After The Crash: The Future of Bitcoin and Math Based Digital Currencies

  

  The video in the beginning of this discussion is the great explanation of the Bitcoin. And history of Crypto-currencies development is nothing less than fascinating. But there is the progress and there is an idea to get rich overnight. These are too very different things. 

  We have the feeling that this entry will be at the right timing again. There is always another crash coming to Bitcoin. It is not the question of the technological advance presented by Bitcoin, but it is the nature of its created Bubble. 

  After our last entry Bitcoin has recovered from low of 2011 to the 4742 at BTCChina. Now another shake out could be coming - the volume is going down dramatically as Bitcoin price is moving up. By the end of January China's ban on currency withdrawal will be in place. You can make your call when the next wave of selling will begin. It is quite interesting that Gold price is moving strongly up last few days with the new money being allocated to Gold. China encourages its citizens to accumulate gold and bans Bitcoin for its financial institutions. Will 2014 become the year of Great Rotation from Bubbles and into the real assets?

You can monitor market caps of more than 60 crypto-currencies here.

Just few headlines in the recent Bitcoin Bubble history:

Statistics Chief at China’s Central Bank Bearish on Bitcoin

Kanye West inspired Bitcoin alternative to launch next month

Malaysia's Central Bank Warns of Bitcoin Risks

Central Banks Launching Worldwide Coordinated Attack On Bitcoin

Update: DEc 18th, 2013

  "Bitcoin Bubble is busted, trades below $350 on BTCChina. Now U.S. Treasury is moving according to the plan we have discussed few days ago.

US Treasury's Financial Crimes Enforcement Network "Reaching Out" To Bitcoin Businesses

Update: Dec 16th, 2013

China Bans Payment Companies from Working With Bitcoin Exchanges, Sources Claim

  Bitcoin is in a meltdown mode today on the news from China, diving below 4000 on BTCChina and is trading at below $700 on Bitstamp. There are unconfirmed rumours about Chase closing accounts related to Bitcoin business. One thing is for sure - more regulation is coming and now Central Banks have announced its war on Bitcoin with the footprint for further actions as we have discussed below."

Peter Schiff: Bitcoin Is Not Gold GLD, GDX

Bitcoin Heist And Jim Rickards On Taper, Janet Yellen and Gold GLD, MUX, TNR.v, GDX

  "In this very interesting episode RT is reporting about the hunger for the FIAT Currencies alternatives and how it is driving the Bitcoin Bubble, but it is not The New Gold or even close to it - as we have written before. New security concerns are reported with the cryptocurremcy and Jim Rickards dissects the Currency War situation in the ECB, BOJ and FED race to the bottom. You will find out why Janet Yellen can not Taper and what is behind the Gold and why Gold Standard is still valuable option even today. 

  After our yesterday US dollar chart observations it has fallen out of bed so far today - maybe somebody already has received Janet Yellen's testimony for tomorrow's nomination hearing."

Claims: "Bitcoin Is Broken", "Security Vulnerability" - Bitcoin site is hacked, with $1million of the virtual currency stolen.

"Bitcoin potential fair value is of 700 ounces of Gold" - Not So Fast - it is Not Gold or even close to it. There will be a lot of opinions about Bitcoin and its stratospheric rise. Its wild gyrations of valuation show the appetite for the alternatives to FIAT currencies and ... another Ponzi Scheme in the making fuelled by speculators. Do not be too alert on this one thou: as FED's issued US Dollars are maybe even worse. Everything will be ended in a bubble one day - before it you can play and make some money.
  But we definitely have a very big problem when somebody is coming out - as ZeroHedge reports - with valuations for Bitcoin based on comparing Gold vs Monetary Supply in existence and then compares the potential "Bitcoin fair value" to 700 of ounces of Gold!?"

Josep T. Salerno: The Birth of the Austrian School

  It is time for education - will it be different this time or basic laws of human nature and economics will be shaping the future even in the times of Great Deformation?

Austrian School of Economics: The Gold Standard in Theory and Myth by Joseph Salerno

"Despots and democratic majorities are drunk with power. They must reluctantly admit that they are subject to the laws of nature. But they reject the very notion of economic law . . . economic history is a long record of government policies that failed because they were designed with a bold disregard for the laws of economics."

— Ludwig von Mises, in Austrian Economics: An Anthology

What Is Our Money And Why China Plans To Move To A Gold Backed Yuan Currency.

