Month: April 2013

Marijuana, Tide Detergent, Chewing Gum & Bitcoin: A Basket Of Currencies For The Near-Future?

[heading]Marijuana, Tide Detergent, Chewing Gum & Bitcoin: A Basket Of Currencies For The Near-Future?[/heading]

The dollar fell to a two-month low versus a basket of currencies on Tuesday on the dollar index. Although merely a technicality – a blip in the overall trajectory – the recent weakness continues cast doubt upon the dollar from all around. In places like Colorado, Washington and the Internet, new forms of currency are taking hold: Marijuana and Bitcoin. Both are sterile assets, meaning they serve a purpose other than just as exchange medium. Read More

Ron Paul: The Atavism

Ron Paul pulled something that is quite familiar to sports fans in the 2012 Presidential Election: he threw in the towel. This is a common phenomenon in sports, as players and coaches sometimes bet against their own team, thus leading to lackluster play on whatever field it may be. One of the most infamous examples of this are the 1919 Chicago Black Sox when 7 or 8 players all promised bookies they’d throw the game for a pre-determined payout. Read More

Love & Bitcoin: OkCupid First Online Dating Site to Accept BTC

OkCupid, one of the world’s most popular dating sites, will now introduce Bitcoin to millions of people who have yet to hear of it. Bitcoiners can now pay for a list of functions at the OKCupid website, such as PM’ing individuals with priority messages.

On Tuesday, despite Bitcoin’s recent correction, OKCupid announced its acceptance of the digital currency for users wanting to pay for the site’s bonus features. The popular, free dating site boasts approximately 4 million active users, and will now become on the world’s largest websites accepting Bitcoin. Read More

Silver Dip Lends Bitcoiners Buying Opportunity

With Bitcoin hovering around $100, and silver at $23.60, it lowest price in three years, now might be a good time for bitcoiners to possibly look into becoming silverbugs. There are lots of reasons to buy silver with Bitcoin, especially now.

One of the primary reasons is sheer demand for silver. Currently, silver holdings are at an all-time high, and this recent dip will surely contribute some to that. With so much money sitting with few individuals in Bitcoin, there is no reason for them  to not diversify some and add to the demand pressures on silver, which since May 2011 have been on the losing side of the price.

First, let’s look at silver demand in recent, recent history.

Appearing on November 9, 1998, “India Silver Hoarding Worries Users Group,” penned by Silver Users Association spokesman Walter Frankland, stated:

“Is there a role for the Silver Users Association–in conjunction with groups in other countries–to take action that would focus on India and see if their market can be opened to freer trade? There’s no reason to wait around until volatility hits the market again, in my opinion.”

In the United States and the “west”, doused in mainstream media mustard gas,  less than 1% of the retail public buys silver. In other countries, taxes of 50% and more on silver sales has dampened demand. But it cannot forever. The derivatives bull market has created a bull market in physical silver that does not exist and a pop-panic out of paper like the world has never seen will ensue. The war on silver will spin epically out of control, and there is no telling where the price may land.

That, alongside short-and-medium term speculation, is why investors’ holdings are near a record high set last April for silver, despite that hedge funds are the least bullish on silver in nearly four years. In the medium-term, speculators have reduced bets on higher silver prices by 72 percent  since the end of February, according to U.S. Commodity Futures Trading Commission data. Silver products held in exchange-traded funds, however, have increased three straight months and now totals $16.2 billion, according to Bloomberg.

Since the first three months of 2012, silver has, for the lion’s share, been held under the $30 mark. Until March, silver appeared to be heading back towards $50 an ounce, its previous high, after climbing above $36. This was short-lived. Now, analysts, based on a survey by Bloomberg, expect the price of silver to average $33.02 an ounce in the fourth quarter.  Despite any bias that a panel chosen by Bloomberg might encompass, silver remains on a long-term trajectory poised to continue its peak-every-two-years model.

The long-term, to be sure, is only in terms of human lifespans, for already the silver price has sat well-off its recent high in April of 2011 for a year-and-four months. That would mean that, although silver might have a doldrum 2012, it would then begin to rise significantly in early 2013.   The price of silver will average $33.02 an ounce in the fourth quarter, 18 percent higher than its current price, according to the median of 13 analyst estimates compiled by Bloomberg. Silver could then easily be poised for a 100-150% rise in price in early spring 2013, landing it at least around $66 per ounce.

