Bitcoin downfall MT Gox shut down.

[dre]

That is not what I said.

You claimed they set interest rates. They just flat out dont, sorry. Commercial banks, thrifts, trusts, and tertiary lenders are all completely free to set their own rates.

Crap from conspiracy websites. Banks compete for business like any other business. There is less competition for soda pop than for banking services.

Ahhh no thats the actual term used in the industry to describe them. These are banks and exchanges that not only sell financial instruments to their clients, but also purchase them for themselves as well, driving up demand for financial products.

If they buy anything is it generally government bonds.

No. They buy financial assets from commercial banks and private companies, in order to inject money into the economy and lower the yields on those instruments. Most recently they bought 600 billion dollars worth of mortgage backed securities, and about 1.75 trillion in debt from private banks. The whole purpose is to provide liquidity.

Edited February 27, 2014 by dre

[TimG]

You claimed they set interest rates.

Just like the CBC:

http://www.cbc.ca/news/business/bank-of-canada-keeps-interest-rate-at-1-1.2450462

"Bank of Canada keeps interest rate at 1%"

Anyone reading the CBC headline should have understood they were talking about the benchmark rate.

At some point I have to assume that readers understand the widely understood meaning of the words.

Ahhh no thats the actual term used in the industry to describe them. These are banks and exchanges that not only sell financial instruments to their clients, but also purchase them for themselves as well, driving up demand for financial products.

That does not change the fact that the free market determines what the interest rates are.

Most recently they bought 600 billion dollars worth of mortgage backed securities, and about 1.75 trillion in debt from private banks. The whole purpose is to provide liquidity.

Sure - and if they later sell the assets for a profit then no money is created. Edited February 27, 2014 by TimG

[dre]

Anyone reading the CBC headline should have understood they were talking about the benchmark rate.

At some point I have to assume that readers understand the widely understood meaning of the words.

That does not change the fact that the free market determines what the interest rates are.

Sure - and if they later sell the assets for a profit then no money is created.

Do you think people dont notice that you abandon every single argument you make as soon as youre challenged on it?

You claim that the CB buys government bonds during QE not assets. When that argument gets destroyed you switch to "well they arent creating new money then if they sell the assets". Do you think nobody is reading your posts?

That does not change the fact that the free market determines what the interest rates are.

No thats just not true. Monetary policy is partially influenced by politics, and partially influenced by the central banks broader view of the economy. It has nothing to do with any "free market".

Just like the CBC:

http://www.cbc.ca/news/business/bank-of-canada-keeps-interest-rate-at-1-1.2450462

"Bank of Canada keeps interest rate at 1%"

I dont know why you keep beating this poor mutilated dead horse. The BOC only controls the rate at which chartered banks lend to each other. This is not the "interest rate", even if you and your average CBC viewer wants to think that.

[TimG]

Do you think people dont notice that you abandon every single argument you make as soon as youre challenged on it?

Don't you think people notice that you make up crap that has nothing to do with what other people said? It is not my fault you are so clueless that you would think that a statement that the central bank sets interest rates could mean anything other than the benchmark rate.

You claim that the CB buys government bonds during QE not assets.

From the beginning I was talking about a "properly run" fiat currency system and I acknowledged that system is not perfect. The trouble we have had since 2008 is the US fed has been scrambling to keep the economy afloat and it is doing a lot of stuff which central banks are not supposed to do. These exceptions do not in any way invalidate my arguments about how a fiat currency system has worked for numerous successful nations for decades. That is what I mean when I say your arguments are irrelevant because they omit the context.

No thats just not true. Monetary policy is partially influenced by politics, and partially influenced by the central banks broader view of the economy. It has nothing to do with any "free market".

You can't even keep your own argument straight. In this case, you were talking about consumer rates - the rate people pay on mortgages. Those rates are determined by the free market. The central bank only affects these rates indirectly. Edited February 28, 2014 by TimG

[Remiel]

If the banks are behind it, then they are involved in financial terrorism.

Financial "terrorism" ? Seriously?

