patrick.net

The problem comes down to trust though. How do you know for a fact that your gold coin is really where you are told it is? There's a huge motive to cheat and just send you old photos of gold coins.

The innovation of Bitcoin was in removing the need for trust by having a distributed blockchain that anyone can read and verify.

The problem with Bitcoin is the ever-expanding "proof of work" needed to add a block to the blockchain, taking up gigawatts of energy now, and designed to keep getting harder as computing power increases.

Patrick says

The problem comes down to trust though. How do you know for a fact that your gold coin is really where you are told it is? There's a huge motive to cheat and just send you old photos of gold coins.

This is how the Gold Standard actually worked. You gave the actual gold coins, Banks gave you notes for it - and 10x those coins in notes for everybody else, too.

Only extremely wealthy had any kind stash of Gold Coins, and it cost a ... er... fortune to store it.

Patrick says

How do you know for a fact that your gold coin is really where you are told it is?

That's the beauty of it.. The coins can be registered via the blockchains as to their location. They can be insured, and the insurance verified via the blockchain. The trust in the custodians becomes verified more and more with each successful reclamation of a coin. If you start with silver coins, the risk is low, and the portability is high. If you have custodians across the nation and world, you can effectively do a coin ownership swap, and withdraw an actual real silver coin anywhere in the world. The transaction log ensures the custodian simply swaps ownership to a foreign location, and they can verify they trust the new ownership via the blockchain certification of many transactions for the other custodian, as well as the insurance. For any coins that DO "disappear" (and they will), the insurance will pay out to the registered owner, so they get a new coin in a different custodian, but the insurer gets the token representing the "missing" coin. They can then send out the goon squad to rough up the offending custodian, or determine that there was a justified loss. There isn't a huge energy hit associated with "mining" the blockchain, but there is a physical cost to participation in the network (just like the old days when banks stored your real money). Insurance on the custodians will confirm that there is secure (enough) storage given the volumes transacted by that custodian.

Custodians will be incentivized to participate by getting transaction and storage fees. Small guys will be extra incentivized to provide custom transactions with high fees (like drop off this stack of coins anonymously in the middle of the night at this location.)

So starting up the network might initially look like this:
You and I both have 100 1oz silver coins. We generate a cert for each coin, and put it on the network. Say silver spot is $30 . Now someone else can say they will give me $32 for a silver coin. By any means I like, I can take possession of that cash, and put a transaction record on the network saying third party C now owns the coin.

Now, you don't trust me very much, but you trust me for $32 as a person with a single transaction on the network. My guy sends his digital token to someone near you in payment of something. That guy shows up and asks to claim his actual silver token. You charge him $1 withdrawal fee, and you send a message to me with his digital token. I verify it. You now have $1 plus a token for one silver in my stash.

We add a few more custodians to the network, and several hundred transactions have occurred for each of us. The transactions are small and limited, but as more and more transactions occur, and more money and silver is deposited into the system, trust builds. You have funds on deposit with several custodians. However, you probably create small transaction swaps so that when a small amount of your silver tokens end up in a small custodians hands, you swap them over to a more central custodian. The digital only transfers are super low cost. More small custodians begin to register to run ATM's and actual delivery services. Several times you go to your centralized custodians to exchange some of your digital tokens back for your physical coins to avoid getting too much exposure. The sheer number of transactions begins to develop a deep trust between your main trading partners.

Soon there is a chunk of the silver in your custody that actually "belongs" to your main counterpart custodians. There is a nearly similar amount of your reserves that you allow to stay in their custody. If there is a loss, the actual owners of the silver in your custody ACTUALLY take the loss. As a security measure, you occasionally travel to remote custodians and perform physical audits to ensure digital assets are backed by real ones. These audits, and the participants performing them are recorded on the digital records associated with the coins. The main thing keeping a custodian from just stealing the silver and running is they would lose the portion of their reserves in the custody of others, plus, they would lose their transaction reputation for secure return of goods. At this point, the digital tokens representing audited coins stored with highly trusted custodians actually increase in value and transaction cost relative to tokens stored with lesser reputation custodians. This provides a simultaneous incentive to store coins with trusted custodians for long term security, but also with less trusted custodians for lower transaction fees. This also gives less trusted custodians a way to be come more trusted and increase their value within the network.

However, so that everyone stays on the up and up, insurance policies are taken out on the stored silver in custody. The insurance policies are publicly verified, and registered onto the digital certificates for the coins within each custodian's purview. The insurance companies do due diligence ensuring storage and access controls are sufficient to prevent loss. A physical loss is both insured, and investigated for recovery. This again increases costs, but also trust, and creates a third even more secure tier of insured storage for people to deposit their coins into. Again, this comes at a higher cost, but only marginally, as the cost is distributed so widely.

