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back to article Bitcoin ban row latest: 'Unstable, loved by criminals' Yup, that's the US dollar – Colorado rep

A US Congressman has proposed a ban on the American dollar to mock colleagues who are campaigning against Bitcoin. Rep. Jared Polis (D-Colorado) said the American dollar bill, much like the Bitcoin cryptocurrency, was "unregulated and unstable," and had been used for illicit criminal activity. Polis, a former web entrepreneur …

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Bronze badge

On the upside...

... there is a politician that gets "it". On the downside the Japanese have a proverb about a "nail that sticks out..."

Still, at least it proves that there are some politicos that aren't afraid to speak out in the face of absurdity. Shame there isn't more.

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Re: On the upside...

The other downside is the possibility that his colleagues will take him seriously. I'm sure governments would love to move to electronic transactions only instead of untrackable physical cash.

I would put the joke icon up, put I'm not sure if I'm joking or not.

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Re: On the upside...

>Still, at least it proves that there are some politicos that aren't afraid to speak out in the face of absurdity.

And against his own party member, double points in my book.

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Hang on there!

Is he REALLY a US Congressman?

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Re: Hang on there!

Proof that Colorado cannabis laws are having their intended affect.

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I need to study it more

I understand the wealth the BitCoins represent today is enormous but too little compared to the actual (OK, traditional) currencies. I also understand some machines do automated work to generate them. And that generating even a single BitCoin is a big achievement for that machine.

But as a layman (among the other 99.999... % of the world population), what I don't understand are:

1. why should I value a currency which is not generated based on the market need of my nation? Is it not like saying that wages of a US and Chinese worker of the same trade are same and should pay equal amount to get a bread?

2. If mining of a BitCoin is analogous to finding a gold rock, are we good paying in gold when buying a bread?

I seriously need to study before those coins grip the world (or the world lets go of the coins)

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Re: I need to study it more

"1. why should I value a currency which is not generated based on the market need of my nation? Is it not like saying that wages of a US and Chinese worker of the same trade are same and should pay equal amount to get a bread?"

Wouldn't this solve issues of inequality? 5 dollars for a bottle of some medicine might be nothing in the US, but in China it is a lot. But I do think there needs to be much more then just global currency to make this world fair.

"2. If mining of a BitCoin is analogous to finding a gold rock, are we good paying in gold when buying a bread?"

Not quite finding a gold rock. If you think about investing in the amount of gear required to mine a single coin within a sensible amount of time and the resources it takes to run it. More like investing in a goldmine... Of course there are those who would use gear/resources which isn't theirs to do this!

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Re: I need to study it more

>>1. why should I value a currency which is not generated based on the market need of my nation?

You can value it if other people value it, essentially. If many are buying and selling things in exchange for BitCoins, then you can see the merit in having some. At present, few are doing so, but this is the end goal of BitCoin proponents. (Well, other than those who are pure speculators).

>>If mining of a BitCoin is analogous to finding a gold rock, are we good paying in gold when buying a bread?

You are correct that a BitCoin is equivalent to finding a gold rock in many ways. BitCoin is interesting in that it is a non-Fiat currency which is entirely virtual. Very amusing. But like your gold rock, it remains non-Fiat. However, unlike the gold rock, it is easily divisible and transferable. With the divisible part being the most significant of those. This makes it more usable as a currency than handing lumps of gold to one another.

Of course there are ways of doing this with gold as well - just have them centrally stored and transfer shares in the gold. Some people do this. If that is your comparison to BitCoins, then it becomes a lot more like it. But if you're comparing to actual gold coins people hand to one another, then its the key differences of easy division and transfer that make BitCoin usable as a currency where gold is not.

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Re: I need to study it more

Bitcoin is generated at a mathematically regulated rate. There will only be a set number of them once all of them have been mined. This makes them precious much like gold or silver. Where they are superioir to precious metals are their portability and security. Once world legder is maintained and copied by everyone. It is regulated by mathematics and cryptogarphy(Not some corrupt financial institution). It allows everyone in the world access to banking services at very cheap prices without the need for a bank. Another benefit is that bitcoin is just one application on the blockchain. Voting, crowd funding, peer to peer lending, financial instruments can all ride on the block chain and the greatest part is scumbag bankers cannot defraud it. - My two cents... I am a IT Systems Engineer.

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The complaints about Bitcoin as the currency of choice for crooks are overwrought...

