Investing in precious metals 101

Gold Vs Bitcoin… Why bitcoin wins.

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  • Sun, Nov 17, 2013 - 01:11am

    #1
    mrees999

    mrees999

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    Gold Vs Bitcoin… Why bitcoin wins.

Gold Vs Bitcoin… Why bitcoin wins.

As gold has remained ~1300 for the year but bitcoin has increased from $13 to ~450 as of today, we can do the math.

Value:

At the beginning of the year – and once of gold could buy you 100 bitcoins. Today and ounce of gold will buy you only 2.9. Bitcoin wins. Much more interest in buying bitcoin than gold worldwide. Gold has history on its side.Bitcoin has ease of use, better accessibility, more acceptance for every day transactions from more people around the world.

More startup companies and excitement for new infrastructure for bitcoin – gold is "grandpa's money" and fallen out of favor for most of the population. Has the reputation for being archaic. Once the research has begun and the "aha" moment finally arrives you will join us and recognize the potential and value. Only those stodgy companies that have made their life-work will continue to fight the future and attitudes such as film fought digital, and record companies fought file-sharing. Once you go digital you don't go back. 

 

Transportability: 

Gold, heavy, need armed gaurds security to move large quantities. Paperwork, insurance, identification – very limited places you can trade for actual goods and services without converting to cash first. Each step requiring fees and money. You might loose 10 – 15% of value by transporting large quantities. Trying to transport across country borders creates its own set of hassles and paperwork.

Bitcoin, you can transport anywhere in the world with Internet access. It travels at the speed of light. It moves inside encrypted wallets so it needs no security. It needs no third parties, insurance, fees. It's "frictionless".You can transport it across borders without effort. There are no borders. Hundreds of thousands of places will accept bitcoin for payment with needing to convert it to cash. – It can be done with your smartphone.

Storage protection from theft.

Gold is most often stored in safes: either a bank's safe or your own. This is always an obvious target of thieves, Or government confiscation.

Bitcoin: You can store in oneline wallets, in a paper-wallet that you can keep anywhere as it's just a series of numbers, you can fit it on the paper that comes in a fortune cookie.  Then access that data from any pc in the world connected to the internet.  You can make backup copies of your encrypted wallet off-line on usb or other removable media. You can store copies of your password protected encrypted wallet on any number of one-line free storage locations such as drop box or "sky drive" etc. Retrieve it from any pc when you want.

There are now methods to store wallet information only in your mind. Sounds like science fiction – but you can set up your own wallet id from a code you make up provided it matches certain rules that define a wallet.  (My Pony Jumps Haystakes During Daytrips To Grandma's House) could be MPJHDDTGH – you get the idea.  How hard is that to get past border gaurds? (just don't forget!)

Divisible:

Gold can be subdivided but at great cost and labor. Not just anybody can subdivde it ounces, half onces etc without precise equipment and the right skills. Techincally gold is very divisable but practically it is not.

Anybody can subdivide bitcoins as far as 8 magnitudes of order. Without effort, the amount will happen automatically through the transactions. You can create any amount of free wallets to store your value and sub one penny worth of bitcoin to 100 free wallets if you like. There is practically no limit.

Recognizable.

Gold can be faked using tungsten as proven recently. The purity might also bug "Fudged" by mixing in other metals to make it less pure. Few people are expert enough or have the correct equipment to detect when they've been conned. – Services of experts might be needed which reduce the value of the gold itself to pay for it.

Bitcoins enter the world unque from each other. Each transaction that is made carries with it the world wide network of the most powerful united computing force known to mankind. Each unit and transaction is protected by 256 bits of military grade encryption that would take supercomputers millions or billions of years to crack. When you receive a bitcoin, there is NO question if it is real or not.

Intrinsic Value

Gold isn't used for very much. Mostly just a store of value by shared belief. Only a tiny bit is used for electronics or art. The value of gold can be "faked" by central banks pushing large quantities to market by flooding it and then slowly buying it back once the price is to their liking again. Anybody else holding gold suffers from the manipulation of the governments and people of power and wealth. The most common place to find it is buried in a protected vault and is almost never seen. It can be double spent or worse as several people may have the same claim on gold stored and not in their own possession as is the vast majority of gold "holders".