[Michael Hardner]

TimG and Dre - you're having an excellent discussion here - stay with the argument and not the man, we're enjoying reading this...

[GostHacked]

Financial "terrorism" ? Seriously?

Very serious. Happens every time a financial institution of some kind get hacked of a denial of service attack.

[GostHacked]

Don't you think people notice that you make up crap that has nothing to do with what other people said? It is not my fault you are so clueless that you would think that a statement that the central bank sets interest rates could mean anything other than the benchmark rate.

Each one of your arguments has been proven incorrect by events of the last few years.

From the beginning I was talking about a "properly run" fiat currency system and I acknowledged that system is not perfect. The trouble we have had since 2008 is the US fed has been scrambling to keep the economy afloat and it is doing a lot of stuff which central banks are not supposed to do. These exceptions do not in any way invalidate my arguments about how a fiat currency system has worked for numerous successful nations for decades. That is what I mean when I say your arguments are irrelevant because they omit the context.

And the main reason for the problems in the USA is that regulations that prevented the crisis were tossed out the door. You've been schooled on this by Kimmy in a couple other threads regarding how the housing market was gamed by those selling and then repackaging bad loans. They knew they were going to make money either way, not a damn was giving about the multitudes of people who lost their homes. Not all of those homeowners were to blame for the situation.

You can't even keep your own argument straight. In this case, you were talking about consumer rates - the rate people pay on mortgages. Those rates are determined by the free market. The central bank only affects these rates indirectly.

What free market? How many entities are available for me to purchase a home? And we can deal with just Canada for that part.

This is another thing to show that people lost trust in the current system and a reason for being interested in another system that gets around the banks. You cannot trust them to make good decisions on your behalf.

http://www.cbc.ca/news/business/hidden-camera-investigation-uncovers-atrocious-investment-advice-1.2553560

Hidden camera investigation

The tests revealed a wide range in the quality of advisers. Some performed well, giving clear answers and asking appropriate questions about the tester’s financial situation and risk tolerance. Other interactions, however, Banerjee found troubling.

In some cases, information was incorrect or misleading - even in response to direct questions, such as how fees are calculated. Some gave unrealistic promises about returns, including one adviser who said that a $50,000 investment should increase by $10,000, $15,000 or $20,000 in one year.

Others failed to adequately assess the customer’s risk profile, which advisers are supposed to use to ascertain the suitability of investment products they recommend to a person.

If I am not getting the proper advice from a financial adviser, how can I have faith in my investments?

These are some of the reasons people have been moving towards bitcoin. Which the market is controlled by those using it.

Another thing regarding taxes and Bitcoin. Currently it is NOT taxed as you claim it to be. Sales tax or income tax. Entities like the IRS have no idea how to handle it. They really don't want to either, unless they can make money off it. If they are able to, then you will see Bitcoin be used all over the place.

http://www.forbes.com/sites/beltway/2014/01/07/taxing-bitcoin/

Back in November, Mindi Lowy and Miriam Abraham of PriceWaterhouseCoopers wrote a terrific review of the current state of play for Tax Notes Today (requires a subscription). They concluded that for now virtual currency would probably be viewed as a capital asset since it has limited use as real money. However, should these vehicles gain wider commercial acceptance, they’d more likely be treated as actual currency for tax and regulatory purposes.

The distinctions are not trivial.

If Bitcoin is a capital asset (the Winkelvoss ETF would treat it that way), long-term gains and losses would be subject to preferential capital gains rates (23.8 percent for high-income taxpayers). However, losses of more than $3,000 could only be used to offset other gains and not ordinary income. Separate rules may apply to professional traders.

[TimG]

Each one of your arguments has been proven incorrect by events of the last few years.

Why is the value of a democracy proven incorrect because some countries have problems with the voting system from time to time? The value of a fiat currency does not go away because of the problems in the last few years.

