Why Bitcoin? Anarchy Roundtable Ep 10

It Puts money back in the hands of the individual people.  Bitcoin is going to change the world.

We have a great talk for you today about bitcoin.  I think it will be fun for both the seasoned bitcoin user, as well as the beginner.  we were careful to explain as many things as we could and talk about deeper issues.

A Beautiful Anarchy: How to Create Your Own Civilization in the Digital Age.  From the description: ” It shows that every truly valuable aspect of our lives extends not from politics and the regime, but from our own voluntary choices”  See also, this video, in which Jeffrey Tucker talks about the book.

Here is the link to Purse.  It’s a bit hard to google.  If you ever need to google it, use the phrase, “Purse Bitcoin.”

One thing that I should have explained in the video was that the buying gold with Amazon using Purse is a classic case of Arbitrage.  Arbitrage is a process of taking advantage of one or similar assets having two different prices in two different markets.   It involves a trade where you buy in one market and sell in another.  In this case, gold on Amazon for Bitcoin, has a lower price than gold for US dollars at a coin shop.  So you buy the gold with bitcoin, using the market created by purse.  Then you sell the gold at a coin shop and deposit the funds into your bank.  You use the money in your bank account to buy bitcoin at Coinbase (which is linked to your account).  Now that you have more bitcoin, you can use it to buy buy more gold on Amazon.  This is an old technique and hedge funds have been doing this in other markets for many years.  It’s highly unusual that a common person could do an arbitrage trade because sophisticated traders have long sewn up these kinds of trades.  This is a case of something flying under the radar.  Jeff feels uneasy about it in the video but really, this is an example of the market at work.  If more people did this, the differences in the prices in the various markets would smooth out.  This would take place by the amount of discounts you get for using purse on Amazon becoming smaller as more people begin seeking them for more and more trades of gold.  This would actually fix the discrepancy.  In a sense, everyone who is buying anything on Amazon, using purse, is doing an arbitrage trade, even if they are only taking goods for the bitcoin.  For more on arbitrage, check out the entry on the Investopedia page.  It includes a short explanation and a short video, discussing the topic.  Another name for this kind of trade is an asymmetrical risk/reward trade.  There is very little risk in the trade but the payout is huge.

Upon closer inspection, Amazon only sells collector coins.  All of these coins are selling for prices above their bullion value.  This means you’d have to convince a coin shop that your coin is worth more than all  the rest because of some special condition.  It’s collector value and not just metal value.  That adds risk to the situation.

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