Tags: Silver

Death, Destruction, & Playtime

Screen Shot 2014-09-25 at 11.06.40 AMIt’s hard to know what’s normal sometimes. As an unfortunate son of empire, my life, my own memories as a child, were corrupted at a young age. As such, knowing what should be acceptable behavior while raising my own kids can be challenging.

Yesterday, my 4 year old son was playing with another young boy at his house, while in another room speaking with their father, I could see in the distance the two boys flying some type of fighter jet while bombing a lego city and train station.

At first glance, this is normal right? I mean we all played with GI-Joe’s, green army men, and jet fighters when we were kids.


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India’s Central Bank Will Sell Gold on the Market in Exchange for Gold at the Bank of England

Screen Shot 2014-07-02 at 3.50.34 PMIndia’s gold policy over the last several years is about as dysfunctional as any government policy I have ever seen, and that’s saying a lot. In case you need a reminder, here are a few posts I have written on the subject:

The Times of India: “Almost Every Passenger on a Flight from Dubai to Calicut Was Found Carrying 1kg of Gold”

Gold Smuggling Increases 7x in India and Surpasses Illegal Drug Trade

Indian Temples Fight Back Against Government Gold Grabbing Plot

In a nutshell, Indians were buying too much gold for their government’s comfort, so the “authorities” stepped in with duties and import restrictions in an attempt to stifle the trade. So smuggling soared.

Fast forward to today. It appears the government has finally realized they can’t stop their citizens penchant for gold, so they have decided to dump central bank gold onto the market. What is incredible to me is that they are justifying this with a so-called “swap” into phantom gold at the Bank of England. The favored global hub of shady, rent-seeking, banker oligarchs.

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My Latest Interview with Financial Survival Network – Creating a Decentralized World

Creating an ever connected, yet increasingly decentralized world is no easy task. Nevertheless, it is something I believe humanity must do in order to traverse the current challenging times and come out the other side better off than before.

Yesterday, I highlighted what I believe is an extremely important article on the worker co-op movement. Earlier in the week, I sat down with Kerry Lutz of Financial Survival Network to discuss everything from Bitcoin and crony capitalism, to marijuana legalization and local food.

You can listen to the interview here. Enjoy!

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Perpetual Assets Launches “Bitcoin for Bullion” Campaign

I’ve mentioned the guys at Perpetual Assets several times before on this site. I met them last summer at the Liberty Mastermind Conference, and I’ve been extremely impressed with their vision when it comes to precious metals, crypto-currencies and a dedication to making this world a better place.

Well, they just took their game to a whole new level with the announcement that they will be accepting Bitcoin as payment for their entire product suite, which includes self-directed IRAs, a precious metals debit card and of course a wide variety of bullion products.

However, their IRA product is what really has me excited at the moment. The last time I highlighted this was following the announcement of Obama’s myRA program. Perpetual Assets saw an explosion in interest and sales and I can see why.

What the self-directed IRA allows is for anyone to transfer their retirement funds into their own LLC which then allows you to invest it in pretty much anything. Physical gold, silver, bitcoin, real estate and of course stocks and bonds if you so desire.

Let’s take a real world example. Let’s say you have all your retirement funds at Fidelity and it is 100% in a stock index fund. You can liquidate 10% of that tax-free (or whatever percentage you want) and move it to your LLC IRA. Then you can do whatever you want with this cash. You can even buy physical gold and store it yourself. The options are seemingly as endless as your imagination.

You can find out more information by going to their site here. Furthermore, if you want me to make a personal introduction to the team I would be more than happy to. They are fantastic.

Oh, and of course, you can always trade in a little BTC for bullion with them while you’re at it!

In Liberty,
Michael Krieger

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What is Payment Protocol “Ripple” and How Does it Allow for Physically Backed Digital Gold Currency Exchange

I’ve known about Ripple for close to a year now. I’ve been meaning to write a post on it for several months, but since doing so is such a difficult effort I kept putting it off. The most accurate expression I’ve seen to-date describing the daunting task of explaining Ripple to someone who has never heard of it is the following line published in a recent Bitcoin Magazine article:

If you’re ever explaining Bitcoin to someone and they’re getting it, start talking about Ripple, just to confuse them again.