But, some hedge funds are predicting an economic slowdown which they surmise will curb demand for silver.  On the opposite side of the rope in the tug-of-war for silver, many monied investors and  main street investors are anticipating a price rise based on the implementation of global quantitative easing, spearheaded by the Federal Reserve. The price of silver tripled when the Federal Reserve purchased $2.3 trillion of debt through Quantitative Easing 1 and Quantitative Easing 2 from December 2008-June 2011. One can tease also from the chart below that in the late summer of 2007, as there was a stealth Q.E., silver responded predictably.

 

Much of the Bloomberg article is focused on the “schizophrenic” model for silver, which is a seriously flawed axiom from which to look at the silver price. Silver’s history is one much longer than that of Industrial Society. Industry has created novel demand for silver.  And so, therefore, is predisposed to act as upward price pressure in the long run. Even if there were a complete collapse of industry in the world, in the fog of a broken price mechanism, silver would retain desirability. It would be psychologically comforting to many to default onto the money of their forebearers. Silver will be one item of many that has cultural relevancy were there to be an industrial collapse. It would be one of few with history as money.

“Since the beginning of the year it has reacted more like a base metal than a precious one,” said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “The main negatives are still in industry. We’re waiting for more quantitative easing, and that would be really positive.”

The idea that quantitative easing is the only basis for a rise in the price of silver is preposterous. What about war? An open war with Iran would send gold up, and then also increase industrial and fear demand for silver. Gold could head up towards $1900 if there is a further breakup of plans for an European Stability Mechanism (ESB). That would mean a price rise for silver. Quantitative Easing alone is not the only reason to expect silver to increase in price.

The silver price tumbled 29 percent from February-June 2012, but, as Bloomberg points out, the metals volatility is “masking what are already historically high prices.” Despite that silver is trading 44 percent below its recent high of $49.85 of April 2011, the two-decade average for the devil’s metal is $9.97.

“Industrial demand may remain weak at least for another six months,” said Jochen Hitzfeld from UniCredit SpA in Munich. “This makes the gap that investors have to absorb even higher,” said Hitzfield, who forsees an average 2012 Q4 price of $28.

Investors purchased 797 tons via silver-backed ETPs this year and are now holders of 18,093 tons, if one does not want to question the solvency of COMEX.That is more than eight months of global mine output.  Investors sold a net 812 tons out of ETPs last year. Total silver assets are currently 2.9 percent below the record 18,639 tons reached in April 2011, and Barclays and Morgan Stanley predict that investors will buy 500 more tons in 2013. Hedge funds are adding to their depressed silver position, too. They doubled their net-long position to 9,323 futures and options in the two weeks leading into Aug. 7, according to the CFTC, although this is still 58 percent below the five-year average, a figure which clearly signals that more shorts have accrued as the global awakening in the wake of the 2008 banker-wealth confiscation, as well as the associated fear trade, has put the spotlight on silver and precious metals.

Although silver is usually tagged as schizophrenic metal due to its dual monetary and industrial applications, it really might be the options traders who are schizo. For example,  the most held contract offers the right to buy silver at $50 per ounce by November 2013, whilst the next two biggest enable holders to sell silver at $20 by November 2013 and November 2012. For a comparison, the five largest gold options are all for purchases at higher than today. Those silver positions suggest that there is a tug-of-war taking place over the silver price.

The 100-day historical volatility for futures in silver is at 30.8 percent, which is a volatility more pronounced than gold, platinum, palladium and the main industrial metals traded on the London Metal Exchange.  All these dynamics with the vast majority of the retail public not taking part in this popular investment – less than 1%.

Currently, silver sits at its lowest level in years.

Demand for silver will continue to increase. In India, where silver hoarding has been of concern to the silver abusers (big industry, mostly) for over a century (at least), gold and silver demand is expected to exceed 6000 tons annually by 2016-2017 from the current levels of 3000 tons.  By 2025, according to the Mineral Exploration and Development Report for 12th Five Year Plan Period by the Ministry of Mines, that number could exceed 10,000 tons.

