[ExI] What happens when Bitcoin goes to a million bucks?

[Omar Rahman]

> From: Max More <max at maxmore.com>
> To: Brent Allsop <brent.allsop at canonizer.com>, ExI chat list
> 	<extropy-chat at lists.extropy.org>
> Subject: Re: [ExI] What happens when Bitcoin goes to a million bucks?
> 
> 
> Brent: You say that "Everyone should have at least one Bitcoin". I don't
> pretend to have a good understanding of bitcoins, despite having read
> (lightly) many posts here and some articles (such as the helpful one by
> Keegan Macintosh in the November issue of *Cryonics*), but I do have the
> strong feeling that I really ought to have a few of these peculiar things.
> However, my impression is that it's now too late -- that you can only
> generate new bitcoins if you have some fairly serious computing power.
> 
> Is this right? If so, are there any reasonably non-speculative ways to
> acquire bitcoins?
> 
> My question is not just from a personal perspective. Several people would
> like to pay for their some part of their cryopreservation (or gift Alcor)
> using Bitcoins, so I would like to understand the situation better.
> 
> --Max
> 
> 

Max,

The main problem with bitcoin is precisely this: it is impossible for everyone to have a bitcoin. The system was designed with an upper limit of 21 million coins available. The anonymous people behind bitcoin have designed this as a 'boutique' currency  for test purposes I think. The 21 million upper limit automatically places it out of contention to be a general means of exchange. Hmm....unless we want to get into 'virtual' bitcoins. ;)

Of course 'real' currencies only exist in finite amounts which are only a small fraction of the total assets in a country but we have 'trusted' banks to magnify these currencies through fractional reserve banking. And, of course, as we see in 'quantitative easing' you can print more and add zeroes to the numbers.

May I offer to pay for cryopreservation in Dutch Tulips Max? Or cowrie shells? Etc. etc. etc. All sorts of things have been used for money. If I had enough money to pay for cryopreservation I would want to pay you in a currency which is future-proof and had some stability. And I would want your organisation to be very financially savvy so that you protect my assets so that when/if I wake up I have some scratch to get started with again.

The longer someone has to be cryopreserved the more complex it will be for them to emerge as anything other than a pauper. I would much rather give payment in  the form of Berkshire Hathaway stock if I had it. Hopefully if they manage their transition from Warren Buffet to whoever's next they will have a corporation that will generate profits reliably for a few generations at least.


