Slashdot Mirror
The Bitcoin Strikes Back
smitty777 writes "Slashdot readers are no doubt informed of the infamous crash of Bitcoin. In fact, its demise was followed closely here. Wired has a recent article tracking Bitcoin's climb out of chaos. Valued at $17 before the crash, it had lost 90% of its value due to the hacking incident, down to a low of $2. It climbed back up to $3 in December, and is currently valued at $4. From the article: 'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.' Still, Bitcoin has significant obstacles to overcome, such as covert mining, criminal uses, and other security issues."
Amir Taaki of the Bitcoin Consultancy (who did an interview here a while back) disputes the reasoning and the conclusions in the Wired article.
Regular money has criminal uses. The security concerns are also a non-issue as regular wallets and bank accounts are routinely stolen and money diverted.
The speculators push the price up, pay for press releases and stories, put up blogs talking about how awesome Bitcoin is... then they get out as soon as it starts selling for enough. They've done it once, judging from this article they're doing it again, are people going to fall for it again?
How is this an issue? IMHO if I had to get a virus I would much rather it mine for bitcoin rather than mine my bank account.
The main loss of value was due to the bubble bursting, not the hacking.
The hacking incident certainly didn't help though.
Pay attention to what is going on here, because you will start to see it in other areas as well.
The establishment (through the media) is attempting to build a consensus that Bitcoin is not a legitimate currency, but a "money transfer service". "Money transfer" is a service that carries with it the implication of guarantee against loss of value during that transfer. It is a regulated industry.
By branding Bitcoin a "money transfer service" in the eyes of the public, powerful banking interests will then be able to begin loading Bitcoin down with regulations. Large Bitcoin institutions may even go along willingly. Regulations create monopolies, and monopolies bring higher rents.
This is the classical method in which the free market is subverted by government regulation, and creeping nanny-statism benefits large, risky centralized corporate interests at the expense of main street. It is the prisoner's dilemma in action. So pay attention as it plays out.
"I assumed blithely that there were no elves out there in the darkness"
What was the peak (notional) value? A few tens of millions of dollars? That's just noise. A few nerds, pimps and pushers got all excited, played with it for a while, then got bored. The number of bitcoin nodes has been dropping steadily even before the Bit Sploit, and that's coming from the true believers on the bitcoin forums.
Sure, it's fun to discuss the theory, but can we please stop pretending that it was or could ever be a real currency used by actual folks.
If you were blocking sigs, you wouldn't have to read this.
I don't hold any bitcoin personally, but I will say the valuation trend of the past few months was entirely predicted by myself and others-way back around the initial crash from $32. It has enough momentum from diehards to suppress even functionally superior and safer crypto currency protocols like solidcoin. The crowd here will continue to jeer until their judgement is proven wrong. It will be many years.
It has value because we pretend it does.
So stop pretending about the US $, then.
Seems like both Slashdot and the people advertising Bitcoin just can't stop jacking each other off, can they? All those wonderful, astroturfed articles extolling the virtues of Bitcoin, then the bottom drops out of it faster than the lights go off when you hit the switch. Now they're trying to explain away its inadequacy by claiming that it doesn't actually "compete" with real money, even though that's what its proponents have been claiming from the very beginning.
How much does it cost to buy an editor on Slashdot? Maybe I should start asking the rejects from BoingBoing, they only wind up becoming editors here anyway.
Bitcoin isn't a national currency. National laws don't apply.
Please, PLEASE add "BitCoin" to the "Exclude stories by topic" /. site option.
#DeleteChrome
"It has value because we pretend it does."
absolutely true!
fiat currencies are just as much a shared hallucination as bitcoin.
at least bitcoins may provide more privacy...
Bitcoin has value over minutes, hours or days. As a store of value compared to dollars or gold, who would even presume tat till proven?
It may be time for new transfer services beyond Paypal (quick list wanted), but as a competitor to silver, oil or 5 year treasuries? Nope.
JJ
http://www.techworld.com.au/article/405849/mac_os_x_trojan_steals_processing_power_produce_bitcoins
And people say Apple computers are immune to malware.
Yes, because relative value of a Bitcoin vs USD is really what's holding the currency back, and not, in fact, the massive price instability.
Realistically, people don't want to use a currency that gains 1000% in value, then drops again, then up 200% in only a few months. Until you can pay your taxes in Bitcoin, you're going to have to convert money out of Bitcoin ASAP after getting it, to ensure you can actually meet future obligations, and that makes it a right pain to deal with.