Basically, all I am describing here is a banking system, but with balances that can be transferred independently of central financial regulation. There are no "accounts", only secure transaction records. Reputation, transparency, and volume are the keys to the security of the system, and magic printing of coins is impossible. If someone wants to start a competing network, they need to provide actual physical coins to do so. And if someone wants to take their tokens from one network to another, they simply withdraw the actual coins, and move then to the other network.

The biggest hurdle will be the panic of governments as they lose control of the money supply. It absolutely WILL be chaos as a new secure form of payment pulls the plug in the sewer pipe, and the rats are flushed away out of the system. Underground railroads for gold and silver coins will form. But you will be able to make a deposit into a black market bank in China, then travel to Ireland and withdraw your money, and dedicated persons other than you will be taking all the risk (and profiting handsomely).

If the facility has never given physical delivery, that's a sure sign they don't have the metal. A system like this only works if the holders are unscrupulously honest. And that takes time to establish. Most vaults are fractional reserve, and regardless of insurance, in a run, would leave you holding the bag. It's happened time and again with regular banks, which are supposedly so well regulated. Getting late in the game for physical though, if you aren't already holding, expect 4-6 weeks delivery, and that's been the case for months now.

Swiss stonks are for me.
FLSW, Franklin Templeton Swiss stock ETF.

clambo says

Swiss stonks are for me.
FLSW, Franklin Templeton Swiss stock ETF.

What % of your portfolio is in SS?

Zak says

Custodians will be incentivized to participate by getting transaction and storage fees.

If you don't hold it you don't own it.

As long as you have to trust someone to hold your coins you have to trust somebody.

Get yourself a good sturdy waterproof storage chest. Fill this chest with gold and silver coin and bullion, Precious jewels and jewelry, and some fancy knifes and swords. Bury it where no one will ever find it. Make a map.

Your savings will be safe.

As a goldbug and a silverbug, I'd much rather have the metal in my hand, which I do. But there are already ETFs that hold the Gold/Silver which can be redeemed for actual metal from Sprott Inc. I don't know what the better play is going to be long term, and don't really care. I'm certain the dollar and other fiats fall off a cliff and I'm well prepared either way.

I hold Bitcoin as an insurance policy on top of it. The market has clearly opted to Bitcoin as a store of value over the past 5 years, volatility aside. I was buying Ethereum as well but that's more because I like how the network is bringing new options to market. I sold off when it dropped to about $3600 but I'll likely buy back in.

theoakman says

I'm certain the dollar and other fiats fall off a cliff and I'm well prepared either way.

theoakman says

I hold Bitcoin as an insurance policy on top of it. The market has clearly opted to Bitcoin as a store of value over the past 5 years, volatility aside.

The question no one can answer. Dollar goes to shit. Who is going to buy your BTC or Ethereum? I'm not. No one I know will. No one wants it outside of speculation, which is fine. You can make money off it while things are normal.

There's a reason 2A is so important. It was never about protection of property or militias. It was about control. A $800 handgun WILL appreciate over time. Provides protection. And you can shoot your way to feeding yourself. The left wants control. Why do you think every cycle gun control is brought up? And even if the guns don't appreciate, you can shoot things to stay alive. Bitcoin, gold, silver, etc., none of that will do shit for you at the end of the day.

1 - Freedom of speech like this site. 2 - Give me a damn gun. If the left is successful in toppling either, your digital tokens and metals are work dick. 100% true. They're on a god damn war path to destroy the two most fundament ideologies of America. I'd have an arsenal and ammo before even touching crypto or metals. Our military is not large enough to do a citizen taken over. So it's you against your neighbors. You either work together or you kill them. It's pretty black and white when shit hits the fan.

The whole premise of Digital Blockchain currency is way off when it comes to classic Dutch economics.
It is nothing more than a bubble, pure and simple and I'm going to tell you why.

In classic economics your dollar is self contained monetary unit, valued in currency that it is.

When you put your money in the bank, you get interest(Ideally), and that interest is compounded in Dollar value. Each of your dollars are a self contained unit pegged to the value of the dollar. If you take that money and put it into a house, worth $300K, your house is worth 300K units of the money used to purchase it. When that asset deflates, you don't have 300K units worth less. You have $150K units, and the only way to get 300K back is if the asset doubles in value.

That is not what happens with digital currency, and why the long run investment is a fools errand.

