People seem to be oblivious to the fact that a currency must be available in order to be useful. There is a reason that Gresham's Law has achieved "Law" status.
Oddly, the right thing to do for currency acceptance would be to shutdown all of the ASICs.
Once an established lending system based on bitcoins is established it will have the same problems as our current currencies. It wasn't printing money that caused the real estate bubble, it was the way to banking system has the power to expand credit and the systemic risk that expansion of credit causes.
Once there are fractional reserve bitcoin banks it will no longer be a deflationary currency.
IMHO the Real estate bubble was from the Fed bailing the prior tech bubble by suppressing interest rates - which encourages borrowing. When loans are paid back, the currency created by taking the loan is extinguished but they have been juicing the system by continually suppressing rates via QE/bond purchases and not letting the real market decide the risk (ie: price of bonds). Now that interest rates have hit the floor - the next bubble to pop is the USD itself.
Loans are generally repaid in currency, paying back a loan creates even more currency as the additional currency created by the interest becomes an asset against which loans can be issued.
Meanwhile, BTC gains and loses 50 - 80% of its value in a single day. I wonder which is more stable.
It would have been in the 70s -- which is why USD support has remained despite the Nixon shock for a few more decades. By now, most central banks and governments are increasingly, dare I say "prepared" or slowly preparing for the possibility without it impacting their economies or trade too badly. Nobody wants to see the USD fail or die --- but day-to-day economic / monetary policies on US soil should become less and less of a rest-of-the-world economic worry, concern or impact compared to previously.
Now, the last remaining problem is savings of millions tied up in USD promises worldwide. Still a big problem, and rest assured the USD will continue to get "support" to the proportion that these savings haven't "migrated" over to "something else" yet.
Anyway, one day all these notes the US has been "exporting" globally for many years will come home one way or the other. Hope the new cash supplies won't, ahem, "overwhelm" a struggling domestic economy at that time, shall we?
But more importantly, is there any real sign that that time is soon? Global financial crisis...and the world's investors are literally paying the US to take their money with the current returns on US treasuries.
But it's hardly the USD "collapsing" - it's a gradual process over time, which crucially doesn't effect the buying power of individuals over meaningful timespans to them (decades, not days - unlike BTC).
And, probably more importantly, whatever replacement reserve currency comes to the fore (and what would it be, exactly?), it won't be something like BTC.
USD collapse would certainly be a far reaching global event but that doesn't mean it will not happen. I'm sure all prior entities with reserve status also thought their position unasailable.
http://www.zerohedge.com/sites/default/files/images/user5/im...
Global support for it is waning. China is doing direct currency swap deals and is no longer supporting USD by stacking treasuries at the rate it was. Russia is dishoarding treasuries too. The current trade deficit is propped up by the Fed buying USG bonds and suppressing interest rates. USD is not long for this world in its current form.
People don't go around predicting the decline and fall of the Australian dollar for example.
Bingo! You got it! The USD is not going anywhere or collapsing. The global "reserve asset" named dollar however seems to be slowly on its way out.
Fair game right?
Problem is, there's a wave of trillions global dollars that will now seek to "go home". Inflation hasn't happened yet when fresh currency notes are "exported" (exchanged for real goods from the world) immediately. But those USD, whether in bonds or treasuries or bank deposits or hard cash, will seek to come back to their native soil when global savings or trades no longer desire them as they used to. Wait for it! The money has already been "printed", then "kept in custody" all over the globe for some amount of time (circulating at times, finding a good temporary residence for some other times), but still waiting to go back to their permanent home, to circulating with ever-increasing velocity..
In the short term you are probably right. In the long term you are almost certainly wrong.
(Not making a case for "collapse gonna happen", just saying "if, then your military's worth sinks with your currency"...)
US debt cannot increase indefinitely without consequence, and in a time of desperate need (such as the 2008 bailouts) it has to print lots of money and hence cause inflation. If the US dollar suffered 10% inflation 2 years in a row, it could originate some drastic changes, as dollar holders might want to get rid of the coin. Figure china selling out its entire dollar reservers in one year, US goes to the tank.
Im not being alarmist, its just a possibility. Comparing Bitcoin to USD makes no sense at this stage in many ways, starting with volume.
Plenty of BitCoin people seem adamant the USD is definitely going to collapse, but can't explain why it hasn't already, or where the instability causing it too would come from, or why smaller, less wide-spread currencies don't do the same barring exceptional circumstances (i.e. Zimbabwe).
Agree mortgages didn't pop due to being paid back.
As long as we don't have a big bitcoin credit market and we don't want to regulate the bitcoin "printing press" to adjust for market cycles, it won't even be a disadvantage. = As long as it's only a secondary currency to most users.
Gold serves as a currency yet the methods of mining have changed drastically in the last 1,000 years.
http://en.wikipedia.org/wiki/Bretton_Woods_system http://en.wikipedia.org/wiki/Executive_Order_6102
I'm not a gold bug and I see many problems with using gold as a currency, namely that the amount of currency in circulation should depend on how much stuff we can dig out of the ground. (In the case of BTC something about how many times a SHA-256 hash can be calculated.)
The idea that gold fell out of use as currency because of industrialization is either a completely new discovery in economics, or completely wrong. I'm pretty sure it's the latter.
Not for the last 80 years it hasn't..
TL;DR: only outside the US, only to Central Banks.
At a national level, yes the Central Banks settled in gold, but that was after the micro transactions bubbled up to be settled from the commercial banks and then eventually cleared at the Central Bank level (Talking on the edges of my understanding here - just trying to see if the reality for an individual level was the currency was gold backed until 71).
Yes, "effectively gold-backed" until the first guy came along to openly demand an actual physical (rather than "potential") exchange of USD reserves for real ounces, in size, from the US. Bam, Nixon shock. Essentially "caused" by one "individual Frenchman" (de Gaulle) testing whether the system can in fact, in size and in physical actuality consistently deliver what it promised to the world.