Tag Archive: Bitcoin

May 30

Bitcoins V.S. Gold & Silver – Which one is Better OR Are they the Same

Gold bullion vault Bitcoins V.S. Gold & Silver   Which one is Better OR Are they the Same

Plenty of people still have a difficult time wrapping their heads around what bitcoin is or why it even has value, especially as the virtual cryptocurrency continues to scale record heights. How isn’t this a Ponzi scheme, many have wondered?

A good way to look at it is to compare it to gold. What gives a shiny metal that doesn’t have a whole lot of real utility–outside of jewelry and limited industrial use–any kind of real world value?

The only reason gold has value is because one day, way back when, long before recorded history, society simply decided that this yellowish precious metal should represent “money.” From that day forward–as that idea spread virally across the globe (or at least the small part of the planet then settled by homo sapiens)–gold came to be worth something in the eyes of the people.

Uninscribed Lydian gold coins Bitcoins V.S. Gold & Silver   Which one is Better OR Are they the Same

Uninscribed Lydian coins made from electrum, a naturally occurring gold and
silver alloy, 6th century BCE. The first gold coins of the Grecian age were struck
in Lydia around 700 BC.

As a representative (and thus store) of value, it became a universal intermediary between goods and services. This was the natural, inevitable economic evolution of the barter system. As it retained its value over time–and eventually throughout human history–gold gained cultural credibility. That’s the quick and easy answer.

Why the chemical element Au? There’s its obvious aesthetic qualities. But gold’s longevity comes from scarcity; its limited quantities were never able to keep up with demand. Since the beginning of human history, a total of 171,300 tonnes of gold have been mined.

As the human economy evolved, we’d eventually transition from gold to paper money, but up until the end of World War II, gold remained a fundamental piece of the financial system in the form of the gold standard, by which governments pegged the value of their printed currencies to amount of gold they owned.

After the war, the gold standard was partially abandoned with the establishment of Bretton Woods, yet the world system remained implicitly tied to it even as countries adopted the U.S. dollar as their reserve currency, being that the U.S. promised to maintain the price of gold at $35.

Then in 1971, due to the financial strains of the Vietnam War, President Nixon ended the direct convertibility of the dollar to gold, thus establishing the U.S. as a fiat currency, money that was backed only by the credibility of the U.S. government. No longer elementally linked to the modern economy, gold still kept its value as an investment asset, given its historic credibility and cultural relevance. Today, one ounce of gold is worth over $1600.

Bitcoin, in its present form, has a stark resemblance to gold. Both are backed by no one. Both are, relative to fiat currency, inconvenient for day to day use. Your gold coins or bitcoins (yet) won’t do much good at the grocery store. Both lack intrinsic value. If the apocalypse arrived tomorrow, your gold and BTC won’t help you survive against the zombies. Both have value only because society has confidence that they will maintain said value over time.

Bitcoin, of course, has been around only since 2009, so it doesn’t have the same kind of long term credibility. But the supply of bitcoins, like gold, are also constrained, built into its elegant mathematical model. There’s hard limit of 21 million bitcoins to be mined, which is predetermined to be reached during the year 2140. So as bitcoin demand and adoption continue to outpace its supply, its price will increase in lockstep.

So why bitcoin? Because bitcoin is gold on steroids, designed for a society that lives through the internet. Bitcoin is designed with the ideals of the contemporary cyber movement in mind: decentralization, peer to peer, cryptography. Easily transferable in ones and zeros, it’s a storage of value for a virtual society. As a payment system, it’s a temporal store of money that can be easily sent across the globe securely and speedily without counterparty risk. No matter the price of bitcoin, these benefits will always give it purpose. With bitcoin trading over $60, its market capitalization is approaching $700 million.

bitcoin chart Bitcoins V.S. Gold & Silver   Which one is Better OR Are they the Same

The benefits of this model are clear. Given its self-contained nature, it eliminates the need for inherent human interference. There’s no need for a central bank because bitcoin self-regulates. Certain aspects of it are, of course, vulnerable, such as mining, as well as security. Every month, it seems, we hear a new report of a hacked bitcoin wallet. Millions have been lost since 2011.