Bitcoin is a very new technology, even though the concept that it brings to life is decades old. The double spending problem has been solved; this means that it is possible to use a digital certificate to stand in the place of money and be sure that no one else can spend that certificate other than you as long as you hold it. This is an unprecedented paradigm shift, the implications of which are not yet fully understood, and for which the tools do not yet exit to fully take advantage of this new idea.
This new technology requires some new thinking when it comes to developing businesses that are built upon it. In the same way that the pioneer providers of email did not correctly understand the service they were selling for many years, new and correct thinking about Bitcoin is needed, and will emerge, so that it reaches its full potential and becomes ubiquitous.
Hotmail used familiar technologies (the browser, email) to create a better way of accessing and delivering email; the idea of using an email client like Outlook Express has been superseded by web interfaces and email ‘in the cloud’ that provides many advantages over a dedicated client with your mail in your own local storage.
Bitcoin, which will transform the way you transfer money, needs to be understood on its own terms, and not as an online form of money. Thinking about Bitcoin as money is as absurd as thinking about email as another form of sending letters by post; one not only replaces the other but it profoundly changes the way people send and consume messages. It is not a simple substitution or one dimensional improvement of an existing idea or service.
As I have explained previously, Bitcoin is not money. Bitcoin is a protocol. If you treat it in this way, with the correct assumptions, you can start the process of putting Bitcoin in a proper context, allowing you to make rational suggestions about the sort of services that might be profitable based on it.
If Bitcoin is a protocol and not money, then setting up currency exchanges that mimic real world money, stock and commodity exchanges to trade in it doesn’t make any sense. You would not set up an email exchange to buy and sell email, and the same thing applies to Bitcoin.
Staying with this train of thought, when you type in an email on your Gmail account, you are inputting your ‘letter’. You press send, it goes through your ISP, over the internets, into the ISP of your recipient and then it is outputted on your recipient’s machine. The same is true of Bitcoin; you input money on one end through a service and then send the Bitcoin to your recipient, without an intermediary to handle the transfer. Once Bitcoin does its job of moving your value across the globe to its recipient it needs to be ‘read out’, i.e. turned back into money, in the same way that your letter is displayed to its recipient in an email.
In the email scenario, once the transfer happens and the email you have received conveys its information to you, it has no use other than to be a record of the information that was sent (accounting), and you archive that information. Bitcoin does this accounting in the block chain for you, and a good service built on it will store extended transaction details for you locally, but what you need to have as the recipient of Bitcoin is money or goods not Bitcoin itself.
Bitcoin’s true nature is as an instant way to transmit money anywhere in the world. It is not an investment, or money itself, and holding on to it in the hopes that it will become valuable is like holding on to an email or a PDF in the hopes it will be come valuable in the future; it doesn’t make any sense.
Despite the fact that you cannot double spend them and each one is unique, Bitcoins have no inherent value, unlike a book or any physical object. They cannot appreciate in value. Mistaken thinking about Bitcoin has spread because it behaves like money, due to the fact it cannot be double spent. This fact however has masked Bi
ATH0 Bitcoin: 1DnwFLXczVZV8kLJbMYoheUrpqHesjxrSi
Are you sure it's really BitCoin "striking back" and not a bunch of emotionally invested sycophants, disciples, apostles, and monetarily invested money launderers?
Open an account at Bitcoinica.com, wire them some cash, set your leverage to 10:1, short Bitcoin.
absolutely true!
fiat currencies are just as much a shared hallucination as bitcoin.
Any medium of exchange is just as much a shared hallucination as bitcoin. Things have value because we pretend they do.
It's just an old scam with a different front.
You sound smart. Do you think the price is gunna go up or down?
Just kidding. That was an interesting read.
While bitcoin has failed as a currency, it is true that it could be used for money transfer. If the receiving party cashes out regularly, there is not much risk involved, and the transfer itself is fast and cheap. The problem is with the cashing out part: just like Paypal or Mastercard refused to relay money to Wikileaks, bitcoin exchanges can also deny doing business with certain people. The advantages of P2P are lost when you want to get some money for your coins.
There will always be a lot of lying around money, expect it. If you can't see the lies then you need to look a little more.
In terms of the variable value of Bitcoins there has been proposals to address this in various ways by alternative currencies. It's natural to have variation however in a normal currency. Bitcoin is still a commodity like any other, it's not a panacea it's not going to rescue the world on it's own but it can definitely make the biggest difference out of recent technologies.