Bitcoin Price March 15-April 10: The Bubble Heard ‘Round The World

Like mistaking the true process of biological evolution, many mistake the ebb-an-flow of supply-and-demand as oozing steadily from the pipes of commerce. The truth behind human action is more complicated than that, and the Bitcoin price over the past week has demonstrated that.

On April 10, Bitcoin climbed to a high $266 and closed at $124.9 the next morning before Mt. Gox, the leading Bitcoin exchange and de facto bitcoin price-fixer, went down for nearly a day. This was the bubble heard around the world, as during this time Bitcoin was the talk of the financial world.

When trading began Thursday, Bitcoin fell again to a low of around $65, before rebounding to sit around $100 through Sunday night trading.

Bitcoin began the year around $13.51. It’s percentage increase fluctuating around 750%. It has outperformed all other assets Year-To-Date, with Natural Gas up 27% since Jan. 1. The green line on top, BTC, would have to be extended 5.5 times to show bitcoin’s 2013 performance.

As I wrote at my blog Silver Vigilante in January:

In the last six months, according to Google trends, countries the world over searched the term “Bitcoin” for the second most amount of times since the digital currency was extremely volatile at the beginning of the 2011 summer. In December, “Bitcoin” was searched the third most amount of times in its history, behind June 2011 (the peak) and just this passed September.

Egypt historical peak search volume, September 2012.
Saudi Arabia, second highest search volume, December 2012
Kazahkstan, 2nd highest search volume
Pakistan, third highest behind February 2012 and June 2011
India, November 2012 second highest behind June 2011
Vietnam, August 2012 second highest behind June 2011,
Turkey second highest December 2012 behind June 2011
In Spain, December 2012 is third largest search volume behind August 2012 by one point, and the peak June 2011.

That Bitcoin is holding at $100 is ominous in that, should it fall below $100 and experience continued bad press and Mt. Gox exchange technical difficulties, the next stop could conceivably be $20, with some support at $30. On the other hand, in consideration of unrelenting demand by increasingly moneyed individuals and groups, it could continue the trajectory it was on during the bubble phase of March 15-April 10, finding support between $150-$300.

After months of gold and silver becoming cheaper in Bitcoin, the trend has reversed this past week, despite the break of key support for precious metals. Nonetheless, gold and silver have become more expensive compared to Bitcoin:

But Mt. Gox has been center-stage throughout a week of DDoS attacks on their server, failed customer service, locked funds and the volatile Bitcoin price largely due to how easy it is to disrupt the Bitcoin network by simply attacking the center for its unfortunately centralized exchange.

Mt. Gox held a Reddit “Ask Me Anything” on Friday for those worried by recent trading problems that culminated with a 12-hour trading halt. Currently, 20,000 new Mt Gox are being opened a day compared with the 60,00 opened in all of March, according to the website.

Mt. Gox explained some issues:

Our system was designed to handle 2~3x our normal load, but now we’re experiencing 10x the amount, which was difficult to prepare for (it takes weeks) with the sudden new accounts. We have two problems: the DDos and volume related to new accounts.

The trade engine is capable of accepting much more of a load. Within 2~3 weeks we will completely rewrite the trade engine, in the meantime we shut down the system today and installed a new server with the current trade engine. Of course, if we didn’t have DDos everything would be fine, so now we’re dealing with two issues at once.

Who is attacking Mt.Gox with a DDoS? “We cannot disclose details, but we have some ideas…Basically because by naming them it makes our job harder because they will move to protect themselves.”

Trading Updates too much to ask for? “We absolutely understand this. The fact is that we are programmers and engineers, not PR guys, and we are still building out our capabilities beyond technology and into servicing our customers better. So, yes, we’re moving on this now and have secured help.”

Question from pmarches: Does mtgox run as a fractional exchange? Meaning, do you have 100% of the bitcoins your users have deposited in your system? “NO. Everything is accounted for (BTC and money). Fractional reserve is absolutely against our principles. In fact 90~95% of BTC are held in cold storage.”

No matter how Mt. Gox plays this off, the jugular of the issue is that users have been unable to withdraw their funds throughout most of the turbulence. Many former capacities of Mt. Gox have been nullified. With Mt. Gox transacting 80-90% of Bitcoin transactions, Bitcoin has suffered.

