4 ms·

A good reason to keep your cash in bitcoin ;)

lrei 14y ago
sure because bitcoin value never went down overnight. Not even 10% like the cypriot savings. Oh wait, never mind. It went down 30% in a single day: http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+Depression+Hits/article21877.htm http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+...
- icebraining 14y ago
  The Cypriot savings didn't lose value, they lost a part. It's not the same thing at all. The proof is that Bitcoin returned to its previous value (and then some) rather quickly, while the savings will never return.
  - lrei 14y ago
    Losing value and losing a part is the same thing. Say you have 100 dollars. And with 100 dollars you can buy 100 beans: * The dollar loses 10% value. Now you can only buy 90 beans. * You lose 10% of your 100 dollars. Now you only have 90 dollars. You can only buy 90 beans. Compare that with: * Cyprus banks go bankrupt, the euro loses 10% value - never mind that people actually lose 100% of their money. * Cyprus savings take a 10% cut, Euro keeps 100% of its value. Sure it's a simplification but I think it's a valid point.
    - icebraining 14y ago
      The Euro losing 10% of value in relation to what? USD? Yen? And even if the dollar loses 10% of the value vs every other currency, it's not true that you can only buy 90 beans, because you're not the only one with dollars: there are farmers who sell in dollars, and buy their stuff in dollars, and so will probably keep their prices. When everyone you trade with uses the same currency as you, there's no value to be lost or gained relative to them, and since Cyprus trades in Euros, a loss of 10% versus say, the dollar, wouldn't automatically make everything 10% more expensive.
      - gasull 14y ago
        This is not true. Currency depreciation leads to price inflation. That's why your dollars (or euros) buy less things year over year.
        icebraining 14y ago
        Currency depreciation by increasing the supply is not the same as losing value relative to other currencies, which was what happened to BItcoins (since the supply is constant). And while both depreciations lead to price inflation, an loss of X% in the latter doesn't lead to an increase of the same amount in price inflation, because not all products completely depend on imports from other economic zones.
  - tptacek 14y ago
    They seem like exactly the same thing. Maybe the reason they don't seem that way to you is that you've decided a priori that Bitcoin will inevitably regain its 30% in value, while Cypriot assets will never gain 6% of value. That seems a little silly. If you bought gold in 1980, you'd still be waiting, 33 years later, for it to recover its value. Gold, silver, currency, and truncated SHA2 hashes can lose value and never fully regain it.
    - icebraining 14y ago
      What Cypriot assets? They lost Euros, which happens to be the same currency that their trading partners use, so there's no value to be gained relative to them. And no, I haven't assumed that Bitcoin will regain in its 30% in value - it already has. But that it can gain (or lose!) so much value relative to the common currency is a big difference, since the common currency can't gain or lose value against itself.
      - tptacek 14y ago
        If you believe that, and are given a choice between (a) an asset which is going to lose 30% of its value but then gain it back and (b) a confiscatory 6% tax on cash, you still prefer (b); you eat the tax, wait for the devaluation of bitcoin, buy bitcoin, and enjoy the appreciation. Of course, that's a silly hypothetical, because the reality is that bitcoin (or gold) is just as likely to stay devalued longer than you can remain illiquid. Your logic is based on the idea that Bitcoin must at some point return to some predictable equilibrium valuation, or even that it must appreciate. The point upthread was, no, obviously that's not true. Next week it be worth pennies, or nothing, and stay that way forever. Which is why moving all your money into Bitcoin is not a rational risk management reaction to confiscatory 6% taxes.
        icebraining 14y ago
        I'm not saying buying Bitcoins is a good move; I myself own none. I'm saying the two situations aren't similar.
A1kmm 14y ago
Even if you keep your cash in fiat currency cash (i.e. euro notes) you would be safe from this. Keeping your money in some form of cash (whether bank notes or Bitcoin) generally puts you in a worse position than low risk (i.e. diversified) investing. An investment bank which kept accounts in Bitcoin and paid out in Bitcoin would still be at risk of government seizures (unless they operated illegally and hid their identities and location, like Silk Road - but they would then have difficulties enforcing loans, and their depositors would have very little recourse if the bank decided to default and steal all the assets).
- gasull 14y ago
  You don't need a bank for your bitcoins. You can keep them in your laptop or smartphone and the Government wouldn't even know you have it there. And even if they did they cannot force you to decrypt your hard drive. You can even keep you bitcoins in your brain. No joke. You can just memorize a passphrase that would recreate an encrypted bitcoin wallet: https://en.bitcoin.it/wiki/Brainwallet https://en.bitcoin.it/wiki/Brainwallet
  - A1kmm 14y ago
    As I said in my comment, keeping Bitcoins is like keeping cash - you can keep either and hide them. Yes, you can secure Bitcoins better than cash if you want to, but that is irrelevant to my point. My point was that you can generally earn interest from a bank at better than inflation rates, and if Bitcoin becomes more mainstream, people will do exactly the same thing Bitcoin they do with cash - give control of it over to a bank, and get an account denominated in that currency (i.e. Bitcoin). Once you give the cash or Bitcoin, as applicable, to the bank, you no longer have it in your wallet / Bitcoin address, but instead, the bank promises that it will give you back that amount of Bitcoins, plus interest. The bank promises to give you back a certain number of Bitcoins, but you don't have any physical way of enforcing that - it is the bank's Bitcoin address that holds them, not yours. Other people borrow Bitcoins from the bank and have to pay back interest at a higher rate than the bank borrows it. Because of interest, banks collectively are owed more than actually exists in circulation at any one time, so Bitcoin becomes fractional reserve system. Under this scenario, the government can still tell banks to reduce your balance (which is a number on your servers, and not physically enforced by the Bitcoin protocol). It doesn't affect BitCoins you hold in your own addresses (just like the Cypriot tax doesn't take a cut of money held as cash by individuals in Cyprus), but that might be only a small fraction of the Bitcoin economy in a future under a fractional reserve system.
viraptor 14y ago
At this point, probably... But on Tuesday it may change. It may be the usual cycle of: some event brings new bitcoin buyers; BTC goes up; media and people who want to ride the wave join in; if it happens too fast people will get nervous, sell at current high and cause another dip. Not sure how many people in Cyprus are interested in bitcoin, but after their transfers are possible again, I wouldn't touch BTC for a couple of days just in case. </speculation>