Keep in mind that my argument all along is "a fiat currency is the worst possible system, except for all others". A commodity based currency system (which includes bitcoin) is simply too rigid. Supply shocks will cause interest rates to suddenly skyrocket and governments will have no ability to do anything about it. No one can plan anything if they have no confidence that currency will have a basically stable value.

And the main reason for the problems in the USA is that regulations that prevented the crisis were tossed out the door.

BS. The problem with the US system was a toxic mixture of social engineering and wall street greed. Politicians had an incentive to allow CBOs because it allowed banks to lend more to minorities than they would otherwise. Wall street loved them because they were great ways to make cash. On top of that you have the perverse incentives created by FannyMae and FreddyMac. Blaming greedy bankers may make you feel better but if you actually want to avoid a repeat you need to look at all contributing factors.

What free market? How many entities are available for me to purchase a home? And we can deal with just Canada for that part.

You have more choices for a mortgage than you have for soda pop or even buying a car. Are you saying there is no free market in soda pop or cars?

This is another thing to show that people lost trust in the current system and a reason for being interested in another system that gets around the banks.

I see no evidence of this. I see a lot of people bitching about things they don't understand but the still keep their money in banks. That is pretty strong evidence that they still trust the system. They are just angry and this anger is not unjustified.

Another thing regarding taxes and Bitcoin. Currently it is NOT taxed as you claim it to be. Sales tax or income tax. Entities like the IRS have no idea how to handle it.

You really need to learn how the tax laws are written today. There is no need for special laws to address bitcoin because they are already taxable under current laws.

If the IRS or the CRA audits a business and finds evidence that they engaged in bitcoin transactions they will simply calculate the profits in US or CAN and assess taxes accordingly. Same for GST/PST. People who think otherwise will be facing jail time and/or large penalties.

Edited February 28, 2014 by TimG

[GostHacked]

Why is the value of a democracy proven incorrect because some countries have problems with the voting system from time to time? The value of a fiat currency does not go away because of the problems in the last few years.

I value democracy, but what you are witnessing is not democracy. It is corporate fascism. And besides the USA is a constitutional republic. There is not much left in that constitution that has not been marginalized by signing statements. Can't have much of a republic either, so not much hope in a democracy.

The value has been proven incorrect when the government strikes down regulations that would have prevented the housing bubble in the USA, which had global impact. I did not make that crap up. It's 100% documented in the public record over the past few years. The government ENCOURAGED it.

It has been proven incorrect when you have a revolving door between CEOs or large corporations and key government positions that determine policies and laws. You have corporate fascism, the merging of corporate and state powers.

Keep in mind that my argument all along is "a fiat currency is the worst possible system, except for all others". A commodity based currency system (which includes bitcoin) is simply too rigid. Supply shocks will cause interest rates to suddenly skyrocket and governments will have no ability to do anything about it. No one can plan anything if they have no confidence that currency will have a basically stable value.

It's all reactionary speculation. Tells me they have no clue what they are doing.

BS. The problem with the US system was a toxic mixture of social engineering and wall street greed. Politicians had an incentive to allow CBOs because it allowed banks to lend more to minorities than they would otherwise. Wall street loved them because they were great ways to make cash. On top of that you have the perverse incentives created by FannyMae and FreddyMac. Blaming greedy bankers may make you feel better but if you actually want to avoid a repeat you need to look at all contributing factors.

And those are huge reasons why people have no faith in the current system. You obviously agree that something has changed to allow the horrific lending practices of those financial institutions. But yet still want to keep blaming the end user and their mortgage dropping in value while they are left to pay 2x for a house that was not worth that much in the first place.

http://en.wikipedia.org/wiki/Fannie_Mae

1990s

In 1992, President George H.W. Bush signed the Housing and Community Development Act of 1992.[15] The Act amended the charter of Fannie Mae and Freddie Mac to reflect the Democratic Congress' view that the GSEs "... have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families in a manner consistent with their overall public purposes, while maintaining a strong financial condition and a reasonable economic return;"[16] For the first time, the GSEs were required to meet "affordable housing goals" set annually by the Department of Housing and Urban Development (HUD) and approved by Congress. The initial annual goal for low-income and moderate-income mortgage purchases for each GSE was 30% of the total number of dwelling units financed by mortgage purchases[17] and increased to 55% by 2007.

