Gyroscopic Investing

http://www.nasdaq.com/article/has-bitco ... n-cm505737

The situation in Greece and the collapse of the Chinese stock market weren’t related, but in Bitcoin terms they really were two sides of the same (virtual) coin. Both resulted in people losing confidence in the traditional, mainstream financial markets and instruments. In the past, even the recent past, the response of those who saw the exposed weakness in conventional market instruments and were concerned would have been to buy gold. An 8 year chart for gold shows that that was the response to the events of 2008/9 - a bull run on gold that took it all the way to around $1200

No.

Stewardship wrote: No.

Double No.

Bitcoin has four huge problems currently:

1) You can't trust any of the bitcoin banks not to vanish with all the assets.
2) It's too easy to lose bitcoins with data corruption or have them stolen remotely.
3) Governments are likely to move against it if it gets too big which will scare people away from accepting it.
4) It's way too volatile.

Even if these issues are ironed out, gold isn't going to lose to it. It may however compete against other currencies though and currently is in places like Macau.

If you had to live in Greece for the next 2 years for some reason, given everything we just saw happen there, and given there's still a huge risk of further crises, what would you rather take with you? Gold or BTC?

I'd rather have both...I'd be very afraid of gold being stolen or not finding buyers in another crisis. OTOH, there are plenty of ways to hide BTC and a ton of different ways to sell it locally and throughout the EU (ex: https://localbitcoins.com/country/GR).

For all the problems BTC has around government intervention, security and volatility, when you put yourself in real crisis mode in a situation like Greece with all banks closed, not just investor mode, suddenly BTC's problems don't seem so bad.

That's not to say BTC has replaced gold today, far from it, but I think those who dismiss it out of hand are underestimating its potential to disrupt gold in the future.

craigr wrote:
1) You can't trust any of the bitcoin banks not to vanish with all the assets.

"Bitcoin bank" is a misnomer, since the whole point is that bitcoin does not require banks. I think what you mean is that you can't trust any of the exchanges not to vanish with all the assets. Most of the people who have been ripped off when dabbling with bitcoin are those who left their assets sitting in their account on a bitcoin-to-fiat exchange, and then the exchange "lost" (or stole) their assets. That was what happened with MtGox.

Sam Brazil wrote:OTOH, there are plenty of ways to hide BTC and a ton of different ways to sell it locally and throughout the EU (ex: https://localbitcoins.com/country/GR).

Your link shows a list of banks and Western Unions which would be closed.

BTC's problems actually seem worse in your "crisis mode in a situation like Greece."

Jake wrote:

craigr wrote:
1) You can't trust any of the bitcoin banks not to vanish with all the assets.

"Bitcoin bank" is a misnomer, since the whole point is that bitcoin does not require banks. I think what you mean is that you can't trust any of the exchanges not to vanish with all the assets. Most of the people who have been ripped off when dabbling with bitcoin are those who left their assets sitting in their account on a bitcoin-to-fiat exchange, and then the exchange "lost" (or stole) their assets. That was what happened with MtGox.

Yes I don't know how to properly address them. They are exchanges, but are holding bitcoins at times so they are banks. In any case, they are the wild west without regulations and handle millions dollars daily. So it's ripe for abuse just as early banks were in all western countries. This is no small irony because Bitcoin advocates state you don't need banking regulations to manage everything, but clearly the large losses of bitcoins to investors shows exactly why banking regulations came into effect. From a historical perspective, it gives everyone today the chance to see how banks from one-two hundred years ago operated and why they are no longer allowed to operate that way without oversight.

The last vulnerability with Bitcoin as a crypto nerd myself is that an attack against the algorithm means the whole system is in jeopardy. The only worry with gold I need to have is whether someone comes up with a cheap way to do cold fusion.

So again I say that Bitcoin could compete against other currencies, but I feel pretty safe knowing it's not going to be taking gold out.

