Another bank bailout

realitykeeper

I think gold will always have a value in countries where they have true capitalism. So, while the value of gold may be downplayed by the EU and US, it is being bought up by China and other true capitalist countries that can afford it. The Russian government would also be buying it if it were not for the sanctions. In any case, it is the international markets and not any individual country which determine the value of gold. If you compare multiple currencies against gold over the past ten years (or the past thousand years) the trend will be remarkably similar for each currency. If you compare multiple currencies against the US dollar (for example), the trend will be different for each currency.

Interestingly, bitcoin is the only currency I could find (other than gold) that has a trend which is similar when compared to a lot of other currencies. I should point out that I am not advocating either gold or bitcoin as an investment although I think holding a few physical gold coins may have some long term merit.

alb

realitykeeper wrote: »

Interestingly, bitcoin is the only currency I could find (other than gold) that has a trend which is similar when compared to a lot of other currencies. I should point out that I am not advocating either gold or bitcoin as an investment although I think holding a few physical gold coins may have some long term merit.

As someone that holds some gold and some Bitcoin, it's interesting to consider how much Bitcoin can eat into golds share of the of the decentralised money market. It's technically superior in most scenarios but gold has history on its side, and people tend to be sceptical of anything new when it comes to money.

realitykeeper

alb wrote: »

As someone that holds some gold and some Bitcoin, it's interesting to consider how much Bitcoin can eat into golds share of the of the decentralised money market. It's technically superior in most scenarios but gold has history on its side, and people tend to be sceptical of anything new when it comes to money.

I am skeptical about bitcoin. Wasn`t there some sort of security breach last year. Also there have been a lot of copycat crypto currencies which have since jumped on the bitcoin bandwagon.

alb

realitykeeper wrote: »

I am skeptical about bitcoin. Wasn`t there some sort of security breach last year. Also there have been a lot of copycat crypto currencies which have since jumped on the bitcoin bandwagon.

The security of the bitcoin system itself is based on military grade encryption which was already widely in use. The original code has been audited and worked on by a lot of smart people, and alternative wallet implementations have been written from scratch by other people. After 6 years of running in public it's looking fairly solid. As long as the encryption is unbreakable it should be good, and if the encryption is cracked, the world will have bigger things to worry about.

For example address 16cou7Ht6WjTzuFyDBnht9hmvXytg6XdVT has $12million worth of bitcoin in it right now. It's public for anyone to see and it's been in use since 2011. Think of it like an impenetrable safe sitting in public in the middle of central park free for anyone to tinker with. Of course the flipside is that the contents of the safe are only as secure as the key.

Many people entrusted their bitcoins to third parties, often amateur companies who were not taking the same kind of security precautions that traditional financial companies or banks usually would. This is where there were security breaches, lots of them, the biggest being Mt Gox, an exchange effectively acting as a bitcoin bank losing a colossal amount of money, and a lot of people learning the hard way to either secure their own keys properly or at the very least use a regulated reputable bitcoin exchange.

There are 1000s of other cryptocurrencies because the barrier to entry is low. For any one of those to emerge as a real challenger to the network-effect lead that Bitcoin has is possible but at this stage pretty unlikely as it would have to offer some massive improvement that cannot be added to Bitcoin itself.

realitykeeper

The second part of this thread pertains to another bailout of the Irish banks.

Specifically, if a new financial crisis caused the Irish banks to seek another bailout should the government use the taxpayer to rescue them again?

alb

Well, did you know about the legislation passed last year to supposedly make gov bailouts a last resort: http://www.theguardian.com/business/2013/jun/27/eu-agrees-banks-bail-in-deal