In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the Community Reinvestment Act (CRA) of 1977.[18] Additionally, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans.[18]

In 1999, The New York Times reported that with the corporation's move towards the subprime market "Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s."[19]

The government helped facilitate that crisis.

You have more choices for a mortgage than you have for soda pop or even buying a car. Are you saying there is no free market in soda pop or cars?

Feel free to provide a list detailing options on mortgages, pop and cars, please.

I see no evidence of this. I see a lot of people bitching about things they don't understand but the still keep their money in banks. That is pretty strong evidence that they still trust the system. They are just angry and this anger is not unjustified.

Keeping the money in the bank is different from allowing the bank to risk your money via investments.

You really need to learn how the tax laws are written today. There is no need for special laws to address bitcoin because they are already taxable under current laws.

Actually they are just kind of getting to that now. And only now that Bitcoin has gained this much popularity.

http://www.cbc.ca/news/business/revenue-canada-says-bitcoins-aren-t-tax-exempt-1.1395075

"When you sell [the BitCoins], they will deposit that in your account," said Chavady. "As soon as it turns into Canadian dollars, it's back in the eyes of the CRA and everybody else. If you get a big deposit of $10,000, or $100,000, [CRA is] going to say, 'Hey, where did that come from?'"

Indeed, the tax man has already thought of that.

The CRA told the CBC there are two separate tax rules that apply to the electronic currency, depending on whether they are used as money to buy things or if they were merely bought and sold for speculative purposes.

"Barter transaction rules apply where BitCoins are used to purchase goods or services," Canada Revenue Agency spokesman Philippe Brideau said in an email.

Barter is the exchange of one good for another good without the use of cash, such as when a farmer who grows vegetables trades with another who raises chickens. Many Canadians don't realize such exchanges are taxable, but they are.

So it only gets taxed when converted into a currency that the government can tax. The Canadian goverment can only accept tax payments in CND funds. Nothing else. So the moment it is exchanged from Bitcoins to Canadian dollars, then it can be taxed. Otherwise, it cannot be taxed directly.

I showed you how the IRS does not know how to treat bitcoin, therefore NOT taxed.

If the IRS or the CRA audits a business and finds evidence that they engaged in bitcoin transactions they will simply calculate the profits in US or CAN and assess taxes accordingly. Same for GST/PST. People who think otherwise will be facing jail time and/or large penalties.

You don't get it. Then bitcoin will have to be treated as a legitimate form of currency, recognized by governments. And since governments cannot control or regulate it, it cannot be taxed. But you make the same clarification I do, which is important. The value is equated to US or CND funds in which the government can tax. They cannot tax anything else but the currency they issue out.

Edited February 28, 2014 by GostHacked

[TimG]

But you make the same clarification I do, which is important. The value is equated to US or CND funds in which the government can tax. They cannot tax anything else but the currency they issue out.

Actually - that is a huge point because it invalidates your argument. Bitcoin transactions are taxable today. The taxes have to be paid in the home currency but they are taxable. If bitcoin exchanges fail to provide governments with the information they need to assess taxes owing then they will be treated as any other criminal or terrorist enterprise. Edited February 28, 2014 by TimG

[Bonam]

Actually - that is a huge point because it invalidates your argument. Bitcoin transactions are taxable today. The taxes have to be paid in the home currency but they are taxable. If bitcoin exchanges fail to provide governments with the information they need to assess taxes owing then they will be treated as any other criminal or terrorist enterprise.

Bitcoin transactions are not taxable, only transactions that result in the exchange of CAD, USD, etc. It doesn't make any sense otherwise... are transactions in World of Warcraft gold taxable, transactions in EVE Online ISK? These other online currencies are not fundamentally different than bitcoin in any way that would impact their tax status.