Stewardship wrote:

Sam Brazil wrote:OTOH, there are plenty of ways to hide BTC and a ton of different ways to sell it locally and throughout the EU (ex: https://localbitcoins.com/country/GR).

Your link shows a list of banks and Western Unions which would be closed.

BTC's problems actually seem worse in your "crisis mode in a situation like Greece."

You can explore all the different methods of payment to exchange BTC for EUR, which range from paypal, skrill, moneybookers to sending gift cards, to sending cash by mail, to meeting in person, etc. all with an ebay style ratings system so you're not completely blind to who you're dealing with...and that's just in Greece. Worst case if you can get to anywhere in the EU there are even more options. Here are all online payment options https://localbitcoins.com/instant-bitco ... nd-offers=

All that assumes you'd need to exchange BTC for EUR before being able to spend it, which isn't true...e.g., you can buy plane tickets with BTC: http://www.economist.com/blogs/gulliver ... ts-bitcoin. Increasingly you can buy any number of things with Bitcoin. If the mail system still functions (even just the post office, not your local mail route, so you can have packages sent there), which it will short of total collapse, then it's super easy because you can order pretty much anything online with BTC. The ability alone to book flights with BTC makes it a good last ditch escape plan.

But like I said, BTC does have disadvantages vs gold so I wouldn't put all my eggs in that basket. Still it certainly does give you options that gold doesn't if you're desperate so keeping some seems like good insurance.

Sam Brazil wrote: You can explore all the different methods of payment to exchange BTC for EUR, which range from paypal, skrill, moneybookers to sending gift cards, to sending cash by mail, to meeting in person, etc. all with an ebay style ratings system so you're not completely blind to who you're dealing with...and that's just in Greece. Worst case if you can get to anywhere in the EU there are even more options. Here are all online payment options https://localbitcoins.com/instant-bitco ... nd-offers=

That site you linked doesn't offer any options in Greece for gift cards, sending cash by mail, or meeting in person.  Paypal and Skrill/Moneybookers would only be useful to those with bank accounts outside of Greece.

Sam Brazil wrote:All that assumes you'd need to exchange BTC for EUR before being able to spend it, which isn't true...e.g., you can buy plane tickets with BTC: http://www.economist.com/blogs/gulliver ... ts-bitcoin. Increasingly you can buy any number of things with Bitcoin. If the mail system still functions (even just the post office, not your local mail route, so you can have packages sent there), which it will short of total collapse, then it's super easy because you can order pretty much anything online with BTC. The ability alone to book flights with BTC makes it a good last ditch escape plan.

Your link doesn't work for me unless I register, but I wouldn't depend on airline tickets to continue to be sold for BTC as a last-resort emergency plan.  Nor would I rely on being able to have all my necessities shipped via mail, especially international mail during a national crisis.

Sam Brazil wrote:But like I said, BTC does have disadvantages vs gold so I wouldn't put all my eggs in that basket. Still it certainly does give you options that gold doesn't if you're desperate so keeping some seems like good insurance.

I don't argue against keeping a combination of BTC & gold in your hypothetical scenario.  But in the real world, those aren't the only two options.  In Greece, I'd want to hold both physical Euro and physical gold along with a variety of other everyday necessities that are currently in short supply there.

Ya looks like the links a little wonky, but there are options to sell BTC in person in Greece: https://localbitcoins.com/sell-bitcoins ... -gr/...and if the mail system is at all functioning (including private mail companies like fedex, ups, dhl), you would never need to do the in person thing. You can even order gold online with bitcoin.

Your link doesn't work for me unless I register, but I wouldn't depend on airline tickets to continue to be sold for BTC as a last-resort emergency plan.  Nor would I rely on being able to have all my necessities shipped via mail, especially international mail during a national crisis.

I wouldn't rely on it either. I suppose the point is that you can't rely on anything in a crisis, including gold. BTC is just another way of diversifying risk.