lrei 14y ago

sure because bitcoin value never went down overnight. Not even 10% like the cypriot savings. Oh wait, never mind. It went down 30% in a single day: http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+Depression+Hits/article21877.htm http://www.dailytech.com/Digital+Black+Friday+First+Bitcoin+...

icebraining 14y ago
The Cypriot savings didn't lose value, they lost a part. It's not the same thing at all. The proof is that Bitcoin returned to its previous value (and then some) rather quickly, while the savings will never return.
- lrei 14y ago
  Losing value and losing a part is the same thing. Say you have 100 dollars. And with 100 dollars you can buy 100 beans: * The dollar loses 10% value. Now you can only buy 90 beans. * You lose 10% of your 100 dollars. Now you only have 90 dollars. You can only buy 90 beans. Compare that with: * Cyprus banks go bankrupt, the euro loses 10% value - never mind that people actually lose 100% of their money. * Cyprus savings take a 10% cut, Euro keeps 100% of its value. Sure it's a simplification but I think it's a valid point.
  - icebraining 14y ago
    The Euro losing 10% of value in relation to what? USD? Yen? And even if the dollar loses 10% of the value vs every other currency, it's not true that you can only buy 90 beans, because you're not the only one with dollars: there are farmers who sell in dollars, and buy their stuff in dollars, and so will probably keep their prices. When everyone you trade with uses the same currency as you, there's no value to be lost or gained relative to them, and since Cyprus trades in Euros, a loss of 10% versus say, the dollar, wouldn't automatically make everything 10% more expensive.
    - gasull 14y ago
      This is not true. Currency depreciation leads to price inflation. That's why your dollars (or euros) buy less things year over year.
      - icebraining 14y ago
        Currency depreciation by increasing the supply is not the same as losing value relative to other currencies, which was what happened to BItcoins (since the supply is constant). And while both depreciations lead to price inflation, an loss of X% in the latter doesn't lead to an increase of the same amount in price inflation, because not all products completely depend on imports from other economic zones.
- tptacek 14y ago
  They seem like exactly the same thing. Maybe the reason they don't seem that way to you is that you've decided a priori that Bitcoin will inevitably regain its 30% in value, while Cypriot assets will never gain 6% of value. That seems a little silly. If you bought gold in 1980, you'd still be waiting, 33 years later, for it to recover its value. Gold, silver, currency, and truncated SHA2 hashes can lose value and never fully regain it.
  - icebraining 14y ago
    What Cypriot assets? They lost Euros, which happens to be the same currency that their trading partners use, so there's no value to be gained relative to them. And no, I haven't assumed that Bitcoin will regain in its 30% in value - it already has. But that it can gain (or lose!) so much value relative to the common currency is a big difference, since the common currency can't gain or lose value against itself.
    - tptacek 14y ago
      If you believe that, and are given a choice between (a) an asset which is going to lose 30% of its value but then gain it back and (b) a confiscatory 6% tax on cash, you still prefer (b); you eat the tax, wait for the devaluation of bitcoin, buy bitcoin, and enjoy the appreciation. Of course, that's a silly hypothetical, because the reality is that bitcoin (or gold) is just as likely to stay devalued longer than you can remain illiquid. Your logic is based on the idea that Bitcoin must at some point return to some predictable equilibrium valuation, or even that it must appreciate. The point upthread was, no, obviously that's not true. Next week it be worth pennies, or nothing, and stay that way forever. Which is why moving all your money into Bitcoin is not a rational risk management reaction to confiscatory 6% taxes.
      - icebraining 14y ago
        I'm not saying buying Bitcoins is a good move; I myself own none. I'm saying the two situations aren't similar.