You can probably still get a lot more mileage out of a briefcase full of any major paper currency than even a fairly fat Bitcoin wallet. I have definite problems with Bitcoin, but they are around the security of the currency and it's holders investment, rather than who is using Bitcoins for what...

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History is on Bitcoins side

The US dollar has a history far worse than Bitcoin with dollar notes issued by the individual states originally and values fluctuating wildly - it was the backing of the Federal Government that stabilized the currency and made it "safe".

Bitcoin is not really that much different that trading with small bits of carbon with strong atomic covalent bonding - we assign a value and trade based upon a mutually agreed value. Although a diamond does look prettier than a Bitcoin.

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Re: History is on Bitcoins side

>>Although a diamond does look prettier than a Bitcoin.

Not to a mathematician.

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Re: History is on Bitcoins side

In a word : bollocks.

Bitcoin barely has a history, and what little it has is rife with scams, thefts and shady deals.

The fact that the US dollar was, at one point in time, emitted individually by states is irrelevant. Today, the US dollar is a strong international currency and everyone is using it - that is what is important.

Bitcoin might be a nice idea, but micropayments is a mechanism that is already helping people today, right now, whereas Bitcoin is just a pipe dream being abused by crims and hacks.

I dare say we don't need yet another currency, virtual or not. I don't see what it is that Bitcoin purports to solve - the only thing it is actually doing is demonstrating how easy it is to subvert the system.

The only way Bitcoin is going to become anything actually useful is if all Bitcoin exchanges become certified - and that means regulation, laws and enforcement. These laws will have to be implemented world-wide, even in countries that are rife with corruption - countries which will obviously become havens for criminal organizations.

When you want to reinvent the wheel, you had better reinvent it better. Bitcoin is just forcing us to go through exactly the same set of issues to resolve a problem nobody asked for.

Just die already, Bitcoin.

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Re: History is on Bitcoins side

@Version 1.0

". . . it was the backing of the Federal Government that stabilized the currency and made it 'safe'."

Exactly.

Except, that argument actually works against you here. As Bitcoin is a decentralised 'currency', that can't be arbitrarily created, the US Federal Government - and indeed any government or private body or person at all - has little ability to influence it.

That's actually one of the main points put forward by its advocates but it's a double-edged sword. The commodity nature of Bitcoin may well prevent governments devaluing it but it also prevents governments using currency flexibly to steady their economies.

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Holmes

Re: History is on Bitcoins side

". . . it was the backing of the Federal Government that stabilized the currency and made it 'safe'."

LOLNO.

Of course, as you imply, "safety" is a sardonic measure here. Very much so, indeed ....

"The most interventionary of the Civil War actions was in the vital field of money and banking. The approach toward hard money and free banking that had been achieved during the 1840s and 1850s was swept away by two pernicious inflationist measures of the wartime Republican administration. One was fiat money greenbacks, which depreciated by half by the middle of the Civil War, and were finally replaced by the gold standard after urgent pressure by hard-money Democrats, but not until 1879, some 14 full years after the end of the war. A second, and more lasting, intervention was the National Banking Acts of 1863, 1864, and 1865, which destroyed the issue of bank notes by state-chartered (or “state”) banks by a prohibitory tax, and then monopolized the issue of bank notes in the hands of a few large, federally chartered “national banks,” mainly centered on Wall Street. In a typical cartelization, national banks were compelled by law to accept each other’s notes and demand deposits at par, negating the process by which the free market had previously been discounting the notes and deposits of shaky and inflationary banks. In this way, the Wall Street–federal government establishment was able to control the banking system, and inflate the supply of notes and deposits in a coordinated manner."

And this just went into the overdrive of destruction once the gold standard was kicked to the kerb.

Seriously, the above book is worth reading as antidote to the caricature of history served up cold in schoolrooms as well as "mainstream" journals of "left" and "right". You will start to just laugh in the face of people holding views that look like they were made in bad Hollywood movies.

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Anonymous Coward

Re: History is on Bitcoins side

Hard to know where to begin, because there are so many misconceptions being spouted here, but I must .....

"Bitcoin barely has a history, and what little it has is rife with scams, thefts and shady deals."

I would hate to do a numerical comparison between bitcoin problems and fiat currency problems to counter that statement, so I won't. But I will agree that there have been growing pains in the first few years.