Yet these issues are self-correcting over time given bitcoin’s incentivization dynamics. Security of data and money is a concern that predates bitcoin and even currency; better practices and technologies can help prevent theft. And it wouldn’t make sense for any one entity, for instance, to attempt to monopolize mining, except to destroy it. After all, this part of the system is somewhat transparent, and bitcoin’s value will be retained in the degree that it is decentralized. If one entity controlled the world’s bitcoin output, it wouldn’t be worth very much, so trying to take over bitcoin doesn’t make financial sense.

Even destroying it poses problems, tantamount to eliminating the world’s gold supply. It’s possible that certain governments or companies even could attempt to cripple it, either through regulation or attacks on the system, yet destroying it completely, for now, seems out of the question. We have to look no further than BitTorrent. Despite years of assaults from the likes of Hollywood, the RIAA, and U.S. government, torrenting continues to drive the majority of internet traffic.

And as long as bitcoin survives, it will rebound. As long as it exists, it will grow. So ignore the warnings of hype and talk of a bubble, in the long run, it’s all more or less irrelevant. The value of bitcoin could crash again, like it did in the summer of 2011. Or it could keep skyrocketing. Whatever happens, neither gold nor bitcoin are going anywhere anytime soon. In the end, that’s all that really matters.

UPDATE: Heres charts for bitcoin and gold since the Nixon Shock. (via reddit)

gold charts Bitcoins V.S. Gold & Silver   Which one is Better OR Are they the Same

May 10

What is Bitcoin? “If” and “How” it Will Impact My Life

What is bitcoin What is Bitcoin?  If and How it Will Impact My Life

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

Opinions differ as to what constitutes “money.”

The English word “money” derives from the Latin word “moneta,” which means to “mint.” Historically, “money” was minted in the form of precious metals, most notably gold and silver. Minted metal was considered “money” because it possessed luster, was scarce, and had perceived intrinsic value. While the former two attributes cannot be disputed, the latter is generally not accepted by everyone. Critics have argued that precious metals have no more intrinsic value than any other medium of exchange.

Despite some of the various interpretations of the attributes of money, it is generally agreed that money is something that represents a generally accepted medium of exchange, has value, and can be used to make payments. Today, the most common form of money in the world is fiat paper currency. Fiat money is issued by a central authority, most often central banks or governments.

The definition of money, however, has become even more problematic with the advent of so-called “cryptocurrency.”

Cryptocurrency is a nebulous word, but its meaning may be easy to decipher.

Cryptocurrency is composed of two words: “crypto” or “cryptography” and “currency.” Cryptography is an amalgamation of two Greek words and in its most elemental form means a “secret writing.” Today, cryptography has a more technologically advanced application. Cryptography may be defined as the enciphering and deciphering of information or communications in a secret language or code. Cryptography is used to secure communications between persons, organizations, businesses, and governments.

Currency may be defined as a medium of exchange in circulation.

Together, cryptocurrency may be defined as a peer-to-peer digital currency based on public and private keys, digital signatures, and encryption.

Essentially, the concept of cryptocurrency is based on the Internet. Similar to the Internet, cryptocurrency is a borderless technology of decentralized network infrastructure that transmits and interconnects information, communication, and data globally.

Origins of Cryptocurrency

The origins of cryptocurrency may date back some fifteen years, with some dating its origins well over twenty years. According to Bitcoin.org:

Bitcoin is one of the first implementations of a concept called crypto-currency, which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of a new form of money that uses cryptography to control its creation and transactions, rather than relying on central authorities.

Bitcoin is one of the first implementations of cryptocurrency and was developed in 2009 by a mysterious person, known only by the pseudonym Satoshi Nakamoto. Brilliant and persuasive, Satoshi Nakamoto argued that fiat currencies are faith-based and cannot be trusted. Instead, he envisioned a system of money that was without a central authority (i.e., decentralized) and founded on the principles of mathematics.

According to Nakamoto:

[Bitcoin is] completely decentralized, with no central server or trusted parties, because everything is based on crypto proof instead of trust. The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

Like many great thinkers before him, Satoshi Nakamoto feared fractional reserve banking and warned that the system of banking founded on consumer trust and confidence was a farce. He understood that with the advent of strong encryption, trust was no longer warranted:

A generation ago, multi-user time-sharing computer systems had a similar problem. Before strong encryption, users had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private. Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors. Then strong encryption became available to the masses, and trust was no longer required. Data could be secured in a way that was physically impossible for others to access, no matter for what reason, no matter how good the excuse, no matter what. It’s time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless.

