World's First Bitcoin ATM

bill_mcgonigle writes "I just bought bitcoins from the World's first Bitcoin ATM at Liberty Forum. I created an account using an Android Bitcoin client and held up its QR code to the Raspberry Pi-based device's optical scanner. After I fed in a $20 Federal Reserve Note, I got back a confirmation QR code on its display, which I then scanned and checked the third-party confirmation URL. The machine can function on any wireless network and will soon be available for purchase by merchants, who can make a commission on customers' Bitcoin purchases."

Comments

Ironic

[Anonymous Coward]

Whats ironic about this is that the bank note is now just as worthless as a bitcoin.

Re:Ironic

[Anonymous Coward]

Actually the bitcoin is worth more because it's very difficult to expand the bitcoin supply while expanding the currency supply is trivial.

Re:Ironic

[peragrin]

that's my thought.

The only thing holding value in the US dollar is ignorance. One of these days people will slowly realize that the USA has no money and can't pay it's debts as the USA like most of the western world don't know anything about virtual money.

You can't spend more than you take in, but we let governments guess at how much they are taking in and spend 10-20% more than that because they like thinking the GDP has some relevance to the government income of tax revenue.

One simple law could solve the long term finical issues. The base amount the government can spend is equal to the previous years tax revenue. Anything beyond that must be in the form of a loan, war bond etc, that needs to be paid back.

Re:Ironic

[Anonymous Coward]

Whats ironic about this is that the bank note is now just as worthless as a bitcoin.

Incorrect troll is incorrect.

Re:Ironic

[murdocj]

Speaking of ignorance... the only reason ANY currency is worth ANYTHING is that people are willing to exchange it for something else.

Perhaps you could start by learning to spell "financial"?

Re:Ironic

[B33rNinj4]

I disagree. Ever try to give a stripper or hooker bitcoins? Bad idea...trust me.

Re:Ironic

[Anonymous Coward]

Sir, you deserve more modpoints.

Re:Ironic

[brokenin2]

That won't work, because the US government would just take out a shit pile of loans pro-actively instead of retro-actively.

Re:Ironic

[Anonymous Coward]

Well, a dye-sublimation printer works pretty well but I can never find paper that looks quite right.

Or did you mean something else?

Re:Ironic

[blue trane]

Why does artificial scarcity create value? Only if the items are "positional goods"; if they derive value from others not having it. But money should be a tool to help raise standard of living and improve conditions for everyone.

Re:Ironic

[blue trane]

Why can't you spend more money than you take it? In fact the US has done this since its inception, and predictions about its demise have gone unfulfilled. Grandchildren have continued to be better off than their grandparents, despite the hyperbolic paranoia of deficit hawks screaming that the sky is falling since Alexander Hamilton's doctrine of assumption created the first national debt.

Re:Ironic

[Anonymous Coward]

Grandparent post demonstrates that ignorance is not in danger of running out any time soon.

Re:Ironic

[AuMatar]

No, the thing holding together the US dollar is common acceptance. It has value because I can go to the store and be assured the man behind the counter will take it. We do that because it's better than a barter system, and we've all mutually agreed to use dollars. The only thing that could harm that would be a large number of people suddenly deciding not to accept it. The amount of debt the US government issues has no bearing on it, unless they decide to massively print money to pay off that debt. Nobody accepts dollars because of the amount of US debt, they accept it because they know they can trade it again.

Re:Ironic

[Anonymous Coward]

The only thing holding value in the US dollar is ignorance.

No, it's the $15 trillion in economic output.

Re:Ironic

[r1348]

Actually I recently read a paper from Tim Morgan, a researcher at Tullett Prebon, that claims that the economy is basically just a dynamic balance between produced energy and consumed energy, and currency is just an intermediary state that loses meaning if there's no energy to buy with it (every product is as valuable as the energy used to craft it). This basically associated the economy to physics, and not to finance, and defines debt as a bet on future energy.

You can read the full paper here http://www.tullettprebon.com/strategyinsights/media_resources.aspx

Re:Ironic

[r1348]

Repying to myself just to add the full link to the paper: http://www.tullettprebon.com/Documents/strategyinsights/TPSI_009_Perfect_Storm_009.pdf

Re:Ironic

[ahabswhale]

Translation: you're super pissed that the dollar is holding its value regardless of the US debt.

Want a tissue?

p.s. You have no idea how currency works.

Re:Ironic

[Anonymous Coward]

It has value because I can go to the store and be assured the man behind the counter will take it. We do that because it's better than a barter system, and we've all mutually agreed to use dollars.

Businesses take it because when the IRS knocks, the only payment that will be accepted is in USD.

The only thing that could harm that would be a large number of people suddenly deciding not to accept it.

How will those people pay the IRS if that happened?

Re:Ironic

[Sussurros]

southworth cv 100% cotton paper

Re:Ironic

[Anonymous Coward]

I posit that artifical scarcity alone does not create value. However, with no artificial scarcity a money cannot hope to maintain value.

History teaches us that successful currencies have a number of properties including:
- scarcity
- divisibility
- durability
- value as something other than a money (let's say "intrinsic value")

Gold has been the most successful money and has all of these properties but is costly to send and costly to store.
Bitcoin is an experiment where intrinsic value is sacrificed for highly efficient transfer and storage. Clearly, Bitcoin is succeeding in the medium term but the long term effects of having no intrinsic value are truly open to speculation.

Aside: Fiat can be thought of as an experiment in replacing essentially physically enforced scarcity for a legal one; this experiment is ongoing and while there are certainly economic advantages, there is no denying the obvious, expected disadvantage that fiat is a poor storage of wealth.

Re:Ironic

[Sarten-X]

...but it's so much more fun to rant about the Big Bad Government doing everything wrong, and how one simple change can fix everything...

Re:Ironic

[hydrofix]

One of these days people will slowly realize that the USA has no money and can't pay it's debts as the USA like most of the western world don't know anything about virtual money.

Well, you still can't change the fact that the USD is the world's reserve currency and the de facto universal currency for measuring the value of "stuff". Wanna buy some BitCoins? Browse to Mt.Gox and the BitCoins' exchange rate is expressed in USD for exactly this reason.

If a distributed virtual currency is to replace the fiat currencies, the process is going to be slow and manageable, and will take decades. It will also require the co-operation of those in control of the present-day fiat currencies. I don't have any hard figures, but I bet even though gold has been around much longer than distributed virtual currencies, only a fraction of world's wealth is in gold; much more is in government bonds and foreign cash reserves. So even if one currency has immediate value, it obviously does not lead to the collapse of other currencies that have only fiat value. Fiat currencies are backed by governments, which are very powerful.

Re:Ironic

[Anonymous Coward]

Of course, a government can spend more than you take in, but only if it is supported by an eternally growing economy and the total amount borrowed is a linear function of the economy. This, unfortunately, is a weak position to be in should you face a recession/depression.

If a government tried instead to maintain savings proportional to the GDP (maintained a treasury) it would not have this weakness and arguably much more power and flexibility when it came to recessions in applying Keynesian strategies to promote economic health.

Re:Ironic

[starworks5]

I was wondering what you all thought about the energy theory of value, contrasted with labor or subjective theory of value, and the concept of having a currency based on the "joule standard". I feel as if it could more accurately describe both labor costs, scarcity in commodities, and environmental externalities. Additionally It would be possible to use this as the basis of agent based economic modeling, including a full economic analysis of labor, commodities, and natural capital, or at least a beginning framework for which to define object relations.

Subjective value theory tries to place "worth" on an item, and the corresponding labor that goes with it, can reduces the price through variable labor costs. What Marxists say is that labor is traded for other labor, and you shouldn't get to dictate what labor is worth, but how much labor a particular item costs. In terms of labor theory of value labor is not a "worth" it is a cost, and your products have to meet the socially necessary labor time, the average amount of time it takes to produce a good, in order to cost the average amount in society.

In this view all capital is the product of labor, and the use of capital in labor increases its value, so that the doctor does get paid more than the farmer. However a doctors amortized fixed capital costs (in labor time) aren't nearly as high as the incremental costs of labor, but by using subjective value theory you can distort them.
This distortion essentially creates labor inefficiencies when making costs artificially low, It reduces the incentive of a higher capital intensive (fixed cost) to lower labor intensive (incremental cost) operation. Conversely in artificially high values by spending time automating things, which take less comparably less labor time. Thus reducing the incentives for less skilled people to become more skilled, and in effect disproportionally rewarding the persons with access to capital, who have automated more 'valuable' tasks.

This does not mean that subjective value theory is useless, labor value theory doesn't do a good job of valuing scarce commodities, but its not like either of them value natural capital or natural labor. Which is why I believe in energy value theory, and think that currency should be based on the "joule standard", as its the only one that can describe all three.

I foresee the economy transitioning to democratized capital and distributed production which will end the temporary and artificial scarcity. However real scarcity of real estate, ecological resources, energy, and minerals will be a increasingly big problem, and all of this can be thought of as a function of energy, including the energy inputs that produce labor. Energy theory of value can be used to measure all the inputs required for a given set of outputs, and can allow us to measure the externalized costs not otherwise accounted for.

Re:Ironic

[DigiShaman]

Ok, so we are drowning. And what do all land walking mammals do in their final moments before they drown? They go flailing about expending lots of energy for that last little gasp of oxygen. But, they do drown.

Once we reach hyperinflation, America effectively drowns shortly thereafter.

Re:Ironic

[filbort]

Bitcoin has no inherent worth; neither does "real" currency. The value comes from the promise that others will accept it in exchange for the things you want to get. For traditional money, this guarantee is practically given, but because money can be minted or multiplied in questionable ways, the system is prone to, ahem, "incidents".

For Bitcoins, speculative devaluation is not a significant risk thanks to the design of the system; but all the parties getting bored of running an informal, distributed economy is. We have some examples of such p2p systems working OK, but also many examples where some form of institutional oversight and coordination is necessary. So, it's complicated...

Re:Ironic

[hcs_$reboot]

You can read the full tullett paper here ...

This is what I read initially, for some reason.

Re:Ironic

[Anonymous Coward]

The question remains, wtf is a bitcoin?

Re:Ironic

[denzacar]

every product is as valuable as the energy used to craft it

Maybe in the world where humans are perfectly rational and communism works.
In this world however, cognitive biases like endowment effect, hyperbolic discounting, loss aversion and money illusion don't allow such simplistic definition of value.

As such, grafting a human-invented concept like economy onto basic laws that run the universe is about as arrogant and fallacious as assuming that the entire universe was made just so the humans would have a place to stay - cause they are made in the image of the creator of the said universe.
And he was a white man.
Who died on a cross.
For our sins.
Cause a woman eat an apple.
A snake made her do that.
Long story.

Re:Ironic

[Darkness404]

How is gold costly to store? Its no more costly than paper money.

There's no reason why gold has to be different than cash in how you store it. Assuming you don't have fractional-reserve banking (which is by definition fraudulent) you could have a gold-based debit card, gold-based ATMs, heck, you could even have gold-based paper money (like the US had in the form of gold certificates).

Re:Ironic

[kqs]

(It's gotta be annoying that year after year the constant prediction of US hyperinflation stubbornly refuses to come true. But look on the bright side: if time is infinite, you'll be right eventually.)

While it's tempting to recast the economy (something we cannot predict well) as energy (which we understand well these days), I'm dubious that the predictive abilities will be recast as well.