However, Bitcoin is now being used by online retailers like Overstock.com and thousands of other businesses for transactions representing millions of dollars. ATMs are appearing in many countries (such as the UK) where people can directly buy bitcoins with their Fiat currency. I would not be surprised to see Amazon and others using it before long.

I suggest you read more about it:

http://online.wsj.com/news/articles/SB10001424052702304815004579418962232488216?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304815004579418962232488216.html

http://www.ibtimes.co.uk/britains-first-bitcoin-atm-arrives-london-cafe-1439017

"The fact that the US dollar was, at one point in time, emitted individually by states is irrelevant. Today, the US dollar is a strong international currency and everyone is using it - that is what is important."

One of the major advantages of the US dollar (other than the fact that it can also be used in scams, thefts and shady deals, as well as honest transactions) is that by it's sheer volume and liquidity, the USD is still the world's reserve currency.

Oil and many other commodities remain priced in dollars, and despite the beating it has taken recently on currency exchanges, for a lot of international commerce it still the best (or only) show in town. Never mind that the government backing it has many trillions in debt and will electronically print more debt whenever needed (also know as quantitative easing).

For an illuminating ,easy-to-understand visual representation of what this actually represents for the USD (and the world) the following site is highly recommended:

http://demonocracy.info/

Bitcoin is not likely to replace the greenback anytime in the foreseeable future, but it might provide a sorely-needed reality check for a lot of people, including yourself.

"Bitcoin might be a nice idea, but micropayments is a mechanism that is already helping people today, right now, whereas Bitcoin is just a pipe dream being abused by crims and hacks."

Micropayments are also a nice idea, and bitcoin is ideally suited for such operations. Imagine a crypto-currency that doesn't depend on flaky, inefficient banking systems in third world countries, corrupt officials, or physical stacks of cash. If I can immediately transfer a sum of currency directly to an Indian tea farmer's mobile phone or bitcoin wallet, with a 100 % traceable transaction chain and little to no transaction costs, I'd call that a solution that it is just screaming to be tried out in the micropayment and micro-loan community.

"I dare say we don't need yet another currency, virtual or not. I don't see what it is that Bitcoin purports to solve - the only thing it is actually doing is demonstrating how easy it is to subvert the system."

Depending on whom you listen to, Bitcoin is either NOT a currency or a currency ideally suited for an internet economy. But that argument is too big to address here.

OTOH, I really liked your statement about "subverting" the system.

The nice thing about bitcoin, is that now EVERYONE can "subvert" the system.

Not just the cowboy financiers, inflationary-minded government officials, "too big to fail" money lenders and the central banks that prop up government budgets by creating even more imaginary money. These actors have subverted the system to a degree that normal people can hardly fathom.

But now, normal people may ALSO leverage monetary policy in their favor. Or more accurately, they can avoid these policies completely. Vote with their feet as it were. Because they certainly can't vote on where the next trillion dollars is coming from.

Imagine that. Your money could became your money again. You could spend it, earn it, or give it away to whoever you want, all over the world....without going through expensive hoops or asking someone's permission.

Is that really such a bad thing?

For an interesting take on this concept, please check the following:

http://auroracoin.org/

"The only way Bitcoin is going to become anything actually useful is if all Bitcoin exchanges become certified - and that means regulation, laws and enforcement. These laws will have to be implemented world-wide, even in countries that are rife with corruption - countries which will obviously become havens for criminal organizations."

Bitcoin is already useful. This is why so many people are using it (7 to 10 billion USDs of market capitalization). Many more will follow. You may be shouting into the wind.

The growing interest in crypto-currency is not just a mass delusion, but more a realization that clever technology exists which addresses many of the problems associated with the current systems used for international payments and misguided monetary policies.

In any case, it is extremely difficult to control a good idea with regulation or laws. World-wide legislation is a hard sell anyway. You just can't centrally certify something that is de-centralized by design. Only the people who have agreed to use and share the crypto currency can certify it.

If you don't still don't agree with me, see what the chairman of the Federal Reserve has to say about it:

http://time.com/10196/bitcoin-janet-yellen-federal-reserve/

"When you want to reinvent the wheel, you had better reinvent it better. Bitcoin is just forcing us to go through exactly the same set of issues to resolve a problem nobody asked for."

Once again, lack of space prevents me from showing the many advantages provided by crypto-currencies (reduced international transaction costs are just one). But I suggest the following reading for more enlightenment.

https://en.bitcoin.it/wiki/Myths

"Just die already, Bitcoin."