But, Mt. Gox is not to be mistaken with the actual Bitcoin protocol, which itself has proven unhackable by even the world’s foremost hackers and engineers.

It is impossible to know if Bitcoin will rise and fall until an attack or sudden spike in demand falls upon the market. As Erik Vorhees, an early adopter of Bitcoin, wrote: “Guessing short term price movements is a fool’s game.”

In an Austrian’s eyes, some recent explanations for bitcoin’s price rise, which is really still the main story for Bitcoin in 2013, read as follow:

The emergence of respected online merchants such as Mega, NameCheap, Reddit and others accepting Bitcoin has proven that businesses see its value, thus leading to the price increase.
Europe’s confiscation of Cypriot bank accounts have led to an influx in Bitcoin purchasers, not so much in Cyprus, but in North America and Europe. This has led to greater levels of speculation upon the price of Bitcoin, with cliques of buyers-and-sellers pumping the price only to sell all at once, and buy in the aftermath of the ensuing panicked selloff.

FATCA regulations have driven individuals to bitcoin for privacy.
Venture Capitalists and other private investors, now moving into Bitcoin, also want Bitcoin at the best prices. While their bitcoin purchases help explain the price rise, they could also explain the volatility and even DDoS attacks on key websites. To DDoS a website, it costs under $500.
Gold and silver buyers, moreover, have moved into the Bitcoin market. Largely thanks to the work of Trace Mayer, many former gold-and-silver bugs have seen the parallels in Bitcoin to precious metals.
The recent FinCEN ruling could have been made at the request of venture capitalists who did not want to put money into Bitcoin only to see it shortly thereafter outlawed. Now, people can be assured the government sees it as just another financial instrument.

Mainstream press interest in Bitcoin has been parabolic. This has led to incredible “hype” around Bitcoin.
Many, many people who simply do not understand Bitcoin are now buying bitcoins due to its media-hype.

Thankfully, Mt. Gox does not act as the Federal Reserve. It can be supplanted based on simple competition or cooperation within the Bitcoin market. This time will come, and more alternatives, such as BitcoinATM, will pop-up online. Greater Internet and computer security literacy could secure privacy for future generations, and Bitcoin encourages this spread. A free market has been born, and it will experience high price volatility and a arm’s race of ideas and technologies built around it.

Paul Krugman, Adam Smith & Bitcoin Mining

The understood return potential for Bitcoin is well-known, as at year’s onset a Bitcoin was worth $13.51. On April 10, it traded as high as $266. And on Thursday, it fell to less than $100 mostly due to issues at Mt. Gox. For good measure, that is similar to if the exchange rate for the British pound soared from $1.62 (where it was on Jan 1.) to $31.90 and the falling back to $12.

Paul Krugman took his swing at Bitcoin on Friday.  He cites an article, first of all, in which the author states two reasons Bitcoin cannot be money:

First, because it has the endorsement of no government, it will never be usable for official transactions. If you are an American, you will eventually have to pay your taxes, which means getting hold of some dollars, and as long as everyone needs to use dollars, that will be the way the currency in which an overwhelming majority of U.S. transactions occur.

A central premise for this statement is the eternal and ubiquitous nature of government. In fact, there is no law of social relationships or economics wherein it is stated that a government must exist. And also,

Second, the cap on the supply of bitcoins may reassure people that there will be no inflation, but in fact it ensures that it can never go into widespread use. A currency needs to be elastic — that is, its supply has to rise and fall in order to keep prices stable even as people’s demand for money varies. Part of the reason the Federal Reserve was created a century ago is that the dollar was at that time an inelastic currency, its supply was basically fixed based on how much gold banks had in their vaults. That meant that when harvest season came around in what was then a heavily agricultural nation, there was always a shortage of cash and a spike in interest rates, and in some years a banking panic.

Due diligence can be a pain, but often spares the outspoken of mis-stepping in their reasoning. In this one by Neil Irwin, he clearly understands that only a certain amount of Bitcoin will ever exist. But, what this individual does not get, is that Bitcoin can be divided to the eighth decimal place, creating so much elasticity that, in today’s dollar terms, the market could grow to theoretically 21 quadrillion.

