All posts by david.phillips@publicdataweb.com

The Why, What, How, When and Where of Bitcoins.

Bitcoins are alternative currency but primarily an e-cash payment system.

Bitcoin-Alt-Currency-V-Fiat-Paper-Money

 

Bitcoin Price

The first internet digital transaction payment method to be significant  was PAYPAL. Most people’s reaction to it was that they would never pay for anything on the internet, and the agencies that controlled the money supply and credit cards were very dubious of such operations. Wind the tape on ten years and Amazon and the vast majority of on-line retailers and service providers accept digital cash transfers and the leader is Paypal, which was eventually bought by Ebay. ClickBank is a variation, with similarities.

Today’s world of online retailing and electronic payment systems could not have flourished without systems like Paypal but it would have been much more slow to introduce it if left to the banks (card issuers) who were entirely happy with the methods of scalping exorbitant fees to enable such processes. With Ebay controlling Paypal who can say that it is not operated in the interest of its owners and not so for its users, other than convenience but no real alternative giving the payees themselves some independence and control. That is until the birth of Bitcoins.

Adoption of Bitcoins is only a matter of time, but it needs greater acceptance before on-line and physical retailing and services and bill payments will be made with Bitcoins: this can be predicted, because when a sufficient number of people wake up to the advantages of doing so then large numbers of people will demand this option when they really do  appreciate the advantages that Alt-Currency provides. Of course this prediction has no timeline attached to it as currently we are in the embryonic phases of this process:  Paypal took ten years before it was widely accepted, but things are moving faster these days. However Bitcoins are very volatile in their valuation and until this settles down large scale adoption is unlikely. Interestingly its only at this stage that risk taking early adopters, investors and platform and service proposers can make bets upon the uptake and thus gain huge advantages. Bitcoins are bought and traded on exchanges, their value goes up and down and they are traded just like a foreign exchange market; like buying pounds or dollar trades against each other’s valuation. Initially Bitcoins are cryptographically mined to extract them by using computers to fire thousands upon thousands of cryptology numerical algorithms to chip away at the hidden numbers interface to reach a seem of correct number’s; a little like finding a seam of gold. Such mining operations sound complex but they aren’t,  but do cost electricity charges for continuous running. (More details on mining see Mining Operations).

The first Bitcoins were invented by a Japanese guy; Satoshi Nakamoto,  some say it was a group with this name simply as an identifier. Whatever the genesis, Bitcoins came into being as a very secure crypto-currency and a proposed alternative to ordinary currencies, credit systems and on-line payment options like Paypal: which are all based upon paper or printed money (Fiat Currency). These currencies have their failings; with the biggest being that the issuing bodies; banks and government’s can control the money supply, just by printing it.  This is inflationary (QE even more so) and has in the past always resulted in eventual collapse. Bitcoins have an inherent rarity quality (like gold) and have to be mined. This operation is a modern digital operation based upon widely dispersed and independently owned computers using Peer to Peer (P2P) cryptographic operations. This means that no one is in control. The cryptography cannot be breached. The network runs over but is independent from the internet. Miners who hit a correct block of Bitcoins, which are unique crypto-coded results, obtain them without cost nor with any controlling issuer, but do incur electricity charges for long-term running. Early Bitcoin miners have and do stand to gain significantly from their efforts. This is the method for obtaining, circulating and interchanging the Bitcoins.

Bitcoins are best to be held within a secure digital code inside a cryptographic wallet, that should be put onto a USB or other offline storage ‘safe’ methods.

As the initial Bitcoins gathered acceptance and momentum, others adopted the code, some adding extra value options and security etc. So currently we have the emergence of many Bitcoin alternatives and clones. The early starters Bitcoin and Litecoin have right now much higher exchange valuations than the rest. But who can predict the winners. Will one single Bitcoin become the Amazon of the market, or will multiples flourish, especially those related to special interest groupings or national alliances?

The Bitcoin runners and riders Alt-Currency clones:

BITCOIN  LiteCoin-Logo  MaxCoin

 Bitcoin                                 Litecoin                                       Maxcoin

auroracoin  Indian-Nations-Bitcoin-Currency Dogecoin

auroracoin                                  MAZACOIN                     dogecoin

Wiki List of Alternative Bitcoins

 

From Paypal to Bitcoins

Paypal illuminates the the road to Bitcoins.

paypal-Bank-Cards

Watching the rise of Peer to Peer networks, it eventually brought about P2P digital payment methods: e-cash system – Bitcoins.

P2P music, films, and torrent downloads initiated the encrypted options for diverse file sharing across the network of individual computer hard drives.  Even storage space donations on mobiles is coming. This activity between users and computers cuts out any organising authority generating a sort of virtual repository of content and activities interacting with the live online internet. So the digital ground was fertile enough for similar P2P operations to be imagined.