Good luck with that mate, it appears the genie is already out of the bottle, and more genies are being created.

Nothing is more dangerous than a idea.

Bitcoin, or something like it, has and will continue to disrupt the world of commerce forever.

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The Dollar is also backed by some questionable promises. A lot of its value comes from the fact we'd all be screwed if it had no value. One might even argue that it's being exploited by the issuer to gain access to unlimited credit from the rest of the world.

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wow

there a US congressman that's not a completed brain damaged retard? when did that happen.

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Anonymous Coward

It's actually quite hilarious

What have the Banksters who have the politicians in their pockets got lose if Bitcoin takes off - everything!

What does the world and his dog stand to gain with Bitcoin - everything! Freedom from the Fiat currency scams.

Check out this one brave lady who worked for the World Bank for many years

http://www.youtube.com/watch?v=-0G4rIXkEXk

It's no wonder they are trying very hard to create FUD around Bitcoin and make it go away - which it won't because more and more people are smelling a rat!

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Anonymous Coward

Re: It's actually quite hilarious

"What does the world and his dog stand to gain with Bitcoin - everything! Freedom from the Fiat currency scams."

Yea, you need to look up what a Fiat Currency is and then come back to us to explain why what you have said is so wrong.

screw it I've done it for you:

"Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith."

Which is exactly what BitCoin would be if it was made legal tender. Far from freeing people from Fiat currency it would actually throw us deeper into the pit.

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Re: It's actually quite hilarious

I don't think the OP is calling for Bitcoin to become legal tender though (in the sense of, the national currency, i.e., something you get paid on, and must be accepted by businesses and the Government as payment). So no, Bitcoin is not fiat.

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Holmes

Re: It's actually quite hilarious

The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of

Not really.

As the printing presses run and promises are being made that future taxpayers can be milked enough (under threat of violence) to pay back the current promissory notes held by the corrupt owners of "government bonds", this becomes more and more of a situation where everyone is grabbing the balls of person next to him and everyone hopes that no-one sneezes.

Which bring us the idea whether Ghaddafi went from "friend" to "fiend" in 50 seconds because he wanted to set up a gold-backed North-African currency.

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Re: It's actually quite hilarious

OK, I don't get how the USD isn't a Fiat currency then??? It has no intrinsic value other than the faith that it can be exchanged for tangible goods.

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Re: It's actually quite hilarious

I don't get how the USD isn't a Fiat currency then

Probably because the USD is a fiat currency. (It's not a "Fiat currency", unless you use it to buy a Chrysler.) It has been ever since the US went off the gold standard.

It might be worth noting, tangentially, that fiat currencies do not have to be endorsed by a government. Small social groups create bottom-up fiat currencies all the time. For a while many people in Somalia were using redenominated notes issued by the then-defunct Somalian government (before it collapsed) as a fiat currency, based purely on informal agreement among the populace to honor it.

There's a longstanding argument among economic historians over whether money was "originally" top-down or bottom-up, but the evidence these days suggests that it was either or both, in various places and at various times. The ability of big human brains to envision complex hypothetical future scenarios lends itself pretty quickly to various ideas about using tokens to represent obligations, and that's in spitting distance of being money.

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Given that there are those who would like to see cash phased out, let's hope that nobody takes this seriously.

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Managing Bitcoin?

"Polis' comments reflect the sentiments of many Bitcoin backers, who have argued that the digital currency, properly managed, is no more dangerous or unstable than its fiat counterparts."

Given that the whole point of Bitcoin, as espoused by those backers, is its independent, non-government and inherently 'decentralised' nature, who is supposed to make sure it is "properly managed"? And how?

So, if the argument goes that Bitcoin is a safe currency If properly managed surely that is an empty argument unless you can explain how you would accomplish such a goal.

Note that I am not at all against Bitcoin - I don't worry that people might be up to no good, shielded by BTC's anonymity - I just don't believe it has a function as a 'real' currency. The main, practical benefit is as a token that you can use for such anonymous electronic transfers. I am very much for that as I wrap my foil hats rather tight but that doesn't make it a real currency in the sense of things being priced and employees being paid in BTC.

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Wild West

I remember watching firms when I was a kid. They were set in the wild west, and there would be a bank/stagecoach/train loaded with dollars, then some guys in black hats would turn up an steal the dollars.