Further, now the idea is out there, it's out there. Is the biggest Anarchist device ever
The US $ is backed by guns. Domestically, by the IRS, which accepts payment only in $, even for bartered goods and labor. Internationally, by the U.S. military if an oil-producing country tries to go off the petro-dollar.
Granted, the US $ has no intrinsic value the way gold does, but there is more pretend going on with BitCoin than with the US $. Even with the pretend, I'm a fan of BitCoin due to its scarcity, anonymity, and digital transfer -- the trifecta of "digital cash" (normally only two of the three are possible). For the past ten years, I've argued to transportation departments that digital cash is a privacy-preserving alternative to EZ-Pass et al, only to deaf ears. The ability to subpoena time and location data is too valuable to police departments.
Has the same intrinsic value as the dollar. Nothing.
more cowbell
I'm a fan of BitCoin due to its scarcity, anonymity, and digital transfer
- never mind the rest of your comment, but anonymity is not part of BitCoin operation.
Every client/server knows every single transaction that was ever transacted in BitCoins, that the exact opposite of anonymity. Any paper dollar, any piece of gold, any paper euro has more anonymity than BitCoin, BitCoin has none.
You can't handle the truth.
Hopefully they get the gift of not having to spend any time with you.
http://www.busyweather.com/
If you want to offer a contradictory viewpoint from a less-biased observer, that's fine. But if you go straight to the maximally biased source, it's suggestive that there isn't an unbiased source with that perspective in the first place. Maybe there is, but if so, use them. If not, don't bother with "balance".
In some cases, you have to wait up to seven days to receive a transfer of your fiat currency after it has been cashed out of your account from Bitcoins. Whilst this is not a fault of the exchanges, it represents a very real impediment to Bitcoin acting in its nature and providing its complete value.
Yes, this is a serious problem limiting the use of bitcoins. I don't see how the situation can be improved without improving the ability to quickly and reliably transfer fiat currencies between accounts.
Regarding the main point, using bitcoins to facilitate currency transfers. It seems to be a pointless middleman, if an exchange can do USD -> BTC -> GBP, then surely it can just do USD -> GBP and skip the bitcoin part completely.
I found your post interesting, even though it appears to plagiarise this blog post, but I'll give you the benefit of the doubt and assume it's your work.
Anyway, your point is sort-of valid. I too find Bitcoin far more interesting as a protocol than as a real currency, because as a currency it is flawed, but it is a substantial step forward in the application of cryptography to seemingly unrelated problems.
You posit Bitcoin as not-a-currency, but a protocol for the exchange of currency. This doesn't making sense. Let me highlight the errors of logic in your argument by replacing all of your mentions of "dollars" with "valuable goods" and all mentions of "Bitcoin" with "dollars". Your post would now be saying (at first) perfectly valid things about money, and then coming to a conclusion that the end result is not-money, because... it doesn't work as money, so I don't want it used as money. E.g.:
Dollars are a very new technology, even though the concept that it brings to life is decades old. The double spending problem has been solved; this means that it is possible to use a paper certificate to stand in the place of valuable goods and be sure that no one else can spend that paper certificate other than you as long as you hold it. This is an unprecedented paradigm shift, the implications of which are not yet fully understood, and for which the tools do not yet exit to fully take advantage of this new idea.
Compared to exchanging good and services by trying to remember who owes what, dollars are a great improvement. It solves a lot of problems. You either have your money or you don't -- solving the "double spending problem".
Paper currency, which will transform the way you transfer goods and services, needs to be understood on its own terms, and not as a good. Thinking about dollars as a good is as absurd....
Still perfectly true, see? Money is not a good in and of itself. It's a piece of paper, and these days, not even that.
If dollars are a protocol and not goods, then setting up currency exchanges that mimic real world exchanges to trade in it doesn't make any sense.
This is where your argument breaks down. So far, Bitcoin has described something identical to money. Now, there are exchanges for money because there's more than one kind of money. There wouldn't be foreign exchanges if there was only one global currency. You also mixed up other sort of markets (e.g.: stock) with foreign exchange -- they're fundamentally different, because they buy and sell shares, and wait for it... cash is used only as an intermediary -- a protocol to facilitate the exchange.
The same cow is sent to India, whether you use $10,000 or $1. The price of dollars is irrelevant to the good that is being transmitted...