You buy 1,000 digital coins, valued at .08 cents, that's $80. From then on, you're counting the value of 1,000 coins, not tracking the $80.
So as your digital currency inflates ,its the money other people are putting in. You only brought $80's to the table. But your tracking 1000 units. When that coin goes from .08 to $1.00 each. Many will want to pull out while they are ahead, leaving everyone else holding the bag. Also some digital coins will add coins to your portfolio when Coins are sold, adding to your unit count. You still are on the hook for $80, but now you may have well over a 1000 coins, worth what ever they are worth.
It's like having interest that is compounded by the minute, rather than at a month end statement.
It's a dangerous game, while it may seem like a sensible thing to do. If everyone jumped in and participated, it would crash the value and it would all be worthless other than the hard money put into it.
Which also brings the other point. You're tracking units separate from the money you put in it, but you get money out based on the number of units you have.
IT's like an asset or baseball cards. But really it's just a Ponzi scheme on a grand scale.
If everybody had a Babe Ruth rookie baseball card, then they would all be worthless.

Tenpoundbass says

IT's like an asset or baseball cards.

baseball cards aren't programmable.

I'm rooting for Patcoin!

WookieMan says

The question no one can answer. Dollar goes to shit. Who is going to buy your BTC or Ethereum? I'm not. No one I know will. No one wants it outside of speculation, which is fine. You can make money off it while things are normal.

There's a reason 2A is so important. It was never about protection of property or militias. It was about control. A $800 handgun WILL appreciate over time. Provides protection. And you can shoot your way to feeding yourself. The left wants control. Why do you think every cycle gun control is brought up? And even if the guns don't appreciate, you can shoot things to stay alive. Bitcoin, gold, silver, etc., none of that will do shit for you at the end of the day.

Currency collapses don't devolve into mad max. It just wipes people's debts and savings and is a reset button to the economy. But third world countries will see their currencies collapse first, so they'll be the beta.

Hircus,
I don't have a significant % of my net worth in FLSW.
There are some reasons.
1. I don't have "new money" coming in presently.
2. A large % of my funds and stocks are in non-retirement accounts. Changing these is not practical.

I plan on adding a few bucks to FLSW as soon as my shitty WFC gets a little bit higher.
I'm then dumping all of my WFC shares.
I'll probably buy 10 grand or so of FLSW.
Edit: I will add 100 bucks per month for a few years, and add any new money I get a hold of.
I’m going to make a few grand with my GME gamble, so a grand or 2 will go to FLSW.

theoakman says

The market has clearly opted to Bitcoin as a store of value over the past 5 years, volatility aside.

You can't have it both ways. Volatility means it is not a good store of value. If I bought a bitcoin for $60k I would not be able to get my $60k back, at least not right away.

Remember, the miners consume the capital input. There is no store of value.

Be honest, you bought some crypto for the same reason I occasionally play the lotto. It's gambling.

theoakman says

Currency collapses don't devolve into mad max. It just wipes people's debts and savings and is a reset button to the economy. But third world countries will see their currencies collapse first, so they'll be the beta.

Mostly true, but take a look at Weimer Germany, or Venezuela today, things can get pretty nasty. And the bigger the bubble, the nastier the collapse. How big is the US debt bubble? Unprecedented, and this is directly from the mouths of central bankers themselves. So no need for beta's, just look around, or study history.

And for the(hopefully) few months when trade and transport grinds to a halt, you'll need more than digital 1's and 0's to trade for necessities.

What about goldbacks if they came down on the price

Stocks usually compensate for inflation.

The hazard there is that the Fed will raise interest rates to counter inflation, and higher rates are bad for stocks as people move to bonds for those higher rates.

But the stocks are at least backed by a real thing: a business which is supposed to produce profits. After interest rates go back down, they should go back up about in proportion.

NuttBoxer says

ble, the nastier the collapse. How big is the US debt bubble? Unprecedented, and this is directly from the mouths of central bankers themselves. So no need for beta's, just look around, or study history.

I have much more than bitcoin/ethereum. I own land, actively farm it. To put it in perspective, I have 30 fruit trees and 10 large raised bed gardens. I'm locked in at 2.5% on 250k remaining debt. I have solar on my home. I own gold. I own silver. I own dividend paying stocks. I own broad market ETFs. And I own foreign stock ETFs in modernized Asian countries like Taiwan, Singapore, and Japan. These things are a small piece of my insurance policy, at best, it might become 5%.

theoakman says

These things are a small piece of my insurance policy, at best, it might become 5%.

I hear ya, but I think the fruit trees are a better investment.

I never gambled more than a couple hundred at a time.

Zak says

The physical can be stored, audited, insured, and accessed with a proper digitally signed token. Tokens can be exchanged across borders instantly. There would be a transaction fee, and potentially a storage fee. The crypto currency could provide verification that the storage facility is insured.

Sounds like https://kinesis.money/money/

Onvacation says

If you don't hold it you don't own it.

