Harry on Bitcoin

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Jack Jones
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Harry on Bitcoin

Post by Jack Jones » Fri Aug 03, 2018 2:04 pm

Okay, not literally, but about the closest we'll get.

Harry Browne radio show on 2004-12-05:

https://web.archive.org/web/20150906090 ... -12-05.mp3

Guy emails asking about digital gold. I'll type it out so you can read it in your easy-chair (starting at 32:29):

"Jack in cyberspace says: 'Are you familiar with gold money, and would you feel safe using it? What concerns would you have using this type of gold purchase? I'm concerned that in times of trouble, or through fraud or dishonest schemes your gold could vanish.'"

"Well you're right about that. And Gold Money is, I'm not familiar with, but it is apparently a company that issues to you credits when you give them money and they put it into gold and give you credits for it. And with other people who are in the same system you can use those credits and make purchases and exchanges and so on." (sounds a lot like Bitcoin to me)

"Well unfortunately, this is one of those public places holding gold that would be ripe for confiscation if the time came. And again, let me make it clear I'm not predicting that the U.S. government is going to confiscate gold in the next 5, 10, 25, 50 years. But I have to protect my assets against even the unthinkable. I try to set up a permanent portfolio in a way that threats that might come in 5 years that I would have never thought of in 100 years would still be protected. And one of the most important ways is, of course, having some assets outside the country in which you live."

"So I wish the people at Gold Money well. I hope they succeed, I hope a lot of things, but unfortunately, I'm not going to put my money there to help them succeed because I don't want to have my gold in a public place."

-----
Okay, so Harry only gave us one objection that seems like it doesn't apply to Bitcoin. Of course, he could have had more, but he does end by wishing the Gold Money folks well.

I think the glaring difference between Bitcoin and Gold Money is that gold is gold, but as we've seen, people have been coming out the woodworks with competing cryptocurrencies. There's a term for this that is escaping me at the moment.

Somewhat tangentially, it's beginning to seem to me that although the original principles and implementation of Bitcoin is sound, the project has become the victim of a social engineering attack that has crippled the currency unnecessarily. See: the rise in fees late last year, merchants dropping support, etc. Fortunately the faithful have forked the project (Bitcoin Cash) and the prospect of a peer-to-peer digital currency outside the reach of the government remains.
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Re: Harry on Bitcoin

Post by boglerdude » Fri Aug 03, 2018 7:50 pm

Whats the problem with the dollar? Just dont hold it, buy stocks n'bonds.
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Re: Harry on Bitcoin

Post by Jack Jones » Sat Aug 04, 2018 5:32 am

boglerdude wrote:
Fri Aug 03, 2018 7:50 pm
Whats the problem with the dollar? Just dont hold it, buy stocks n'bonds.
I already object to the fact that citizens are forced to do what you say...namely we're forced into investing due to inflation. I believe Joe Sixpack should be able to earn a living, put his excess money in the bank (or his safe) and get on with his life without his hard-earned money eroding away on him. Instead we're all forced to invest, and not everyone has the brain for it.

And I'm just considering normal inflation here. What about Venezuela? Or the U.S. in 1980?

We could also look at what the Bitcoin creator put in the genesis block:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
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Re: Harry on Bitcoin

Post by Kriegsspiel » Sat Aug 04, 2018 11:09 am

Jack Jones wrote:
Sat Aug 04, 2018 5:32 am
boglerdude wrote:
Fri Aug 03, 2018 7:50 pm
Whats the problem with the dollar? Just dont hold it, buy stocks n'bonds.
I already object to the fact that citizens are forced to do what you say...namely we're forced into investing due to inflation. I believe Joe Sixpack should be able to earn a living, put his excess money in the bank (or his safe) and get on with his life without his hard-earned money eroding away on him. Instead we're all forced to invest, and not everyone has the brain for it.

And I'm just considering normal inflation here. What about Venezuela? Or the U.S. in 1980?