Bitcoin has many uses.  It is a unit of exchange. A "real" currency that is used every day for everyday kinds of transactions. It also is a store of value and represents many man-hours of computer time and energy costs used in its creation and continued transactions. One use is acting as a measure of account. As you can track each bitcoin through public ledger, it cannot be faked or double spent.  It is also bandwidth for transactions for remittances. Large quantities and it's value act as transport envelops for companies or people that want to send large quantities of value between countries without the expense and delays of international banking transfers which cause "friction" slowness and percentages paid for the transaction.  You can exchange bitcoin for cash in most currencies on both end of a transaction between countries – only limited by the amount of bitcoins owned and transferred,

Bitcoin can eliminate the need for credit cards as business can accept bitcoin payment for electronic payment which reduces the cost normally paid to credit card companies. Bitcoin can save small businesses that can't afford 3-5% of their small profit margin. No risk of charge-backs. You don't need ID, applications, fees, and prerequisites to own bitcoin or conduct business in bitcoin.

These are but a few. The list goes on and one.  Is it any wonder people continue to trade in their inflated and increasingly worthless paper money and their ancient concept of money in gold and silver as they tire of the manipulation by the privledged and governments – and are now embracing the future of money?

What do you think?

 

  • Sun, Nov 17, 2013 - 05:03am

    #2
    bowskill

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    The “aha” moment

I recommend the Bitcoin 101 Blackboard series of youtube videos that Mrees previously shared a link to:

http://www.youtube.com/results?search_query=bitcoin+101+blackboard&sm=3

One of them is on gold vs bitcoin and makes compelling viewing.

Another on whether bitcoin is a bubble is equally good.

Sometime while watching them I had that "aha" moment. It is hard not to come to the conclusion that bitcoin will take the space we all expected gold would be filling right now. The more I learn about it the more convinced I am that it cannot and will not be stopped. While the central banks have likely been preoccupied with keeping gold suppressed this thing called bitcoin has come way out of left field and by the time they even understand it, it will be too late.

  • Sun, Nov 17, 2013 - 01:57pm

    #3

    Tammy Sharp

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    bitcoin etf

  Thanks for posting mrees999.  Im a bitcoin believer and made first purchase yesterday.  But i do have question about possibility of bitcoin etf.  I saw the interview last week with the Winklevii twins trying to push for a bitcoin etf.  We all know that gold etf has been primary weapon of central banks to manipulate gold price by first removing one of its primary intrinsic qualities of being rare, then illegally shorting the heck out of it and dumping illegal amounts of paper contracts through thin overnight trading.  If a bitcoin etf is created do you think it removes bitcoin quality of being scarce and gives TPTB incredible opportunity to manipulate bitcoin as well?  Would bitcoin etf be a game changer?  Thanks again for post!

TAM

  • Sun, Nov 17, 2013 - 04:51pm

    #4
    mrees999

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    Bitcoin ETF…Unsure future

Good questions about a Bitcoin ETF.  I'm not sure what to think about that one.  I can see possible good, but I share your concerns about the possibility of manipulation.

The bad:

Just as you say, it adds a level of opaque dealing with bitcoin. As you start masking movement off the bockchain ledger that is open for everybody. For individual ownership I would advise against it. One of the strongest points going for bitcoin is the transparency and is one of the founding tenets that Satoshi Nakamoto wanted available when creating the currency after the 2008 banking crisis.

 

The good:

Institutional investors, hedge funds, mutual funds might be granted exposure to the currency as it adds legitimacy to and allows non-technical people access to the price movement. It will finally be taken seriously by "big money" and possibly banks themselves.  With the new respect comes political power as these big companies fund the campaigns and the political friends will defend bitcoin with more urgency. You might see mainstream media start talking positive rather than mocking or disbelief. With this respect, it will grab the attention of more people and you'll watch the network effect pile in and growth may explode even further and faster. Good for us "early adopters".

It might make regulation in the future a bit more "bitcoin friendly" having political force backing us up. As you might have noticed there are a few big "discovery" meetings with legal experts, politicians, national security and bitcoin expertsbackers this week. Do you think it was coincidence that there was a ruling just made that political donations can be accepted in bitcoin? You can bet there has been some back room dealing going on.

Our cause is now "Greasing the wheels" for having future powerful proponents, politically speaking, on our behalf as lobbying groups have been working to get attention of policy makers. The fasted way to a politician's hearts is to fund their campaigns.  But this opens the possibility of "secret donations" that might introduces the possibility of skirting campaign reform with untraceable donations.

My recommendation – keep acquiring the bitcoin itself. As much as you can reasonably afford with money you can live without if it crashes.  I honestly don't see that happening, but this is brand new technology with little history so we need to be careful about our risk.  Owning the actual currency and protecting it with off-line storage paper wallets etc is a safer bet not to have our wallet and currency stolen. There are a few on-line instructions for doing this – and here's a great video on how to make a paper bitcoin wallet using your smart phone and ink-jet printer.

http://www.youtube.com/watch?v=W7V2myIwAuE

 

Good luck!