Later some dude(s) in a white hat(s) would come along and sort it all out.

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gambling chip currency

Useful within a casino but not much outside. Created using a specialised manufacturing process with some interesting security properties. Your holdings go up or down relative to real money as they would in any casino where you gamble. In the case of Bitcoin this gambling chip is used within a network of casinos, so can go outside. Most users obtain these chips from a casino cage, here known as a Bitcoin exchange. It's also a bad idea to leave your cash at a casino cage for long in case the casino is robbed or defrauded and goes out of business. But without the exchanges, this gambling chip would probably cease to be played with, as new gamblers would find it more difficult to get involved, though these chips could hypothetically continue to be used between gamblers who arbitrarily value these.

And if the state really wants to regulate this game, it seems most rational this should occur based on the same motivations and methodology by which gambling is regulated.

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Anonymous Coward

If they scrapped the dollar what would rock stars use to snort their coke?

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Anonymous Coward

Dean Swift

Mr Polls's letter is an example of why people from across the pond should not do irony. It is meant to be a rapier, Mr P, not a bludgeon.

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"BitCoin ... is no more dangerous or unstable than its fiat counterparts."

BitCoin *is* a fiat currency. A fiat currency is a currency backed by nothing other than faith in the currency itself.

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>"BitCoin *is* a fiat currency. A fiat currency is a currency backed by nothing other than faith in the currency itself."

No, a fiat currency isn't tied to a good (such as gold) and can be added to as needed. Bitcoin actually functions as a non-fiat currency. There is a finite number of them that can exist due to the algorithms it is based on. That makes it a de facto non-fiat currency even though its virtual. The US dollar is a fiat currency. At any moment the Federal Reserve can say: "let's make another billion dollars". No-one can do the equivalent with BitCoin.

That's one of the things that greatly amuses me about BitCoin. It's an entirely arbitrary and digital currency that acts as a non-fiat currency whilst all those actual physical bits of paper in your pocket are a fiat currency. People need to update their mental categories to no longer confuse medium of exchange with the thing itself. In all practical ways, BitCoin is a non-fiat currency. Yes, it is valued because of faith in the value of them, but that's not actually what makes a currency fiat. The same can be said of people's faith in gold retaining its value (gold is priced much higher than it would be for purely practical reasons). What makes a currency "fiat" is that you can just make more of it when you choose. That's where the term "fiat" comes from. Like the Latin "fiat lux" means "let there be light". No-one can say "let there be BitCoins". You have to do work to calculate them and when all of them are calculated - that's all folks.

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Bitcoin is not all that

Actually, we are more than capable of overseeing transactions. I have submitted an e-petition that would force UK bitcoin users to register receive addresses with HMRC. This would effectively allow for investigation / legal consequences for anyone found using unregistered receive addresses (possible tax evasion / illegal activities). Don't worry bitcoiners, you have nothing to hide, it's not political it's math.

It's ironic that many hardcore bitcoin users hold anti-establishment views and tell us how greedy and irresponsible bankers and politicians are, yet they don't ever want to talk about the sheer scale of wasted electricity to secure the bitcoin ledger and for all of it's copycats. Go ahead, ask them how computer intensive it is and therefore the damage to the environment... but hey, the miners are not greedy or anything.

The so-called "decentralised" structure is apparently it's strength. Yes, sure, you can hold it "cold storage" but that's like saying we can run our own email clients. Well we can and some do... but it's only to be expected, with a ledger that is already in the multi-gigs, users will - stupidly or otherwise - be attracted to centralised services.. and hence the collapse of Mt.Gox that handled an estimated 70% of transactions. Ah yes, the oh-so-clever currency that can't detect when it's running on bad software.

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The irony is the US Dollar, like all fiat currencies is a fraud, so /should/ be banned.

All currencies are created as or end up as Ponzi schemes, so eventually have to be devalued or replaced, no exceptions; this is one of the dirty secrets their proponents really don't want the majority of their respective suckers to understand, because if they really did, there would be rebellions, and they would be out of business, and possibly dead!

Bitcoin is a currency, nuff said!

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Bah!

*nods* The Dollar: the wages of sin.

Y' can't stuff a stripper's G-string with bitcoin.

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Anonymous Coward

Hear, hear!

Let's get rid of all currency — after all, it is just a consensual fiction!

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