We could also look at what the Bitcoin creator put in the genesis block:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
Has there ever been a legit safe asset for a substantial length of time, in practical terms? From what I understand:
  • The first currency was coins, which have been debased throughout history by pretty much everyone.
  • Even if they weren't, you'd still have to pay someone to store them in the bank. You wouldn't get interest on gold coins unless the bank could lend on the deposits and risk losing them.
  • The metals the coins are made out of have storage costs, chance of theft, and are "debased" by mining more of them, pretty much like the coins.
  • Cryptocurrencies subject to all the cons of physical metals, and I'd say it's a lot easier to forget/lose your password to your wallet than it is to lose/forget about bullion you have stored. And to have them stolen.
  • Demurrage currency, like they had in the Middle Ages, continually lose value as the underlying commodity (wheat, most likely) decayed.
  • Credit based fiat currency obviously.
Am I wrong?
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Re: Harry on Bitcoin

Post by l82start » Sat Aug 04, 2018 11:52 am

Kriegsspiel wrote:
Sat Aug 04, 2018 11:09 am


Has there ever been a legit safe asset for a substantial length of time, in practical terms? From what I understand:
  • The first currency was coins, which have been debased throughout history by pretty much everyone.
  • Even if they weren't, you'd still have to pay someone to store them in the bank. You wouldn't get interest on gold coins unless the bank could lend on the deposits and risk losing them.
  • The metals the coins are made out of have storage costs, chance of theft, and are "debased" by mining more of them, pretty much like the coins.
  • Cryptocurrencies subject to all the cons of physical metals, and I'd say it's a lot easier to forget/lose your password to your wallet than it is to lose/forget about bullion you have stored. And to have them stolen.
  • Demurrage currency, like they had in the Middle Ages, continually lose value as the underlying commodity (wheat, most likely) decayed.
  • Credit based fiat currency obviously.
Am I wrong?
it would be interesting to see what happened if you had all the different types of currency as an option at the same time - in competition with each other, if the government didn’t have a monopoly on creation of money, and you could flow your store of value back and forth easily between.. metals, government fiat dollars, crypto currency, private or local currency, etc.. would competition and market feed back keep the risk/urge/need to devalue them at bay?
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Re: Harry on Bitcoin

Post by Maddy » Sat Aug 04, 2018 6:47 pm

Has there ever been a legit safe asset for a substantial length of time, in practical terms?
Perhaps a Steinway grand.
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Re: Harry on Bitcoin

Post by boglerdude » Sat Aug 04, 2018 10:44 pm

> if you had all the different types of currency as an option at the same time - in competition with each other

We do? You can buy gold and crypto. Gresham's law "bad money drives out good"...people hoard gold and crypto and trade dollars.

But I guess this experiment is underway with the competing cryptos...
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Re: Harry on Bitcoin

Post by Jack Jones » Sun Aug 05, 2018 1:35 pm

Kriegsspiel wrote:
Sat Aug 04, 2018 11:09 am
Has there ever been a legit safe asset for a substantial length of time, in practical terms? From what I understand:
  • The first currency was coins, which have been debased throughout history by pretty much everyone.
  • Even if they weren't, you'd still have to pay someone to store them in the bank. You wouldn't get interest on gold coins unless the bank could lend on the deposits and risk losing them.
  • The metals the coins are made out of have storage costs, chance of theft, and are "debased" by mining more of them, pretty much like the coins.
  • Cryptocurrencies subject to all the cons of physical metals, and I'd say it's a lot easier to forget/lose your password to your wallet than it is to lose/forget about bullion you have stored. And to have them stolen.
  • Demurrage currency, like they had in the Middle Ages, continually lose value as the underlying commodity (wheat, most likely) decayed.
  • Credit based fiat currency obviously.
Am I wrong?
No, you're not wrong, but it seems like you're asking: has there ever been a perfect form of money?

I don't think we can have money that doesn't need to be secured since it's inherently valuable. That said, we can talk about the difficulty of securing something.

I think Bitcoin has gold beat here. But it seems like you might disagree? At the very least I'd say Bitcoin is more flexible. You can memorize a Bitcoin passphrase so there's literally nothing physical to steal. You can print out the passphrase and back it up in several locations (you can't have the same pile of gold in multiple locations). A passphrase is easier to obfuscate than a pile of gold. Of course, you have risks like the computer you're using to transact is hacked, etc. but you could also get robbed on the way to the gold dealer.

Interesting point about metals being debased by mining. However, I don't think it's "pretty much like the coins." One involves a laborious process; the other just a knucklehead with power. Bitcoin has a supply cap so it shouldn't be debased in this manner. I suppose a majority of miners could agree to increase or remove the cap, but it seems like it might be in their interest not to. I'm not sure, haven't thought this through much.