[GostHacked]

Actually - that is a huge point because it invalidates your argument. Bitcoin transactions are taxable today. The taxes have to be paid in the home currency but they are taxable. If bitcoin exchanges fail to provide governments with the information they need to assess taxes owing then they will be treated as any other criminal or terrorist enterprise.

Canada cannot accept tax payment in anything other than Canadian dollars. Bitcoin cannot be taxed directly, only the equivalent when transferred to CND funds. A simple, but very important point.

The IRS cannot accept payment in anything else but US dollars. Bitcoin is not accepted there.

[TimG]

Bitcoin transactions are not taxable, only transactions that result in the exchange of CAD, USD, etc. It doesn't make any sense otherwise...

Not true. All transactions are taxable under Canadian and US law. The medium of exchange is irrelevant. If a business in Canada sells something to someone in Canada then GST and PST are payable.

Here is the appropriate reference:

http://www.cra-arc.gc.ca/E/pub/tp/it490/it490-e.html

A barter transaction is effected when any two persons agree to a reciprocal exchange of goods or services and carry out that exchange usually without using money.

..

The Department takes the view that barter transactions are within the purview of the Income Tax Act.

The IRS has similar rules.

'bitcoins' are goods with value - much like 'beenie babies' or 'baseball cards'.

Edited February 28, 2014 by TimG

[Bonam]

Not true. All transactions are taxable under Canadian and US law. The medium of exchange is irrelevant. If a business in Canada sells something to someone in Canada then GST and PST are payable.

Here is the appropriate reference:

http://www.cra-arc.gc.ca/E/pub/tp/it490/it490-e.html

The IRS has similar rules.

Read the rest of it:

6. In the case of goods bartered by a taxpayer for either goods or services, the value of those goods must similarly be brought into the taxpayer's income if they are business-related. For example, the value of groceries given by a grocer to someone in exchange for something else must be brought into the grocer's income. In addition, other goods bartered may give rise to a capital gain. Such would be the case if capital property in the form of a valuable painting, a sailboat or land is bartered for goods or services.

If your bitcoin transactions are not related to your business, and capital property is not involved in the transaction, then nothing there says that the transaction would be taxable.

So yes, if you are running a business and do your finances in bitcoins, you'll probably want to figure out a way to pay taxes. On the other hand, if you, for example, buy some shares in a bitcoin stock for 1 bitcoin and later sell those shares for 2 bitcoins, and you do this as a hobby rather than as your main business, then no, you don't owe the government 15% of your 1 bitcoin capital gain. Just like if I find a loot drop in WoW and sell it on the auction house for 5000 WoW gold, I don't owe the government income tax or capital gains tax in WoW gold or its USD equivalent.

[GostHacked]

Not true. All transactions are taxable under Canadian and US law. The medium of exchange is irrelevant. If a business in Canada sells something to someone in Canada then GST and PST are payable.

Go and try to pay your taxes via Bitcoin and see how that goes for you.

But barter is what most people do with each other, and not recognized businesses. If barter can be taxed, then yard sales can be taxed. The governments want their cut.

http://www.techvibes.com/blog/bitcoins-arent-money-2013-11-07

CANADA REVENUE AGENCY ISSUES

When these types of things come on the scene and start to really gain some attention, you can be sure that the Canada Revenue Agency will be right there by its side to chime in on their tax implications.

But the issue of bitcoins presents a real dilemma for the CRA. As you can see from the above, the fact that it’s decentralized means that there is absolutely no government regulation surrounding the issuance and trail of bitcoin transactions. No doubt, the government is likely getting a bit nervous.

Just this week, the Canada Revenue Agency put out a brief fact sheet entitled “What you should know about digital currency,” commenting on the tax implications of digital currencies specifically singling out bitcoins. Although brief, the fact sheet is interesting indeed. As expected, the CRA specifically states that digital currency transactions are taxable, but their classification and how to treat the transaction is what’s intriguing.

But this author describes the issues with barter and taxing a decentralized non-governmental regulated currency.

WHAT DOES IT ALL MEAN?