Re:Ironic

[Anonymous Coward]

"One simple law could solve the long term finical issues. The base amount the government can spend is equal to the previous years tax revenue. Anything beyond that must be in the *form of a loan*, war bond etc, that needs to be paid back"

You mean like a Treasury note?

Re:Ironic

[Anonymous Coward]

Let's think about this a little. If the US Dollar goes into hyperinflation, people won't be able to afford their recreational drugs and GPU electric bills, and the value of Bitcoin will "drown" right along with it.

Bitcoin is far too dependent on the regular economy to be useful in such a scenario.

Re:Ironic

[viperidaenz]

US Businesses take it because it's the law. They must accept payment in dollars.

Bitcoins don't have that power. No one has to accept them.

Re:Ironic

[Anonymous Coward]

... because it's very difficult to expand the bitcoin supply

Which is why scalability issues would** eventually render Bitcoin useless as a currency. Metallic standards had the virtue that mining extraction rates reflect economic expansion of the general economy (up to the point that increasing economic complexity eventually requires abandonment of metallic standards.) Bitcoin supply reflects nothing more than the lack of understanding its creators had of what money is.

[** were it generally to be adopted]

Re:Ironic

[Anonymous Coward]

You are stupid.

Re:Ironic

[innerweb]

By my understanding, the current generation is not falling under the better off trend for the vast majority of its members.

Re:Ironic

[NonSequor]

Scalar theories of value all break down in the end. I identify four fundamental quantities that aren't generally interchangeable: energy, mass, information, and computation power.

You may think that, for example, computation power is a function of energy, but instead it's a function of energy, resources arranged so as to do computation with that energy, and time to do the computation. If tomorrow you gave me enough energy to power all of the world's computers for a year, I still wouldn't be able to do two day's worth of computation in one day, but if instead you gave me two days I could do two days worth of computation.

Gathering information requires energy. If you spend one joule gathering information, are you sure you're one joule wiser, or might there be some information that might save less energy than the cost of collecting it? The existence of r-strategist species in nature seems to indicate there are times when that is the case.

Computer programs are resources. Institutional policies are resources. Networks of relationships are resources. All of these things take energy to build and maintain, but there is never a guarantee that they can be built for a fixed quantity of energy. How do you plan to account for happy accidents where a good solution was happened upon quickly with little energy investment, or for situations where a great deal of energy was wasted pursuing an unworkable idea? I don't think you can analyze away the underlying stochastic nature of information when analyzing the value of these kinds of resources.

Re:Ironic

[Anonymous Coward]

How is gold costly to store? Its no more costly than paper money.

"Paper" money (in any decent quantity) isn't made of paper any more, it's data. It's stored on spreadsheets and in databases. Any decent quantity of gold needs to be stored in high security vaults. You understand that when the Fed does quantitative easing, it is literally done with a swipe of the mouse, yeah?

Assuming you don't have fractional-reserve banking (which is by definition fraudulent)

Show me the statute which makes fractional reserve banking (by a licensed financial institution) fraudulent anywhere in the word. Far from being fraudulent, it is a necessary requirement for the creation of the kind of wealth required to put the hardware you need to read this post in front of you. By all means, go and live in a cave if you like. The rest of us will partake of the wonders of modern capitalism which could not have come into being but for fractional reserves banking. Nor is fractional reserve banking incompatible with a gold based money system, it is a creature of the gold based money system.

.... you could even have gold-based paper money.

Yes we tried it. It worked really well for a long time. A lot better in fact than the direct use of gold (or silver; or cowry shells) as an exchange technology. But we have this bizarre tendency to advanced to newer and better technologies all the time and not want to go backwards again. Humans!

Re:Ironic

[Bob9113]

the economy is basically just a dynamic balance between produced energy and consumed energy

It is a really good perspective to consider for the way it makes you think about production, but it is not broadly generalizable. It is very true for commodities -- particularly if they are energy intensive goods, like rubber, copper, or meat -- but not for goods and services which are differentiated by skill or creativity. It takes the same amount of energy to write a bestseller as to write a book noone buys. It takes far more energy to shingle a roof than to transplant a kidney (even if you amortize the energy consumed in med school).

Re:Ironic

[budgenator]

It doesn't always, if there is low demand for something, it doesn't matter if it is scarce or plentifull. For a currency, the amount of currency should track the amount of value reasonably closely to avoid undesirable effects like inflation and deflation. When a currency is deflating it is a sign that there is insufficient amount of curency in circulation, basically the money is too valuable to spend; the money is both scarce and in high demand. When the currency is inflating it's a sign that there is too much in circulation, basically the money is too worthless to bother to save; the money is plentyfull and in low demand.

Re:Ironic

[TheLink]

Well he's wrong. Since it's not just energy we depend on and it's not just energy we _want_.

every product is as valuable as the energy used to craft it

Tell that to stamp collectors. Tell that to art collectors. Tell that to the buyers of luxury goods.

There are lots of scarcities in this world that are not determined by energy unless you really stretch things to the point that they are useless in predicting or understanding stuff.

As for the US currency, it's not actually holding value - it is actually depreciating because of inflation. But that's not necessarily a problem for the USA (see below).

Why some economists recommendation of "printing money" to solve financial problems works at least for the USA is because the US dollar is used by the majority of countries in the world to buy and sell petroleum, wheat, CPUs, edible oils, milk, manufacturing equipment, toys, etc from each other.

Because of that when the USA prints money, the USA is actually transferring wealth from the rest of the world that holds positive amounts of US dollars (whether as assets, cash, goods or loans to others).

Basically when the USA prints money it taxes the rest of the world. If the US Gov gives enough of the printed money to the US citizens the US citizens will benefit overall. And hence the US financial problems are solved at the expense of the rest of the world.

In contrast if you are Zimbabwe you can do as much Quantitative Easing as you want and the rest of the world will just laugh at you. BUT IF the Zimbabwe government printed money and invested it into projects that benefit Zimbabwe with good ROI then yes printing money would have helped Zimbabwe. It would just be like another tax on the Zimbabwe residents but used productively. The big problem is getting good ROI or at least better ROI than not taxing the residents. And that's not always easy.

So it should now be obvious that it is much easier to make your country wealthier if you can tax the whole world rather than just the residents of your country. Then you don't even need projects with good ROI. Just take wealth from the rest of the world and hand it to yourself and your people.

And that should help explain why printing money works in some cases and not others.

I see lots of clueless US people (not just economists ;) ) talking about going to the gold standard, the USA not being able to pay back debts, stupid stuff like China owns the USA, etc.

The USA owes most of its debts in US dollars. Not gold. It can create as much US dollars as it needs! The Federal Reserve loaned out trillions from
"thin air" in 2008+. But note that strangely some of the trillions went into bailing out foreign banks! The US people should realize that it only works for them if enough of the printed money goes to them...

You should now see why going to the gold standard or the other alternatives would hurt the USA a lot.

Re:Ironic

[Capsaicin]

Bitcoin has no inherent worth; neither does "real" currency. The value comes from the promise that others will accept it in exchange for the things you want to get.

What you are describing is simply is a contract mediated by a mutually acceptable exchange medium. What distinguishes ""real" currency" (that is legal tender; aka money) is that mutually acceptability is not required for its use.

For traditional money, this guarantee is practically given ...

It's just a tad stronger than that. Money has (at least) two distinct characteristics not shared by other exchange media (such as Bitcoin): a) The government will accepted it in satisfaction of your tax liability; AND (more to the point here), you can compel a creditor to accept it in satisfaction of a debt.

Re:Ironic

[Anonymous Coward]

If the non-government sector desires to save in the currency of issue then the only way that this can happen (and this is just a matter of accounting) is if the government spends more than it taxes (in that currency). The only way the non-government sector can get the currency of issue is if the government spends it. That is the nature of the monopoly the government holds. It doesn’t come out of thin air. The currency enters the economy always via government spending (and central bank operations – like foreign exchange and gold transactions; open market operations (bond purchases in this case)). If the government is taxing as much as it spends (that is, running a balanced budget) then there can be no saving in the currency. If it runs a budget surplus (taxing more than it is spending on any day) then the non-government sector has to be dissaving (running down wealth). So the only way the non-government sector can accumulate assets in the currency of issue is when the budget is in deficit. Budget deficits “finance” private saving not the other way round.

-- Professor Bill Mitchell - Deficit Spending 101

Re:Ironic

[budgenator]

One simple law could solve the long term finical issues. The base amount the government can spend is equal to the previous years tax revenue. Anything beyond that must be in the form of a loan, war bond etc, that needs to be paid back.

Then they sell more bonds to pay the bonds that are coming due ad infintum; in short that's what we are doing now. Something like 47% of what are being paid in Federal taxes is going toward interest on those bonds right now.

Re:Ironic

[Anonymous Coward]

How will those people pay the IRS if that happened?

Something drastic would have to have happened for a large number of people to stop accepting the currency.

In such a case, I think a better question would be: How would the IRS deal with a large number of people refusing to pay in USD? Lets say it's 60% of the population. What is the IRS going to do? Jail everyone? Shoot everyone?

In fact, how would the IRS even suppose to pay its employees, if its employees know that the currency is largely not accepted anymore? Do you think people will accept value-less paper for payment? What happens if they don't? Who is going to "come knocking"?

The IRS is not immune from the effects of loss of faith in the currency, hyperinflation, and so forth. It is not some demigod.

Your view is far too simplistic. A loss of belief in the value of a currency is symptomatic of much larger problems within an economy which will not be fixed by hand waving and making vague IRS threats. The notion that "the IRS comes knocking" automagically gives currency value is absurd.

Re:Ironic

[Anonymous Coward]

This is a common misconception.

"Legal tender is currency that cannot legally be refused in payment of debt. Private businesses may adopt their own policies on whether or not to accept cash as long it doesn't violate state law."

Legal tender doesn't *have* to be accepted (unless it's debt payment). You're right in that Bitcoin can't be used to pay your taxes - gosh darnit! - for now you'll just have to pay your taxes in USD, and if you want to have the court system to fall back on, you must settle trades in USD. Yes, regrettably, private businesses don't *have* to serve every customer. Shoving USD at people doesn't compel them to service your needs.

You might be getting confusing by the fact that it's illegal to circulate currency that *resembles* USD, e.g. Liberty Dollars. Well, Bitcoin's digital 1s and 0s hardly resemble green paper rectangles with pictures of dead people on them.

Re:Ironic

[Anonymous Coward]

Businesses must accept dollars for settlement of debts. For services not yet provided or goods not yet sold, there is no requirement to accept dollars as payment whatsoever.

This is the concept of legal tender. It's a small but important distinction. If you offer me US dollars for a good I am selling, I am not required to accept them. I can demand a donkey and 5 virgin pigs. If you don't have a donkey and 5 virgin pigs, you're going without. Otherwise, you could simply force me to accept a price I feel is unfair by doing your own conversion of donkeys and pigs to dollars or forcing me to do one.

Re:Ironic

[dryeo]

That's not totally true. Using something like chickens as currency would mean earning interest in the form of eggs and if nothing else, Sunday dinner, even if no-one wants to use it in an exchange.
Of course it has its own problems like needing to be fed chicken scratch and tending to inflate the money supply in the presence of roosters, but the value of a chicken is pretty obvious.

Re:Ironic

[fluffy99]

Translation: you're super pissed that the dollar is holding its value regardless of the US debt.

Want a tissue?

p.s. You have no idea how currency works.

The US dollar has been declining in value compared to foreign currency for a very long time. http://en.wikipedia.org/wiki/U.S._Dollar_Index

Not sure if your post was in response to TheLink, but he/she certainly seems to understand how the Fed and Treasury are devaluing the US dollar by "printing money".