That was precisely how I felt when a friend of mine first introduced me to Ripple. I had only recently really gotten behind Bitcoin, and now I had to try to understand something else? Even worse, something that seemed far more complicated. While I was interested in the idea right off the bat because I have a huge degree of trust in this person’s opinion on technology, it seemed overwhelming so I put the entire thing to the side.

My perspective changed later in the year when another friend of mine asked me if I knew about Ripple. It turns out he is friends with the head of Markets and Trading at Ripple Labs, Phil Rapoport. Since Phil is based in NYC, and I was headed there, I decided to set up a meeting and develop a more informed opinion on the subject.

By the time I met with Phil, I had put a lot more thought into Ripple in order to ask good questions by the time he showed up. I was highly skeptical for many reasons.

Ripple is not particularly embraced within many areas of the Bitcoin community, and I can understand why. Going in, I had many doubts. It is first and foremost a payment protocol, and secondly a “math based currency.” Since I couldn’t grasp the payment aspect until my meeting with Phil, I had spent all of my time thinking about the currency aspect of it, and that part was not appealing to me when compared to Bitcoin.

First off, the currency is pre-mined. This means that all the units are already in existence from day one and controlled by the creators, as opposed to Bitcoin, where the currency is mined over time by computers confirming transactions and ensuring the system runs smoothly. The distinction is important since the distribution process for Ripple is entirely opaque, while the distribution process for Bitcoin is far more transparent. While you do not know who exactly receives the bitcoins as each block is created, you do know how many are being distributed and at what pace until that moment in 2140 when the very last BTC is mined. With Ripple (the native currency of the protocol is known as XRP), the only thing we know is that there are 100 billion in existence (the most there will ever be) and that the founders kept 20 billion for themselves. The remaining 80 billion have been allocated to a company called Ripple Labs, which is in charge of distributing the remaining XRP as they deem appropriate. To-date, about 9.5% of the 80 billion have been distributed and you can track the progress here.

From a business standpoint, I can understand why this would be the case. They can sell some of it into the market to pay day-to-day expenses (Ripple already has a total valuation of about $1.4 billion), they can allocate it to employees as compensation, they can give it away via charity such as their partnership with the World Community Grid, and most importantly they can gift them to strategic “Gateways” (more on those later) in order to grow the payment system into what it needs to become in order to succeed.

One of the things that I and many others in the Bitcoin community have loved about Bitcoin is the fact that some poor computer nerd could have started mining bitcoins from his home computer several years back and now be a millionaire. It is very grassroots in that way. The people who saw its potential early on had the ability to participate in what was kind of like a decentralized IPO. All you needed was a little vision and some computer chops. There is something brilliant and beautiful in that distribution process. While mining is now a very expensive affair and out of the reach of the average person, this wasn’t the case in the beginning when there was far more risk involved in the entire experiment.

With Ripple, a somewhat equitable early distribution process was never on the table. The founders have/are allocating the currency in a highly centralized and opaque manner. There’s something about this that rubs many in the crypto-currency community the wrong way. Moreover, because Bitcoin is such a grass roots creation, it is simply much more political than Ripple is or ever will be. Buying Bitcoin and supporting it is for many of us an expression of disgust with the Federal Reserve in particular, and the legacy banking system in general. While many supporters of Ripple will most definitely harbor similar sentiments, buying XRP isn’t really a statement, while buying and spending BTC very much still is.

So those are some of the “negative” aspects of Ripple. I think they represent much of the skepticism in the Bitcoin community. They certainly reflect many of my own sentiments before I learned more about the tremendous potential of the payment system.

I will now explain how I overcame my initial skepticism on Ripple and saw the enormous power and benefit of the payment protocol itself. Earlier, I described some of the main differences between Ripple and Bitcoin. I called your attention to many of the aspect of Ripple that folks within the Bitcoin community tend to dislike. I think it is also important to understand some similarities they share.

