1) Currency no longer has a backing. The US stopped using the gold standard in 1970 (Ironically, the US Dollar became the global trading standard simply because they had a gold standard). 2) Currency is based purely on trust, not inherent value e.g. during hyperinflation in Germany in the 20's, the currency was worth less than firewood, so people burnt money because money because it was cheaper to burn money than firewood. 3) The trust in the value of money is why you accept a 1,000 shilling note as being worth something. It's trust. Yes, the state issues it, but that is not the basis of trust in currency. It's the assumption that society as a whole shares your view on the value of the money... e.g. in Zimbabwe, the state issued the currency, but the people did not have faith in the currency. So the notion of value of a currency being predicated on state issuance is moot. 4) Bitcoin actually solves interesting problems online, the biggest being anonymity. e.g. If you spend 1,000 KES at Java, that money can't be traced to you. The money is accepted by the merchant. Period. There's no tracing it back to you. A 50 KES note spent in a matatu, buying drugs etc can't be traced back to you (unless the state marks bills). Money is trusted. We've been unable to replicate that online. So for now, we use cards. Paypal etc. We have intermediaries who guarantee value. Who guarantee that the transaction would be settled. This has one problem, margins. MasterCard, Visa, Paypal etc all have their pound of flesh. Additionally, the lack of anonymity means that all transactions can be traced back to both the merchant and customer and the merchants can determine what type of goods can be transacted. Whilst this might look like a good idea, the problem is that the state can use this to get rid of unwanted actors in the economy. What Bitcoin represents is free trade online. You can buy whatever you want, sell whatever you want online e.g. you can create a secure email service to insulate yourself from the state e.g. Snowden. 5) Money transfer - the US Dollar means that you have to be in good standing with the west in order to conduct international transactions. This need not be the case with bitcoin. You no longer need to use NY clearing houses to transfer international currency. You can use bitcoin (e.g. A citizen of Sudan, who wants to launch an ecommerce website can start accepting bitcoin, which is global and bypass the US clearing houses). Freedom to trade. US foreign policy should not be the baseline for international trade. The one caveat I have with bitcoin is the fact that it has deflationary tendencies, not inflationary, because it has a limited supply. The inflationary tendencies of legal currency mean that the incentive to the holder is to spend/invest rather than hoard the currency, which increases the velocity of the cash. It's used to buy more and more goods/services. Bitcoin, due to its deflationary tendency, incentivises the holder to keep, rather than spend the cash. e.g. At some point, in 2011, bitcoin was worth roughly 50 USD, it's worth 300 USD today, so if you spent 1 bitcoin buying say an iPod Shuffle, that same amount of money, had you waited, would have bought you 6 iPods shuffles, so you would have a feeling of loss. That's the biggest worry. However, the fact that more and more people are trading with it might mean that folks actually spend, rather than hoard the money. On Wed, Nov 26, 2014 at 2:07 PM, Paul Roy via kictanet < kictanet@lists.kictanet.or.ke> wrote:
Well, am against this notion of a few people making "something out of nothing" and majority "making nothing out of something". I have no issue with the technology side. True using crypto technology and blockchain you can trace the history etc, however this does not explain some mysteries. First a few points to ponder
1. Who invented bitcoin? Why is s/he in hiding? If i were the inventor i would proudly be associated with BTC in this case the guy went to hiding...did he know something or is he/she remaining anonymous avoiding legal action from eminent collapse of bitcoin with a few billionaires and majority impoverished?
2. Ok BTC is popular and they claim over 6 million coins blah...blah... have been mined so far. How did this happen? Who are these billionaires who spent enormous computing resources to mine bitcoin while the rest of the world was asleep?
3. Paypal has a disclaimer on bitcoin trade...do they know something? Many governments do not recognize bitcoin and others have even burned it as a legal tender
4. What's backing this currency? Air?
Anyway the truth is that some genius came up with some incredible algorithm based on cryptography, released the code, used pseudo-names to hide s/he identity, got his/her cronies and fictitious accounts with millions of these so called coins, sat back and enjoying billions coming his/her way.
What a genius!
pro
On Wed, Nov 26, 2014 at 10:57 AM, Anthony Lenya <tlensya@gmail.com> wrote:
Bernie Madoff anyone? ? On 26 Nov 2014 10:54, "Patrick Kariuki via skunkworks" < skunkworks@lists.my.co.ke> wrote:
Any basis for your advice?
The US Marshal service is auctioning Bitcoins - If the Bitcoin was part of some ponzi scheme wouldn't they destroy them instead?
http://www.usmarshals.gov/assets/2014/dpr-bitcoins/
On Wed, Nov 26, 2014 at 10:05 AM, Paul Roy via skunkworks < skunkworks@lists.my.co.ke> wrote:
John,
Good to see you trying to marshal support for digital currency. This is simply pyramid scheme that will make so many people lose their hard earned cash, moreso fraudsters and hackers are having a playing field ripping off many innocent investors...
My advice, keep off bitcoin!
pro
On Wed, Nov 26, 2014 at 9:33 AM, John Karanja via skunkworks < skunkworks@lists.my.co.ke> wrote:
Hi Listers,
Bitcoin Meetup sign up here: <https://mail.google.com/mail/u/0/goog_1446634865> http://www.meetup.com/Kenya-Bitcoin/events/218657905/
Bitcoin which is like *global M-Pesa is* the World's most celebrated digital and crypto-currency. The past 5 years has seen this new technology experience gradual and steady growth in use around the World. Bitcoin today has over 10 million users globally and is growing fast! Together with the African Digital Currency Association(ADCA) we are hosting a Bitcoin Meetup on Monday 1st December 2014 5:30PM at the iHub, 4th Floor, Bishop Magua Centre, Ngong Road, Directly opposite Uchumi, Ngong Road. We look forward to demonstrating how you can Buy, Trade and Store your Bitcoin in this session.
Come prepared with your Bitcoin Wallets which you can download from Google Play and Apple Store as Whive <http://Whive.org> will be sponsoring free BTC Giveways.
If you have no idea how to set up the wallet buzz me off-list and I will help.
Bitcoin Meetup sign up here: <https://mail.google.com/mail/u/0/goog_1446634865> http://www.meetup.com/Kenya-Bitcoin/events/218657905/
As background info read about E.A legal status and regulation of Bitcoin on the iHub community blog here. Post by ADCA lead Michael Kimani.
http://community.ihub.co.ke/blogs/21585/digital-currency-regulation-in-east-...
See you there,
John Karanja
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