Re:Ironic

[betterunixthanunix]

The only thing holding value in the US dollar is ignorance

..and the fact that American adults need to pay taxes, repay loans, etc. Laws create demand for money, which determines its value.

Re:Ironic

[betterunixthanunix]

the only reason ANY currency is worth ANYTHING is that people are willing to exchange it for something else.

What this misses is the reason why anyone would be so willing. Why, for example, is everyone willing to take USD from me in the US, but almost nobody will accept USD in Canada?

The answer is staring you in the face, of course: laws. Most adults in the US are required, by law, to give the government some amount of USD every year. Most Canadian adults must give the Canadian government some CAN each year.

In reality, the economic value of all things, currencies included, is determined by supply and demand. Money demand stems from the laws surrounding money: tax laws, debt laws, tort laws, etc.

Re:Ironic

[Anonymous Coward]

"If a distributed virtual currency is to replace the fiat currencies, the process is going to be slow and manageable, and will take decades."

No. That's oldthink.

NOTHING takes decades, these days.

How long did it take Skype to reach critical mass?

And really, bitcoin is Skype - for money...

Re:Ironic

[betterunixthanunix]

It has value because I can go to the store and be assured the man behind the counter will take it

Unless the store is in Canada. Strangely, they want to deal in CAN and not USD. Hm..

We do that because it's better than a barter system, and we've all mutually agreed to use dollars

You say this as though the agreement process is something magic or instinctive. Again, why don't Canadians accept it? Why don't Europeans? Why is the use of a currency so neatly aligned with national borders, anyway?

Hint:

https://en.wikipedia.org/wiki/Tax_law

Re:Ironic

[Anonymous Coward]

You need stronger shelves.

Re:Ironic

[Anonymous Coward]

Tax law only addresses the convenience aspect of the currency, in that its more convenient to trade in the same currency that is used when trading with the government. It eliminates the overhead of currency exchange, simplifies accounting, etc, when purchasing government services or paying tax.

That does not in any way address the value component of the currency, which is based on the belief of the participants in the system. A hyperinflated currency such as the Zimbabwean dollar is worthless regardless of the fact that the government uses it or requires it for tax. People won't trade things of higher value such as food for it because the food is more important to them.

Value is decided independently by the people using the system. The convenience of using the same currency as the government is one aspect of that value and is why currency use is aligned with national borders. It is not even the major factor in determining which currency is accepted or rejected by the people, as ably demonstrated by German hyperinflation in the '20s and Zimbabwean hyperinflation in recent times.

Re:Ironic

[grnbrg]

And really, bitcoin is Skype - for money...

One of the more interesting quotes I've seen recently is:

Bitcoin isn't a currency. It's a Money Over Internet Protocol.

Which is about right.

grnbrg.

Re:Ironic

[dryeo]

Actually in my experience every business in Canada accepts USD. They often skim a few cents from the transaction if it is paper and coins almost always trade at par and are common in change. Even the local government, last time I tried, was willing to accept USD, though at par at a time when the USD was worth quite a bit more. I'd expect that even Revenue Canada would accept payment in USD.

Re:Ironic

[AuMatar]

Most places along the border will happily take USD. Same for US places near Canada. Its all about the ease of them trading it again to the next person. In places in Europe its easier to use Euros even if it isn't the local currency- because they can trade it easily. Most hotels in Europe quote in euros, and take payment in euros- even in Croatia and Turkey where they use other currencies.

Re:Ironic

[dbIII]

Not by as much as would be thought given the debt because there are a wide variety of things that influence it's value. I'm not sure if China even has any debt, but it's currency is not as strong because that's not the only thing considered.

Re:Ironic

[pantaril]

What distinguishes ""real" currency" (that is legal tender; aka money) is that mutually acceptability is not required for its use.

Realy? And how does the transaction between two parties work, when one party refuses to accept your "real" currency?

Re:Ironic

[Anonymous Coward]

I've held that very opinion, and have disposed it those around me for the better part of a decade. I guess my lack of PhD and article submissions are holding me back...

Re:Ironic

[Capsaicin]

Realy? And how does the transaction between two parties work, when one party refuses to accept your "real" currency?

Refusing party goes hungry?

Party must accept legal tender in satisfaction of a debt or accept that the debt is unrecoverable.). Of course it may be in certain cases of contractual breach that a court will order some equitable remedy such as specific performance, but debt judgment will ring only in money.

Re:Ironic

[adolf]

Since the introduction of the Federal Reserve Bank, has this ever happened on US soil?

Re:Ironic

[slim]

I'm pretty sure there was a story somewhere about an "escort agency" accepting bitcoins, and I find it entirely plausible. They're easy to accept. They can be exchanged for "real" currency.

Re:Ironic

[horza]

you could have a gold-based debit card, gold-based ATMs, heck, you could even have gold-based paper money

There are already gold based ATMs, started a couple of years ago.

Phillip.

Re:Ironic

[Deliveranc3]

Better off really? They earn less money, work more hours, women have entered and doubled the work force, they have less savings, more debt, higher cost of living... medical services and education are at a higher percentage of personal income.

Yes if you look at averages the west is only in decline since the 80s but if you look at the median you'll see a much longer and more depressing trend.

Re:Ironic

[angel'o'sphere]

No, the thing holding together the US dollar is common acceptance. It has value because I can go to the store and be assured the man behind the counter will take it.
That is a very simplified view ;D
In fact the USD is the only currency that is backed. I wonder why so many people don't know that.
Since the Nixon aera, the USD is backed by OIL. Nixon convinced, mostly by threat to invade the country, most oil producers to only sell oil on the world market for USD. About 75% of the oil selling countries still stick to that "treaty". The main reason for the Iran debacle is that the Shah bluntly refused to comply. Since the EUR exists more and more countries either also accept EUR or only accept EUR for trading oil. The more USD is declining to be the main currency for oil trade, the less the USD will be relevant. In fact the only country where you can buy stuff and pay stuff with USD will be the USA in the foreseeable future.

Nobody accepts dollars because of the amount of US debt, they accept it because they know they can trade it again. That is, why *I* don't accept USD as payment ... I need nothing I could buy for it ;D

Re:Ironic

[serviscope_minor]

AND (more to the point here), you can compel a creditor to accept it in satisfaction of a debt.

Ah, the magic "debt" that gets so frequently misunderstood.

Sure you can pay an existing debt in legal tender (that is in fact the definition of legal tender), but you cannot force people to be your creditor.

In hyperinflationary economies, sure, people could legally settle existing debts in Marks (or whatever), but they couldn't buy stuff like food for them since noone would except them even if you could settle a "debt".

So people resorted to barter economy.

Which comes back round to the OP's point: money is only worth something because people believe it is. If people stop believing, then it doesn't matter what the law says about debts and taxes, you still won't be able to exchange food for money. There are several examples of that happning throughout history.

Note also that firstly in such circumstances, the economy is so fucked that people are more concerned with eating that debts and taxes and secondly, the wortless 100e12 Zimbabweian dollar note would legally settle any debts from the previous week many times over.

Re:Ironic

[Bigby]

Although correct, it ignores the gist of the GP. Sure, the money will have worth. But as the perceptive ability to pay off debts becomes less likely, the less value/worth the money has on the international market. So you and government law can assign whatever value they want to currency...but the international exchange rates will dictate its true worth.

Re:Ironic

[Bigby]

It helps when most countries are destroying their currency at a similar rate to the US..for the same reasons.

China controls the value of their currency to specifically devalue it at the US dollar rate. They want to keep their stuff cheap for Americans. They do it by expanding their money supply...like the US. To do that in a country with laws and accounting, you need to go in debt. You need a negative for every positive. I don't know how China terms the negative side of money supply expansion, but it is debt. Maybe they liquidate the debt at the stroke of a pen, but that is just lawlessness and done so at the extreme detriment to their credit rating. Since I think they have a good credit rating, I would assume they administer their debt.

Re:Ironic

[Anonymous Coward]

There is the other reason Nixon took us off the gold standard in the first place: foreign economies can flood the market, drastically reduce the value of gold and suddenly you can't even afford to buy milk for breakfast.

Re:Ironic

[kamapuaa]

This isn't true. In 1998-2000 the government ran at a surplus, before that in 1969. Before the New Deal, the government frequently ran at a surplus.

Re:Ironic

[Teancum]

... because it's very difficult to expand the bitcoin supply

Which is why scalability issues would** eventually render Bitcoin useless as a currency. Metallic standards had the virtue that mining extraction rates reflect economic expansion of the general economy (up to the point that increasing economic complexity eventually requires abandonment of metallic standards.) Bitcoin supply reflects nothing more than the lack of understanding its creators had of what money is.

[** were it generally to be adopted]

What scalability issues are there that would be a major issue?

I think the guys who set up Bitcoin understood money very well and likely better than this AC poster. There are some scalability issues with the processing of work units and transmitting work unit information from one node to the next (nothing that hasn't been discussed with any other peer to peer network, but it is a problem). The thought was that there eventually would be a "central core" of "bankers" or at least very interested participants with high speed data lines that would deal with major transactions involving Bitcoins and working with the main work units, and then there would be ancillary tiers for more mundane transactions (like buying a burger at a local restaurant) that would engage in transactions with a "bank" or at least a trusted Bitcoin provider for reduced fees.

Scalability issues with Bitcoins have been discussed since its inception and are well taken care of for anybody who really wants to use it for currency. There are some legitimate gripes about how it is organized and for some of the finer points of the protocol, but the broad issue of scalability is not even remotely an issue.

One thing to note is that Bitcoins are a deflationary currency rather than an inflationary one. As the economy of the Bitcoin users has expanded, the value of an individual bitcoin has continually climbed. The first transaction for Bitcoins was buying a pizza in Florida (it cost about 1000 Bitcoins at the time). Individual Bitcoins are now worth quite a bit more, even though the direct exchange rate between U.S. Dollars and Bitcoins has varied.... generally the trend has been for individual Bitcoins to be worth even more (aka a single Bitcoin buys more Dollars over time). That is why fractional bitcoins are commonly used now instead of full bitcoins or even kilobitcoins. It does take getting used to the idea of a deflationary currency than an inflationary currency like most countries of the world use, and where holding onto some bitcoins actually "earns interest" over time simply because of the deflation. That doesn't stop transactions from happening though.

Re:Ironic

[Teancum]

The value of the U.S. Dollar is at the moment pure faith, as in religious kind of faith, but faith in the federal government and the faith that people have that they can use that dollar to buy something of value in the future. Perhaps you think that is misplaced faith or that it is born of ignorance to reality, but that is the best way I can think of describing what its current real value holds.

BTW, your "technical fix" for what the government can spend is technically what federal law says should be happening for tax revenue and budget planning right now. The only reason why it isn't working is that the loans of money to the government to help balance the federal budget are getting out of control. That and of course the Federal Reserve is literally "printing money out of thin air" by loaning trillions of dollars to banks who are in turn using that money to buy debt. Even that isn't enough so the Federal Reserve is instead buying T-bills directly.

Re:Ironic

[Teancum]

The problem with Liberty Dollars is that they were pegged at the exchange rate of 1 LD == 1 USD as well as using the term "dollar". The other slightly more minor problem was that the developer of Liberty Dollars could also be prosecuted in federal court.... with the end effect of discontinuing the currency. I disagree that the legal action which took place against the developers of the Liberty Dollar as I find nothing illegal was actually done, but it pissed off the wrong people none the less.