New variations of the P2P methods.This was done anonymously by Satoshi Nakamoto (may be a fictional name) to generate the underlying cryptographic code for Bitcoins. Possibly as an answer to the Paypal buy out by Ebay; which was once again producing another monolithic controlling platform for payments. And the banks and the post offices etc all missed the boat on it. Just going to show that established bureaucratic enterprises that should be smart enough to see such opportunities in fact never are, and are then followers, often the last to adopt them.

Paypal piloted the way for digital payments to become manifest, but its another controlling corporation, whereas P2P is a set of individuals without a control authority – an ideal option for a Paypal style of operation but immune from outside controlling interests.

An ideal environment for making financial payments and other transactions free of any overarching authority and self interest and external meddling: Bitcoins

Of course a lot is owed to the Paypal method; at first it was questioned, avoided, ridiculed, then accepted, and where would Amazon et-all be without it?

So along came Bitcoins and yes you probably guessed it, these same old tired enterprises, couldn’t invent it, blinded by their existing methods, they never imagined it. How could they? Its beyond their experience and expertise, as being the first ever real alternative payment operation totally independent of existing methods and without government manipulations, exchange controls, intermediaries, monopolies, external shenanigans and vested interests.

Shock, horror and rage, not just because it was not invented by them, but if accepted en mass it could rule out entirely all the options for fraud inherent within the current world-wide currency method of easily printable fiat paper money.

Bitcoins have all the value of a genuinely reliable, trustworthy and rarity method of financing commerce, and placing it directly into the hands of people, independent individuals under their control and not with bankers controlling the money supply.

Bitcoin is just as volatile as any agreed upon value market, with ups and downs, and in the initial introductory phase, such things are subject to very major swings, plus all the rhetoric, and bad media coverage that attempts to sink it: just like the early days of Paypal!

Bitcoins may be volatile in value, so is paper money – always going south in value.  Bitcoins do have potential to protect the value of an individuals payment options.

How long will it be before Amazon and others accept Bitcoin payments?

Financial Myopia

Sailing over the edge?

East India Company

The 2008 banking crash was averted, by doing much more of what caused it in the first place: MADNESS.

This is why I turned my attention to Bitcoins

 

The finances of governments would not be allowed operate at the level of ordinary business; and focusing upon these strange rules of political economics brings about an understanding of the inevitable doom inherent within the system. This system is ignoring what in a real world business or within financially controlled, sensible operations, could never be sustained nor even allowed as it amounts to fraudulent malpractice. A business cannot put debt outside its ledger, yet a government can? This is madness.

Governments don’t include the National Debt in their accounting policy and are printing money to increase debt as a form of crazy madness that looks good in the short term if they can get people to look the other way and not include National Debt in the financial balancing equation. In a business any directors doing this would be put in prison for fraud.

Incurring huge loans with huge interest payable, to who else but the banks, as the massive deficits grow politicians are betting upon some long-term future time of repayment when they won’t be there to reap the bitter harvest: this is how government operate these days.

The national debt of the USA , Uk, Japan and many more countries is growing at an exponential rate, they have massive deficits. Their myopia or pretended blindness is used to paper over the short term  by selling government bonds that pay out in about thirty years’ time. Pushing repayments into the future. The annual interest on these huge debt bonds is, to use that hideous Americanism, which everyone repeats is – truly awesome!

Banks which are now fully established as too big to be allowed to fail are bailed out by government money (they print it or electronically to generate it: magically). Banks use this cash in many instances to buy government long term bonds. Yes I’m sure you begin to realise the stupidity and incongruity of this as it is a circular movement of imagined capital, that generates only a self iterative productive element: interest charges: debt, more national debt moved across the balance sheet to Peter Pan’s never, never land.

Just like the potentates of old: I’m the king, I’ll just print money! And every-time this has been done it all ended in hard times.

Expanding debt cannot be sustained indefinitely.

Having the experience of operating a small business I became acutely aware that a countries economics must in some form match those same forces that come into play in a business environment.

The only puzzle in my mind was why doesn’t every other business person realize this? Why does the media ignore real facts, why don’t politicians see that their knee jerk short term fixes are ultimately ruinous.. yes they behave like Dickens’s character Mt Mc Corber who always thought something good would turn up to save the bad situation….. then I came to the conclusion that it’s a sort of national – international groupthink; a common dream of wish-fulfilment; we are collectively sleepwalking into disaster, because to think about realities is to hard to swallow.

