On 03/01/2014 05:26 PM, Jed Rothwell wrote:
Craig <cchayniepub...@gmail.com <mailto:cchayniepub...@gmail.com>> wrote:
Borders are opening up as people are now able to trade with each
other without the expensive exchange rate tax, which every
merchant in every third-world country experiences when he tries to
compete with countries which do not want his government's currency.
Surely we can find a solution to that problem that does not involve a
ponzi-scheme currency that fluctuates in value by hundreds of dollars
a day, and that is wide open to the largest theft in the history of
banking.
There's no incentive to try. We don't have competition in the currency
business. The legal tender laws, and expensive banking regulations,
effectively prevent that; and any time someone has tried to come up with
something innovative and interesting, outside the banking industry, it's
been closed down.
I followed e-gold closely, from 1999 until 2006 when their servers were
seized. In 1999 - 2000, I bought and sold e-gold for about a year as an
independent agent. Doug Jackson had the vision to use gold as a form of
currency, which could be sent through the internet with immediate
settlement, and which would serve as the foundation for other forms of
money. He started the company in 1996, and grew it to over $200 million
in gold bullion by the time they shut it down. In fact, e-gold was
superior to Bitcoin for these reasons:
1) It offered immediate settlement. Bitcoin settlement occurs when a
transaction is added to the block chain, which takes about 10 minutes on
average, but can take up to an hour or more; and if the transaction fee
is too low, it can take up to 48 hours.
2) e-Gold offered potential justice to those defrauded, and a complete
trail for law enforcement when they had a court order. Law enforcement
frequently used e-gold to find criminals. While e-gold, itself, could be
used without an identifying account, all exchange services required
identification for those sending money into the e-gold system, and those
taking money out of the e-gold system. The fact that all transactions
were centralized made law enforcement much easier than it had been
previously when most of the types of scams that were being used with
e-gold, were replacing scams which were being used by Western Union
payments and other types of payments like this, which were, effectively,
completely anonymous. (and still are).
3) e-Gold offered price stability, because gold has a far, far larger
market cap than Bitcoin.
4) e-Gold accepted technical responsibility for the operation of the
e-gold system; whereas with Bitcoin, there is nothing that can be done
when you create a transaction with a valid, but unowned output, as MtGox
discovered in Oct, 2011. With e-gold, there was always someone to call
when something went wrong.
People have told me that Bitcoin is kharma for e-gold, because they
could close down e-gold, but they can't close Bitcoin. [But I have no
doubt that they can push Bitcoin completely underground in many places.]
No longer need people be burdened by expensive transaction fees
which can cost upwards of $50, and a day's time, to send money to
some other part of the world.
I often buy things in Japan with a credit card, such as books from
Amazon.com Japan. It takes no time at all. It is no different from
buying things from a U.S. vendor. The bank charges a little extra for
the currency conversion. You can send money to people in Japan with
PayPal, I believe.
But Paypal is not money, because it is reversible. Businesses will never
negotiate for Paypal. Nothing with a low markup will ever be sold for
Paypal. People have used e-gold to buy houses, cars, boats, real estate,
and airplanes; but Paypal can never be used for anything like this,
because Paypal dollars can be taken away, even months after they've been
placed in your account.
To be a true international currency, you've got to start with something
for a monetary base. It has to be: 1) tangible; 2) fungible; 3)
auditable; 4) portable; 5) scarce; 6) stable [which Bitcoin hasn't yet
achieve]; 7) recognizable; 8) reliable; and 9) acceptable. Paypal
dollars fail several of these because of this fatal flaw: they are built
upon credit.
But to really get the vision as to what people are trying to do with
such a currency like Bitcoin, you have to think of it as cash, and you
have to treat it like cash. With a solid foundation, from a
non-reversible currency, you can then build an infrastructure on top of
it that has all the bells, whistles, and security that you want to see.
So while Bitcoin is not as good as e-gold once was, the infrastructure
which can be built on top of it, can be everything that e-gold once was,
and very much more; because Bitcoin can satisfy all the requirements of
a monetary base upon which entire capital markets, credit markets,
clearing houses, payment processors, and everything else can be built.
This is the new era that these disorganized libertarian coders are
thrusting in front of our eyes.
Can the US government do this? People like to think that we can do
anything through government once we put our minds to the task, but
without competition, then the visionaries which do see the future, are
never allowed to put it into practice. If the banking industry wakes up
and says, you know, we need an international, non reversible currency,
to be used to expand trade and commerce, then at this point, I would
only conclude they got the idea from Satoshi Nakamoto; but Bitcoin will
beat them to it.
Craig
