it harder to evade taxation with cryptocurrencies because they involve a public ledger. No such traceable infrastructure exists with cash, unless those who use cash use a bank and deposit that cash in it.

Employers are already required to report income/wages/salaries, so when employers start paying their employees in bitcoin, they might simply be required to include bitcoin wallte addresses used, then the government can simply look up that wallet address to see where things are transferred.

The claim that bitcoin is for black markets seems rather dubious to me; the claim is made as though not a single dollar (conventional money) has ever been used for the black market. Same with tax evasion; I don't think there will be any more tax evasion with bitcoin than there already is now with regular dollars.

Quote:
Originally Posted by senor boogie woogie View Post
Or gambling online. The person is not gambling with legal tender, so it should not be illegal, right?
I guess based on what I understand or am aware of, but personally I'm not going to answer this question with anything definitive because it's for the law/courts (lawyers/judges/juries), and CPAs to answer, and I am none of those (and I'm also not serving on a jury case involving online gambling with cryptocurrencies).

Quote:
Originally Posted by senor boogie woogie View Post
What is the value backing of Bitcoin?
Theoretically, its scarcity from its limited supply and the demand essentially for the services/features/benefits it offers as an online automated payment system (e.g., it's cheaper than competing systems, doesn't require conversion to a foreign currency, doesn't require having a bank account or credit card account - which involve having to jump through hoops to obtain them).

There are ways of looking at analogies. For example gold is a good, and bitcoin is a service; people trade for both. Another example is that gold is a good measured in terms of mass (ounces) & bitcoin is a service that can be measured in terms of energy (joules needed to power the computers used to obtain a single bitcoin); think of how a prospector panning or digging for gold has to also exert energy to obtain that 1 ounce of gold, and as it gets more difficult for them to find gold, the higher the price (or they quit bothering with chasing after gold if no one is willing to pay them for their effort). Those computers that are "mining" bitcoins (and that's what they actually call it, mining for bitcoins) are essentially collectively serving as a decentralized payment processing system & what they are mainly contributing to it is security (encryption of the data to keep it from being altered or tampered with).

The price of bitcoin goes up because it gets harder to mine them over time (the bitcoin protocol cuts the number of bitcoins released every round, which is 10 minutes on average by half, every 4 years), just like real gold from mines or panning depletes over time; it also gets more difficult to mine them because more prospectors are chasing after bitcoins by adding more computing power to the mining network, just like more prospectors chase after the same limited physical quantity of gold.

Quote:
Originally Posted by senor boogie woogie View Post
Gold, silver, what?
When the notion of backing bank notes with gold or silver is discussed, what we're talking about is the fact that the actual paper and ink that those notes are composed of are inherently "worthless" (other than the value for the ink & paper). We used to have gold and silver certificates as currency or the medium of exchange in circulation, and the idea was that you could take those gold or silver certificates to a bank and exchange them for actual gold or silver. The idea was that you originally got some gold or silver, took it to a bank for safekeeping, and in exchange they gave you one of these notes, so you could later go back to the bank with that note and say "I want my gold or silver now, and here's my note to prove I own a share", just like you do with your ticky for your laundry.

In this context it doesn't make any more sense to talk about bitcoin being backed by yet something else & beyond what it is, anymore than it does to talk about gold or silver being backed by yet something else & beyond what it is.

Quote:
Originally Posted by senor boogie woogie View Post
Are Bitcoins "made" or is there a finite amount of them?
There is a limited supply that is released into circulation. They're not made when they're released into circulation; they're already there & it's just that no one has obtained access to them yet to use them in circulation.

Quote:
Originally Posted by senor boogie woogie View Post
As we see in history, and today in Venezuela, Zimbabwe and in a slower, more controlled sense of the United States, currency declines and becomes worthless over time. An American nickel in and of itself fifty years ago had value (could buy some candy or even a soda), now it has no value.
Quarters & dimes that were made of silver still hold the same value today as they did when they were minted. Pennies used to be minted with copper, but not any longer, because copper has become more valuable than the content in a penny. The pennies made today are "faux copper", they have the appearance but not the content. I'm not familiar with the details behind the nickel; how do you Google that, "Is a nickel worth of nickel worth a nickel?" LOL

Quote:
Originally Posted by senor boogie woogie View Post
Do not steal, the government hates competition!
I like Ron Paul; he's awesome.
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Last edited by Neil; December 10th, 2017 at 02:05 PM.
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Old December 10th, 2017, 06:27 PM   #22
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They have been using "phone minutes" in place of their government currency in many places in Africa for years. W/ crypto there is no need for banks and governments along w/ whoever else wants to get their grubby little hands in there to take a piece for every single transaction.
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Old December 10th, 2017, 06:50 PM   #23
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Originally Posted by Sabcat View Post
They have been using "phone minutes" in place of their government currency in many places in Africa for years. W/ crypto there is no need for banks and governments along w/ whoever else wants to get their grubby little hands in there to take a piece for every single transaction.

So you see the problem
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