Krugman fails to use his imagination, and thus viewing Bitcoin as literally being gold. He cannot make the extrapolation that there is a theory on which Bitcoin is based to which the gold mining process can lend insight. But the insight must go much deeper than merely Internet workers digging holes into the dirt of the web to pull out certain specs from the digital abyss, with the same variables input as with real-world mining. Krugman writes:

One thing I haven’t seen emphasized, however, is the extent to which the whole concept of having to “mine” Bitcoins by expending real resources amounts to a drastic retrogression — a retrogression that Adam Smith would have scorned.

But, the real resources expended in mining Bitcoin do not equal the real resources expended in mining gold. Plus, the vector of real resources eventually expended to create money based on fiat ends up draining the economy much more. Krugman:

Smith actually wrote eloquently about the fundamental foolishness of relying on gold and silver currency, which — as he pointed out — serve only a symbolic function, yet absorbed real resources in their production, and why it would be smart to replace them with paper currency:

The gold and silver money which circulates in any country, and by means of which, the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver, enable the country to convert a great part of this dead stock into active and productive stock; into stock which produces something to the country. The gold and silver money which circulates in any country may very properly be compared to a highway, which, while it circulates and carries to market all the grass and corn of the country, produces itself not a single pile of either. The judicious operations of banking, by providing, if I may be allowed so violent a metaphor, a sort of waggon-way through the air, enable the country to convert, as it were, a great part of its highways into good pastures, and corn fields, and thereby to increase, very considerably, the annual produce of its land and labour.

And now here we are in a world of high information technology — and people think it’s smart, nay cutting-edge, to create a sort of virtual currency whose creation requires wasting real resources in a way Adam Smith considered foolish and outmoded in 1776.

Resources expended mining Bitcoin are nowhere near the amount of real resources expended in eighteenth century gold and silver mining technology

Krugman lacks an understanding about the nature of the Internet. He fails to note that never before has information technology and its infrastructure been used for such purposes, and it is by far an exact mathematical equivalent to the mining process. It is not the gold mining industry. This is as clear as day. He takes the simile too far.

Bitcoin, World Energy Use & Prospects For Growth

Time Magazine has defended the social viability for the spread of Bitcoin, proclaiming that “stopping the movement of [Bitcoin] will be possible only if countries are willing to impose harsh taxes and capital controls. Once alternative currencies are frictionlessly available on the Internet, every laptop will become its own Cayman Island.”

All sorts of characters have come out of the woodworks to take a swing at Bitcoin. As Bloomberg wrote:

Blockchain.info, a site that tracks data on Bitcoin mining, estimates that in just the last 24 hours, miners used about $147,000 of electricity just to run their hardware, assuming an average price of 15 cents per kilowatt hour … That’s enough to power roughly 31,000 U.S. homes, or about half a Large Hadron Collide Read More

Opportunity Cost: Silver, Bitcoin

Opportunity Cost: Silver, Bitcoin

Let’s say that at $49 you had 1,000 ounces of silver.  And you kept it. You’d have 1,000 ounces of silver, valued in USD denominated terms at $27,500.

Now, let’s say that anytime between then and now, you moved just half of that silver into Bitcoin. Let’s look at your silver, now, as insurance on your liquid funds via the bitcoin protocol.

That 500 ounces of silver could have been $15,000 in value to about $300,000 now.  That’s assuming a $10 bitcoin price…That could have been as recently as January, 2013.

Now, let’s say you traded back into silver now, with premiums on silver products rising in price now. You could buy about 10,344 ounces of silver… Read More

Bitcoin, The Hive & Spontaneous Order

An important question when pondering Bitcoin’s place in the world is this: is it a phenomenon of the hive or spontaneous order? Was it given by modern day philosopher-kings or did it rip through the cracks in the “boot stamping on human face forever” as an alternative to submission?

First things first, let’s learn more about the hive and spontaneous order.

Smart phones and social media have created the next step in technological collective consciousness.  More so than ever the individual is connected to friends, family and acquaintances 24/7. A constant stream of information informs us and is, ultimately, meant to guide, making more like the greater group.