Rumors abound as to the real identity of Satoshi Nakamoto, with some speculating that the Central Intelligence Agency (CIA) may be the true developer behind Bitcoin. Irrespective of his real identity, whether a person or an organization, Satoshi Nakamoto abruptly left the project sometime in late 2010, bequeathing his project and work for others to continue.

Bitcoin was founded as an open source application and is released under the MIT license. It is generally described as a “community driven project,” and on September 27, 2012 the Bitcoin foundation was created “to standardize, protect, and promote Bitcoin.” Since its initial development, Bitcoin has grown exponentially in value and popularity.

Defining Bitcoin

Bitcoin is a digital currency with no central authority. It is a quasi-anonymous peer-to-peer technology that can be used to send and receive money in what is commonly called a “wallet.” Because of its decentralized stature, Bitcoin differs from most other digital currencies available on the Internet. Unlike other digital currencies and payment processors, for example, Bitcoin does not utilize accounts – no accounts are created, no personal information is demanded, and no identification is required. Instead, Bitcoin utilizes public and private keys and digital signatures, which are based on public key cryptography, to generate addresses from which bitcoins may be sent or received. According to one online resource, “a Bitcoin address is a 160-bit hash of the public portion of a public/private ECDSA keypair.”

Payment is made when one address owner sends (i.e., digitally signs) bitcoins to another address. Bitcoin addresses begin with the numbers “1″ or “3″ and are generally between twenty-seven and thirty-four alphanumeric characters in length. A Bitcoin address is similar to a PayPal email address. However, unlike PayPal addresses, a Bitcoin wallet may generate unlimited addresses. Ownership of addresses are never in question – generated addresses have at least one secret number, known as a private key, and are stored locally in a Bitcoin wallet. It is this secret embedded private key which assigns ownership of Bitcoin addresses. Because ownership rests in the secret private key, it is imperative to back up the Bitcoin wallet data.

Here are some additional things to consider:

  • The Bitcoin currency is abbreviated as “BTC.”
  • Bitcoins may be procured by mining, buying, or selling goods or services in BTC.
  • Bitcoins are mined by solving complex mathematical equations.
  • Bitcoin is “inflation proof.” Only 21 million bitcoins can be mined and thus “minted.”
  • There are over 11 million bitcoins currently minted in circulation.
  • Bitcoin transactions are irreversible.
  • It is recommended to use an escrow service for large business transactions in bitcoins.
  • Bitcoin transactions are instantaneous and can be verified in as little as ten minutes.
  • Transaction fees are modest.
  • It is recommended to generate a new Bitcoin address for every new transaction.
  • All Bitcoin transactions are recorded in a “block chain.”
  • The block chain prevents duplicate transactions.
  • Bitcoin transactions are not entirely anonymous by default.
  • To anonymize Bitcoin transactions, it is recommended to use anonymization services, like Tor.
  • Always encrypt a Bitcoin wallet with a strong password or strong encryption.

Bitcoins may be traded online for other digital currencies, redeemed for precious metals, or exchanged for fiat currencies. While the block chain may publish all Bitcoin transactions, it cannot easily compromise anonymity. Perhaps the greatest threat to Bitcoin anonymity are third party exchangers. Most digital currency exchangers are registered Money Services Businesses (MSBs) and follow the “know your customer” (KYC) reporting rule followed by virtually all financial institutions. This requirement forces anonymous Bitcoin users out of the dark – though there are some legal and not so legal ways around identification. Some exchangers do not require identification – but oftentimes place a predefined pecuniary cap on transactions. Exchangers’ fees vary, and the methods of payment vary, as well – though bank wire, Western Union, prepaid debit cards, money orders, and PayPal are the most popular.

More recently, with the advent of Bitcoin debit cards, physical bitcoins, and various other Bitcoin services, it is becoming easier than ever to use bitcoins virtually anywhere in the world – online and offline. No-name prepaid debit cards also add considerably more privacy to Bitcoin transactions, especially when exchanging bitcoins for fiat currency. In most instances, this may be one of the best methods of exchanging bitcoins for fiat currency, principally due to the inherent privacy of no-name prepaid cards and the high reloading capacities of some prepaid debit cards.