Now, again, that seems sort-of OK on the surface. It's true of dollars too, not just bitcoins. You can "send" a good to someone in another country by sending them enough cash to buy that good locally. This transfers real value, irrespective of the instantaneous "value" of the currency. Makes sense. Except that we know that it doesn't. The dollar would not be useful if its value suddenly dropped to "near zero". This has happened with real currencies before, and almost always results in massive economic damage and the permanent discontinuation of the currency.
The dollar's true nature is as an instant way to transmit the value of goods anywhere in the world. It is not an investment, or the good itself, and holding on to it in the hopes that it will become valuable is like holding on to an email or a PDF in the hopes it will be come valuable in the future; it doesn't make any sense.
And at least USD is actually useable to buy a car and house.
Guess which one I prefer: The anonymous, p2p, super cool hi tech bitcoin, or the currency that I can use to purchase goods and can be paid by an employer with?
Gold doesnt have any intrinsic value in the sense that you are using the word. It has intrinsic value in its usefulness (alloying, electronics, etc), but those are wholly out of line with its monetary value.
If we wanted to get all semantic and argue it, I could point out that a US dollar also has intrinsic worth, since I can write notes on it, and in the event of a global extinction event, the ability to transmit messages on paper would be of far more value than the ability to make gold-plated electrical connectors.
So long as governments define myriad victimless activities and mere attempts to keep their prying nose out of your private financial transaction as "crimes," I would say Bitcoin's "criminal uses" are a feature, not an obstacle.
Liberty in your lifetime
"Any medium of exchange is just as much a shared hallucination as bitcoin..."
commodity based you can at least barter with or consume; in general you are correct and we agree.
they all have trade off's. i'll take decentralized, secure (potentially anonymous) Bitcoin and fend off the hackers while others pay banking intermediaries high fees for transactions performed at their leisure, presumably with less risk.
to each their own... ;)
"It has value because we pretend it does."
absolutely true!
fiat currencies are just as much a shared hallucination as bitcoin.
at least bitcoins may provide more privacy...
...and can't be produced out of thin air.
So you will just use whichever currency suits your needs. That makes sense, congratulations. NOONE WOULD ADVISE AGAINST THIS.
Wouldn't you agree that it is nice for people (including future you) to have a choice? Or do you think that everyone in the world should be expected to have the same priorities as you do, specifically, right now?
That scam is still around?
Bitcoin is produced out of thin air, it's just harder to do so but one only has to let a computer grind on it for awhile. It seems like a silly system when there is a hard limit of 21 million of them. I think it's a poorly thought out currency system when there's only roughly 1 bitcoin for every 300 people. I don't think it's a human-friendly system if we're eventually going to have to deal with it in scientific notation if it does ever take hold.
Essentially this is just going to be an ongoing scam then. One marketing approach fails, they roll onto "Well we're REALLY a *Insert New Scheme* and all of you just misunderstood!"
But hey, a sucker born every minute right?
Cue all the people who now tell me "No no no! You just don't get it!"
Chas - The one, the only.
THANK GOD!!!
nt
Bitcoin is the most traceable "currency" in the world. It's just that bitcoin accounts don't have names attached, making them less tracable than bank account transfers, credit cards, etc., but certainly you can trace them, and ask the first legit possessor how they obtained them.
There should probably be an anti-fraud protocol that attempts to trace the paths of fraudulently transferred bitcoins. You could establish "super" civil rights protections around it that complied with the tightest civil liberties rules in various countries, much like wikileaks did for journalism, but ultimately provided a sensible framework for ex-post-facto dispute resolution.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
I should have clarified that I think Bitcoin intrinsically lacks qualifications for a currency capable of buying a car.
For instance, a break through in prime factorization (or however bitcoins are created) that is kept secret could mean that someone generates a ton of money out of thin air, which are impossible to identify apart from normal bitcoins (as they would be legitimate bitcoins). Think the counterfeiting problem, except a breakthrough here means an exponentially bigger problem.
Further, the problem of the wildly fluctuating prices: why would I want to store money in a currency whose value can wildly fluctuate from $17 ea, to $2, to 4, all in the span of a year? Why would a bank want to give out loans in a currency when they could end up receiving far less than they loaned out? Why would I want to loan from them when my debt could skyrocket in price?
Further, I can think of very few usecases for the anonymous features of Bitcoin. Every scenario I can think of involves activity that is internationally illegal (ie, money laundering). How would you like seeing Big Corp, Inc have $1B in bitcoins from venture funding, then "losing" $500 mil to "unforseen contingencies", and knowing there is no possibility of tracing what happened? Hmmm, doesnt sound so good now does it?