The government has a bit of a problem on its hands when it comes to bitcoin transactions. They are gaining steam and are quickly becoming one of the biggest talked about topics, especially in the tech community. It’s hard to predict the outcome for bitcoins, but if things continue on this pace, they will be difficult to ignore.

The major problem for the CRA is that they have little way of tracing bitcoin transactions since it’s so unregulated and decentralized. The fact that it’s international makes things even more difficult to control and track.

http://business.financialpost.com/2013/04/29/canada-revenue-agency-zeroes-in-on-bitcoin/

The government cannot trace, track or verify Bitcoin transactions, there fore cannot be taxed. Canadian dollars are tracked, traced and verified with the current systems that are government regulated. You need to transfer the value INTO CND funds before you make a payment to the CRA.

[TimG]

So yes, if you are running a business and do your finances in bitcoins, you'll probably want to figure out a way to pay taxes.

Which was my point. Amazon is paying taxes even when people pay in bitcoins.

On the other hand, if you, for example, buy some shares in a bitcoin stock for 1 bitcoin and later sell those shares for 2 bitcoins, and you do this as a hobby rather than as your main business

The "small change" rule. But 10 bitcoins is a significant chunk of change and trading in collectables are taxable:

http://beginnersinvest.about.com/od/capitalgainstax/ss/capital-gains-tax-rates_4.htm

If you invest in art, gold, silver, coins, stamps, wine, books, or virtually anything else that can be labeled a collectible, then the special collectible capital gains taxes probably apply to you. These rates are higher than regular capital gains taxes.

So if you are making a profit buying/selling bitcoins then you better figure out how to pay your taxes too.

You would also be allowed to deduct capital loses.

Edited February 28, 2014 by TimG

[TimG]

The government cannot trace, track or verify Bitcoin transactions, there fore cannot be taxed. Canadian dollars are tracked, traced and verified with the current systems that are government regulated. You need to transfer the value INTO CND funds before you make a payment to the CRA.

The same is true of cash transactions but that has not stopped auditors from looking at the activity of the business and inferring income and taxes accordingly. It is illegal to run a business without tracking cash transactions and it is illegal to run a business without tracking bitcoin transactions. Edited February 28, 2014 by TimG

[Bonam]

http://beginnersinvest.about.com/od/capitalgainstax/ss/capital-gains-tax-rates_4.htm

So if you are making a profit buying/selling bitcoins then you better figure out how to pay your taxes too.

The capital gains tax is triggered when you sell your collectible for USD. You don't pay tax merely for holding a rare bottle of wine as it appreciates in value, nor do you pay tax if you trade your rare bottle of wine to your friend for a rare bottle of wine from his collection presuming they had roughly equal fair market value. But if you sell the bottle of wine for more than you bought it for, then yes, you pay capital gains tax.

Similarly, if you buy and sell bitcoins for USD then of course the transactions back and forth to USD, to the extent that they generate capital gains, are taxable. On the other hand, if you trade bitcoins for litecoins and then trade the litecoins back for bitcoins, and end up with more bitcoins, you never generated a capital gain in any real currency. If you buy shares of Asicminer (denominated in bitcoins), and receive their weekly bitcoin dividend, you do not pay tax on said dividend until you convert the money back to USD.

If you disagree with any of the above you really gotta go tell all the WoW players that they owe the US government trillions of WoW gold. Are loot drops from monsters in games taxable? How about that magic sword you bought in Age of Conan from Bork the Destroyer for 3 pieces of platinum? How about your insurance payout you got when pirates ganked your battleship in EVE Online? Should I have reported the 150,000,000 gold I sold a magic amulet for in the Diablo 3 auction house to the IRS?

As we've discussed before, you can always find legal language to support literally any possible position, but the current reality is USD transactions and virtual currency transactions are treated differently.

[TimG]

On the other hand, if you trade bitcoins for litecoins and then trade the litecoins back for bitcoins, and end up with more bitcoins, you never generated a capital gain in any real currency. If you buy shares of Asicminer (denominated in bitcoins), and receive their weekly bitcoin dividend, you do not pay tax on said dividend until you convert the money back to USD.