Since Bitcoins are not pegged at any currency of any kind, clearly are not even using the term "dollar", nor is there a central repository which can be shut down through legal action, it makes a much harder target to make the same kind of arguments. That physical bills aren't even needed to keep Bitcoins in circulation, it makes the whole thing moot.

BTW, you can make rectangular pieces of paper that have value in Bitcoins (with pictures of dead people if you really want them on that paper)... and there are several notions on how to accomplish that trick. None the less, it is still a distributed operation if such "printing" of bitcoins happens.

Re:Ironic

[Anonymous Coward]

I think you've got it backwards. It's the strippers that are asking their customers for bitcoin:

http://www.strip4bit.com/ (NSFW)

Re:Ironic

[Anonymous Coward]

Take a look at Strip4bit

Re:Ironic

[Anonymous Coward]

Hayek, in his book The Fatal Conceit, argues (successfully, IMO) that the rules of a market economy lie between instinct and reason.

Re:Ironic

[Capsaicin]

Sure you can pay an existing debt in legal tender (that is in fact the definition of legal tender), but you cannot force people to be your creditor.

That really goes without saying. I agree that it is tautological that entering into contract is voluntary and this is of no relevance to the fact that money can be used non-voluntarily to settle any debt that arises from entering a voluntary agreement. So this observation adds nothing.

To give a concrete example (assuming here that we are not criminally in breach of the tax code for bartering), we could enter into a contract where you specify that I must pay you in X ozt of gold because you don't like handling money. However should I refuse to hand over the gold (and since gold is fungible) you will be able to recover only the market value (though at what date that value is to be calculated will depend on the facts of the case) of that gold in actual money. I can, in other words I can compel you to settle the debt in money (of course ultimately you could refuse and be out of pocket).

In hyperinflationary economies ...

We see a collapse of the money system. To argue against a definition of money based on the hyperinflation alone is like arguing against the definition of a bridge as a "something that spans two points a fold" (however inadequate that definition may otherwise be) by looking at the Tacoma Narrows Bridge post collapse and shouting out: "look it doesn't connect two points together at all!" ... or understanding how a car works once the engine is removed.

If you want to understand how something works, look at it when it works. After that you will be in a better position to draw conclusions about the circumstances under which it ceases to work.

... sure, people could legally settle existing debts in Marks (or whatever), but they couldn't buy stuff like food for them since noone would except [sic] them

Well they would for a time, even as the prices in RM rose as you stood in a queue and if workers demanded to be paid thrice a day and their wives waited for them at the factory gates with wheelbarrows. As it happens I own a fine (and near complete) set of German postage stamps from that period. Interestingly the first 2/3rds of the stamps have higher and higher prices printed on them, but towards the end the stamps were printed without any price at all. That was stamped on at the time of sale. Very interesting stuff hyperinflation, but again, not the first port of call if you wish to understand how money works and what money is.

... in such circumstances, the economy is so fucked that people are more concerned with eating that debts and taxes ...

Indeed and in such circumstances the economy is so fucked that the government can no longer raise taxes. As I explained above, money takes its value not from some mere "promise that others [ie. other private individuals] will accept it in exchange," but from the government's ability to raise taxes (as well as its secondary, state mediated, debt settling function). The fact that the "Zimbabweian dollar" became "worthless" once the economy tanked merely highlights this fact.

Who was it who defined money as "whatever is accepted at government pay offices?" In any cases, I hope we can all agree that Bitcoin is not money.

Re:Ironic

[Anonymous Coward]

Seems fine to me. Just make sure to show her that she can buy her coke cleaner and cheaper on the silk road than she otherwise gets it. She'll probably be disappointed if you go to pay her in cash the next time.

Re:Ironic

[BitZtream]

Show me the statute which makes fractional reserve banking (by a licensed financial institution) fraudulent anywhere in the word. Far from being fraudulent, it is a necessary requirement for the creation of the kind of wealth required to put the hardware you need to read this post in front of you.

Just because its not illegal doesn't mean it isn't fraud. It sure as hell isn't a requirement to accomplish anything. Fractional reserve means they loan money they don't ACTUALLY HAVE. That my friend, is fraud is most normal people's heads. Only in a twisted world is that 'ok' and normal. It doesn't take much of an intelligent person to spot the metric fuckton of problems this sort of fraud causes, and if you'd had your eyes open the last couple of years you'd see it first hand.

How does it feel?

[Anonymous Coward]

How does it feel using a currency primarily used by terrorists, druggies, and child pornographers?

Re:How does it feel?

[gmuslera]

A lot of people use US dollars without concern. Ignorance is bliss

Re:How does it feel?

[Anonymous Coward]

Pretty darn safe?

Re:How does it feel?

[Anonymous Coward]

Which part of "primarily" is giving you problems there, sparky?

Re:How does it feel?

[trout007]

You put primarily in the wrong place.

The currency primarily used by terrorists, druggies, and child pornographers is the US Dollar.

You may have intended to say the currency used primarily by those groups.

Re:How does it feel?

[Ol Biscuitbarrel]

Hey, come on. TFA says after 4 years Bitcoin is being used by a "handful of businesses," including a sweets bakery in San Francisco. At that rate Henry Ford would have had about 105 cars in circulation by now! Look out for that Bitcoin juggernaut!

Re:How does it feel?

[maztuhblastah]

Yeah, well... I still use the US dollar despite that.

Kidding aside, I have to wonder why people such as yourself like to sling mud at the idea? If I didn't know better I'd suspect jealousy.

Re:How does it feel?

[Anonymous Coward]

Grammar, how does it work?

Re:How does it feel?

[Anonymous Coward]

The software to accept bitcoins, the machinery, etc is still a work in progress. My company is going to be accepting it shortly. It is the next project on our list to get to. One of the reasons we have not done so already is the shopping cart lacks the facilities. There are companies making integration easier though and we will work with one of them to add the support/module needed so that other businesses like ours can easily support the acceptance of bitcoins.

Re:How does it feel?

[Anonymous Coward]

and some of the handful of businesses take in millions in bitcoins a year..

Re:How does it feel?

[fluffy99]

The software to accept bitcoins, the machinery, etc is still a work in progress. My company is going to be accepting it shortly. It is the next project on our list to get to. One of the reasons we have not done so already is the shopping cart lacks the facilities. There are companies making integration easier though and we will work with one of them to add the support/module needed so that other businesses like ours can easily support the acceptance of bitcoins.

May I ask why exactly you want the capability to accept BitCoin? Do you expect increased sales? Losing sales to competition that does accept BitCoin? Just want the novelty? I'm curious as I don't see bitcoin as much more than a geek novelty at this point and at worst potentially disastrous (See the MT Gox hack as an example).

Re:How does it feel?

[Shikaku]

I'll give you a good one:

I like the option that I can avoid any bank completely. Especially the "bank" PayPal that almost every internet commerce site uses.

You gave them cash and got bitcoins back?

[93 Escort Wagon]

Congratulations.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

While BTC as currency is volatile, other currencies suffrer from this too as pretty much every currency is not backed by anything (except US army going down on your ass etc). It has dozens of black market uses so it's pretty much standard now for illegal gambling, drugs and ransoms. I see bright future for BTC once governments try to ban it and spread awareness of BTC because of that.

BTC is also a new frontier similar to market shares. It's useless to mine it uneless you're lucky enough to get specialised ASIC but if you bought BTC two months ago and sold them now you'd earn 30-40% of invested capital.

Re:You gave them cash and got bitcoins back?

[OneAhead]

While BTC as currency is volatile, other currencies suffrer from this too as pretty much every currency is not backed by anything (except US army going down on your ass etc).

At the risk of sounding cynical, the US army going down on your ass definitely classifies as "something" to me...

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

You make it sound like Bitcoin, a small but quickly growing experimental transaction system, has a similar volatility problem to the world's largest fiat currencies. This is clearly not true.

If you bought bitcoins 2 months ago and sold today you would have made 90-140% (depending on what you traded for, 120% for USD) of the invested capital. The could easily lose or gain 50% against most currencies/commodities over the next month. People holding bitcoins have to accept this serious volatility. Merchants need to change their prices rapidly as value rises or falls (there are tools to help with this of course). Users should not hold more than they can comfortably afford to lose suddenly and completely.

Re:You gave them cash and got bitcoins back?

[Kittenman]

Congratulations.

And want to buy this bridge I have?

Re:You gave them cash and got bitcoins back?

[__aaltlg1547]

You make it sound like Bitcoin, a small but quickly growing experimental transaction system, has a similar volatility problem to the world's largest fiat currencies. This is clearly not true.

If you bought bitcoins 2 months ago and sold today you would have made 90-140% (depending on what you traded for, 120% for USD) of the invested capital. The could easily lose or gain 50% against most currencies/commodities over the next month. People holding bitcoins have to accept this serious volatility. Merchants need to change their prices rapidly as value rises or falls (there are tools to help with this of course). Users should not hold more than they can comfortably afford to lose suddenly and completely.

Right there. That's the reason why it's not prudent to exchange dollars for bitcoins.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

You must then acknowledge that it's not prudent to hold dollars in a savings account (or under a mattress) either. Becuase the *official* inflation rate is around 2%, about 1.5% higher than the interest paid on a savings account. And in about half a decade the monetary supply has been doubled to bail out the banks, so we can guess that "real" inflation is quite a big higher (or maybe they'll "fix" it by making price caps like in Argentina!!!)

The point is, holding dollars is guaranteed losses due to inflation. If it isn't prudent to hold bitcoins (which have been *appreciating* significantly over 4 years, so much so that RunToGold.com points out that gold is "collapsing" against bitcoin!) then it is at least just as imprudent to hold dollars.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

And they don't take payment in bitcoin either.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Yes, but I'm guaranteed to be able to pay my taxes, rent, buy food etc., with USD, but with BTC, there's no guarantee that I'll be able to buy anything with it. And that's a very serious problem, I give somebody else my money and I get something that won't make me money, other than by arbitrage, and it isn't guaranteed to permit me to buy anything either.

That's taking an awful lot of risk with absolutely no reward whatsoever. I guess P. T. Barnum was right about suckers.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Perfect condescending Wonka!

http://knowyourmeme.com/memes/condescending-wonka-creepy-wonka

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

"At the risk of sounding cynical, the US army going down on your ass definitely classifies as "something" to me..."

Nahhh, not so much, really. When Uncle Sam is annoyed, he sends the Army to get your attention. When Uncle gets really pissed, he calls the Chief of Naval Operations. CNO picks up the phone, and says, "Semper Fi, Commandant - I got some ass that needs kicking." You ain't got any real problems, until you see the Gator Navy coming, Naval air tearing up your defenses, while NGFS hammers the shit our of your troops. When those jarheads hit the beach, you better just put your head between your knees, and kiss your ass goodbye. Give your heart to Momma, give your soul to Jesus, but your ass belongs to us!

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Damn. I traded BOTH of my dollars for bitcoins yesterday. And my one Euro. AmIfucked?

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Wouldn't bitcoins be the perfect currency for mercs though? (Sort of a private army I guess.)

Re:You gave them cash and got bitcoins back?

[CodeHxr]

Yes, but I'm guaranteed to be able to pay my taxes, rent, buy food etc., with USD, <snip>

Ever tried buying Burger King, or even gasoline, with a $50 bill or higher? These notes are supposed to be legal tender for all debts, public and private, yet certain denominations are not accepted at certain establishments. I'm not suggesting that these places should or should not be allowed to accept/reject whatever denominations of currency they choose, but I'd say that the guarantee you speak of isn't as solid as one might believe.

