Bitcoins.....

[thisnumbersdisconnected]

Your money isn't at the bank either. All that is there is a promise to pay if you make a demand. There really isn't any difference.

Wrong. Do you have any idea how much cash is on hand at any given bank every day just to cover the eventuality that someone may come in and seek a complete withdrawal?

We aren't on the gold standard. Your dollar bills don't say "Silver Certificates" any more. What backs up your dollars other than the collective belief that they are worth something.

Completely irrelevant. There is cash, whether backed by gold or silver or not. Bitcoins do not exist.

 

[InTheLight]

Folks, you both missed the point. Bitcoins are just a medium of exchange, the currency of the internet. There are even attempts to tax them as personal property. There really isn't much difference between them and your debit card.

Yes, there is.

Your money isn't at the bank either. All that is there is a promise to pay if you make a demand. There really isn't any difference.

Supposing you take a gold coin to a dealer with the intention of turning it into cash. What guarantee do you have that the dealer will buy your coin? None. You don't even have a promise from someone to exchange it for cash.

We aren't on the gold standard. Your dollar bills don't say "Silver Certificates" any more. What backs up your dollars other than the collective belief that they are worth something.

The sweat of my brow that created the goods and services that I converted into money and deposited into the bank.

But, essentially, you are partially correct. If the world agreed that solid orange maple leafs with flecks of yellow in them were currency, then that would be a currency.

 

[MNJacob]

I would respectfully submit that if you call your bank and ask, how much cash your could actually withdraw without advance notice, or better yet, how big a check to you written on one of their accounts that you could actually get in dollars, you might be surprised at how small the amount really is.

The real issue is that the puny amounts that we "own" are not large enough to challenge the required cash reserves that brick and mortar banks keep on hand.

Modern monetary systems are dependent on trust, not actual specie. We aren't that far from a cashless society, not really that much different than the concept of bitcoins.

I appreciate your reservations about "Bitcoins" themselves, but my points are more general, about the concept of a virtual currency. And seriously, your debit card, or even your paper check is not really backed up by much more than a promise to pay.

It's part of the reason that many survivalists advocate maintiaining a portion of your own resources in "hard" currencies, whether that be Krugerands, other coins, or something that has intrinsic value. If the power is out, your debit card isn't doing you any good. If the power has been out for a week, your paper check isn't going to do you any good, and if the power has been out for over a month, I'm not sure your dollars will be worth much either.

 

[Sapper Woody]

Wrong. Do you have any idea how much cash is on hand at any given bank every day just to cover the eventuality that someone may come in and seek a complete withdrawal?Completely irrelevant. There is cash, whether backed by gold or silver or not. Bitcoins do not exist.

Your cash doesn't exist either. At least, most of it doesn't. Once it's in the bank it's loaned out, so it's in another person's bank; then gets loaned out, etc. You can cash in bitcoins for USD, just like you can cash in a nonexistent digital currency that represents a dollar with your debit card. There really is absolutely no difference in a bit coin and a debit card. At least bit coins are backed by your dollar that you placed in. Your debit dollar is backed by a fraction of what it represents. So, by this standard, bit coins are more real than the money you spend with your debit card.

Edited for spelling.

 

[thisnumbersdisconnected]

Your cash doesn't exist either. At least, most of it doesn't. Once it's in the bank it's loaned out, so it's in another person's bank; then gets loaned out, etc.

Banks don't like this known, because robberies would increase ten-fold. In fact, they will tell you they have $20,000 max at the start of any given business day. That is untruthful, for obvious reasons.

My son's best friend worked his way through college as a bank security guard. Each teller station has about $15,000 on hand at the beginning of the day. Additionally, there is a reserve amount of about $150,000 in the vault, accessible only with the manager's key. Large main branches, such as in major downtown areas of a city, will have nearly three times that much on hand.

Unless you have a million dollar checking account -- and that would be naïve, given it is only insured by FDIC up to $250K -- you can walk into your bank and withdraw everything you've got in there, checking and savings, though they will discourage you from doing so while you're at the teller cage. You will be taken to a manager, who will take you to a closed area, and happily give you your money if you insist on it being given. However, they will ask you to take a cashier's check instead. They understandably don't want you carrying that kind of money out of the bank where everyone can see you having done so.

You can cash in bitcoins for USD, just like you can cash in a nonexistent digital currency that represents a dollar with your debit card. There really is absolutely no difference in a bit coin and a debit card. At least bit coins are backed by your dollar that you placed in. Your debit dollar is backed by a fraction of what it represents. So, by this standard, bit coins are more real than the money you spend with your debit card..