One major similarity is that they both represent new payment systems that at their core allow for transfers of value from one person to another across the world at essentially zero cost. Both run on open source code and empower merchants and economic growth generally by eliminating the middlemen currently taking anywhere from 2%-3% for merely processing payments. The tens of billions of dollars spent on such fees can be repositioned as fuel for the global economy and put to more productive uses.

They were both released to the world for free. This represents a huge revolution not just in payments, but in potentially how some startups might choose to fund themselves in the future. Within Bitcoin, the unit of exchange, BTC, is needed in order to participate in the payment protocol. In that way, bitcoins, can be seen as the equity of the network. Early adopters bought or mined bitcoin, and as they increased tremendously in value, many of them have used their wealth and knowledge to greatly advance the protocol to where it is today.

Ripple also has a currency, called XRP, which can also be seen as the “equity” of the payment system. Here is where we start to see a major difference between the two systems. Within the Bitcoin network, you will use BTC, whereas the Ripple network is currency agnostic for the most part. The system does not discriminate between one currency or the other. Using Ripple, you can send payment to someone quickly and at essentially no cost whether it is USD, gold, XRP, or bitcoins.

That said, the currency XRP does play two major roles in the system.

1) Since it is the native currency on the protocol, it is the only currency traded or exchanged on the system that does not have any counter-party risk. Anyone with a Ripple wallet can send anyone else XRP at any time with no exceptions, sort of like Bitcoin. By contrast, in order to receive any other currency or asset of value on the system you must trust certain “Gateways.”

2) There is also a certain amount of XRP that is destroyed with every transaction on the system. The amount is a negligible .00001 XRP (a extraordinarily tiny fraction of a penny), and is used to prevent spam transactions from clogging the protocol. As such, each wallet on Ripple needs to have a minuscule XRP reserve balance of 20, which is at total of $0.28 at current prices.

In a nutshell: XRP has value as the reserve currency of the payment system. It is the grease in the wheels of the whole thing.

Ok, so I probably lost a lot of you above with the whole “Gateway” and “trust” concept. Let me explain.

First of all, no other currencies or items of value are actually held within the Ripple payment system. Gold traded on Ripple will be held in a vault somewhere, and U.S. dollars (USD) traded will be held in some sort of external financial institution, a bank, credit union or whatever. This is where “Gateways” come into play. “Gateways” are essentially companies that serve as the custodians for non-XRP assets that trade on Ripple.

To make this easy to understand, I will use the USD example. If you are a U.S. citizen and want to hold USD in your Ripple wallet the best “Gateway” to use at the moment is SnapSwap. SnapSwap has a bank account at Bank of America and you “fund” your Ripple wallet with USD by sending the currency to SnapSwap’s bank account. At that point your USD enters the Ripple network and you can purchase XRP and send it to anyone, or you can send your USD to anyone on the Ripple network who also “trusts” SnapSwap. As I mentioned earlier, you don’t need “trust” to send or receive XRP, you only need “trust” to send other items of value that have counter-party risk. Since there is obviously counter-party risk associated with your USD (risk resides at both SnapSwap and Bank of America) a Ripple user must conduct due diligence to determine whether or not they “trust” SnapSwap in order to receive USD via Ripple. The choice is yours.

For more information on how SnapSwap funding works, I suggest reading this explanation.

This brings me to what I think is one of the most exciting parts of Ripple, the ability to trade physically backed, deliverable precious metals. All you need is a “Gateway” with a vault (or access to one) that is willing to allow the metals to trade instantaneously and in fractional amounts on the payment system. While my mind was already excited about this potential after I met Phil in NYC, one of the things holding me back from writing this article was the lack of a solid option for doing so. Well that option arrived in January with the launch of Ripple Singapore as a “Gateway” in late January.