A1kmm 14y ago

Even if you keep your cash in fiat currency cash (i.e. euro notes) you would be safe from this. Keeping your money in some form of cash (whether bank notes or Bitcoin) generally puts you in a worse position than low risk (i.e. diversified) investing. An investment bank which kept accounts in Bitcoin and paid out in Bitcoin would still be at risk of government seizures (unless they operated illegally and hid their identities and location, like Silk Road - but they would then have difficulties enforcing loans, and their depositors would have very little recourse if the bank decided to default and steal all the assets).

gasull 14y ago
You don't need a bank for your bitcoins. You can keep them in your laptop or smartphone and the Government wouldn't even know you have it there. And even if they did they cannot force you to decrypt your hard drive. You can even keep you bitcoins in your brain. No joke. You can just memorize a passphrase that would recreate an encrypted bitcoin wallet: https://en.bitcoin.it/wiki/Brainwallet https://en.bitcoin.it/wiki/Brainwallet
- A1kmm 14y ago
  As I said in my comment, keeping Bitcoins is like keeping cash - you can keep either and hide them. Yes, you can secure Bitcoins better than cash if you want to, but that is irrelevant to my point. My point was that you can generally earn interest from a bank at better than inflation rates, and if Bitcoin becomes more mainstream, people will do exactly the same thing Bitcoin they do with cash - give control of it over to a bank, and get an account denominated in that currency (i.e. Bitcoin). Once you give the cash or Bitcoin, as applicable, to the bank, you no longer have it in your wallet / Bitcoin address, but instead, the bank promises that it will give you back that amount of Bitcoins, plus interest. The bank promises to give you back a certain number of Bitcoins, but you don't have any physical way of enforcing that - it is the bank's Bitcoin address that holds them, not yours. Other people borrow Bitcoins from the bank and have to pay back interest at a higher rate than the bank borrows it. Because of interest, banks collectively are owed more than actually exists in circulation at any one time, so Bitcoin becomes fractional reserve system. Under this scenario, the government can still tell banks to reduce your balance (which is a number on your servers, and not physically enforced by the Bitcoin protocol). It doesn't affect BitCoins you hold in your own addresses (just like the Cypriot tax doesn't take a cut of money held as cash by individuals in Cyprus), but that might be only a small fraction of the Bitcoin economy in a future under a fractional reserve system.

viraptor 14y ago

At this point, probably... But on Tuesday it may change. It may be the usual cycle of: some event brings new bitcoin buyers; BTC goes up; media and people who want to ride the wave join in; if it happens too fast people will get nervous, sell at current high and cause another dip. Not sure how many people in Cyprus are interested in bitcoin, but after their transfers are possible again, I wouldn't touch BTC for a couple of days just in case. </speculation>