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Bitcoin: Get Rich or Die Mining

US stocks got clobbered on Monday. Gold trended in the opposite direction, moving back above the $1,600 mark. And Bitcoin, the topic of conversation for those forward-looking tech geeks and up-to-no-good anarchist types, held steady above $30 per coin.

Hardcore proponents of the cyber currency don’t pay much attention to the day-to-day noise. It’s largely irrelevant, they reckon. When all is said and done…when the last of the 21 million or so coins are mined…that’s when the real fun will begin.

The currency is mathematically limited in supply. Provided demand continues to grow, the value of the coins will shoot up as fresh supply dries up and eventually…stops.

Speculation about the potential value of a single coin varies widely. We’ve heard wide-eyed forecasts running into the many thousands of dollars. That’s why enthusiasts are scrambling to build their stash now, before the price rockets.

Get rich or die mining, as they say.

Maybe that’s just crazy talk. But we’ve got a soft spot for crazy. A little nonsense now and then, wrote Roald Dahl, is cherished by even the wisest of men.

Besides that, time marches in one direction only…and the cyber nerds and anti-statists believe they’ve got the clock on their side. With every passing month and year, they argue, more and more people come to accept – nay, prefer – a currency that is not dependent on the whims and folly of central bankers.

In the war of currency attrition, they’re prepared to wait it out…to watch as the government-issued paper around them begins to burn…leaving their cyber currency to stand tall…divisible down to (for now) eight decimal places.

We have no idea what tomorrow holds, Fellow Reckoner. But one must admire the conviction of these fringy individuals. They are embroiled in an age old battle of man vs. state, liberty vs. control, freedom vs. slavery. Bitcoin just happens to be their weapon of choice.

Of course, the important thing to note about free market folk is that they’re nothing if not self-reliant. They prefer to sink or swim on their own.

In the case of bitcoin, our guess is, they will.

The cyber subject actually came up a few weeks ago. Your editor was hosting an asado here in Buenos Aires…

‘You gold bugs,’ we heard a friend exclaim, ‘you’re sooo pre- bitcoin!’

‘You don’t bury them in your backyard,’ she continued. ‘You don’t have to smuggle them across borders hidden in the seams of your coat. You don’t need to vault them in some far off jurisdiction. That’s the whole point!’

Regards,

Joel Bowman
for The Daily Reckoning Australia

Join The Daily Reckoning on Google+

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10 Comments

  1. Josh says:

    Great Article.
    I’m really excited about bitcoin.

    People Say it has no intrinsic value but I say it does. It’s intrinsic value is the fact that I can send it across the world instantly and no one takes a cut. And you cant double spend it.
    Thats its intrinsic value right there.

  2. TraderTimm says:

    For those readers wondering what bitcoin is all about, a helpful infographic is here:

    http://spectrum.ieee.org/img/06Bitcoin-1338412974774.jpg (1871 x 1420)

    It steps you through a typical transaction between two people in the bitcoin network.

    Further reading here at the wiki:

    https://en.bitcoin.it/wiki/Main_Page

    When you select a client, keep in mind that the full official clients take some time to sync up with the network – v0.8.0 will do this in a few hours. If that is too inconvenient, the Electrum client can provide a quick way to start using bitcoin, as it is lightweight and doesn’t download the entire blockchain.

    Bitcoin is all about monetary freedom. There are no central authorities telling you how to spend your money. I think this is important for everyone, no matter where you live on this planet.

  3. ELeeMacFall says:

    Thank you for writing such a fair piece. As one of those “up-to-no-good anarchists” I find it refreshing to see some comments on Bitcoin without a lot of sensationalism thrown in.

  4. Bitcoins are going to eventually do to banks what email has done to the post office.

  5. Tom says:

    Gold doesn’t really have an intrinsic value. It does have some very valuable uses as it is very malleable but lots of manufacturers try to find substitutes for gold because of the demand it has for its store of value. This store of value is not intrinsic but exists because it offers the best solution to store value at that time. Now that bitcoin is around, gold and other precious metals may fall out of favor with people looking to hedge the inflationary pressure of fiat currency and the systemic risk of the global banking system.

  6. Danielle says:

    @Josh – the value is no more and no less than what people are willing to exchange it for, the same as any other trade good. If everyone in the world suddenly decided that Old Masters paintings were worthless, they would be.

    The only intrinsic value that things have are basic necessities like food and shelter. Everyone needs those, and thus are always willing to trade something in exchange for them. Anything beyond that is just consensus opinion, which can change.

  7. Joe says:

    So there is nothing to back up the value of a bitcoin except its’ rareness. I do recall that the Emperor brought a new and extremely rare wardrobe the other day.

    Fools and money, parted, easily they are – in the style of Yoda.

  8. fan of freedom says:

    Bitcoin will need to be eternally vigilant to prevent catastrophe. It is the most splendid idea and its power will be stability and anonymity. It must never be infiltrated.

  9. Welcome to the new age says:

    With $425M in market capitalization, and over 40,000 transactions daily, I’d say that’s a fair investment to “backup” the growing value of bitcoin.

    Rareness is not the only factor contributing to it’s value. Being democratically controlled, it is not subject to manipulation unlike centrally controlled currencies, which helps give it a solid foundation.

    The fractional reserve system is ripe for corruption. Fancy a 1,000,000% inflation rate as what happened to Zimbabwe in 2008? A 100 trillion dollar note from 2008 now sells for $5 on ebay. Under no circumstances should that be possible in a fair system.

    You don’t see the laws of physics being compromised to support the existence of the universe. The same should apply to our laws and means of exchange.

    Wait until other decentralized services such as lending and insurance catch on.

  10. Lowkey says:

    Ah Joe, I wonder if now 6 months later when you can now buy a ticket on virgin galactic with bitcoin, the value up over $800 usd you still believe that. Nothing backs fiat currency but the government and its promise to have men with sticks and guns kick the crap out of you and kidnap you if you refuse to participate in a debt slavery scam. And gold is just pretty metal, no substantial industrial use, little intrinsic value.
    Cryptocurrency is backed by the strength of the network, the electricity and computing power to verify transactions, awesome math that creates and enforces trust between any two transacting parties without needing coercion, immunity to national boundaries and regulations, immunity to manipulation via unlimited creation of supply, the ability to be forked and customised by anyone willing to spend a few days reading documentation, speed, lower transaction costs, eventual ease of use and no historical debt weighing it down.

    Is that enough backing? Or would you rather explain how a few pieces of plastic that steadily devalue the longer you own them and derives its values from politicians saying “cos I say so” is superior? Or how a bit of metal whose value is subject to fluctuations based on people digging holes in the ground or other people putting it back in other holes is better?

    Cryptocurrency ftw!

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