The Borg is known from Star Trek, and is essentially a synonym of “hive mind” or “collective consciousness.” The Borg Collective is a civilization with a group mind. Each individual is not truly an individual, for they are linked to the collective by a sophisticated network. Today, this is known as the Internet, which ensures each “individual” is under constant supervision and guidance.  In fiction, this collective consciousness, known as the borg, allows the individual to “share the same thoughts,” and adapt quickly to defensive tactics used against them. We are today cybernetic organisms,  to a degree, thanks to our droid phones and so on.  The ultimate goal of borg society is achieving perfection and “resistance is futile.” Read More

Guest Post: Bitcoin: The New World’s Orders Plot For a One World Currency?

[Editor’s Note: The following post is by TDV Researcher, Justin O’Connell]

As a general rule, if anything is covered en masse by the mainstream media, then I tend to believe that which I am watching is actually one long promotional spot.

The same could potentially be said for Bitcoin as over the past months its popularity has grown so much that “anarcho-capitalist…Libertarian…Freedom Fighter against mankind’s two biggest enemies, the State and Central Banks,” Dollar Vigilante Chief Editor, Jeff Berwick, has been on CNBC, CNN, Fox News, and BBC, and other mainstream outlets.

What brought on this sudden attention? No, not our anarcho-capitalism, but our announcement of the world’s first BitcoinATM.

So, is Jeff just a patsy so that the New World Order can bring in a digital currency? I began wondering this myself, and I came to what I think is a reasonable conclusion.

What many skeptics fail to understand is that the so-called New World Order – with its global governance, fiat currencies and so on – has already, for the most part, been implemented on a global scale. Especially economically. For instance, 95%+ of fiat money today is digital, and it’s all based on the Federal Reserve System, thus creating one worldwide currency with lots of different designs on the actual notes supposedly representing the various cultural backgrounds of nation-states.

Despite nearly everything being digital already, there are mainstream technologies that go above-and-beyond, aiming to rule out the need for cash.

One particular app for this cashless society, above-and-beyond credit and debit, is called Square, and was developed by Jack Dorsey, Twitter’s co-founder. According to CNN, “this is a telltale signs that the mobile-payments revolution has arrived.” CNN writes, as anyone who has studied American consumers know, “changing the way Americans pay for stuff is going to be really hard work.”

But Bitcoin is turning out to be a force to be reckoned with. For instance, in comparison to long-time friends of the liberty movement, gold and silver, Bitcoin seems to have been the play to make over the past six months and beyond. For months, besides today’s drop from $150-$115, after running to $150 from $105, our charts over at Gold Silver Bitcoin have shown a bimetallic standard precipitously dropping relative to Bitcoin.

The CNN article surmises that,

“Paying by phone will be as transformative as the advent of the credit card in the 1950s. It will change the way we shop and bank. With powerful smartphones and tablets taking center stage on both sides of the checkout counter, it will reshape the relationship between buyer and seller. Not only will the phone or the tablet become a wallet for consumers, but it will also turn into a credit card reader and a register for merchants. Shoppers will use their mobile device as a coupon book, a comparison-shopping tool, and a repository of those unwieldy loyalty cards they carry from everyone from giant retail chains to the corner bakery. And your smartphones will serve as beacons that will alert a retailer when you walk into its store so that it can recommend products, show you reviews, or direct you to aisle five, where that beanbag chair you didn’t buy last week still beckons — and you can now have it for 10% off. You won’t even need a few singles to tip the valet or pay the dog walker, because they’ll take mobile payments too.”

This basically explains the Bitcoin experience. One big difference? While CNN assumes a central authority, Bitcoin does not. With big players like AT&T, Verizon, Visa, Mastercard, Google, Microsoft, and eBay’s PayPal unit investing in billions in digital payment solutions,  it is no surprise that the mainstream media is serving the idea to the public domain in kind and uncritical ways. One of their assumptions is a monopoly on the technology by some corporation friendly to compromising. While the mainstream press has been unable to ignore Bitcoin, it certainly has been critical of Bitcoin being prone to hackers. Sure, a great many people have lost bitcoins. But, imagine if the general population had to become their own banks. Most of them would get eaten right away by sharks in the economic waters.