And my understanding is that we moved away from a gold standard precisely so that we could regulate the economy to some degree by controlling the flow of money. We gave up the stability of having some real-world backing (gold) so that we could have more flexibility. Bitcoin has the worst of both worlds: its "backing" is a mathematical function, the supply is uncontrollable, and its value is unstable. Wooo, where can I sign up?
I don't think it's a human-friendly system if we're eventually going to have to deal with it in scientific notation if it does ever take hold.
Why bother with scientific notion? Just use SI prefixes.
upon the advice of my lawyer, i have no sig at this time
It was like bitcoin in the 90's and early 2000's, until the U.S. government can't tolerate it as an alternative currency and use all sorts of reasons (kiddie porn, illegal drug transaction, gambling etc.) to shut it down.
New Economic Perspectives
Just for clarification, there are a set number of Bitcoins being mined over time, regardless of computational efficiency. The only "breakthrough" issue would be breaking the hash algorithm - which would mean huge problems for the traditional financial industry as well.
Learn about Photography Basics.
Bitcoin transactions are very traceable and there is no indirection or anonymization built into the software. The GP doesn't know what he is talking about.
Bitcoin can't compete with Western Union Money Transfer, let alone forex trading, because the total volume in bitcoins is tiny. Yesterday's Bitcoin volume was about $50,000. (Some days are higher, but that's mostly the same money trading back and forth. There are trading programs running.) If one business the size of a typical supermarket converted a day's receipts in Bitcoins to dollars, the Bitcoin market would crash.
Bitcoin is behaving like a penny stock. It crashed from $31 to $2, and now it's noodling around in the $2 to $4 range.
Anyone remember Beenz? Flooz? DigiCash? CyberCoin? This isn't the first try at a "digital currency". I suspect that someone will probably make this work, but that somebody will be Facebook. Apple, or a telco.
Bitcoin is the currency of choice for potheads and pedophiles. I hope it never recovers and everyone who used it got fucked.
Money doesn't have value "because we pretent it does", it has value because it can be used to clear tax, and other, debts with the government. No pretenting required.
For instance, a break through in prime factorization (or however bitcoins are created) that is kept secret could mean that someone generates a ton of money out of thin air, which are impossible to identify apart from normal bitcoins (as they would be legitimate bitcoins).
They're created through brute forcing SHA256 hashes to meet a specific criteria. As the global hashrate rises, a difficulty factor is automatically adjusted to keep generation constant at 300 per hour.
If you invent an inexpensive piece of hardware that can push several orders of magnitude more SHA256 hashes per joule, you will successfully capture a disproportionate percentage of those 300 coins per hour. You do not get to generate unlimited coins - you just asymptotically approach 300/hour.
In fact, this has already happened: hashing used to be done on CPUs at about 10-20 MHash/s per core; then the RadeonHD happened. Suddenly some people had access to hundreds / thousands of "cores" (they're vector processors, practically miniature Crays for $200 a pop for this problem), pushing 500-1000 MH/s per GPU. Hashrate surged by orders of magnitude as people bought 58xx and 59xx cards as fast as they could make them, and difficulty rose in lockstep. End result: CPUs are now irrelevant and Radeons are marginally profitable if you have cheap power. It wasn't a problem.
It's also easy to switch to a new proof-of-work if someone completely breaks SHA256.
There are some significant weaknesses in Bitcoin, but this isn't one of them.
Aren't libertarians actually for anti-fraud regulation and enforcement? or is that just another pro-nanny-statism wuss, real men would just hire their thugs^H^H^H^H^Hfree-market security-entrepreneurs to crowdsource their highly efficient non-governmental dispute resolution system.
"Internationally, by the U.S. military if an oil-producing country tries to go off the petro-dollar."
there is no petro-dollar. Countries which export petroleum could decide to sell in whatever currencies they want---you can exchange billions of dollars for other major currencies with a bank in a minute long phone call.
It happens that both buyers and sellers find using USD for settlement is mutually convenient. If a seller insisted on qatari dinars or whatever, the buyer would probably agree, but pay a little bit less because of an extra administrative step to say deposit and change money from a bank that handles the smaller currency.
Oil exporters like to hold dollars. But if Saudi Arabia wanted to sell oil to Korea and price in won, would the USA care? No. It's just that Saudis themselves prefer dollars to won though these days they'd probably take euros equally.
The military makes all sorts of contingency plans.
