I'm quite surprised by the response to bit coins on here.
I agree the volatility is enough to make anyone's eyes water but any currency should be looked at in two ways.
- Holding assets denominated in a respective currency
If you have assets of any type you are making a currency play no matter how you look at things. The best part of the idea of bitcoins is that they are de-centralised. Most major currencies are being abused at the moment for political gain. After years of mis-management and inefficient spending on wars, the public sector, etc, instead of fixing economies and effectively getting themselves elected out of office, they choose to continue borrowing which in a lot of countries has led to negative real interest rates. Having saving in a currency which is independent of a single countries manipulation is a good idea. I think given what is going on economically at the moment it’s an idea which if anything needs to catch on. Maybe this is more a question of electorates actually electing a government that will fix budget deficits rather than just taking the easy road but part of this is also people having a choice to make a change. Being able to move your money away from these governments, or at least having the option to, is important.
Let’s not forget, if you have assets and real interest rates are negative, what is actually happening is the government is taking your money from you by stealth to reduce the real value of its debts. This is logically no different than them stealing money directly from your bank account. I have to say, it’s very, very clever mainly because very few people even realise it’s happening, it is also very, very wrong.
If you want to be a professional trader this is very important to you. If you make money the first thing you should do it defend it. Negative real interest rates are a significant problem at the moment and it’s a result of global economic mis-management. The other issue is excessive taxation. Before I talk about this I should say I am a fan of tax. There are people in society that are unable to fend for themselves and it is humanities duty to provide and care for these people. When you are born it is luck of the draw. You could have just as likely been born into a poor society, or for reasons beyond your control, not had the advantages that a lot of the people in this forum have. I however do not think that I should have to pay tax for the 11% pay rise afforded to MPs while they deny even inflationary pay rises to nurses.
You should be taxed fairly to compensate for the advantages the society you live within provides. For people in normal employment that is because they must live in that location to have a good job. Their company must be in that location because they are close to affluent customers. For us, the professional trader, this is not the case, and in a true global economy this is not the case. If you live in a brazil and have and online business that does most of its dealing in china and japan, why should you pay 40% of your money to the Brazilian government? This has become a joke anyway of late because, you are taxed more when you are paid, more when you spend it, the cost of living just keeps going up and why, are things really improving? Is all the money you are putting in really going to pay for firemen and the police, is housing really becoming more affordable? In a global economy if you are lucky to have the flexibility you could live anywhere and thus should live in the location that provides you with the fairest total cost of living.
You may not see it yet, but the idea of a country specific currency is arcane. If you do not believe me look at the euro, look at how many individual currencies that replaced. In the US before the federal reserve existed there were hundreds of regional banks all issuing their own currency. Bit coins are in their infancy, but the idea of a decentralised currency is an important one for a global economy and providing people freedom beyond the control of individual governments.
So what the hell does this rant have to do with bit coins? You should have the option to be able to have assets in a currency in which a single government cannot steal from you. The funny thing is I am not saying change the world, I think it’s far, far too sick and deep down people don’t really want to change. But those of us smart enough to see what is happening should have the option to get off the merry go round. De-centralised currencies will eventually be a way of doing this and it is important that they work.