The Bitcoin Learning Curve

April 30th, 2012   Submitted by Seth King

It’s true that Daily Anarchist has seemingly transformed into the Daily Bitcoin blog. I’ve begun migrating my sponsors to Bitcoin advertising platforms. I’ve kicked out Paypal as an accepted form of payment for my store’s merchandise, choosing to only accepting Bitcoin. I pay my contributors in Bitcoin instead of the Dollar. And many of our articles focus on exciting developments in the Bitcoin economy. But it’s all for good reason. Bitcoin is the global currency of the future. It empowers the market in a way like never before and has afforded me a great deal of independence. I look forward to the day when I have completely replaced the Dollar with Bitcoin.

I am sure Daily Anarchist has many readers who are not tech savvy. And I am sure that upon first glance Bitcoin looks overwhelming. The effort put into learning about Bitcoin far outweighs the benefits. Fortunately, there is a new set of very short videos that will not only break down Bitcoin for the lay person, but will help him or her understand how great the benfits of Bitcoin are. These are a work in progress and I will attempt to add new videos to this article as they are created. Consider using this page as an outreach tool. Enjoy!

11 Responses to “The Bitcoin Learning Curve”

  1. Bob RobertsonNo Gravatar says:

    I find it remarkable how many people think that competing currencies are “illegal”. Only counterfeiting is actually “illegal”, and Bitcoin cannot be confused for Federal Reserve Notes.

    Legal Tender means one MUST accept the currency covered by the legal tender law, not that it is the only currency that may be accepted.

    My personal preference was the e-Gold style, but because that was centralized (like Napster) it could be attacked and consumed by Leviathan.

    I look forward to prices denominated in Bitcoins settling down as people get used to it. It will be interesting.

  2. EulerNo Gravatar says:

    I’m embarrassed to say I really know nothing about it. I usually just skip articles mentioning it. I’ll get around to absorbing the info at some point.

    • Seth KingNo Gravatar says:

      Well, you have a good excuse. Ph. D. programs in Math are usually all consuming. But these videos are two minutes a piece, so…

      With your background I think you’ll really dig Bitcoin.

  3. Pete WalkerNo Gravatar says:

    If The State shuts down the Internet, does that in turn shut down Bitcoin?

    • Seth KingNo Gravatar says:

      If the state could manage to shut down the internet, Bitcoin would not be a viable currency. But they would have to shut down the entire internet, not just in one country, but the whole world. And it could not just be censoring the internet, they would have to completely shut it down entirely. So, yes, if all of the governments of the world act together in completely destroying the internet forever, Bitcoin is toast. But if that happens, I think we’d have bigger problems than just the currency. Also, if they tried to do that nothing would make them lose legitimacy more, plus you would likely see the meshnet spring to life, which would be cool.

      Long story short, I don’t think there is anything the government can do to stop Bitcoin.

  4. Jim DeltonNo Gravatar says:

    I’m going to presume that I have been selling something and getting paid in bitcoins. So after awhile I have a lot of bitcoins in my bitcoin bank. At that point I decide I need a new office to handle my new business volume. The people I want to buy my new office from only take FRNotes. How do I turn my bitcoins into FRNs? Will there be other people in the bitcoin world who are willing to take bitcoins and send FRNs? If so, what will those people ultimately do with their bitcoins? Seems like eventually a lot of “other money” is going to wind up inside the bitcoin system with no way to “get it out” should people eventually decide they don’t want to use bitcoin anymore. Or to ask this question a different way… if all the bitcoin users for whatever reason decide they just don’t want to do the bitcoin thing anymore, how to they all get their bitcoins turned back into some other generally accepted currancy, such as FRNs?