...only an oscillation from a low point. Try as hard as you will, Slashdot; the world isn't ready for "Bitcoin adoption."
The idea behind this is that the central bank and government would be responsible with the power to regulate the money supply. That means to not create more in times of plenty and growth, so that it could be done to stave off recessions/depressions without causing constant inflation. What has happened in reality is constant pumping of bubbles in times of plenty, and then even more creation of money in times of need. This occurs because it is politically advantageous to do so, but has lead to the creation of absurd amounts of credit/debt that each following generation needs to deal with. Noone knows how to deal with this in a politically acceptable way so the can keeps getting kicked down the block. The original idea is utopian, and is at the root of the financial problems plaguing the world today.
If you invent an inexpensive piece of hardware that can push several orders of magnitude more SHA256 hashes per joule, you will successfully capture a disproportionate percentage of those 300 coins per hour. You do not get to generate unlimited coins - you just asymptotically approach 300/hour.
On the other hand, if you can push significantly more SHA256 hashes than the rest of the Bitcoin network you can rewrite history in a way that lets you spend the same Bitcoins multiple times. (There's also a subtle security flaw in some versions of the Bitcoin software that allow you to spend other people's Bitcoins if you can do this. This should be impossible due to the ECDSA signatures in transactions, but for speed reasons the software doesn't actually bother to check them under certain circumstances.)
Crash course in laize faire capitalism.
I'm a bitcoin speculator, I believe in the value of the currency and the extrication of the information world from the policed world.
The truth about bitcoin is that significantly more money has been invested in bitcoin than the current total value of the currency. This is not because it's a ponzi scheme, it's because it has opponents. People who are willing to lose money to keep out other investors and drive the price down. Who? Well obviously I can't tell for sure but it makes sense that the U.S. government, major hedge funds, and billionaire diversification wealth management services are involved. Why? Well first to maintain the value of existent wealth, if you have billions that's a level of money that you simply can't spend... you and your great great great great grandchildren will be wealthy... unless something changes. These people diversify into gold and resources when any chance of real social change comes on into the picture, these funds are geared to this... not profit.
But why not just buy it all up? Why drop the price and keep people thinking it's worth $4? Well the really terrifying thing for these groups is that people would have a realistic notion of how much money there is in the system. People, particularly middle class people, are aghast when they begin to understand how much conventional currency actually exists. There are hundreds of people who could pay you through your great great great great great great grandchildren (all of them) a good wage to bash your face against a wall. With a finite currency, you'd KNOW that you have less than 1/10,000,000,000 of total USD (assuming a solid retirement savings and decent home, for example). That spells rebellion against existent currencies.
How? Buy high, sell low. Not difficult, and surprisingly, not very expensive (especially when you can sell to yourself). And in addition make strategic sells when speculators buy large lots so that many of the high volume trades appear to be people unloading when in fact most of the transaction was people buying (50,000 price goes up 50c strategic sell right at the end of 2,000 and the overall price trade blip goes red) People are willing to accept the price on offer in most cases, there are always amounts trickling in from people who accepted donations, sold goods (for the current price), or are forced to give up their speculation for financial reasons. Speculators like myself are more than happy to buy in at the current value, and people who don't care (or know better) simply accept the exchange rated value as the actual.
I saw an example of this while watching the market on the 21st, when it went up to $4.50 and then dropped to $4 in less than 1 second, with a huge heap of available coins suddenly appearing, available in the evacuated space. It looked like the price had never moved.
Personally I think the brains have been stolen from again and again by the cult of personality and back door individualistic crony capitalism. We NEED our own capital pool, not just because of the many options bitcoins make available but because we'll never be free to create, invent and work together seamlessly if we can get backstabber by anyone with a hand in government, fiscal policy etc. Regulations have never helped us, the people buying change and directing the regulators have never been brains, they've always been the wealthy and the politicians. The ability to sabotage our and each other's projects is at the core of why billionaires struggle to get more billions, so they can fight one another. It takes time, effort, and brains to build something... it takes nothing to pull a fire alarm. The problem is people who think it takes a lack of ethics, they think that's a real thing, god help them.
Me and other speculators who really believe in bitcoin are holding on to our coins, and I imagine the pool of coins available to the people trying to lower their value is going down. In the coming weeks we'll see more and more articles of this nature. With even o
http://newstechnica.com/2011/06/18/bitcoin-to-revolutionise-the-economy/
To reduce bitcoin to its transactional features is short-sighted. This is being done as a marketing spin.