The CNN article champions the ease of digital transactions, and the time saved. Bitcoin is surely faster:

“While this revolution will be powered by complex technology, its ultimate effect will be to greatly simplify things for consumers. Think about my experience at Grumpy. While I had to fiddle with my phone ahead of time — to upload my credit card to the Square app and to authorize it to talk to the Grumpy register — once there, the phone never left my pocket. All I had to do was order my cappuccino.”

The article portends that “a cashless future is more real than many suspect.” According to the global head of mobile at Visa, “financial institutions are going to have a big role to play.”

“We are, I think, on a precipice of some fundamental change in the way money is exchanged between consumers and businesses,” Rep. Shelley Moore Capito, R-W.Va., said as she opened the first of a string of hearings one year ago on cashless ways.

The Federal Reserve found that 12 percent of cell phone users had already made a payment through their phones, and almost two-thirds of technology experts surveyed by the Pew Center on Internet and American Life said they expected mobile payments to eclipse cash and credit cards by 2020.

But, Square and similar technologies are different from Bitcoin. Bitcoin has caught on with a younger generation that, as Trace Mayer once put it to me (to paraphrase), “grew up in a digital sea. [The younger generation] are fish in a digital sea, whereas the older generation are snorkeling tourists.” In other words, p2p technology is a concept in-and-of itself for the Internet-literate. That goes a long way to explaining its popularity.

As the late Bob Chapman of the International Forecaster asked about gold and silver relative to fiat, “where else are you going to go” in a time of ubiquitous deceit? Bitcoin offers yet another alternative to what I’ve coined a “rebel’s portfolio” already heavy in silver and gold.

The pseudonymous nature (read: not totally anonymous) of Bitcoin does associate IPs with wallets. But, the paper-trail is a more obtuse alternative to the traditional bank account. The Powers That Be focus intensely on record-keeping, the historical record shows this, and so any added time-cost for their zeroing-in on you acts as the new privacy.

The popular appeal of Bitcoin – its p2p foundation – is as simple as first-language to the younger generation. Trace explains this well. Max Keiser recently said that he called gold in 2008, and people asked “What if the government confiscates my gold?” To which Max Keiser responds, “What you should have been asking yourself is, ‘What if the government confiscates my bank account?’” He then goes on: “Since $5 per BTC I’ve been recommending Bitcoin and many of you asked, ‘What if the government shuts off the Internet?’” Max Keiser answers thus: “What you should have been asking yourselves is, ‘What if the government shuts down the banks?”

And so, there are fundamental differences between the digital payment technologies pursued publicly by TPTB, and Bitcoin. This is what caught the eye of so many tech-savvy and Austrian-minded individuals across the world, but largely concentrated in the US and greater North America. Now, with Bitcoin skyrocketing from $9.31 last Fall to $150 today, the power of the Internet has never been clearer.

Bitcoin is a bet on the Internet. And, if you read our recent TDV Homegrown issue, you might have learned something about the Egyptian experience with a government using the “internet kill switch.” I wrote:

“Over one year ago, the Egyptian government cut off approximately 88% of the country’s internet access. Here is what happened: The government owned the biggest Internet provider in the nation, and only had to contact a few other companies to make this happen. The government ordered the shutdown of nearly all Internet access within Egypt. Ninety-three percent of Egypt’s networks went down. One of the only connections to the Internet that was not blocked belongs to Noor Data Network, the ISP used by the Egyptian (stock) Exchange.”

I then went over some of the ways Egyptians worked around this Internet shutdown, as well as the likelihood of it happening in the US. The conclusion of the article was bullish for the Internet, for the Internet is a vibrant and evolving system. It is crucial to everyone’s way of life, and we see this with centralized and decentralized payment solutions. The Internet will continue to be defended by its users and impinged upon by its self-appointed overseers. It’s a battle in which any Dollar Vigilante would delightfully indulge.

[Editor’s Note: News of Jeff’s latest Bitcoin venture along with a list of Bitcoin-related business opportunities are in the pages of the latest TDV Dispatch, which is available only to subscribers. To learn more about becoming a TDV subscriber, and getting access to more in-depth analysis and actionable ideas, just click here now.]