When national productivity and trade of a nation its GDP is unable to match these debts the country is in fact already bankrupt. A business, cannot claim to be profitable when it has bank loans and other debts, and has no efficiency or production and sales to match these within a given time agreed with the lender (usually a bank or a venture capital group, shareholders etc).

A company is audited annually, the books have to balance, if they don’t the business usually folds. This is natural financial evolution; survival of the fittest.

A government aligned with banks seem to defy the natural laws of financial evolution; totally ignoring the mounting debt it generates by negative inaction with a negative miss-match of income, not enough taxation revenue, declining exports, and several other factors, it treats with Qantittative Easing.

Taxation income, GDP, future growth to repay borrowing; these are the positive balance sheet factors, and our governments use the trick of generating ‘free’ money (only for banks) to continue the dancing financial circus and because everyone involved goes along with it, it keeps growing.

But each and every minute the interest is growing. Some agencies are doing well on these interest repayments, but the mountain of debt is growing, even more and just to finance the interest!

No business would be able to get away with such a situation.

Now the comparison of business to government is only for provision of a tangible similarity. I’m not suggesting that governments should be run exactly like a business, its just an indicator regarding financial matters. Governments are supposed to be a collaborative college of elected representatives of the people and to act in the interests of the people: well that’s my idealistic view of democracy.  Instead we have a situation of power seeking and greed, corrupt politicians; most of these people somehow become richer or mostly richer that the general public.  Politicians are blitzed by self interest groups, and lobbyists with lots of money, there to sway opinions and contract placements and political directions in there favour and banks are the top dogs in such lobbying. So we have a situation that on the surface at least looks like the enemy of the state is its people. This phenomena is world-wide East and West and every country has army-styled Darth Vader lookalike police forces to keep the citizens at bay if they march or gather to complain.

Secretly we might guess that these politicians overlording it with the situation I describe above, know something that they fear, when the populations awake to run away mismanagement. Are they are building up their future protection.

All over the planet the people of one shade of opinion or another are taking to the streets. The basic cause of disaffection often and in most cases comes down to a financial restriction. The underlying causes of this are financial constraints on the lower and middle economic situations of the people who are well aware despite the manipulated statistics trying to convince us that recovery is happening, and things will get better (in the UK driven by the same old factors: house prices). When the public know that prices are rising, even if statistics say they are not so high, and bank rates are so low that cheap money is filtered out but only to the big, the powerful and the rich. Its no wonder its really creaking at the seems.

House price inflation is not counted in the inflation quotient which is in reality far higher than the government would have us believe.

So its only a matter of scale and belief: wishful thinking of the governments; the politicians, the bankers, who put off the day of reckoning which inevitably must happen, history of such events in trading bubbles of the past have always burst; this one with its extra factors of injected QE takes us into entirely uncharted territory.

OMG! (Oh My God) To use another verbal virus: I woke up to the fact that what brought about the 2008 crash, was used again to bubble things up for another repeat. More borrowing, inflating property prices.

So watch-out there could be trouble ahead.

A good idea is to spread any savings you might have out of no interest generating bank accounts and other paper backed financial savings and have at the very least some, commodities of value. The rich are doing this – buying property, gold and other physical items of collectable value.

Other options are to hold some alternative currency such as Bitcoins and their derivative clones.

As I began to wake up to an understanding of all this, I then looked more positively into AltCurrency, and my comments on this blog will continue with my experiences and involvement with it.

They the politicians divert attention to immigration blaming incoming foreigners for problems, diverging attention from real underlying issues that the politicians are incapable of solving and they are often pressurised and hoodwinked by the lobbyists (bankers). Will we learn from history or be condemned to repeat it: as throughout history leaders have turned on something they can identify as a cause of blame, because they are inept at unravelling and dealing with a situation beyond their ability to understand or control.

The vast majority of politicians are not capable  of controlling modern financial systems, this is apparent by their ineptitude and playing around with short term measures. Giving out lies and good news at election times hoodwinks the sleeping general public as much as the sleeping  over-extended dreaming egos of the politicians just as easily manipulated by their masters the lobbyists : bankers who deal in imaginary paper money with no substantial reserves backing it up.

Money trouble like Germany had in the 1920’s brought about the rise of Hitler and the Germans voted his ideology into power legitimately!

Hyper-Inflation

Recommended Reading to get the low-down on these subjects.

CLICK HERE

Have politicians been so inept, or so llobyfied,or leaned upon to the extent that the devil bankers own their souls?

See this film from Aljazeera: Goldman Sachs – THE BANK THAT RULES THE WORLD

http://www.aljazeera.com/programmes/specialseries/2014/06/goldman-sachs-bank-rules-world-2014613175932453607.html