Re:You gave them cash and got bitcoins back?

[shaitand]

First the instability incorrectly implied was created by using choice peaks and valleys in the speculative market. You can lose 50% of your money on the USD/EUR speculative market in minutes. The rest of the world doesn't operate on the spot price of dollars vs euros or dollars vs anything else. It operates on a sliding AVERAGE price. The average price of bitcoin is up 200% in the last 6 months. About 300% in the last year and about 3000% in the last 3 years. Bitcoin is deflationary, the market is lower volume so it can be moved quickly for short periods of time and takes longer to stabilize around legitimate market moving events (like the recent halving of new bitcoin supply, which is the reason for the recent 200% move) but over time your Bitcoin goes up in value not down. You can be as certain of that as you can that the value of the dollar will go down over the course of time. Unlike the dollar's inflation, Bitcoins deflation is at a constant rate but marked by events that halve the reward periodically for mining that create large but permanent moves in price it will happen again in 2016. There is more certainty in the Bitcoin than the dollar, there is no hidden inflation, no disparity between the money supply and purchasing power. There really isn't much room for speculation on the supply of bitcoin. Reward changes will result in price bumps of ever smaller magnitude over time. For instance the official inflation rate was mentioned by someone as being 2% right now. That seems high but the subjective difference in goods you can buy with a given amount of USD vs a few years ago is 1/2 to 1/3.

You are guaranteed to be able to pay your taxes with USD. The rest is dependent on someone wanting USD more than the goods you want to buy. At the moment that is more likely than the person wanting bitcoin but as bitcoin adoption grows that problem slowly fades. This "ATM" is a great step in that direction.

As for no reward. You are out of your mind. People adopting Bitcoin would be the greatest thing since sliced bread. You have all the assurance and privacy you get with cash with all the convenience of a digital currency. No coins or paper to worry about. No change when you buy something. No counterfeiting, no wrong change, no paying with the wrong sized bill. And get all that without generating a record that can be analyzed by third parties for reasons that aren't beneficial to you. Nobody can freeze your account, not even the IRS or the DEA. There is no bank generating policies that try to get you to overdraft your account so they can change fees. If you have a debt nobody can forcefully take your funds and block you from buying food or paying for shelter. There are as many benefits for vendors. No charge backs, canceled checks, or need for a merchant account.

There is also no need for currency conversions to conduct trade with other nations. There isn't even a need for other currencies. There is no longer a worry that China is undervaluing it's currency for trade advantage or the US overvaluing it's currency. No nation would be dependent on the honesty of another with regard to currency. No fractional reserve banking tricks, banks would be on a level playing field with individuals the only difference would be the size of the loans they could give. You gain all the advantages of a global currency without any of the downfalls. You might store an encrypted copy of your wallet in a bank but not in a bank account. National governments would want none of this of course. They like manipulating their money and even more so they like people being forced to use easily tracked and traced currency so they can tax it. This wouldn't really be impacted much because large enterprise pays very little tax as it is and the overhead to keep separate ledgers for government and real internal ledgers wouldn't be worthwhile even without the consequences of being caught.

Not to mention the ease of use. No more wallet filled with cards. You just carry a cell phone. Drinking at a bar? No need for a tab. Put a durable touch

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Congratulations.

have you tried the other way around? :)

Re:You gave them cash and got bitcoins back?

[xaxa]

Yes, but I'm guaranteed to be able to pay my taxes, rent, buy food etc., with USD, <snip>

Ever tried buying Burger King, or even gasoline, with a $50 bill or higher? These notes are supposed to be legal tender for all debts, public and private, yet certain denominations are not accepted at certain establishments.

In Burger King you aren't in debt, you are offering to exchange your money for the burger. They are allowed to reject your offer.

Re:You gave them cash and got bitcoins back?

[shaitand]

If I had $30 in a jar for the last 6 months it would be worth less than it was when I put it there. If I had purchased $30 worth of bitcoin 6 months ago it would be worth $90 now. The average price of Bitcoin increases over time because it is deflationary where dollars are inflationary. People tend to forget that the market isn't just perception, supply and demand plays a big role. There is a limited supply of bitcoin. It requires a greater and greater investment to maintain that supply so the perception is going to be that Bitcoin is more and more valuable.

So yeah. I'd rather have the Bitcoin than cash. Also, I can deposit $10k in cash, or amounts totaling that within a 3 month period, all day, every day, without the bank and the IRS giving me a hard time about it. So if I'm going to sell concessions outside the stadium your damn right I want to use BTC. Since BTC is not US Currency I can count it as inventory and let profits accumulate there and only take the tax hit on the BTC I trade for cash.

Basically I can use my BTC account like a Roth IRA but without any early withdraw penalties or contribution limits.

With cash I get some of the privacy offered by Bitcoin but I have to deal with all the hassles of cash. Paying wrong amounts, incorrect change, not having change, no large transactions, avoiding counterfeit currency. Cash is a pain in the ass. You can use a debit or credit card but then your life is a paper trail. Your money can be frozen or taken. The bank you deal with is undoubtedly a hostile entity that has embraced fee based banking and is going to be looking for ways to fee you. All of them will authorize overdrafts rather than simply blocking transactions and they do everything they can to make it hard to figure out what you can safely spend. You can sometimes reverse a transaction with a charge back but they will refuse to block a vendor from charging you again.

Thanks but no thanks. I'll take Bitcoin.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Quite right. Government fiat is accepted in this society because violence can get results. That isn't to say that violence against innocent people solves problems(it doesn't) but it most definitely is an incentive. Violently controlling currency and interest rates is unsustainable to the degree it wrecks our productivity. If while this mild to moderate predation there is also increases in productivity that offset the cost, then the sustainability of such violence is extended. Thus we get a 'stable' currency backed by threats.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

Especially now that more fruitcakes are signing up...

Re:You gave them cash and got bitcoins back?

[slashrio]

Users should not hold more than they can comfortably afford to lose suddenly and completely.

In my, further totally worthless, opinion the same goes for the USD and the EUR.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

so i should do dollar->yen->bitcoin?

Re:You gave them cash and got bitcoins back?

[OneAhead]

To be clear, my GP post was a quip. The US dollar is backed by more than violence. It is backed by a very large number of people (and not only Americans) willing to trade goods for it. Whoever disagrees with this may say "it's worth nothing to me", but then I'll say "fine, give it to me then, I'll happily trade it with people who disagree with you". Or they may say "point, but I wouldn't keep my savings in it; it's constantly losing value, and it may collapse any time... any time now..." but its stability is not so bad (especially compared to BitCoin), and the powers that be aren't so stupid that they will hurt people's trust in the currency enough to cause huge fluctuations.
In the end, that's a lot of circular reasoning, but so are other things in life; how are you going to compile a compiler without a compiler? Most fiat currencies were bootstrapped by the gold standard, and at some point, it was decided the gold wasn't necessary anymore.

Re:You gave them cash and got bitcoins back?

[Anonymous Coward]

In reality, the USD isn't significantly backed by the US Forces, so much as it is backed by Americans as a whole.

I.e. not accepting the currency (in America) will make things much harder for you. Massive devaluation of the currency (by which I mean Zimbabwe type inflation), will cause a problem as the federal government learns what it is like to try to bar your office door against a militia of 350 million bearing 175 million small arms.

Meta Article

[Nialin]

Incidentally, this whole article is rather meta, due to the whole "first" aspect of it.

Re:Meta Article

[Anonymous Coward]

"Meta post!"? Doesn't haven't the same ring, sorry.

Waiting for the other shoe

[Great Big Bird]

to drop... I am waiting for some kind of bad security hole. How many bitcoin sites have been laughably insecure?

Re:Waiting for the other shoe

[Anonymous Coward]

It's nice to see a Slashdot commenter that generally thinks Bitcoin is a bad idea but isn't a complete idiot. The drooling retards shouting PONZI (such as dblll) only serve to undermine the anti-Bitcoin argument.

As the first such ATM, I too expect a security issue of some kind. Bitcoin practically has a tradition of throwing the first attempt at a new idea under the joke-security bus.

That said, second and third generations of attempts spring up quickly and learn a great deal from past failures. The extremely hard, fast, and hostile environment of Bitcoin simulates a potent form of evolution for technical security.

Re:Waiting for the other shoe

[brokenin2]

This one would be on you.. You control the security of the key that the money is sent to. Now if they don't send you the money, there's an issue you'll need to work out with them, but your risk is limited to: from the time you put the money in the machine, to the time you receive it.. Depending on how sure you want to be, that's anywhere from about 10 seconds to an hour.

Re:Waiting for the other shoe

[hedwards]

But, BTC is more or less indistinguishable from a Ponzi scheme. The early adopters get massive amounts of BTC for basically nothing and later adopters are the ones that pump up the price. It may not technically be a Ponzi scheme, but that would only be by technicality. It's still early investors being paid by later investors and ultimately nothing is produced to justify anybody profiting.

I'm going to laugh my ass off when BTC ultimately does collapse. At some point it's going to hit a deflationary spiral when the last blocks are unlocked and no more BTC come into existence.

Re:Waiting for the other shoe

[Anonymous Coward]

So, you plan to be around laughing your ass off in the year 2230 or so?
Good luck with that.

Re:Waiting for the other shoe

[TheSHAD0W]

Yeah, I'm expecting a machine to be grabbed, then hacked, and all the coins in its account moved out.

If they're smart, they'll have a separate account for each machine to limit the potential damage, although this may make scaling and inventory difficult.

Re:Waiting for the other shoe

[Anonymous Coward]

I am going to laugh at you now.
So far it has not collapsed. And it will not.

Their wiki explained it well. It's not Ponzi Scheme. It has one similarity, that early adopters are risking.(they do, power and CPU cycles cost money). At the end of the day, anyone who uses or creates something new, benefits most from it when it gos mainstream.

Books, Computers, Internet are proof..

Re:Waiting for the other shoe

[Anonymous Coward]

Nothing is produced?

A highly efficient, incorruptible, pseudononymous, transaction network has no value!?

Even VISA and MasterCard have non-zero market cap and they are arguably much less valuable than a mainstream Bitcoin network would be.

Re:Waiting for the other shoe

[Anonymous Coward]

But, BTC is more or less indistinguishable from a Ponzi scheme. The early adopters get massive amounts of BTC for basically nothing and later adopters are the ones that pump up the price. It may not technically be a Ponzi scheme, but that would only be by technicality. It's still early investors being paid by later investors and ultimately nothing is produced to justify anybody profiting.

That is also true for the system we use to distribute natural resources. Early adopters get massive amounts and can profit from it from later adopters.
You didn't live around 1500 AD? Too bad, now the amount of natural resources you control relies on your ancestors.
But just because it's massively unfair doesn't mean that it won't work.
In the end the success of bitcoins depends of if people will be willing to accept it as a form of payment but that is true for any currency, if no-one accepts you dollars they won't be worth more than the paper they are made of. (Interestingly enough this also means that the value of a dollar can vary from person to person depending on if people are willing to trade with him or not.)

Re:Waiting for the other shoe

[fastest fascist]

Define "produced". Bitcoin aims to offer a better way to transfer wealth than we had today. To a lot of people, that is "of value". As for the end of new minting - Your optimism is commendable, but seeing as that won't happen this century, you're not likely to be alive to see it. In any case, the currency has been deflating as it is - The market value has been rising faster than the supply. I'm not seeing a spiral.

