Bitcoin v.s Liberty Dollar

I ask this question in all sincerity...I really don't know the answer or have an opinion (yet)...please help me form one!

From a US Treasury Dept. perspective...what are the legal distinctions between "Bitcoin" and the Bernard von Nothaus "Liberty Dollar"?

Bitcoin Wiki...http://en.wikipedia.org/wiki/Bitcoin
Recent Article...http://www.cnbc.com/id/100613312

Liberty Dollar Wiki...http://en.wikipedia.org/wiki/Liberty_Dollar

Is it the Liberty Dollar's semblance to the US Dollar?
Is it because Liberty dollars are made from specie?
...what if Bitcoins were backed by specie (like the paper liberty dollars)?

Thanks!

 

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I don't think the federal government likes any alternative currency possibly undermining the "faith" in the US dollar, especially as the default reserve currency. Unlike Liberty dollars, it would be near impossible to "shut down" Bitcoin from what I understand about it's encryption, algorithm and distributed network; however, all that has to happen is for them to slap a FBI/DOJ sticker on the exchange websites and the value of BTC will be influenced to say the least. Just my 2c.

 

I realize what I'm about to suggest next is a bit "out there", but...

"What if" enough countries supported Bitcoin by backing it with gold reserves...could it compete with the US Dollar as the world's reserve currency? What effect would an FBI/DOJ sticker have then?

 

I don't collect bitcoins unless they're certified by one of the major TPGs.

 

That would first require these countries to back their currencies with gold and then buy bitcoins using their now gold-backed money. Last I checked there aren't many countries SERIOUSLY looking at going back to a full-reserve standard. Now partial, that's a different story. There it could get interesting, but it would have to be a country that is a big enough of a player on the world stage to put pressure on the US. Either way, an FBI/DOJ takeover of the EXCHANGE sites, similar to what happened with the Safe Ports Act back in 2004 with online poker, etc, would still do the job in terms of US demand for BTC. You can't exactly trade them unless you're listing them for sale on usb drives and can prove you own those blocks (ie not fraudulent)....Again just my 2c.

 

And without that vaunted "green bean" it is zilch IMHO.

 

Liberty dollars were declared counterfeit since they were too similar to USD. They were made from specie, had Liberty on them like all of our coins do, and were denominated in dollars. That from my understanding was the fundamental argument of the case.

Bitcoins are digital currency that share none of those characteristics. Therefor I believe it would be impossible to argue bitcoins are counterfeit USD. They may not like it, just like they may not like PM, (many would argue that), but there is nothing they can do about it.

I view bitcoins as similar to holding Euro or Yen. Yes, you have governmental risk holding another currency, but you also have systematic, acceptance, and now bubble risk with bitcoins. Plus, its rumored the people who created bitcoins hold massive amounts of them. There is also a risk one day they may wish to "cash out". If you were an anonymous founder of bitcoins and your holdings now were valued in the billions, wouldn't you want to start diversifying?

 

The big difference with bitcoins is that they're apparently extremely vulnerable to manipulation. They spiked hugely this week, perhaps on the news out of Cyprus; then somebody launched a DDOS attack against Mt. Gox, one of the biggest Bitcoin exchanges, and the value dropped by 20%.

If a single DDOS attack can make the value fluctuate that much, do you really think any large government would be unable to bend the market to its will?

I understand some of the technological and philosophical background of Bitcoins, but I find it very hard to take them seriously.

 

With the amount of money that has been poured into bitcoins, I take them very seriously. On the other hand, they're seriously not where I want to put my money.

Another scary thing is when you ask someone who is really high on the hog about bitcoins to explain how they work. If you're lucky they'll be able to tell you there's some sort of crypography involved, that they aren't tied to any government, and their numbers are supposedly limited.

But, ask them to tell you where the money goes when a bitcoin miner produces a new bitcoin and it is sold to the public and all you hear is the sound of crickets chirping.

 

Hmm... I thought I just posted, but all it did was erase what I wrote.

Basically, Bitcoins are virtual currency. At one point, they had COOL looking holographic coins, which someday I'd like to own one... preferably after they aren't $200 a bit...

NORFED (Liberty Dollars) was designed to be an alternate currency. I'm guessing intent wasn't to counterfeit dollars, but it was clearly intended to supplant the USD.

As for how funding is spent after received for BCs... That's up to the seller. It's not like there's a "bank of bitcoin" that holds the payments. It's peer to peer. You get paid, then you transfer the BCs.

Here's a funny table of how money transfers work for BCs. I think it applies to actual coins, as well:

https://en.bitcoin.it/wiki/Payment_methods

 

I find it hard to take bitcoins seriously. Maybe it's just me, but I think it's creators are trying to live out their sci-fi fantasies by creating, what they probably see, as a galactic currency.

 

I hate it when that happens...

Bitcoins are designed to supplant ALL currencies. I read where there are now over $1B worth of bitcoins in "circulation".

Interesting table...:thumb:

 

The Liberty Dollar was deemed counterfeit based on the usage of the word 'Dollar'. BitCoin does not do this, so they won't be able to throw the book at it for that reason. However even if they did prosecute the creator it would do no good. BitCoin functions based on the shared network of its clients. It cannot be stopped short of disabling the Internet and/or electricity. I do anticipate more digital currencies in the future with superior algorithms that will likely supplant BitCoin, but for now it is essentially unstoppable.

This is not possible. BitCoin's algorithm was hard coded into the protocol from the beginning. It has a built in deflation algorithm. Currently about half of the BitCoins that could ever be produced have been. BitCoin is immune to central banking policy, which is the attraction, aside from fee-free global real time exchange. Its path was laid out at its inception and the only thing that can impact the value of a BitCoin is buying and selling them. Truly it is the only free market that isn't black.

 

Interesting...but can't we still buy/sell these on eBay...and use them in any store that will accept them?




I guess that's a bit of a rhetorical question...the US Government can accept any money as "current money" or "currency" and trade the US dollar against them on an open market. However, the US government will only enforce the use of US dollars as "Legal Tender"...meaning, legal payment for US debts, public or private.

I guess that's where Liberty dollars got into trouble...if a "reasonable" person could have mistaken the Liberty dollar as US legal tender.

 

As Bitcoins "deflate" (increase in value), through limited supply, loss of "wallets", etc., wouldn't it seem reasonable that Gresham's Law might take effect?

...or does their unique business model exempt Bitcoins from Gresham's Law? What if a Bitcoin competitor comes out with an algorithm with 2% inflation built in? (Not sure how that would be done...just asking.) Would folks hoard their Bitcoins and actually use the competitor's coins? Would it matter?

The "value" of Bitcoins seems to be their freedom, convenience, and relative safety. However, I see that there are some "double spend" techniques already in use.

Now that the current Bitcoins are valued at over $1B and can't be traced or taxed...how long before various governments try to take them down?

 

Moved from "possible currency" to political aspects. Post deleted Closed