  "This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Alan  Greenspan  1966. "Gold and Economic Freedom" 

Does one 'super-corporation' run the global economy? - The Network of Global Corporate Control

Golden Age. Planet Ponzi. All You Need Is Love. Happy New Year 2013!

"As Mitch Feierstein explains in his book "Planet Ponzi", you will not get much anything else if you are not in the Circle of Old Boyz. Oh ye, oops: we are wrong here - we will All get our Taxes Increased, Starting with Inflation. We will All get the Bill left from Those who continue to Party even now.

  Suck it up my friends, just suck it up. If you are not on the Payroll in Washington, DC or with other Members of the Oldest Pioneer Organisation - we are All pretty much ... (Add the Spice here to your liking)."

The History Of Money And Why US Dollars Are Issued By Private Bank - Federal Reserve System

"We are at the very important point in the history of the modern financial system. The recent events in Europe  are no less than ground-changing historical  development and the magnitude of it will be understood only many years later. European countries are giving up their Sovereignty in order to save the Euro zone. Now the history of money will be your guide to the new order, when the New Normal will be transformed into the New World Order. 

  Private FED manipulates all markets now and has the right at its own discretion to increase the FED rate at any moment, which will increase all interest rates in a chain: mortgage payments, car loans, student loans, credit card loans, business loans etc. Should FED decide to stop monetary expansion at some point: QEn+1 and Twists - yields on the Treasuries will explode. U.S. is at the total mercy of the unelected managers running the private bank. You would think: who can do such a thing, which will bring a total collapse to the world economy - watch the movies to get your own answer. The idea to buy the assets for pennies on the dollar can be irresistible again."

Sci-Fi Movie Script: "Federal Reserve - Keeping The Strong US Dollar Policy From 1913 - Established To 

Serve and Protect" GS, JPM, BAK, C, HBC

Austrian School of Economics: The Gold Standard in Theory and Myth by Joseph Salerno

"Despots and democratic majorities are drunk with power. They must reluctantly admit that they are subject to the laws of nature. But they reject the very notion of economic law . . . economic history is a long record of government policies that failed because they were designed with a bold disregard for the laws of economics."

— Ludwig von Mises, in Austrian Economics: An Anthology

The Network of Global Corporate Control

MailOnline:

Does one 'super-corporation' run the global economy? Study claims it could be terrifyingly unstable

• Research found that 147 companies formed a 'super entity' within group, controlling 40 per cent of its  wealth

By ROB WAUGH

A University of Zurich study 'proves' that a small group of companies - mainly banks - wields huge power over the global economy.

The study is the first to look at all 43,060 transnational corporations and the web of ownership between them - and created a 'map' of 1,318 companies at the heart of the global economy.

The study found that 147 companies formed a 'super entity' within this, controlling 40 per cent of its  wealth. All own part or all of one another. Most are banks - the top 20 includes Barclays and Goldman Sachs. But the close connections mean that the network could be vulnerable to collapse.

The 1,318 transnational corporations that form the core of the globalised economy - connections show partial ownership of one another, and the size of the circles corresponds to revenue. The companies 'own' through shares the majority of the 'real' economy

'In effect, less than one per cent of the companies were able to control 40 per cent of the entire network,' says James Glattfelder, a complex systems theorist at the Swiss Federal Institute in Zurich, who co-wrote the research, to be published in the journal PLoS One. 

Some of the assumptions underlying the study have come in for criticism - such as the idea that ownership equates to control. But the Swiss researchers have no axe to grind: they simply applied mathematical models usually used to model natural systems to the world economy, using data from Orbis 2007, a database listing 37 million companies and investors. 

Economists such as John Driffil of the University of London, a macroeconomics expert, told New Scientist that the value of its study wasn't to see who controlled the global economy, but the tight connections between the world's largest companies. 

The financial collapse of 2008 showed that such tightly-knit networks can be unstable.

'If one company suffers distress,' Glattfelder says, 'This propagates.' 

Protest against global capitalism outside St Paul's cathedral, London: But it seems unlikely that the 147 corporations at the heart of the world economy could wield real political power - they represent too many interests

The research requires more analysis, but it could be used to look for the weaknesses in the network of global wealth, and prevent future financial disaster. 

Looking at 'connectedness' also puts paid to conspiracy theories about the world's wealth - companies connect to highly connected companies for business reasons, rather than world domination.

The 'core' of 147 companies also represents too many interests to wield real political power - but it could act 'as one' to defend common interests. Sadly for market reformers, resisting change may be one such common interest."