by Michele Suede (Libertarian News)
Recently I wrote an article entitled The Most Dangerous Creation In The History Of Man. The article covered the emergence of Bitcoin; an electronic open source peer-to-peer currency that has no central banking server, is untraceable (when proper steps are taken), and essentially can not be taxed through coercive measures. The article makes the point that if a currency can not be taxed and controlled, eventually it will topple the coercively funded fascist control grid you call the modern State. Read more about it in thisBitcoin forum post that explains it in more detail.
I’ve received several requests for more information about how people can put Bitcoin to work for them. Most articles on Bitcoin, and even the Bitcoin site itself, don’t give a clear top to bottom description of how common users of Bitcoin can put the currency to use.
It is a tad confusing if you are not familiar with how currency markets work, but not to worry, it is not as intimidating as it sounds. Bitcoins are generated on a logarithmic scale by dedicated “miners” who run software that generate the complex hash codes which make up a Bitcoin. Bitcoins can not be artificially inflated and require real resources (electricity and time) to produce.
Here are a few reasons why I think Bitcoins are superior to gold as medium of exchange:
1. It is impossible to artificially inflate the supply of Bitcoins in existence. They are produced at a known steady rate, the supply of which will eventually top out. The nature of Bitcoin transactions makes it so that no bankers, nor anyone else, can use fractional reserve accounting to artificially inflate the money supply. Clearly this means governments, nor anyone else, can use artificial credit expansion to make more of them.
2. Bitcoin transactions are made for the web! It is impossible to actually ship gold across a wire. The best one can do is use a medium that represents gold, such as shares of GLD, and trade those as a currency. Clearly this leaves room for inflation of the money supply by unscrupulous bankers. When a person transacts in Bitcoins, it is the equivalent of actually sending gold across a wire. The unreproducible currency itself is transacted with, unlike a paper currency that represents a commodity.
3. Bitcoins can not be confiscated since the files they reside on can be replicated and hidden in USB keys or anonymous servers.
4. The peer-to-peer nature of Bitcoin makes it as impossible to stop as BitTorrents. Governments would have to shut down the web to stop it.
5. It is impossible to create salted Bitcoins or “shave the edges” off of them. There are wide spread rumors that the supply of gold that central banks are holding is loaded with tungsten bars coated in gold.
6. Obviously they are lighter, easier to transact with, and far easier to secure than gold bullion.
Let me repeat: Bitcoin IS NOT A PONZI – it is the same as if people were digging up gold nuggets out of the ground and then trading them as money. Any claims that early adopters are simply promoting this as a Ponzi are like claiming people who were promoting buying Apple’s IPO were promoting a Ponzi.
Bitcoins use a 256 bit public/private key encryption algorithm that has never been cracked in practice and is considered secure by the NSA.
Bitcoins CAN NOT BE ARTIFICIALLY INFLATED.
Total Bitcoin production will TOP OUT in the future meaning NO NEW BITCOINS WILL BE CREATED BEYOND A CERTAIN DATE.
If you have additional concerns, please take the time to research the answers on your own. Don’t blindly dismiss it because of a concern that could easily be addressed with some simple research and questioning of those who are current users of the system.
Anyone who has a through understanding of Austrian economics should immediately recognize the inherent benefits of Bitcoin. Bitcoin is the equivalent of electronic gold. Even better than gold in some respects.
Here are a few articles that cover the economics of the Bitcoin monetary system in more detail:
- The Economics Of Bitcoin – Why Mainstream Economists Lie About Deflation
- The Economics Of Bitcoin – How Bitcoins Act As Money
- Against The Gold Standard
- The Economics Of Bitcoin – Doug Casey Gets It Wrong
- The Economics Of Bitcoin – Resource Allocation And Interest Rate Distortion
- The Economics Of Bitcoin – Challenging Mises’ Regression Theorem
- The Economics Of Bitcoin – Challenging Mises’ Regression Theorem – Prof. George Selgin Responds
- Why Do People Want A Gold Standard When History Shows Us It Does Not Last?
That said, lets go through the process of a common user setting up a Bitcoin account in an electronic bank and then purchasing some Bitcoins with US Dollars. Then we will buy an item using the Bitcoins we just purchased.
Check out OKPay.com for a payment processing service that accepts Bitcoins and translates them directly into an e-wallet that can be accessed by a Master Card debit card anywhere in the world. Checkout Crypto X Change for an easy way to buy and sell Bitcoins through normal bank accounts.
Step 1: Setting up a Bitcoin wallet.