Re:Waiting for the other shoe

[DriedClexler]

What you've described applied to every business venture of earth, no matter what the legitimacy of the product or business model. Yes, early adopters of innovative ventures get the biggest shares in that ventures, which become the most valuable when the general public appreciates it.

The founders and early investors at Facebook, Google, Dell, Apple, Microsoft, etc etc etc all own the most of those respective and thus most of their capitalized values. Were they scams too? No, because at bottom, they all produced something useful.

You don't see the use in Bitcoin? Great, but that's a different argument than saying it's structured as a Ponzi scheme.

Re:Waiting for the other shoe

[Anonymous Coward]

But, BTC is more or less indistinguishable from a Ponzi scheme. The early adopters get massive amounts of BTC for basically nothing and later adopters are the ones that pump up the price. It may not technically be a Ponzi scheme, but that would only be by technicality. It's still early investors being paid by later investors and ultimately nothing is produced to justify anybody profiting.

I'm going to laugh my ass off when BTC ultimately does collapse. At some point it's going to hit a deflationary spiral when the last blocks are unlocked and no more BTC come into existence.

This represents a fundamental misunderstanding of bitcoin. The last block when no more bitcoins come to existence? yes, that is going to happen in 2140, but the 21M coins in circulation divisible to the 8th decimal will continue to swirl around just like the I remember when Slashdot was filled with smart nerds... http://blockchain.info/stats right now today the bitcoin system transacts >$7M every 24 hrs when delimited in USD. This is not a Ponzi scheme, this payment system and currency berthed by the internet, backed by cryptography. Very simple and brutally unforgiving supply and demand dictate the price per coin. Because some people bought early or mined before they were worth anything and have realized a large gain does not make it a Ponzi.

Re:Waiting for the other shoe

[angel'o'sphere]

Everybody had the chance to be an early adopter ...

Re:Waiting for the other shoe

[Anonymous Coward]

You know, the same could be said for gold. You used to be able to go to a river and pan it out of dirt. Now you're reduced to blasting gigantic tunnels through rock and leaching it out with cyanide compounds.

Re:Waiting for the other shoe

[Anonymous Coward]

ultimately nothing is produced to justify anybody profiting.

Absolutely - there simply no value in a system that allows you to send money internationally, unblockably, near-instantly, close to fee-free and irreversibly from anywhere in the world with an internet connection.

Re:Waiting for the other shoe

[Visserau]

Can people please stop saying this? It's getting old. No transfer of money or assets takes place between new and old investors. The early coins are simply easier to get. In fact, you could argue that the early investors are hurt by more people jumping on board. The low hanging fruit is gone, and a larger pool means the time required per coin grows faster with more people activly mining them. Of course, they realisitically benefit more in the long run by having a large active community around the currency. (I'm not denying that early investors had it much better, but that does NOT equal ponzi scheme.)

Also, it is designed to work down to any number of decimal places. The hard cap on the number of BTC that can exist is designed to prevent endless money printing, which is far more likely to cause deflation. Once the coin cap is reached, the value of one BTC in "real" currency GROWS, but the consumer uses less of their coin to purchase the same goods. E.g. evnetually with sufficent growth in user base it may cost 10 bit-cents for a big mac rather than $1, then that falls to 1 cent, then .1 then .01 and so on. (Obviously it doesn't have to go in factors of 10.) This is hardly deflation - but yes it's also good for the early adoptors.

I'm far from a BTC expert and have nothing to do with them. I have no idea whether or not the stated goals will work out, but willful ignorance repeated over and over is annoying. Hopefully calling it out will do more good than blowing a mod point.

Re:Waiting for the other shoe

[Visserau]

To update my own post: I did some more reading, and it is apparently no longer practical to really "buy in" via mining.

In the early days of Bitcoin, it was easy for anyone to find new blocks using standard CPUs. As more and more people started mining, the difficulty of finding new blocks has greatly increased to the point where the average time for a CPU to find a single block can be many years. The only cost-effective method of mining is using a high-end graphics card with special software (see also Why a GPU mines faster than a CPU) and/or joining a mining pool. Since solo CPU mining is essentially useless, it was removed from the GUI of the Bitcoin software.

That makes it even more favourable for the early miners, but still not a ponzi scheme. A BTC bought by a new participant is irrevocable theirs and is gained (almost) immediatly and has nothing to do with return on a (feigned) investment.

Re:Waiting for the other shoe

[Anonymous Coward]

But, BTC is more or less indistinguishable from a Ponzi scheme. The early adopters get massive amounts of BTC for basically nothing and later adopters are the ones that pump up the price. It may not technically be a Ponzi scheme, but that would only be by technicality. It's still early investors being paid by later investors and ultimately nothing is produced to justify anybody profiting.

I'm going to laugh my ass off when BTC ultimately does collapse. At some point it's going to hit a deflationary spiral when the last blocks are unlocked and no more BTC come into existence.

Any investment could be called a Ponzi scheme with your logic.
Early investors always get money from "nothing", if by nothing you mean taking a risk and correctly predicting the market.

Re:Waiting for the other shoe

[Visserau]

http://codinginmysleep.com/ponzi-schemes-in-plain-english/

OK, I'll stop now :)

Re:Waiting for the other shoe

[Anonymous Coward]

I'm going to laugh my ass off when BTC ultimately does collapse. At some point it's going to hit a deflationary spiral when the last blocks are unlocked and no more BTC come into existence.

You are going to be waiting a long time for that laugh, the year 2140 to be exact.

Re:Waiting for the other shoe

[guises]

Pyramid scheme, not Ponzi scheme: called a pyramid scheme because of it's top down nature, small top and large base. A Ponzi scheme is where you promise returns on an investment and instead of investing the money you pay those returns out of the principle, all the while telling your investors that things are going great.

Re:Waiting for the other shoe

[horza]

Visserau, hedwards is just one of those Bitcoin trolls that spams the fake "Bitcoin is a Ponzi scheme" all over every forum. It's been debunked a million times so you don't need to worry. One point you are missing is that the original investors don't make lots of money. If they didn't use them then nobody apart from the original miners would have any, hence it would not exist as a currency. As they spread and demand goes up. The original people sell low as eg $1 is a lot more than they spent in electricity to generate it. They think it's a lot at the time. If you don't believe me, go back through past /. posts of the ilk "Bitcoin value hits $X" and count the number of posts bemoaning that they sold at $X/10 thinking they were getting a great deal at the time.

Sure some early miners might still have coins, but if they haven't sold by now they've been holding on an awful long time and obviously the money aspect isn't that important to them. Sure it might keep going up but hold onto anything and the value normally goes up if you hold onto it long enough. Doesn't matter if its wine or property. People like hedwards are bitter because they think they missed out on something. They are just sad small minded people. I didn't invest any time or money into Bitcoin, but if those brave enough to do so end up with a little cash in their pocket I'm not going to begrudge them.

Phillip.

Re:Waiting for the other shoe

[Anonymous Coward]

Bitcoin aims to offer a better way to transfer wealth than we had today. To a lot of people, that is "of value".

There is a faulty logic involved in that statement. Money has no intrinsic value. If I draw my face on a piece of paper and call it My Dollar, it will be worth exactly as much as the paper and ink I used to produce it. The difference between My Dollar and American Dollar is that the American Dollar is A) widely accepted as a payment method, and B) it is regulated by the state. Bitcoin slowly gains acceptance, but the issue of regulation remain a question. Even if there are security measures in place to prevent forgery and such, there are no safeguards that would protect BitCoin from the perils of economy. Hell, even the highly regulated $ isn't 100% safe from market fluctuations, and to expect BitCoin to be a better representation of wealth is pure madness.

Re:Waiting for the other shoe

[Anonymous Coward]

People that say bitcoins are a ponzi scheme are woefully ignorant. It is a pump and dump scheme.

Re:Waiting for the other shoe

[Anonymous Coward]

From the first fucking line on wikipedia's entry for deflation.

In economics, deflation is a decrease in the general price level of goods and services.

You're fucking stupid if you are trying to argue that there won't be deflation and then immediately follow up with examples of deflation (the big mac costing 10 bit-cents down from 1 bitcoin)

Re:Waiting for the other shoe

[sourcerror]

Reading list:

http://en.wikipedia.org/wiki/Deflation#Major_deflations_in_the_US

Re:Waiting for the other shoe

[sarysa]

Wasn't there a post on slashdot recently saying far more than half of all bitcoins were being hoarded? (That, and/or lost) I don't think you have a handle on just how many people are trying to game the system.

Re:Waiting for the other shoe

[Anonymous Coward]

"I'm going to laugh my ass off when BTC ultimately does collapse."
I'm going to laugh my ass off when the dollar ultimately does collapse.

Re:Waiting for the other shoe

[david_thornley]

A computer is useful in a way a bitcoin isn't. You can do useful and fun stuff with a computer, but all you can do with a bitcoin is exchange it for something useful. Money is just a way of keeping track of value in order to facilitate an open market. It plays a vital role, but it isn't actually a good or service.

To put it another way, Jobs and Wozniak got started producing Apple computers, which were of value to people outside Apple Computers, and went from there. Early bitcoin adopters mined the things by verifying bitcoin transactions (if I understand this correctly), producing nothing of value for anybody outside the bitcoin community, and providing no service other than helping the bitcoin work. This is why it's compared to a Ponzi scheme, in that early adopters got lots of bitcoins by doing nothing generally useful. There is no element of fraud, but the cashflow works much the same way.

Further, I've already got a method of keeping track of value. I use United States dollars. Using bitcoins would provide me with no clear benefit*, and I'd be paying actual USD to people who basically got rich in bitcoin by taking in each other's laundry. No thanks.

*Bitcoins can provide another way to transfer value, but it isn't all that useful. I can use USD for that purpose, and there is a massive infrastructure to make it easy and safe for me to do so. It fails on illegal transactions, which I'm not interested in anyway. It fails for WikiLeaks, which is a problem, but not one that greatly affects me. (It would be more convenient for me to send a check to a physical address than to use bitcoins for the transfer.) Anonymity is a major problem as well as an occasional win. I conduct most of my business by asking banks etc. to change a few numbers. This is done electronically, which is not all that secure, but I don't pay for the losses. By having these transactions non-anonymous and traceable, it's possible to challenge fraud and sometimes restore money all around. I don't have these protections with cash, but I don't do large transactions in cash, and physical security helps keep me safe. Bitcoin has all the vulnerabilities of an electronic system and all the vulnerabilities of cash.

Re:Waiting for the other shoe

[DriedClexler]

A computer is useful in a way a bitcoin isn't. You can do useful and fun stuff with a computer, but all you can do with a bitcoin is exchange it for something useful. Money is just a way of keeping track of value in order to facilitate an open market. It plays a vital role, but it isn't actually a good or service.

So you agree money provides a useful service -- indirect exchange -- and thus produces real value by enabling people to be better off than if they could not conduct indirect exchanges via money. (Though you don't quite appreciate the implications thereof.)

And Bitcoin is (trying to be a generally-accepted kind of) money with advantages over other moneys.

So you already agree this is different from on Ponzi scheme in that Bitcoin provides value (or at least the honest potential to). All you have to add in response, to attempt to substantiate your position, is that you're personally dismissive of the benefits. And that certainly is your right, just as others are every day finding genuine use cases for it where it really does better than other currencies. (And many think Macs are crap and everyone using them is just deluded.)

But it does not at all substantiate your claim that Bitcoin is some "Ponzi scheme", wholly dependent on more people putting more money in while producing no valuable product.