 

 

  • Mon, Nov 18, 2013 - 08:55am

    #5
    bowskill

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    Regular crypto-currency commentary

I vote mrees999 and/or JimH do a regular market commentary for PP smiley

This is a huge topic. So much is happening on two fronts:
A) the groundswell of adoption and continued development of services
B) the efforts of politicians and regulators to catch up and try and control it.

I suspect that some governments will support or ignore it. Especially those anti US$ reserve currency Others will attack the Achilles heel of bitcoin which is the public trust in it. A propaganda campaign lapped up by the MSM associating it with drugs, firearms, prostitution and terrorism would not surprise me.

The view of a balanced and steady commentator/guide through this period would be invaluable to PP. 

Jim ???

 

  • Mon, Nov 18, 2013 - 11:27am

    #6
    ao

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    mrees999 wrote:What do you

[quote=mrees999]

What do you think?

 

[/quote]

I think you have a promising future as an annuity salesman.

  • Mon, Nov 18, 2013 - 04:31pm

    #7
    AndyG

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    a good discussion

Thanks for discussing this topic. Like others I thought about bitcoin a while ago [when $20 a coin] and 'wish' I had purchased some. I see some of the advantages but do consider it 'speculation' myself. Especially now as others see the parabolic curve being formed. I do disagree with you Bowskill about how governments will view [ignore or support] it. Surely it cuts their power drastically as they can't Ctrl-P it at will – or could they? I think for me putting a little money in [for those that did early on, good on you] you are prepared to lose is a 'punt' now. But I do see governments attacking this for all they are worth. Not just in the MSM but digitally. Bankers will hate it I'm sure, and be pulling all the strings and leverage they can to get politicians to attack and destroy it, ideally without anyone knowing who is doing the attacking.

Gold? Don't write it off just yet. When you log on and see your 'wallet' emptied or all transactions of bitcoin 'denied' [made illegal or prevented], then perhaps reaching for a few physical gold coins will be reassuring.

  • Mon, Nov 18, 2013 - 04:57pm

    #8

    Time2help

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    Whoops, power is out…

…ahh yes, there's my flashlight.  Now where did I leave those bitcoins???

  • Mon, Nov 18, 2013 - 07:10pm

    #9
    jdye51

    jdye51

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    What do I think?

I think we are in a collapse that can only increase in momentum. I think we are past peak oil and are on the downward slope with no new non-polluting energy source ready to replace it. Industrial civilization is on borrowed time while we frack the hell out of our land and use huge amounts of increasingly scarce water for rapidly diminishing barrels. What will power the internet as the ROI of oil of any type becomes less and less? Coal? Nuclear? They have their own problems. Think climate change and Fukushima.

Why invest in a doomed technology? Bitcoins, even fiat currency, what do they matter when the world is collapsing around us? Is this normalcy bias in action? At least put your money into hard assets that will still be there when power becomes unreliable. There are no assurances that even gold and silver will be of any use past a certain point though they at least have a history of usage and are tangible. What is important to the Filipino people affected by the mega-typhoon? – food and clean water. The use of Bitcoins implies a belief that technology can be relied upon to be there for us in the future. I believe this is a false assumption. Events affecting the 3 E's are accelerating and our future is more and more uncertain.

Why all this focus on money and debate about what is the best form to have? What does it matter?!  Maybe some people only have an intellectual understanding of collapse and haven't really taken it's implications fully into their hearts. Focusing on money becomes a way to distract and to reinforce the illusion of control in the face of increasing chaos. For me, the desire to keep playing poker while the ship is sinking is just crazy. But I suppose we all have our ways of dealing with the unthinkable. It just seems like beating a dead horse.

So aren't you glad you asked! smiley

  • Mon, Nov 18, 2013 - 07:32pm

    #10

    Time2help

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    jdye51 wrote:Why all this

[quote=jdye51]

Why all this focus on money and debate about what is the best form to have? What does it matter?!  Maybe some people only have an intellectual understanding of collapse and haven't really taken it's implications fully into their hearts. Focusing on money becomes a way to distract and to reinforce the illusion of control in the face of increasing chaos. For me, the desire to keep playing poker while the ship is sinking is just crazy. But I suppose we all have our ways of dealing with the unthinkable. It just seems like beating a dead horse.

[/quote]

Limited internet access (due to energy constraints, electrical grid degradation/disrepair, government intervention, etc.) is just one of reasons I'd be cautious with cryptocurrencies. I think in the short term these may play out quite well for those with $$ they can afford to play with, but in the long(er) term? 

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