Posts Tagged ‘gold’


January 11, 2016 Leave a comment

In theory, central banks are supposed to act independently of governments for the good of the national economy. In practice, central banks and governments jump right into bed with each other when either of them finds itself in a financial pickle.

When privately funded banks need bailing out because of idiotic, greed-driven behavior, the central bank uses fear-mongering to act on their behalf and get the government to bail them out with our hard earned money. On the other hand, when the government needs money to finance massive wars and welfare programs they know they can’t afford, the central bank simply prints money out of thin air to finance the reckless behavior – the inflation tax.


The precious metals, of which gold is king, have always served as the ultimate hedge against fiat currency collapse. That’s why the price of gold rises whenever the populace’s faith in fiat currency decreases.


Since the birth and continuous rise of Bitcoin, the average Joe Schmoe now has 2 ways of protecting himself against greedy bankstas and irresponsible politicians. Mr. Schmoe can use the Gold and Bitcoin dynamic duo to keep a watchful eye on “those in charge” of your long-term financial fate.

“The threat of Bitcoin places constraints on monetary policy. In jurisdictions that finance large amounts of government spending through the inflation tax, such a constraint may become binding”. – VP of the federal reserve bank of St. Louis


Bitcoin is an even better hedge than gold against nefarious institutional monetary behavior. Bitcoin is waaaay more difficult for deadbeat governments to steal from its people to pay off bad debts. Bitcoin is for the little person, like me….. and you?

Categories: bitcoin Tags: , ,

No Assassins, Please!

January 2, 2016 1 comment

In the long run, Bitcoin can succeed either:

  1. As a convenient global currency of exchange (in parallel with inflation-prone national fiat currencies),
  2. As a store of “perceived” value (serving as a hedge (like gold) against fiat currency devaluation or outright collapse)
  3. Both 1. and 2.

Of course, BTC itself can collapse at any moment to zero; nada; goose-egg-city.

BD00 thinks that if Bitcoin does indeed succeed, the odds are better that it will do so as 2 over 1, or as 2 over both 1 and 2. And if it does, it may steal some market share from gold.

To further explore the assumption of success “as a store of perceived value“, consider the approximate numbers in the box below. Based on these numbers, Bitcoin’s market capitalization is currently a minuscule fraction of gold’s market capitalization: .1 percent.


Next, consider the following table:


If Bitcoin manages to “steal” 5% of the gold market (meaning that 5% of all gold holders decide to exchange their gold for BTC), each $500 BTC you own today will be worth $25,000 when the 5% market share threshold is crossed.

So, what advantages does BTC offer over gold to entice the goldbugs to convert?

  1. BTC is infinitely more transportable than gold, especially in larger amounts, from any location in the world to any other location in the world. All one needs is an internet connection to execute a global transfer much faster, and at a lower cost, than shipping physical gold artifacts.
  2. BTC is much more accurately divisible than gold: 1 satoshi = .00000001 BTC
  3. Even though gold is scarce, BTC is more scarce. After the 21 millionth BTC is minted sometime in the year 2140, that’s it. Fini. No more BTC will be mined.
  4. You can store and guard your BTC yourself (if you choose to) in lieu of paying a “trusted” third party to store and guard your physical gold bars. It’s also much easier to guard a tiny BTC cold storage device in your possession than a cache of weighty gold bars.

Based on reasoning similar to that given in this post, Bitcoin advocate Wences Casares recommends people consider investing 1% of their savings in BTC. As you might surmise, BD00 also recommends the same advice. That way, if you lose your entire BTC investment, you won’t be itching to hire an assassin to inflict a slooow and painful death upon me.


Categories: bitcoin Tags: , ,
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