Indeed, Bitcoin adoption could stop right now without a single person "holding the bag" as in a Ponzi scheme -- for example, if it stabilizes as the medium of exchange for a niche market (*cough* online illegal drugs) in which people prefer to swap in/out of Bitcoin (from/to another currency at a varying exchange rate) than try to trade using a "standard" medium like USD.

Re:Waiting for the other shoe

[Anonymous Coward]

Dude your arguing against AstroTurfers/shills. Cryptographically secure currency strikes fear into certain people/orgs.

Re:Waiting for the other shoe

[Visserau]

Yep, I woefully screwed up my definition of deflation. I guess my point was that is a different type of deflation, built into the design of the currency and not necessarily a bad thing.

Re:Waiting for the other shoe

[AnonyMouseCowWard]

No no. Google, Dell, Apple, Microsoft.. those are all companies that _make money_. They make money by producing something, by _creating_ something. That's not what Bitcoin is doing.

The proper analogy is that a few people found shiny rocks in a riverbed. They then go "nice, shiny!", get together and discover few people own those shiny rocks. They then proceed to convince everyone that these shiny rocks should be worth something and that it can be used as a currency, since it's rare and easily transportable. In the beginning, most people don't care, and so the founders accumulate a lot of shiny rocks. By the time shiny rocks become popular, there are few to be found in the riverbed, but some suckers still come by and look for fragments of shiny rocks.

It's not exactly a Ponzi scheme because no new member is directly paying old members through the scheme. They are all increasing the value of shiny rocks however, as they become more commonly used. The only problem is that those shiny rocks have absolutely no use, and do not produce anything (that's why I didn't say gold; gold has uses). While it's fun for as long as it works, one day people might realize they could use something else than shiny rocks, and their values will drop. Or, or maybe the feudal lord ruling over the place decides that he won't accept shiny rocks but prefers paper bills written "United States of America" and "legal tender" for you to pay your taxes and dues, who knows.

Re:Waiting for the other shoe

[virg_mattes]

It's not exactly a Ponzi scheme because no new member is directly paying old members through the scheme. They are all increasing the value of shiny rocks however, as they become more commonly used. The only problem is that those shiny rocks have absolutely no use, and do not produce anything (that's why I didn't say gold; gold has uses).

This is the malfunction in your logic. Currency has use in the simple function of currency, as shown by paper money. It facilitates exchange, and therefore makes general commerce easier. To wit, what any currency, Bitcoin or shiny rock, "produces" is a better functioning economy. If Bitcoins have some advantage over other currencies, then they have an intrinsic value through that added (usability/portability/anonymity/whatever the advantage is). So in your example, shiny river rocks have a value in that everyone agrees to use them as a medium of value exchange, and that makes commerce move more efficiently.

While it's fun for as long as it works, one day people might realize they could use something else than shiny rocks, and their values will drop.

This is true of any currency. In fact, the rise and fall of currency values is a market unto itself. Even virtual currencies follow this pattern, as evidenced by the markets for both legitimate exchange (Bitcoin or Linden Dollars) and illegitimate (WoW gold or other game currencies).

Virg

Unreal

[DeathFromSomewhere]

You just gave them real money and got nothing back in exchange. Stupid beyond belief.

Re:Unreal

[rtaylor]

You just gave them real money and got a few hundred thousand web visits worth a few hundred dollars.

Re: Unreal

[Anonymous Coward]

How is one real and the other unreal?

If with the bitcoins he got he is able to purchase online or otherwise stuff of equivalent price to $20, then I would say it's a fai deal.

Re:Unreal

[Anonymous Coward]

Not stupid...fucking brilliant. With I'd thought of this scam.

Re:Unreal

[Darkness404]

They're both "nothing" and neither are real money.

There's nothing separating a bitcoin, a US dollar or a napkin that says $10000 1337 D0ll@rz on it. They all have next to no intrinsic value, although they all could be used as an exchange mechanism.

Historically, there's been a 100% failure rate for fiat currencies. Despite the conveniences of bitcoin it is still fiat currency just like the Zimbabwe Dollar, the US dollar and the napkin that I doodled $10000 1337 D0ll@rz on.

Re:Unreal

[DeathFromSomewhere]

There's nothing separating a bitcoin, a US dollar or a napkin that says $10000 1337 D0ll@rz on it.

One of these I can exchange for goods and services in the real world and have a reasonable expectation the other person will want it. I'll let you figure out which one it is. And no I don't care that your shitty blog takes donations in bitcoin.

Historically, there's been a 100% failure rate for fiat currencies.

And historically 100% of people have died. Who gives a shit.

conveniences of bitcoin

Don't make me laugh.

Re:Unreal

[Darkness404]

Keeping your wealth in fiat currency (dollars, bitcoin, used napkins, etc.) is stupid. Sure, people accept US dollars right now, people also accepted Zimbabwe Dollars, people also accepted the Papiermark, etc. And when hyperinflation hit, it hits suddenly and hard. Indeed in the months leading up to the hyperinflation of the Papiermark, German economists said the real danger was DEflation!

Putting faith in fiat currency is like claiming you're immortal.

Re:Unreal

[arth1]

There's nothing separating a bitcoin, a US dollar or a napkin that says $10000 1337 D0ll@rz on it. They all have next to no intrinsic value, although they all could be used as an exchange mechanism.

One being a legal tender[*] is a significant difference.
You can pay your rent and taxes in bitcoins no more than you can pay it in promises against next year's harvest.
You may be able to sell your bitcoins or next year's harvest, so you can get real money to pay your bills with, but that part is all on you.

[*] "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."
-- 31 U.S.C., paragraph 5103

Re:Unreal

[femtobyte]

One significant difference: the $10000 1337 D0ll@rz napkin may not have required an approximately equal amount (by monetary value) of energy to be wasted in its creation. Bitcoin is an ecological disaster, because the market for Bitcoin creation means it is favorable to burn a nearly equal amount of money on hardware+energy to set up a mining rig. For a fiat currency by government mandate (or other convenient shared societal delusion), each $100 bill doesn't entail wasting $99 of resources to create (I bet it's pretty easy to pen your 1337 D0ll@rz napkin, yet still useful as a currency if enough people agree to provide goods/services in exchange --- including the original scrawler, if this currency is likely to take off).

Re:Unreal

[dryeo]

The US dollar is backed up with a very large military which enforces its use as the common currency of the world.

Re:Unreal

[Njovich]

Historically, there's been a 100% failure rate for fiat currencies

Nothing has intrinsic value. Nothing. All there is are fiat currencies.

Also, I guess by failure you mean that they thrive and are used by 99% of the world population every day to do nearly everything?

Re:Unreal

[Njovich]

Keeping your wealth in natural objects (gold, etc) is stupid. Sure, people accept gold right now, people also accepted tulip bulbs, people also accepted beads, salt, shells, cereal grain etc. And when hyperinflation hit, it hits suddenly and hard. Indeed in the months leading up to the hyperinflation of tulips, Dutch traders said the real danger was DEflation!

Putting faith in gold is like claiming you're immortal.

Re:Unreal

[Anne Thwacks]

AFAICT Bitcoin IS legal tender in France. Most of us don't live in the USA.

Re:Unreal

[arth1]

AFAICT Bitcoin IS legal tender in France. Most of us don't live in the USA.

YCT very little, then. Try paying a debt in France with Bitcoins and call the police if they refuse to accept it.

France has laws stating what's legal tender - since 2003, only Euros - and strict laws punishing those who refuse legal tender as payment for debt.

What has happened in France is that Paymium is allowed to run an exchange in partnership with Credit Mutuel (a real bank). They can do so whether they exchange bitcoins or dollars or zorkmids - they have to abide by regulations, and track all transactions in the Euro value, and for large transactions report them. This is like any other exchange, and does not make what they trade the legal tender (Euros) against legal tender, whether it's Yen, Bitcoins, Silver, future coffee crops or toenail clippings. Nor does it make it either legal or illegal currency (which is different from legal tender) - the authorization doesn't say anything about Bitcoin's legality as a currency, only the regulation of an exchange.

Re:Unreal

[angel'o'sphere]

That: AFAICT Bitcoin IS legal tender in France. Most of us don't live in the USA. is wrong.
The only legal tender in France is: Euro.

Re:Unreal

[Bigby]

I agree with you on what a bad idea fiat currencies can be.

However, the 100% failure rate is a horrible statistic. Of course all currencies that came to an end failed. Why would a successful currency come to an end?

A better stat would be "What percent of failed currencies are fiat?"

Re:Unreal

[maharvey]

fail

Worth more when it goes both ways

[egcagrac0]

It will be a far more useful offering when I can both give it currency to be credited bitcoins, and transfer bitcoins to it to receive currency.

Re:Worth more when it goes both ways

[Anonymous Coward]

You can already do that easily using exchanges but yes, it would be nice.

Re:Worth more when it goes both ways

[phizi0n]

Why would you want to give it anything when you could walk away with the machine and steal all their bitcoins instead?

Re:Worth more when it goes both ways

[Anonymous Coward]

It will be a far more useful offering when I can both give it currency to be credited bitcoins, and transfer bitcoins to it to receive currency.

Yes than you even can take them as gambling machines 100 U$ in BTC out wait for a while put your BTC in and get 110 U$ out or loose some and only get 90 U$ out.

Re:Worth more when it goes both ways

[Anonymous Coward]

Although you probably won't be able to steal the bitcoins (they should be up in a cloud somewhere, not on the box), the cash might be of interest.

But sadly, for you, they must have thought about this too. For instance, there are simple ways to render money in a machine unusable when the machine is being tampered with.

Re:Worth more when it goes both ways

[Anonymous Coward]

You might as well wait until Bitcoins really hit the popularity stage.

Then you can walk down a street and crack open some morons wifi and steal their everything.

It's win-win. For you.

Re:Worth more when it goes both ways

[egcagrac0]

First, outright theft isn't compatible with my personal moral code.

Second, the bitcoins themselves are almost certainly stored in a wallet elsewhere.

Re:Worth more when it goes both ways

[egcagrac0]

This isn't a gambling machine; it's an exchange machine that could be used for commodity speculation.

... and until it can buy bitcoins and pay dollars, it's a bitcoin vending machine, not an exchange machine.

Re:Worth more when it goes both ways

[Anonymous Coward]

Why doesn't he just go rob a liquor store?

Re:Worth more when it goes both ways

[egcagrac0]

Really... which bitcoin exchange today lets me trade physical currency for bitcoin and vice versa?

Possibly related question, what's the physical address I go to do this?

Re:Worth more when it goes both ways

[Anonymous Coward]

Who says the bitcoin wallet is local? Maybe its just accessed through an encrypted tunnel. The key could automatically be deleted when power is disconnected from an onboard battery. If you say this is bad because it can be hacked, that might be true. But, ATMs use a similar system of "battery protected key". (Its in the keypad module itself.)

Re:Worth more when it goes both ways

[Anonymous Coward]

There are plenty of them online that will trade you bitcoin for many different currencies and vice versa. MtGox is only one example.

I don't know of a physical one, but assuming you aren't a luddite it shouldn't be an issue.

Re:Worth more when it goes both ways

[egcagrac0]

... which really doesn't help if you want to get cash out of the system anonymously.

Re:Worth more when it goes both ways

[Anonymous Coward]

Nope. Sadly right now, no currency offers that.

Is this in Nevada or Atlantic City?

[Anonymous Coward]

I thought gambling was illegal most other places.