Gresham's law...interesting. Although I'm not sure that cryptocurrencies qualify as good money because they have no commodity value. They have a cost to extract, like metals, but are inherently worthless.

Strange times we live in.
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Re: Harry on Bitcoin

Post by Ad Orientem » Sun Aug 12, 2018 11:35 pm

Bitcoin is the greatest racket since someone started selling pet rocks. Of course when you bought a pet rock, you actually got... a rock.
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Re: Harry on Bitcoin

Post by moda0306 » Mon Aug 13, 2018 9:46 am

Jack Jones wrote:
Sat Aug 04, 2018 5:32 am
boglerdude wrote:
Fri Aug 03, 2018 7:50 pm
Whats the problem with the dollar? Just dont hold it, buy stocks n'bonds.
I already object to the fact that citizens are forced to do what you say...namely we're forced into investing due to inflation. I believe Joe Sixpack should be able to earn a living, put his excess money in the bank (or his safe) and get on with his life without his hard-earned money eroding away on him. Instead we're all forced to invest, and not everyone has the brain for it.

And I'm just considering normal inflation here. What about Venezuela? Or the U.S. in 1980?

We could also look at what the Bitcoin creator put in the genesis block:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
I don't really buy much that inflation is much of an enemy of wealth creation when you actually look at it in practice. Historically, in the US anyway, people could recoup most-if-not-all of their inflation through a simple and historically very safe CD ladder. People don't invest to get a 1%-3% RoR to counter inflation. They invest to get 7%-12% because they 1) think they deserve it, 2) aren't saving enough to retire on a 1-3% RoR, and 3) it's a bit addictive, fun and enticing. I've meet a lot of people who seem to think that they have a God-Given right to an 8% RoR with no inflation and only temporary, mild downturns. And anything that veers from that is some sort of grand corruption of the system, whether it be an advisor, Wall-Street, the government, the fed, Obama, etc.

Even HB pointed out that your ability to earn income from your skills is your #1 asset (for the vast majority of folks). To the degree that one cannot stockpile enough of that income over their working years to become financially independent, it's likely due to their spending or labor market income value, not the fact that their CD ladder was only averaging 4%, or that 2008 came along and wiped out their $100k in their 100%-equity 401(k). Even to the degree your wages can't keep up with inflation, that's less of a story of inflation screwing you, and more of a story of your ability to negotiate for higher wages being limited. But for the latter, you could easily negotiate for the higher wages if your employer's nominal income is going up with their "inflating" sales.
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Re: Harry on Bitcoin

Post by dualstow » Tue Aug 14, 2018 2:19 pm

Jack Jones wrote:
Sun Aug 05, 2018 1:35 pm
You can memorize a Bitcoin passphrase so there's literally nothing physical to steal. You can print out the passphrase and back it up in several locations (you can't have the same pile of gold in multiple locations).

You make a compelling case, Jack. However, I was really turned off by the fact that I couldn't even cash in the Bitcoin that was given to me by a member here on the forum. At first I thought I had lost 3 words of the passphrase, but I have since found other people who were only given a 9-word phrase, only to be asked for a 12-word one to cash it in. On top of it, I gave all kinds of identifying information to some (admittedly reputable) bitcoin exchanges, which I'm sure is still stored on their servers. Social, driver's license...

Even though I can be a klutz and occasionally lose things while traveling, I take extra care with physical gold. I can think of a few things that could happen, but nothing like the absurdity in the paragraph above.

I'm almost grateful that it happened. It's like when a dog bit me in the face -- yes, it really happened -- but didn't do much damage. I am careful for life from a small inconvenience and therefore I am less likely to experience a devastating disaster.
The Latest Cryptocurrency Exchange Hack Is a $60 Million Theft at Japan's Zaif.
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Re: Harry on Bitcoin

Post by Jack Jones » Fri Aug 17, 2018 12:33 pm

Ad Orientem wrote:
Sun Aug 12, 2018 11:35 pm
Bitcoin is the greatest racket since someone started selling pet rocks. Of course when you bought a pet rock, you actually got... a rock.
How so?

As an investment speculation? Yeah, sure, perhaps.

But as a permissionless currency outside the reach of governments? I disagree with you here.
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