The Future of Bitcoin

Bitcoin popularity has grown exponentially in the last few years. While bitcoins have no intrinsic value, they are considered valuable because they “are useful and because they are scarce.” Although not everyone agrees Bitcoin is money, they do not all agree for the same reasons. Establishment economists reject Bitcoin because it lacks a central authority. Others reject it because it has no intrinsic value. But virtually everyone agrees that Bitcoin is to some extent a “bubble,” similar to other currencies, in that it booms and busts. But unlike fiat currencies, which generally have no protective measure against inflation, bitcoins are inflation-proof.

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: the ability to bypass government restrictions, including economic embargoes and capital controls, to transmit money quasi-anonymously to anyone anywhere virtually instantaneously irrespective of geopolitical restrictions. While virtually all digital currencies can more or less do the same, no other currency offers an equal combination of peer-to-peer transactions, strong encryption, anonymity, and liquidity that Bitcoin has possessed up to this point.

In the Islamic Republic of Iran, a state particularly hard hit by US sanctions, for example, the value and interest of Bitcoin is rapidly rising. According to Business Week:

Under sanctions imposed by the US and its allies, dollars are hard to come by in Iran. The rial fell from 20,160 against the greenback on the street market in August to 36,500 rials to the dollar in October. It’s settled, for now, around 27,000. The central bank’s fixed official rate is 12,260. Yet there’s one currency in Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-only currency.

Iranians are buying and selling goods and services nationally and internationally with bitcoins. The Iranians are not alone, however. The perceived value and importance of Bitcoin is growing everywhere, especially in Europe. After the so-called “Cyprus haircut,” whereby the European Troika purloined the savings of the people of Cyprus, more and more people are sensing the value of a peer-to-peer cryptocurrency, free from the control of governments and central banks.

Because bitcoins offer strong privacy; can be used to bypass government restrictions and regulations; can be used to send money anonymously instantaneously anywhere in the world; can be used for so-called “money laundering”; and can be used to purchase so-called “illegal goods and services” anywhere in the world, there is some indication that in the very near future the Bitcoin may become more regulated under the Financial Crime Enforcement Network (FinCEN). This would not come as a surprise. However, it seems that for the present, only exchangers have to register as Money Services Businesses (MSBs).

While Bitcoin is by no means the only digital currency or peer-to-peer cryptocurrency, it is at the moment by far the most private, popular, and best implemented.

There is no indication that this will change anytime in the foreseeable future.

James Black is the author of The Privacy Book. For more information, please visit www.sovereignpress.org

May 09

China’s Advertises Bitcoin to it’s People – Lates in Currency War to Remove the US Dollar as Reserve Currency

currency wars header 021 China’s Advertises Bitcoin to its People   Lates in Currency War to Remove the US Dollar as Reserve Currency

Throughout history wars have been fought for a number of reasons, not the least of which is economic gain. The traditional means to that end has been physical combat, but we’re now in a new era – an era where wars are increasingly fought with technical and financial means. The US has already fallen victim to widespread cyber attacks originating in China and is suspected of conducting its own technological attacks on others.

The recent economic crisis showed the world how susceptible even powerful nations are to financial tumult. Displacing the USD as the global reserve currency would put China closer to their explicitly stated aspirations without ever having to engage the world’s strongest military.

At the end of last week China Central Television, a state-run broadcaster, aired a documentary offering an overview of bitcoin and its potential benefits. Given the tight controls the Chinese government has over mainland media, this was not just tacit approval from the world’s second largest and centrally-run economy. It was a continuation of an ongoing series of rhetoric and actions to undermine the US Dollar, as well as destabilize the beneficiary of global reserve currency status: the United States.

China Wants to Remove the US Dollar’s Reserve Currency Status

Since the end of World War II, the US Dollar has enjoyed the benefits of being the world’s reserve currency. The dollar has remained strong as a result of being the denominating currency of roughly 60% of global bank and sovereign foreign currency reserves, as well as the de facto medium of exchange for major commodity transactions. The reserve currency’s issuing nation receives a number of unique benefits, not the least of which is the ability to borrow money at significantly lower rates, as has been heavily taken advantage of by the US.