Sorry, Woody, but that just isn't right. The only thing I have to fear regarding cash is the potential -- very, very small -- for counterfeiters. Bitcoins, on the other hand, are an incredible scam. The difficulty with the bitcoin is their "production," which is unregulated and not at all done transparently. There is nothing to prevent a sudden surge in bitcoins being dumped by a creator, nothing to prepare you for a sudden surprise major cash-in, nothing guaranteeing you anything. These aren't banks. They are not brick-and-mortar stock exchanges. They are entirely web-based, and anyone who pays in legal fiat will most likely be left with nothing.

Bitcoins take advantage of this so-called "emerging digital market" by selling an "opportunity" to be part of the next "big thing." The creators are actually preying on the down economy and on people who are unreasonably trusting -- maybe for an amount they normally could afford to lose, but probably not -- that these exchange will fulfill their role. Maybe they do for a little bit, but just like a Ponzi scheme, a lot of new investors are losing money in unviable fluctuations while people in the know, or the technogeek-geniuses, are making a killing by "pretending" to get their digital blocks compromised. Think Mt. Gox. Only 46% of the pending transactions get refunded, if you're lucky enough to get a refund. Your money can be said to be "floating around in cyberspace," but it isn't. Somebody got it, and you'll never see it again.

Here's a major clue to the scam: Contact with these exchanges other than through their website is impossible. There are no email responses, no phone numbers for customer services, any complaints that do get to an actual location somewhere go unanswered, and nearly half the original "exchanges" have completely disappeared from the web.

 

[Sapper Woody]

Banks don't like this known, because robberies would increase ten-fold. In fact, they will tell you they have $20,000 max at the start of any given business day. That is untruthful, for obvious reasons.

My son's best friend worked his way through college as a bank security guard. Each teller station has about $15,000 on hand at the beginning of the day. Additionally, there is a reserve amount of about $150,000 in the vault, accessible only with the manager's key. Large main branches, such as in major downtown areas of a city, will have nearly three times that much on hand.

Even still, that $300,000+ on hand is only a fraction of what people think is actually in there.

Unless you have a million dollar checking account -- and that would be naïve, given it is only insured by FDIC up to $250K -- you can walk into your bank and withdraw everything you've got in there, checking and savings, though they will discourage you from doing so while you're at the teller cage. You will be taken to a manager, who will take you to a closed area, and happily give you your money if you insist on it being given. However, they will ask you to take a cashier's check instead. They understandably don't want you carrying that kind of money out of the bank where everyone can see you having done so.Sorry, Woody, but that just isn't right. The only thing I have to fear regarding cash is the potential -- very, very small -- for counterfeiters. Bitcoins, on the other hand, are an incredible scam. The difficulty with the bitcoin is their "production," which is unregulated and not at all done transparently. There is nothing to prevent a sudden surge in bitcoins being dumped by a creator, nothing to prepare you for a sudden surprise major cash-in, nothing guaranteeing you anything. These aren't banks. They are not brick-and-mortar stock exchanges. They are entirely web-based, and anyone who pays in legal fiat will most likely be left with nothing.

Bitcoins take advantage of this so-called "emerging digital market" by selling an "opportunity" to be part of the next "big thing." The creators are actually preying on the down economy and on people who are unreasonably trusting -- maybe for an amount they normally could afford to lose, but probably not -- that these exchange will fulfill their role. Maybe they do for a little bit, but just like a Ponzi scheme, a lot of new investors are losing money in unviable fluctuations while people in the know, or the technogeek-geniuses, are making a killing by "pretending" to get their digital blocks compromised. Think Mt. Gox. Only 46% of the pending transactions get refunded, if you're lucky enough to get a refund. Your money can be said to be "floating around in cyberspace," but it isn't. Somebody got it, and you'll never see it again.

Here's a major clue to the scam: Contact with these exchanges other than through their website is impossible. There are no email responses, no phone numbers for customer services, any complaints that do get to an actual location somewhere go unanswered, and nearly half the original "exchanges" have completely disappeared from the web.

I'm not saying bit coins themselves are good. It was a horrible attempt at best, a scam at worst. But the idea of digital currency is not new. It's what we do now, only taken to the next logical step. Which is barely a step. Hundreds of dollars pass through my account each month. I handle less than $10 in physical cash each month. In effect, I am using digital currency. Same exact as buying into a digital currency. You put money in for the opportunity to go paperless.