Bitcoin is many things, firstly, bitcoins are "precious bits". You can "own" certain amounts of bitcoins merely by being the only one to know the private key to a bitcoin address that had some coins transferred to it.
These precious bits are being used as money (and therefore are money), for direct payment of goods and services, without exchange to any of the established fiat currencies. I've done it many times. I've been payed to write code in BTC and I did not exchange them for anything, neither immediately nor later, I still hold on to these coins (store of wealth) and will someday buy something with it (maybe pizza, but I hope it'l be more than that). Additionally bitcoins are easily divisible and recognizable and therefore bitcoin is a money.
Is it a commodity money? That depends on wether these "precious bits" (which don't actually exist), are a commodity. I'd say no, but in the end: who cares?
Bitcoin is obviously money.
Bitcoin competes against VISA/PayPal/Google/Apple, true, but it also competes against USD/EUR/SDR/Gold/Silver/ChickenFeet/Salt/Sheep.
I say let there be competition! Currency competition will probably become a necessity after of our paper money has collapsed (don't think it'll collapse? read here: http://papermoneycollapse.com/ [papermoneycollapse.com]). We will need some sound money at some point, otherwise we're back to barter, which is highly inefficient. I'm not saying bitcoin is our saviour, but it should be allowed to compete. (It will compete without permission, regardless, but that may make it a little harder)
Just because its value has been bootstrapped (and is still being bootstrapped) by way of exchange to/from FIAT, doesn't mean bitcoin is merely a payment processing mechanism.
Whoever says bitcoins have no value by themselves, should try the following for educational purposes:
* actually acquire BTC 10 somehow.
* visit silkroadvb5piz3r.onion and buy some gardening supplies
* hold on to 1 bitcoin for 1 year (this is called "saving" and makes sense only when using sound money (as opposed to FIAT money which is constantly being inflated))
Oh, by the way: still mad about not having been an early adopter in the Summer '11 bubble? Well, here's you second chance.
Merry crisis and happy new fear.
Yay let's move the price around on Christmas! When no one's at their desk!
Possible exceptions:
Sad Bitcoin Speculators
Government/Hedge fund flunkies
People who want a Slashdot article (1 a week on BTC is excessive, is there some system where articles can not hit the main page but we can sign up to see them?) but don't want anyone to read it or comment!
I should have clarified that I think Bitcoin intrinsically lacks qualifications for a currency capable of buying a car.
For instance, a break through in prime factorization (or however bitcoins are created) that is kept secret could mean that someone generates a ton of money out of thin air, which are impossible to identify apart from normal bitcoins (as they would be legitimate bitcoins). Think the counterfeiting problem, except a breakthrough here means an exponentially bigger problem.
If there is a secret breakthrough in prime factorization, we have bigger problems than bitcoin. One problem would be criminals accessing your conventional bank's website and stealing all of your money.
It's highly unlikely.
Further, the problem of the wildly fluctuating prices: why would I want to store money in a currency whose value can wildly fluctuate from $17 ea, to $2, to 4, all in the span of a year? Why would a bank want to give out loans in a currency when they could end up receiving far less than they loaned out? Why would I want to loan from them when my debt could skyrocket in price?
The stability problem is because so few people are using it. If bitcoin had as many people using it as, say, the Euro dollar, it would be more stable than any other currency. One day it might become very stable indeed, it's certainly designed with that goal in mind.
Further, I can think of very few usecases for the anonymous features of Bitcoin. Every scenario I can think of involves activity that is internationally illegal (ie, money laundering). How would you like seeing Big Corp, Inc have $1B in bitcoins from venture funding, then "losing" $500 mil to "unforseen contingencies", and knowing there is no possibility of tracing what happened? Hmmm, doesnt sound so good now does it?
Bitcoin is not designed to be anonymous. It's has security features which involve *everyone* who uses bitcoin helping out to verify the validity of *every* transaction in the world. Do you want your next door neighbour to know how much you get paid each week? No? That's why bitcoin has strong privacy.
Bitcoin needs privacy as a side effect of the way it works, not because it's designed to be anonymous.
And my understanding is that we moved away from a gold standard precisely so that we could regulate the economy to some degree by controlling the flow of money. We gave up the stability of having some real-world backing (gold) so that we could have more flexibility. Bitcoin has the worst of both worlds: its "backing" is a mathematical function, the supply is uncontrollable, and its value is unstable. Wooo, where can I sign up?