China has been outspoken for years about their desire to find a replacement for the USD as the world’s reserve currency, citing the dollar’s susceptibility to volatility and inflation. That concern is not new to the global stage and was famously addressed in 1971 when US Secretary of the US Treasury John Connally told a group of European finance ministers that the dollar was “our currency, and your problem.”

Since the global financial crisis began China has been on an unabated campaign to displace the dollar’s coveted position – bitcoin provides a potentially game-changing tool in that arsenal. Below is a brief timeline of the escalating currency war China has openly waged:

    • March 2009 – China central bank governor zhou xiaochuan appeals to the g20 to create a new currency standard to replace the dollar as global reserve. Keep in mind that bitcoin was in its infancy when this recommendation was made – this appeal likely would have referred to a basket of many currencies or notes issued by the International Monetary Fund.

    • September 2012 – China announces it will begin selling oil in currencies other than the dollar. Since the 1970’s, global oil sales have been conducted in dollars as a result of longstanding diplomatic agreements the US made with major oil producing nations.

    • September 2012 – A member of china’s commerce ministry publicly recommends using their position as Tokyo’s largest foreign creditor to launch a bond attack on Japan.

    • The comments were made amid escalating territorial disputes and suggested China “impose sanctions on Japan in the most effective manner” by selling large quantities of Japanese bonds to drive up the neighboring country’s borrowing costs.

    • Worth noting: China is also the US’ top foreign creditor, holding more than 7% of outstanding US debt.

    • March 2013 – Chinese central bank Deputy Governor Yi Gang declares china is “fully prepared” for a currency war, specifically noting “China will take into full account the quantitative easing policies implemented by central banks of foreign countries.”

    • March / April 2013 – China bypasses the USD as an intermediary of exchange by opening direct swap lines with australia and brazil to build trade with the two nations without requiring a facilitating swap to USD.

    • US Debt Holders China’s Advertises Bitcoin to its People   Lates in Currency War to Remove the US Dollar as Reserve Currency

China Brings Bitcoin to Its Populace

Last week CCTV, the predominant state television broadcaster in China, aired an overview of bitcoin explaining both how some folks have made money from the new currency and how many see it as a speculative bubble. The Chinese government, which has more than a dozen agencies regulating media and information flow, clearly wants its population to know about bitcoin despite the successful global use of the currency to circumvent capital controls and undermine central authority – governmental aspects China takes quite seriously.

If China successfully aids the proliferation of bitcoin, the implications on the global currency system could be monumental. Rather than having to use USD as an intermediary currency or establish swap lines to support international trade, a world conducting trade with bitcoin would mean the USD currently used for this purpose would be leaked as additional supply in the Forex markets, driving down the value of USD and driving up borrowing rates for the US. This change, on a large scale, would drastically accelerate the effects of the inflationary policies already taken up by the Federal Reserve. A significant inflationary trend in USD could potentially create a devastating cycle as global banks looking to preserve their wealth seek alternative reserve currencies, even further reducing the dollar’s value.

The effect in China and on the bitcoin market is already being realized. Bitcoin wallet software has been downloaded nearly 40,000 times since the program aired three days ago – that’s almost 7 times the number downloaded in the US over the same period and 13 times the rate of downloads in China leading up to the report.

If this trend continues, we may have just witnessed the single most significant event in bitcoin history since the currency’s inception.

wallet downloads China’s Advertises Bitcoin to its People   Lates in Currency War to Remove the US Dollar as Reserve Currency

May 06

Ebay may open its wallet to the virtual currency Bitcoin.

eBay May Begin Accepting Bitcoin for Online Payments Ebay may open its wallet to the virtual currency Bitcoin.

EBay may open its wallet to the virtual currency Bitcoin.

The e-commerce heavyweight is exploring ways to integrate bitcoins into its PayPal payments network,  Chief Executive John Donahoe said in an interview with The Wall Street Journal.

“It’s a new disruptive technology, so, yeah, we’re looking at Bitcoin closely,” Donahoe said. “There may be ways to enable it inside PayPal.”

