Bitcoins being suppressed like gold is a good sign
Those in power try to suppress whatever they perceive as a threat to their power. For instance it is well known that the powers that be have always tried to suppress the price of commodities and especially that of gold because the value of gold in terms of a particular currency say, the US Dollar provides an insight into the extent to which that currency has been debased by printing more of it.
Inflation REALLY is the most popular form of taxation imposed by those in power. So any instrument or indicator that can show the true extent of inflation comes under attack from the authorities.
Bitcoin is an attempt (a very well thought out and successful one) at some sort of decentralized electronic currency, which most importantly is limited to only 21 million units. So ultimately it would suffer from no inflation at all. This fact is downright blasphemous to those who print money at the Fed.
As if to add insult to injury, the run up to that figure of 21 million units has been controlled in such a way that its impact to the value of the already existing Bitcoins be minimal.
This is the reason the bankers went after Bitcoins with a vengeance. They used the (by now familiar) tactic of first hyping it up via mainstream media then crashing it down via their network of hackers.
ars technica recently published the (non-conspiratorial version of the) story of what happened:
While the ars technica story attracted a good number of comments, on Slashdot, it attracted over 700 comments.
The original Whitepaper on Bitcoins can be found on the main site bitcoin.org
Written by the man himself – Satoshi Nakamoto
Perhaps one of the most elegant explanations of what Bitcoins are all about has been provided by PC Perspective in a July 2011 review of GPUs used for mining Bitcoins.
When dealing with a more traditional and physical local currency, there is a need to for both parties to trust the currency but not much need to trust each other as handing over cash is fairly straightforward. One does not need to trust the other person as much as if it were a check which could bounce. Once it has changed hands, the buyer can not go and spend that money elsewhere as it is physically gone.
Transactions over the Internet; however, greatly reduce the convenience of that local currency, and due to the series of tubes’ inability to carry cash through the pipes, services like Paypal as well as credit cards and checks are likely to be used in its place.
While these replacements are convenient, they also are much riskier than cash as fraudulent charge-backs and disputes are likely to occur, leaving the seller in a bad position. Due to this risk, sellers have to factor a certain percentage of expected fraud into their prices in addition to collecting as much personally identifiable information as possible.
Bitcoin seeks to remedy these risks by bringing the convenience of a local currency to the virtual plane with irreversible transactions, a public record of all transactions, and the ability to trust strong cryptography instead of the need for trusting people.
With bitcoin, all transactions are publicly recorded; however, the public details only lead to a public key/wallet, not an actual person. People can generate as many wallets/addresses as needed.
This is in contrast to the traditional system where anonymity is achieved by the public trusting a third party who in turn trusts its users and controls their information for them. Further, the identity of the user is not necessarily needed as only the public/private key pair is required to complete the transaction.
By cutting out the third party “middle men” in the form of Paypal and credit card companies, the user is able to better control their personally identifiable information on the Internet. In the wake of numerous Internet attacks in which financial institutions and merchant websites were hacked and their customers’ information was leaked to the public, being able to control what information (if any) businesses get is a good thing.
Stolen databases and outdated security on even the most well respected companies has proven that they cannot be fully trusted to protect one’s information; therefore, the inherent ability of bitcoin to put the user in control of their private information is positive.