> 
> On Wed, Nov 6, 2013 at 10:12 PM, Brent Allsop <brent.allsop at canonizer.com>wrote:
> 
>> 
>> Transhumanist economists,
>> 
>> As most of you know, in 2010, some guy purchased about $25 worth of
>> Bitcoin, which is now worth over $800K.  My working hypothesis is that this
>> will continue and that before 2020, Bitcoin will be worth a million bucks.
>> It's so funny to tell people that, and see them look at you with that
>> "Your CRAZY" look in their eyes, as they say "A Bitcoin isn't going to be
>> worth a million bucks!"
>> 
>> Have you checked the price of Gold, lately?  It's been crashing,
>> dramatically, for 2 years now.  Why do you think?  The so called gold
>> experts, are saying things like:
>> 
>> "The bear market in gold has been going on for two years. It seems to fly
>> in the face of fundamentals, as central banks print enough currency to
>> paper the world."
>> 
>> Once you factor in the fact that there is a new competitor in town, and
>> that people are starting to sell Gold to buy Bitcoin, that explains what
>> otherwise doesn't make sense to these traditional gold "experts" that have
>> made lots of money up till two years ago.  In other words, All the money
>> that is in the pockets of holders of Gold, is now flowing into the pockets
>> of holders of Bitcoins, at a very rapid rate.
>> 
>> And My belief is that this Gold casualty that is just getting started, is
>> just the first casualty.  It will soon spread to stocks, bonds, real
>> estate, and anything with value that can be sold.  All the money in the
>> pockets of the people holding them, will be quickly draining into the
>> pockets of Bitcoiners at an increasing accelerating rate.
>> 
>> Bitcoin, as many experts are starting to say: "is simply the best
>> investment out there, bar none."  So what would you expect?  Money flows to
>> where it is treated the best, just like water flows downhill.  And if you
>> have a Bitcoin in your pocket, that is looking increasingly tempting.
>> 
>> As the cost of money and interest rates starts to skyrocket, as all
>> sources of capital continue to flow into Bitcoin what will happen? I think
>> at least the following will happen:
>> 
>> 1.    People will be selling anything they can liquidate, so they can buy
>> Bitcoin.  Even at a loss, since that loss will soon be made up for, once it
>> is in Bitcoin.  (Do you think a tax penalty of 10%, will stop people from
>> liquidating their IRAs?)
>> 2.    People will be borrowing money, mortgaging things, like their house,
>> to buy Bitcoins, because no interest rate will come close to the rate at
>> which Bitcoin will continue to go up.
>> 3.    The price of stocks will decline.  The PE ratio of stocks has
>> historically been at around 20.   This will drop by half or more, as nobody
>> will want to buy stocks, unless it is a very good value.  The greatly
>> reduced PE, will become "the new normal" and it will be much harder to make
>> money by going public.
>> 4.    Interest rates will go up significantly, because of the demand for
>> money, to buy Bitcoins.
>> 5.    The economy will convert from a consumer economy with lots of debt
>> to everyone will only want to only buy something when they absolutely need
>> it.  As it will be far better to spend it on something that will be worth
>> 10 times its value in a year or so.  It will convert to a bit time saving
>> economy.  Will this stabilize the boom and bust cycle?
>> 6.    The Winklevoss twins will be laughing at Facebook, and Zukkerberg,
>> as Facebook  stock price continues to decline and fails to keep pace with
>> their 1% of all bitcoins.
>> 
>> When we head into a recession, the fed lowers the interest rate to Zero to
>> provide 'liquidity' and in hopes people will borrow money to invest in the
>> economy.  But this doesn't work very well as there is nothing that is
>> making money, to make it worth borrowing during a recession.
>> 
>> But Bitcoin will change this dramatically.  Everyone will want to borrow
>> money even more in a recession, as recession will cause Bitcoins to go up
>> even faster than they are now.  People will have even less motivation to
>> invest in the economy.  So there will be two market forces.  Bitcoins
>> driving up interest rates, and the federal reserve printing money and
>> trying to lower interest rates.  People will be borrowing this printed
>> money, purchasing Bitcions.  WIll that cause rapid inflation of fiat
>> currency?
>> 
>> Who will win such an epic battle between Bitcoin trying to increasa
>> interest rates, and the Fed trying to lower them?  What will the effect be,
>> when Bitcoin starts rapidly approaching one million $$ ?
>> 
>> My minds seems to get all scrambled when I try to analyze such.  Can you
>> guys help provide some additional rational to my attempt to get my head
>> around what could happen?  Could everyone brainstorm some of the long term
>> possibilities, here?
>> 
>> I've tried to browse some of the Bitcoins forums for some intelligent
>> information on this, but all of them are idiots that can only think
>> linearly, and they haven't got a clue.  While Transhumanists are good at
>> thinking exponentially.  So, what are some of the more extreme
>> possibilities you guys see?
>> 
>> One thing I feel for sure.  Everyone should have at last one Bitcoin.  And
>> people only say there is no such thing as a "Get Rich Quick Scheme",
>> because they don't know how close the singularity is.
>> 
>> Brent Allsop
>> 
>> 
> -- 
> Max More, PhD
> Strategic Philosopher

Generally I am in favour of a digital currency, because I believe it will act to reduce economic disparity around the world. The days of currency fluctuations on the latest 'news' would be gone. Think about it, something happens and your currency drops by 5% (or possibly much more). Does anyone REALLY believe that a nation and it's entire accumulated assets have been destroyed by 5% because Prime Minister X put his penis in Woman Z instead of the usual Woman Y and therefore his government is going to collapse? (Please feel free to read that with whatever gender roles you prefer.)

A real digital currency is going to need to be open source, available to all, and it is going to need some 'mathematical backup' so that if/when someone breaks the encryption you can switch fairly painlessly to a different encryption standard. It will also need to be issued by a globally trusted source. So, Hello One World Government!

Of course there will be multiple digital currencies for all the usual reasons, not least of which is that those in the currency speculation/ currency manipulation/ currency exchange business won't want to see their 'industry' be destroyed by technological innovation. So, Goodbye One World Government!

Regards,

Omar Rahman
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.extropy.org/pipermail/extropy-chat/attachments/20131107/fc94f796/attachment.html>