Integration into PayPal’s network would give Bitcoin some much-needed legitimacy. Accepted by few retailers, the currency is held mostly by speculators hoping to profit from price fluctuations, which have been particularly volatile in recent weeks.

Donahoe said eBay hasn’t yet made any commitments to use the currency.

He said Bitcoin was reminiscent of music sharing sites Kazaa and Napster, which were found to violate trademark rights, but helped spawn legitimate sites such Pandora and Spotify. “Virtual currency is something that’s here to stay,” Donahoe said.

Within the next five years, Bitcoin or other virtual currencies, such as airline miles, could be converted to cash and used in retail, Donahoe said. Integrating such virtual currencies into its payment network would help eBay in its effort to push PayPal use at bricks-and-mortar retailers, rather than just online. PayPal brought in $1.55 billion in revenue for eBay in this year’s first quarter, an 18% jump from a year earlier.

Last month the U.S. Treasury Department said it will apply money-laundering rules to Bitcoin and other virtual currencies, meaning firms that issue or exchange the increasingly popular online cash will be regulated in a manner similar to traditional money-order providers.

Coinsetter, which will allow participants to trade bitcoins using borrowed money in the coming weeks, has attracted venture capital funding. And Western Union Co. WU +0.71% and MoneyGram International Inc. MGI +1.32% are also studying ways to allow customers to transfer money around the globe using bitcoins.

For now, the currency is accepted on a few sites, such as Reddit and WordPress, as well as Pizzaforcoins.com, which allows users to pay for some pizza deliveries.

The currency is still volatile, making its prospects in retail sales risky. In April alone, bitcoins have ranged from $50.01 to $266, with an average of $114.94, according to bitcoincharts.com, one site tracking the currency’s value. The market for bitcoins is over $1 billion, according to the site.

Source: Wall Street Journal

Apr 09

Lessons From the Newest Electronic Money – Bitcoin

Bitcoin Lessons From the Newest Electronic Money – Bitcoin

One of the more interesting developments of the modern electronic age of money has been the rise of Bitcoin, a decentralized digital form of money.  If you’re not familiar with it or you’re confused by what Bitcoin is, you’re not alone.  It’s a fairly new, innovative and complex form of money.  And that’s right, Bitcoin is definitely money.

Today’s Dominant Form of Money Versus Bitcoin

Anyone who understands the basic tenets of Monetary Realism know that many things can serve as money and many things DO serve as money.  After all, anyone can create money, but the trouble is in getting others to accept it.  And since money’s primary purpose is in the means of exchange, just about anything can serve as money as long as it meets that primary purpose.  The thing is, there aren’t all that many things that meet that need on a broad level.  For instance, lots of people like to claim that gold is money (which it is), but gold isn’t accepted for payment in many places.  Therefore, MR says that gold has a low level of moneyness (to better understand the concept of moneyness please see here).  Gold is money, but it’s just not a very good kind of money.  Bitcoin is actually very similar.  If you have Bitcoins you can buy certain things online that only a Bitcoin merchant will allow you to buy.  These merchants accept Bitcoins as a form of final payment.  To them, it’s a form of money with a very high level of moneyness.  But to a company like Wal-Mart a Bitcoin is like a gold bar.  It doesn’t give you access to anything in their store therefore its moneyness is virtually nil in a Wal-Mart.  Most retailers around the world view Bitcoins similarly.

In the USA, the primary form of money is bank deposits because bank deposits are the form of money that dominate the US payments system.  The US payments system, which is maintained by private banks, is the primary playing field for the purpose of exchanging goods and services.  In other words, if you want access to the most convenient and widely accepted form of payment (bank deposits), you need to become a member of the US payments system usually by becoming a bank client.  This gives you access to credit cards, debit cards, a bank account that allows you to withdraw/deposit cash, etc which allows you to interact on the US payments system.  Becoming a bank client is kind of like opening a Ticketmaster account so you can obtain access to the means of exchange to gain entry into a theater performance (you just want access to the tickets that give you access to a performance).  In the case of banking, you open an account in order to gain access to the US payments system so you can access the performance that is the US economy.  Obtaining Bitcoins is similar in many ways, but very different as I’ll describe below.

 

READ FULL ARTICLE HERE:  http://pragcap.com/is-bitcoin-money