This is why I don't hold Kenisis, and I ever so slightly distrust my PSLV holdings

So here's a crazy question.
What if there's a run on the banks, there's hyper inflation, the dollar becomes worthless or for what ever reason, the money stops flowing?
What will digital currency be worth then? If you answered that question honestly, then you've assured yourself, they are nothing more than tokens in an video game, in hopes to convert them into real US dollars. You're playing an elaborate Coin Pusher.

Tenpoundbass says

What will digital currency be worth

Whatever value people place in it.
Its worthless garbage, really.
Everyone and their brother can mint a bajillion cryptocoins
Its worse than fiat in that regard...

If it gets shitty, can you eat it? or trade it for food?
I expect an epic dismissal of the dollar
Then crypto
and falling back to precious metals

I'm buying silver, only because I'm too poor to own gold

To add to that, the Dollar fluctuates what it is worth based on the GDP. A digital coin value does not account for the dollar fluctuation.
So if a digital coin has a great run when the dollar is strong. Then when the Dollar gets weak and loses 25% to 50% of it's value. Coin Bulls say digital currency will go through the roof. I say it would also lose 50% of the total when all was factored in. People would be buying in, while the value would be in free fall.

ThatGuy says

I'm buying silver, only because I'm too poor to own gold

I haven't even considered it because I've heard one can't get delivery. Or can they?

Check prices at
https://online.kitco.com/silver?utm_source=patrick.net&utm_medium=patrick.net&utm_content=submenu-buy-silver&utm_campaign=patrick.net
Then call local coin/gold/silver dealers and pawn shops. The shops price should be around kitcos. If significantly more; pass. If significantly less you MIGHT have a bargain.

If everybody bought silver instead of crypto they would truly have a store of value but silver can't be programmed or stored on a flashdrive.

It looks like Kitco will sell you a 63 pound (thousand ounce) bar for $30,950 and send it to you right away.
https://online.kitco.com/buy/1008/1000-oz-Silver-Good-Delivery-List-Bar-999-1008

Smaller sizes carry higher premiums.

I'd probably get the silver eagles. Bars are hard to spend during cannibal anarchy but doable.

just_passing_through says

I'd probably get the silver eagles

WOW! $42 a piece when you buy 500!

You can still buy a one ounce queen for $34.50

theoakman says

I have much more than bitcoin/ethereum. I own land, actively farm it. To put it in perspective, I have 30 fruit trees and 10 large raised bed gardens. I'm locked in at 2.5% on 250k remaining debt. I have solar on my home. I own gold. I own silver. I own dividend paying stocks. I own broad market ETFs. And I own foreign stock ETFs in modernized Asian countries like Taiwan, Singapore, and Japan. These things are a small piece of my insurance policy, at best, it might become 5%.

You left out an important piece, do you own guns? And how far are you from the nearest city?

just_passing_through says

I'd probably get the silver eagles. Bars are hard to spend during cannibal anarchy but doable.

DO NOT buy Eagles right now. Premium is too high. Better to buy silver rounds. At the top, or in a crises, no one gives a shit about what coins you have, just how much silver is in them.

bullionvault.com

Recommended by iTulip back in the day.

Bear in mind, any bullion transactions conducted outside the USA is subject to FATCA reporting requirements. Any profits are subject to 30% collectibles tax.

NuttBoxer says

DO NOT buy Eagles right now. Premium is too high. Better to buy silver rounds. At the top, or in a crises, no one gives a shit about what coins you have, just how much silver is in them.

I'm not. That's just what I'd buy in an ideal situation. That way if no anarchy they trade well and if anarchy I have some silver. I have a pal who started stacking silver 3 years ago. I probably should have purchased back then.

I'll tell ya what else I'm not going to do: drive around / call around to coin dealers an pawn shops.

Not right now when everyone and their mother is doing it.

edit: gold was a great buy a few years ago as well.

Onvacation says

WOW! $42 a piece when you buy 500!

Lol yeah, I noticed that. From the dates and descriptions, I didn't realize silver was being minted by US and Canada this century. I have some eagles and other somewhat large silver dollars my grandparents gave me as a kid. They would stick them in those plastic Easter egg hunt eggs. I got some $2 bills that way as well.

Enough silver to eat for a few days but not enough to get by on.

just_passing_through says

Enough silver to eat for a few days but not enough to get by on.

Having a community of people you can depend on is maybe the most important part of survival. But silver/gold, guns, ammo, rations, and a water filter certainly don't hurt.

clambo says

I plan on adding a few bucks to FLSW as soon as my shitty WFC gets a little bit higher.

I was surprised to see FLSW didn't go down on the news of the G7 deal to have a 15% minimum tax, which might take some of the competitiveness away from the swiss tax haven.
Maybe the market expects the swiss to make other compensatory adjustments that make it a new positive for business, just in other ways.


https://finance.yahoo.com/news/switzerland-must-adjust-remain-business-144428861.html