Plenty of people around the world think it was a very bad idea to move away from a gold standard.
The primary issue with BitCoins is that its a decentralized currency - but the primary way to exchange it for other currencies is via a highly centralized exchange.
I believe it will only really take off once a decentralized exchange system exists.
I transfer the coin into any machine. Put it on a CD and it's gone until I bring it back. There's no record, it's anonymous.
The fact that it is so much cheaper despite being a middle man in that transaction should tell you something,
Summary is misleading. The price didn't fall from $17 because of hacking. It fell because its brief over-popularity explosion went back down.
Unless they have access to Silk Road's records. ;)
You're assuming everyone is willing to disobey their legitimate superiors and laws. People do not have a right to Bitcoin. People do not have a right to copy (most) information. Laws restricting Bitcoin and copying information are generally legitimate laws, and people have a moral obligation to obey them. Even if unenforcable, a law that makes Bitcoin illegal is a death knell.
Luckily this is the first sentence I read then stopped reading.
Quote : " It is not an investment, or money itself, and holding on to it in the hopes that it will become valuable is like holding on to an email or a PDF in the hopes it will be come valuable in the future; it doesn’t make any sense."
Then it must also make no sense to mine? Bitcoin value pay for hashing power that in turn make it work securely.
You clearly don't understand the basics.
Fair enough on the first point, I have reservations about the second, and on this...
Plenty of people around the world think it was a very bad idea to move away from a gold standard.
I would remark, why then should we move to the "prime factors" standard? It doesnt even have the fake intrinsic value that gold has due to its multi-thousand year history as a currency; bitcoins have value only because people in the last 2-3 years have decided they do. That is a REALLY poor standard for gold.
That was my point: Gold standard has benefits and problems, an un-backed currency has benefits and problems, but an unbacked currency with uncontrollable supply has the worst of each.
If you invent an inexpensive piece of hardware that can push several orders of magnitude more SHA256 hashes per joule, you will successfully capture a disproportionate percentage of those 300 coins per hour. You do not get to generate unlimited coins - you just asymptotically approach 300/hour.
Fair enough, obviously I know little enough about that part of it that I cannot refute that.
Bitcoin is digital, with all the qualities of information that make information non scarce.
Except that the creator of Bitcoin artificially added scarcity: there will only ever be 21 million bitcoins created. Which is part of the reason we're seeing all this hoarding and speculation, and indeed probably an important aspect of why Bitcoin has got so much attention; the limited amount of coins appeals to a certain fairly common kind of libertarian geek.
This article is not about generating Bitcoin, its about the role and true nature of Bitcoin in transactions once its in circulation.
Yes
You have mixed two arguments here, part of a Keynsian monetarist argument for unlimited money supply controlled by the State, and a crude Ad Hominem attack.
There is no such thing as 'artificial scarcity'. Everything physical in the earth is limited in amount. Money that is created by fiat is unlimited, and is therefore not only contrary to common sense as money relates to physical goods, but is irrational in a mathematical sense.
Hoarding and speculating in Bitcoin is no different to the hoarding and speculation that happens in any other scarce commodity, so by citing hoarding you are actually giving weight to the argument that Bitcoin has value for reason other than it has an appeal only to 'libertarian geeks'.
If you have anything intelligent to say on a subject, I suggest that you say it, instead of boring everyone with your ill thought out, low wit sarcasm and dullardry.
You said in your article, "The same is true of Bitcoin; you input money on one end through a service and then send the Bitcoin to your recipient, without an intermediary to handle the transfer. Once Bitcoin does its job of moving your value across the globe to its recipient it needs to be ‘read out’, i.e. turned back into money."
What you are describing is the exact purpose of money. That's its only job. To store and transfer value. In your example you have obviously (like we all constantly do) unconsciously accepted that money is simply dollars. Dollars actually are not money. Fiat currencies work temporarily but there is no way for it to be issued and sustain itself for any more than 40 or 50 years. Not only has it never happened, but Its a mathematical inevitability that it will fail. (the average lifespan is 23 years if I remember correctly)
Let's take your quote, and exchange the words "money" with "product." In this case suddenly you have something that is being exchanged for value, whether you prefer it to be paper dollars or a physical good. This is the entire role of money. You may think, just because it isn't printed by governments or it doesn't have a face on the front of it, that it doesn't seem like the "money" we are used to. But economically, Bitcoin is a far better money and exchange of value than all other paper money, and its advantages even rival that of gold and silver.