Bitcoins are useless on their own (unlike WoW coins which are useful in game). At some point they have to be converted back to fiat currency or goods/services with value. At that point the transactions are taxable. If you made a killing on bitcoins and you used it to buy a large asset like a house you would have to show how you got the money and when you revealed you made it trading bitcoins you would have to pay taxes on the capital gains.

As we've discussed before, you can always find legal language to support literally any possible position, but the current reality is USD transactions and virtual currency transactions are treated differently.

Personally I would not bet against the tax dept on this issue because you would likely lose any attempt to argue that taxes are not payable if bitcoins are used to purchase real goods or services. If bitcoins are not used to buy goods or services then why would anyone want them? Edited March 1, 2014 by TimG

[dre]

Don't you think people notice that you make up crap that has nothing to do with what other people said? It is not my fault you are so clueless that you would think that a statement that the central bank sets interest rates could mean anything other than the benchmark rate.

I didnt make up anything. You claimed QE was about purchasing bonds. I simply pointed it out that normally its about moving assets off the balance sheets of banks and private companies to create liquidity. And you moved the goalposts and changed your argument too "well t hey arent creating new money if they sell the assets later". Same goes with your origional argument that the adoption of a fixed pull currency like bitcoin would not be a problem for the commercial banking business model. You make false or misleading statements then you run away from them.

[Hudson Jones]

Bitcoins are useless on their own

It looks like your knowledge of bitcoin is useless.

Hundreds of thousands of people use bitcoins to purchase products and services.

Did you know that one of the largest online retailers, overstock.com accepts bitcoin? Probably not.

[TimG]

Hundreds of thousands of people use bitcoins to purchase products and services.

Read what I wrote:

Bitcoins are useless on their own (unlike WoW coins which useful in game). At some point they have to be converted back to fiat currency or goods/services with value.

I know what bitcoin is and is not. Edited February 28, 2014 by TimG

[TimG]

I didnt make up anything.

Now you are moving the goalposts. First you were whining about your gross misunderstanding of what I said about central banks setting interest rates. Now you are carping about QE which is a secondary issue because it is not normally something central banks should be doing.

Same goes with your origional argument that the adoption of a fixed pull currency like bitcoin would not be a problem for the commercial banking business model.

That statement is still true. Bitcoin is no threat to the commerical banking and no one has provided any credible counter arguments. I only adjusted the reasons one I thought about and realized that fractional reserve banking probably could not be used with bitcoin. What that means is bitcoin will be endlessly plagued with supply problems which will make it useless without a broader fiat currency system picking up the slack.

That said, it still will be possible for banks to engage in fractional reserve banking with bitcoin just like they used to do with gold. All is required is a pubic willing to accept a certificate a deposit in a bitcoin exchange in lieu of the actual bitcoins. This appears to be already happening. In fact, given the opaque nature of bitcoin exchanges it would not surprise me to find out that fractional reserve banking has already started.

Edited March 1, 2014 by TimG

[dre]

That statement is still true. Bitcoin is no threat to the commerical banking and no one has provided any credible counter arguments. I only adjusted the reasons one I thought about and realized that fractional reserve banking probably could not be used with bitcoin. What that means is bitcoin will be endlessly plagued with supply problems which will make it useless without a broader fiat currency system picking up the slack.

No youre just lying about what your argument was. You claimed that even if it was widely established it wouldnt threaten the commercial banking business model. Thats what I replied to.

A silly idea. Banks deal in any currency they want. If the bitcoin became a widely established medium of exchange banks would happily take deposits in bitcoin and offer loans in bitcoin. Their business model is not threatened at all.

Its hard to get anywhere arguing with you because you make false and misleading statements, and then run away from them, and try to argue different statements. Youve already done this a half dozen times in this thread, and Im not the only one thats commented on it.

Youve only waded into this water about 6 inches and youre already in over your head.