 

[thisnumbersdisconnected]

Even still, that $300,000+ on hand is only a fraction of what people think is actually in there.

No matter what they think is in there, if they have money deposited with a bank or brokerage house, the money is available on demand. It is not with this bitcoin scam.

... But the idea of digital currency is not new. It's what we do now, only taken to the next logical step.

Not really. What we have in a debit card or a "smart card" is a digital representation of tangible currency. Bitcoins do not exist, cannot be touched, are not guaranteed or insured. They are the scam to the reality and trustworthiness of the debit card's actual monetary value.

Which is barely a step. Hundreds of dollars pass through my account each month. I handle less than $10 in physical cash each month. In effect, I am using digital currency. Same exact as buying into a digital currency. You put money in for the opportunity to go paperless.

This isn't the same thing, Woody. Not in the least. You may handle only $10 or $20 of all the cash that goes through your account each month, but if you wanted to handle all of it, you could. Not so with bitcoins. Again, they simply do not exist, and are not representative of anything.

 

[Sapper Woody]

No matter what they think is in there, if they have money deposited with a bank or brokerage house, the money is available on demand. It is not with this bitcoin scam.

Here's the breaking point of the discussion. The physical money is still available to be cashed out.

Not really. What we have in a debit card or a "smart card" is a digital representation of tangible currency. Bitcoins do not exist, cannot be touched, are not guaranteed or insured. They are the scam to the reality and trustworthiness of the debit card's actual monetary value.

And the digital currency is an online representation of the money you changed into a digital currency.

This isn't the same thing, Woody. Not in the least. You may handle only $10 or $20 of all the cash that goes through your account each month, but if you wanted to handle all of it, you could. Not so with bitcoins. Again, they simply do not exist, and are not representative of anything.

And you can cash in on digital currency and handle it all if you want. Your debit card represents money, same as a bit coin. Exact same. Your debit card doesn't make any money go from one bank to another. It makes digital numbers go up on one end and down on the other. No cash moves.

 

[thisnumbersdisconnected]

Here's the breaking point of the discussion. The physical money is still available to be cashed out. And the digital currency is an online representation of the money you changed into a digital currency.

Then why have well over half of the people who've "bought" bitcoins lost everything they paid in?

And you can cash in on digital currency and handle it all if you want. Your debit card represents money, same as a bit coin. Exact same.

I stand no chance whatsoever of losing the money represented on my debit card. I stand a very good chance of losing a large portion, if not all, of any bitcoins I would be stupid enough to buy. My debit card does, indeed, represent money. Bitcoins represent high risk and a very real possibility of complete loss.

Your debit card doesn't make any money go from one bank to another. It makes digital numbers go up on one end and down on the other. No cash moves.

Bull, Woody. Cash follows the digital transaction, and by no less than a few hours, usually overnight bank reconciliations. Bitcoins theoretically can be used in the same fashion, but by being unregulated, subject to huge fluctuations based on a sudden surge in bitcoins being dumped by a creator or a sudden surprise major cash-in that devalues everyone else's holdings, they are too volatile to be "real." They are more like a junk bond, a low-trust, high-yield investment that carries far too much risk to be viable. Junk bonds carry Standard & Poor's lowest bond ratings, a BB or worse. Bitcoins couldn't qualify for that high a rating.

 

[Sapper Woody]

Then why have well over half of the people who've "bought" bitcoins lost everything they paid in?I stand no chance whatsoever of losing the money represented on my debit card. I stand a very good chance of losing a large portion, if not all, of any bitcoins I would be stupid enough to buy.

Again, I am speaking of digital currency in general. Bit coins failed. It doesnt mean a regulated currency won't work.

Bull, Woody. Cash follows the digital transaction, and by no less than a few hours, usually overnight bank reconciliations.

Are you saying that in a few hours my cash magically flies from my home bank in San Antonio to anywhere in the world? That's insane. No cash changes hands. It's all digital credits.

Bitcoins theoretically can be used in the same fashion, but by being unregulated, subject to huge fluctuations based on a sudden surge in bitcoins being dumped by a creator or a sudden surprise major cash-in that devalues everyone else's holdings, they are too volatile to be "real." They are more like a junk bond, a low-trust, high-yield investment that carries far too much risk to be viable. Junk bonds carry Standard & Poor's lowest bond ratings, a BB or worse. Bitcoins couldn't qualify for that high a rating.

Again, one failed, unregulated test does not mean failure for a regulated market.