  5. KontrarianNo Gravatar says:

    I really like the idea of bitcoins although admittedly I have never used the service, if you can call it that.
    I have one major concern and maybe someone can address it.
    Bitcoins rely on electricity and for the most part the internet and maybe one day LAN at a brick and mortar store.
    Well, the infrastructure for the internet is not exactly in the hands of the people, neither is the power grid.
    If you do not have internet access and/or power then your bitcoins are useless.
    Gold, silver, cigs, or ammo would almost always be redeemable since you can hold it physically.
    So it seems to me that if we have a truly open/free market then we would have competing currencies and bitcoins would be very viable.
    But I can’t imagine, but who knows the future, bitcoins being the next reserve currency.
    It would seem that it could only survive alongside other hard money, but never exclusively.
    Even if bitcoins usage made up 90% of all transactions, wouldn’t you be a fool to have all your money it bitcoins?
    What would you do if the government shut down the internet?
    But if we assume that bitcoins made up that percentage of transactions, then the government would have to have been long gone by that time.
    What if you don’t pay your electricity bill and the utility company cuts your power?
    How do you pay them so you can get your service running again?
    Maybe you just go to starbucks with your laptop.
    Anyway, I’m just throwing stuff out there and I hope everyone shoots down my concerns because I really like what I’m seeing in bitcoins.

  6. PECBNo Gravatar says:

    From what I read (correct me if I’m wrong), technically the internet is not required for bitcoin. Transactions could be conducted via smart cards, usb sticks, and the like.

  7. Martin BrockNo Gravatar says:

    Bitcoin is interesting, and something (or many things) like it might succeed ultimately, but I’m a Bitcoin skeptic for several reasons.

    Money is a medium of exchange and can also be a standard of value for extending credit. When a commodity is a standard of value, notes promising the commodity themselves become money, i.e. people will accept the notes only to exchange them later for other goods. Under a gold standard, for example, gold is money, and notes promising gold are also money.

    These promissory notes are not fiat money. Fiat money has value because a state forces it to circulate in various ways. A state need not force notes promising a commodity to circulate. If you write an IOU for an ounce of gold, your note’s value is a product of your creditworthiness, not a product of statutory force. [Of course, if you are a state, your creditworthiness is a product of force, but that's another story.]

    When promissory notes are money, the supply of money is more elastic than the supply of the standard of value. If you want to exchange your good for my money but I have no gold, you may accept my note promising gold instead. If the market for gold is sufficiently liquid, I’ll obtain the promised gold by exchanging something else I own (like my labor) for gold elsewhere, and you’ll then exchange the note for gold if that’s what you want.

    But the market for gold could be illiquid, i.e. efforts to obtain promised gold could drive up the value of gold relative to goods like labor, and if the supply of gold is limited, a rising value could lead people to hold gold expecting a still higher value in the future, as opposed to increasing to supply of gold, making the market for gold even less liquid.

    If gold becomes more valuable relative to other goods generally, this process is deflation. This deflation increases the burden on debtors and can ultimately drive many debtors into bankruptcy.

    These debtors are simply people who have valuable goods other than gold in a market in which gold monopolizes the monetary function. This sort of monopoly is always a matter of statutory force. Without statutory force, decreeing gold a legal tender for example, people in this scenario will use other standards of value, like silver, to extend credit.

    Because the Bitcoin supply grows ever more slowly and ultimately approaches a maximum, a monetary system in which Bitcoins are a standard of value for extending credit is subject to this deflationary process. If Bitcoin is not an exclusive standard, it could one of many standards competing for the monetary role; however, because Bitcoins have no intrinsic value, it’s hard to imagine a stable value for them in this role. What would this stable value be? We’ve already seen a Bitcoin bubble. Why wouldn’t a bubble reoccur?

    • Seth KingNo Gravatar says:

      The Subjective Value Theory dictates that Bitcoin’s value will forever be in a state of flux. Gold does not have intrinsic value. Gold’s value is imputed.

      Try not to overthink Bitcoin. It’s basically just a network of individuals with an uncounterfetiable tally system. As the network grows, so too does the value of each Bitcoin. Will the Bitcoin network shrink? Doubtful, unless something better comes along.

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