Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 1 Dec 2013 by

China Embraces Bitcoin

Bitcoins can vanish, gold can not. That’s the bottom line for me. Like most people I’m not a software engineer, for me it’s nearly impossible to ever be sure about the safety of Bitcoin. My trust in the virtual currency can only be based on my trust in software engineers. If I deposit one troy ounce of gold in a vault, I’m positive it will be there the next day having roughly the same exchange rate against goods and services. Gold is immortal and has proven to maintain it purchasing power over thousands of years. Bitcoin is not immortal and still has a lot to prove.

Money is always a matter of trust

As an Austrian I believe in free markets and little interference in the economy from governments. For thousands of years the free market has chosen gold and silver as money because they were to most marketable things. However, technological development can change this. In the end, money is whatever the free market chooses it to be.

Bitcoin has no intrinsic value? No, but money never has intrinsic value (or use value I would say), because money is never the end goal of a participant in the economy.  Money is a generally accepted medium used for indirect exchange, the end goal is always a sandwich, a sweater, a house, a bike, etc. You can’t eat gold, nor can you eat dollars, Bitcoins or tally sticks.

Through technological advancement Bitcoin is suited as money and has advantages over all other currencies not be missed out. It’s decentralized, scarce and it can be used 24 hours a day to send unlimited amounts of value to the other side of the planet without a bank or government being able to interfere. In a global economy destroyed by central banks Bitcoin is a technological reaction of the free market, and thus I fully support the Bitcoin experiment.

It’s fate, though, will most likely be determined in the east. China has a leading role on the world stage of economics and it’s not averse to Bitcoin. The Chinese exchanges have already surpassed the ones in the west in terms of BTC volume, and they have only just begun. Note the BTC Volumes on the left axis of the charts:

Mt. Gox USD bitcoin

BTC China

It all started after CCTV, the predominant network in the mainland, broadcasted this in May:

This documentary gives a fair few of Bitcoin. Nothing like the lies that are being spread by mainstream economists in the Netherlands, who don’t understand anything of Bitcoin or economic theory so it seems. Rejecting it because governments can’t control it, expressing their eternal discord with free markets.

In August the Chinese central bank mentioned Bitcoin as a potential “international monetary anchor”, in a press release about the need for a new Bretton Woods System. Google Translate:

In the international financial crisis, “Bitcoin” In the generation algorithm, it has been restricted in mathematics Bitcoin within the next 100 years the largest stock of money is 21 million, thus forming the “anchor” recently popular. “Bitcoin” can prove to the international monetary States “anchor” desire. The current international monetary system problems inherent in addition to the “Triffin Dilemma”, but its core defect is not credible “anchor”. 

And then in October China’s Google, Baidu, started accepting Bitcoin after which the price skyrocketed from $200 to over $1000, strengthening Bitcoin’s position in global finance. Let’s see where this experiment is going.

In Gold We Trust


Koos Jansen
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  • wheresthefreemarket

    how can anyone trust this system?

    Intelligence Gathering Plays Key Role at New York Fed’s Trading Desk

    By Pam Martens: December 2, 2013

    a Neil Irwin article in 2009 in the Washington Post, economist Simon
    Johnson is quoted as worrying that the New York Fed “pays too much
    deference to the expertise and presumed wisdom of a sector that screwed
    up massively.” The article goes on to note that “experts worry that the
    New York Fed has adopted the mindset of a trading floor: well attuned
    to ripples in financial markets but not to long-term trends and

    What the New York Fed is doing in its daily routine is
    the strongest proof yet that we have lost any semblance of fair and
    efficient markets. The stock and bond markets are supposed to exhibit,
    through their price action, the sum total of knowledge of all market
    participants. The price action is supposed to be there, minute by
    minute, second by second, for all market players to observe on a level
    playing field.

    Certainly, the average American investor does not
    have a direct phone line to Wall Street traders to pick their brains for
    behind-the-scenes intelligence. If the price action of the individual
    securities or sectors is no longer adequate to discern what is happening
    in the market, why should the little investor participate?

    New York Fed is obviously battle-scarred from the 2008 crash and
    attempting to comfort itself through increased intelligence efforts. The
    irony is that its intelligence is coming from the very Wall Street
    firms that have lobbied Congress to build this opaque and inefficient

    All of these efforts at super-sleuthing (which
    are destined to fail because of the source of the intelligence) would be
    unnecessary if the trillions of dollars of derivatives now traded in
    the dark were moved onto transparent exchanges; if Wall Street firms
    were forced to stop internalizing their order flow and subject buy and
    sell orders to the light of day; if traders from across multiple firms
    were prohibited from colluding in chat rooms on Bloomberg terminals; and
    if Wall Street’s private justice system, which ushers customer
    complaints and compliance issues into the darkness of mandatory
    arbitration hotel rooms, was restored to the disinfecting sunlight of
    our Nation’s courts and an inquiring press.

    I hate to be the
    one to tell those early risers at the New York Fed, but this is a game
    of folly that will not end well for any of us.


  • Chris Randolph

    “If I deposit one troy ounce of gold in a vault, I’m positive it will be there the next day..” Really? Have you told Germany that..?

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