In the press release describing the service they explained:

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My Latest Interview with “Wall Street for Main Street” – Technology, Bitcoin and the U.S. Economy

Yesterday, I had the pleasure to record another podcast with Jason Burack of Wall Street for Main Street. This is the first interview I’ve done in a little while, and it went quite a bit longer than either of us expected. I always enjoy doing these podcasts, as it allows me to express myself in a different format and explore topics I don’t have a chance to get to in my writings.

I’ve already heard excellent feedback on this one, let me know what you think.

Enjoy!

 

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Video of the Day: Shit Bitcoin Fanatics Say

Back in 2012, I introduced you to a hilarious video created by my friend Dan Ameduri titled: Shit Gold Bugs Say. If you haven’t seen it, I definitely suggest checking it out. I even make a brief cameo appearance at the 0:57 mark.

Today I bring you a new video. Similar concept, different item and also very funny. Introducing “Shit Bitcoin Fanatics Say.”

Enjoy.

 

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Overstock.com Passes $1 Million in Bitcoin Sales in Less than Two Months

The decision by Patrick Byrne, CEO of Overstock.com, to accept Bitcoin in exchange for its products has turned out to be a very savvy business decision for the online retailer. While the pace of Bitcoin sales has dropped off significantly from the tremendous $130k recorded in the first 24 hours, the sales have continued to come in. Only two months into the experiment, the retailer has now surpassed $1 million in BTC sales. More importantly, Mr. Byrne estimate 60% of these sales came from entirely new customers.

From TechDirt:

“We did not expect to hit this milestone so quickly,” states Overstock.com Chairman and CEO Patrick M. Byrne. “Bitcoin customers are good customers, and we’re pleased to provide them this service.”

Overstock.com started accepting Bitcoin in early January by partnering with Coinbase to process the payments and handle the conversion of Bitcoin into U.S. dollars. Since then, Overstock.com reports 4,300 customers paid for over $1 million worth of goods with Bitcoin. The retailer estimates almost 60% of those are new customers to Overstock.com.

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Inaugural Interview with “The News Doctors” – Bitcoin, Freedom and Decentralization

Last Friday, I had the opportunity to sit down with Eric Dubin, editor of The News Doctors, an alternative news site, and host of Liberty Rising Radio. This was a lengthy interview and we cover a lot of very important bases. Eric asked many key questions on the minds of Bitcoin skeptics, so I think this particular interview will be especially useful for those out there who still haven’t come around to supporting it. One thing that I really want to hammer home to goldbugs is that we should not be cheering or encouraging a Chinese backed monetary system. Rather, we should aim to separate the state from money.

Enjoy.

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Amagi Metals: The Place to Buy Precious Metals with Bitcoin

Even those in the precious metals community who do not support Bitcoin, cannot deny two very significant facts. First, there is an undeniable overlap between many of those in the precious metals community and those within the Bitcoin ecosystem. Second, many of the early adopters of BTC have amassed sizable fortunes. So we have a captive audience of potential precious metals buyers who have exponentially more wealth than they had two years ago. You might think it’d be a good idea to offer gold and silver for sale for Bitcoin. That’s where Amagi Metals comes in.

Over the past several months I have come to know Stephen Macaskill, the man behind Amagi Metals, which is based just 30 miles east of me in Denver, Colorado. Stephen saw the potential to accept Bitcoin before most people had even heard of it. Specifically, the company was started in 2008 and began accepting BTC in November 2012. The rewards reaped from this decision have been enormous, with a reported $900,000 in Bitcoin for precious metals sales over Thanksgiving weekend alone! As such, the Bitcoin part of the business supports at least one full time employee at this point.

Those in the precious metals community should understand and appreciate the fact that many of the fortunes made in Bitcoin ultimately represent considerable buying power directed at those wise enough to take advantage. A merchant takes no BTC volatility risk either, as long as they use a payment processor like Coinbase (check out this interview with the founder) or BitPay.

As such, for those looking to spend some bitcoin on bars and coins, I strongly suggest checking out Amagi Metals.

In Liberty,
Michael Krieger

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