Re: Is this in Nevada or Atlantic City?

[Anonymous Coward]

So foreign exchange trading is illegal?

How about stock market? Commodity trading?

Re: Is this in Nevada or Atlantic City?

[__aaltlg1547]

Calling it a currency is misleading. To be a currency, something has to be generally accepted as payment for goods, services and debts, at least within some geographic area. Bitcoin is a digital commodity that mostly can't be used to buy or sell anything without first finding a buyer to turn it back into money.

Re:Is this in Nevada or Atlantic City?

[brokenin2]

It's funny all the people calling anyone getting into Bitcoin suckers. It'd be fun to see if one of them would dare to mark the price of Bitcoin for each time they've made a comment link that. I'm one of those "Bitcoin suckers".... At this point, I've got about 30 grand to show for my original $19.50 investment.. Boy, you've really made me feel like a sucker now haven't you. There was a one month period (shorter actually) where you could have bought them and held them until now and lost some USD on them if you were to sell today.. It's looking more and more like soon, that won't even be true.. It will soon become impossible to have lost money on them. Fools! Fools! You're all fools!!! Oh, uh.. Why didn't I do that? What amazes me is how long it's going to take some of you to realize you were the fools, despite the indisputable math, and the fact that no one made anyone any promises you'll still be yelling 'Ponzi Scheme' for years to come. Good for you. More power to ya.

Of course, buy them, and trade them, and you can easily lose money, but that's just because you're not as smart as the other bitcoin traders.. You could do that trading gummy bears as well...

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

That just makes you functionally equivalent to P.T. Barnum.

Re:Is this in Nevada or Atlantic City?

[Tim the Gecko]

dutchguy1600s wrote:

I've multiplied my original investment in tulip bulbs by 100!

FLawesomedude wrote:

I made 10x my starting money by flipping houses. It's easy!

brokenin2 wrote:

At this point, I've got about 30 grand to show for my original $19.50 investment

Does this story ever have a happy ending?

Re:Is this in Nevada or Atlantic City?

[hedwards]

This is a zero sum game. In order for you to win money, other people have to lose money. And because there's nothing being produced, you're guaranteed that the early adopters will wind up profiting even as the late comers end up footing the entire bill.

And hell yes you're a fool. Even fools get lucky, but in total, the people getting lucky will be vastly outnumbered by the people who get screwed because of the way in which the BTC are created. And the early fools will reap more rewards individually than the later fools will pay out individually.

Also, if you've bothered to read up at all, and I mean at all, on the Ponzi scheme, this is exactly what it looks like. The early adopters crow about how it's money for nothing, when they're being paid by the people getting in later. At some point the money runs low and it falls apart. We haven't yet hit the point where it falls apart, but when the deflationary spiral hits the system, those BTC that people have will be effectively worthless as there's no upside to buying them, assuming you even can buy them. And general instability as small purchases cause huge changes in value because of low trading volume.

It's also likely to be illegal as I doubt very much that the SEC is being permitted to oversee all of this, nor the equivalents in other nations.

Re: Is this in Nevada or Atlantic City?

[Anonymous Coward]

You haven't looked very hard. There are lots of places to spend bitcoins.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

Lol, the part where someone get's pwned by karma for being smug?

Re: Is this in Nevada or Atlantic City?

[Anonymous Coward]

OK, how is it not currency?
I buy bitcoin. I buy service with it. So it's trad-able in Euro and I can actually buy product with it, which I do. And for me for various reasons buying with credit card is not an option.

Re: Is this in Nevada or Atlantic City?

[Anonymous Coward]

Calling it a currency is misleading. To be a currency, something has to be generally accepted as payment for goods, services and debts, at least within some geographic area. Bitcoin is a digital commodity that mostly can't be used to buy or sell anything without first finding a buyer to turn it back into money.

On the contrary

https://en.bitcoin.it/wiki/Trade#Online_products

Re:Is this in Nevada or Atlantic City?

[brokenin2]

I guess. He made a few buck along the way didn't he?

I spent my $19.50 after I saw an article on /. about bitcoin. I remember thinking, wow, that's an insane (but good) idea. I was fully expecting that it would get hacked the next week and disappear. It never even crossed my mind that it would survive to become anything substantial. More than a year later when I realized I had a substantial sum of the things, it took me about a week of double-taking and reading to realize that they were really for real, and that they were really very similar to any other currency, except that they're more secure and better managed than any other example that I could find).

As it turns out Satoshi had created a very well designed system that has yet to be hacked in any substantial way. Having looked over the design a few times, I really doubt that it ever will be.

Of course, sites related to bitcoin have been hacked, but that has nothing to do with Satoshi's design. They were designed to work like cash, and they do.. Including the part where someone can just steal them if you let them. One time, a long time ago there was a bug in the Satoshi client that accidentally created some extra coins (and the other Satoshi clients didn't reject them) so temporarily there were more coins that the protocol should have allowed, but the bug was quickly fixed, and the clients retroactively recognized the invalid transaction and removed it, so ultimately it was a failure as a security bug (it should be noted that noone tried to hack extra coins though, it was the product of an accident if I recall).

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

Of course, since you already own $30k worth of bitcoins, you have a huge incentive to praise bitcoins, in order to increase the demand for them and thus their value...

I guess there are no laws about insider trading in bitcoinland?

Re:Is this in Nevada or Atlantic City?

[brokenin2]

It's true it's a zero sum game. The same goes for currencies died of an inflationary spiral. A zero sum game is actually what money is for. Making sure you're on the winners side is nice if you're going to play with money. So far it's working for me.

I was certainly lucky, but you explain to me why my luck is going to change? Your premiss only works if one day everyone dumps them all. I'll certainly keep an eye on it, but tell me why everyone's going to dump them tomorrow, or some other day, when the system has anywhere from 1/10th to 1/1000th the wasted money of our current system? You're not a fool for paying an extra 2-3% for everything? In total, the losers don't necessarily end up being people holding bitcoins. As they become more accepted, the losers may end up being all the other people holding other currencies. I assume that means you. The bitcoin adopters will lose if bitcoin stops gaining in popularity, and does an about face and starts decreasing in popularity (the speculator roller coaster also matters, but is a short term thing). Right now, that doesn't seem to be happening (trust me, I watch). There is a strong motivation for merchants to use them. There are no charge backs, no fraud, no PII to get your ass kicked by California with, and almost no fees (none if you don't mind things being very slow). Bitpay noted that in their first 10,000 transactions online, they didn't have a single case of fraud. The norm for Mastercard and Visa is 1 in every 160 transactions.

On the Ponzi issue.. Yes, there are similarities. Same goes for penny stocks and to a lesser extent normal stocks, any forex, and really, *ANYTHING* you could invest in. I don't advise people to invest in them. I tell people that they're neat, and a better form of money, but still very volatile. I also tell them that if they do try to use them as a get rich quick scheme, they're likely going to lose all their money when the volatility spooks them and they make a bad trade. If they're going to do anything like investing, they should get a small amount that they'll never miss, and forget about them for years (it's the forget about them part people have trouble with). What's better though, is to get a few, and use them just to learn what it's about.. Go over to bitmit and see how cool it is to buy things online without handing out your life's history.

OK, do you even listen to yourself? "those BTC that people have will be effectively worthless as there's no upside to buying them, assuming you even can buy them." If you can't buy them, then they're the price hasn't dropped all that much after all. There are lots of the things.. You'll always be able to find someone to sell you 0.00000001 BTC... especially if you're right. For a deflationary spiral to work, the price has to CRASH because nobody wants them, because you can't do anything with them because everyone wants them too much to part with them. Unsurprisingly there aren't many great historical examples. Eventually, people have necessities that they'll need to acquire, and they'll even part with things that might be worth more later.

There are a number organizations that have been very careful to ensure that they're compliant with the KYC requirements, and registered for official approval from FINCEN.. The US government hasn't officially stated anything one way or the other, but having FINCEN involved and participating is a (weak) endorsement of sorts. Under current laws, it's most likely legal, but tomorrows laws may take aim specifically at Bitcoin and similar things. It's still pretty unlikely that they'd be able to do anything about it, but that sure might hurt adoption (in the US anyway), and thus the price.

Some governments have clearly stated that Bitcoin is perfectly legal, although they don't formally recognize it as a currency, more like a commodity.

If you bothered to read up at all, and I mean at all, you'd know all this already.

Re:Is this in Nevada or Atlantic City?

[HeadOffice]

Time will tell...

http://en.wikipedia.org/wiki/Greater_fool_theory

Re:Is this in Nevada or Atlantic City?

[Njovich]

Do you even know what a zero sum game is? And what bitcoin is? How is that zero sum?

Also, the 'someone has to lose money in any deal'... It's only true in an 'opportunity cost' sense, not in real world numbers. It means that say, if you bought a painting for 10 dollars, sell it to me for 20, and I sell it later again for 25, you have lost that 5 dollar that you could have made by making the deal I made. In reality of course, we both made money on the deals, and that deal I made may never have become available to you.

Re: Is this in Nevada or Atlantic City?

[wonkey_monkey]

No-one is legally obligated to accept it as payment of a debt?

Re:Is this in Nevada or Atlantic City?

[sFurbo]

It seems bitcoins would be the easiest (and cheapest) way to transfer money to and from places without much financial infrastructure. That makes it a non-zero sum game. This also means that it might not (completely) collapse, as there is real utility in it.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

How exactly is this "zero-sum game" property of bitcoin any different to any other financial instrument, e.g. dollars? Or hedge funds. Or CDSs. *Money* doesn't produce anything, rather, it enables commerce which tends to favor production.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

Or for a practical (and quite meta) demonstration of the principle in action: http://bitcoingem.com/

Re:Is this in Nevada or Atlantic City?

[angel'o'sphere]

Sigh ... what is so hard to understand?

Bitcoins are not a commodity. They are not ment to be traded. They are a currency.

If you buy and sell bitcoins to attempt to make a profit, you have exactly the same risk as buying Yen or Chinese Yuan or South African Rand.

OTOH if I sell ebooks on my web site and you have the choice to pay $1.99 or BTC 0.3, you simply do the math for you and pay with what ever currency you want. Why would you care whether the book tomorrow costs BTC 0.4 or BTC 0.02?

If I would price my eBook for $1.99 or EUR 1.50, you would do the same ... or is the EUR or the british pound a ponzi scheme as well?

Re:Is this in Nevada or Atlantic City?

[brokenin2]

Many people own USD and praise it's merits.. Not really insider trading. I'm not privy to Google announcing bitcoin support for google wallet or anything.

Also, I'm not trying to tell anyone to go invest in bitcoins. I actually don't think that people investing in it is in my long term interest. People using it is. I also think people using it is in their long term best interest as well if the project succeeds. I'm not a big fan of today's banking industry, and stories about LIBOR manipulation where no one goes to jail really aren't helping.

I was originally just trying to say that the jackasses that call anyone and anything relating to bitcoin fools and scam artists are well..jackasses.

It's true I have more incentive now, but I always thought it was a good idea otherwise I'd never have wasted nearly $20 on someone's pipe dream.

You're certainly correct though, if you're looking for an unbiased opinion, I'm certainly not a good choice.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

This is a zero sum game.

Maybe the exchange is to some degree, but there is an economy emerging from Bitcoin. There are all sorts of coffee shops, webhosting services, and even Reddit and Wordpress accept Bitcoin as payment for services. Those exchanges are not zero sum. Bitcoin is facilitating the net increase in wealth from those economic interactions.

Re:Is this in Nevada or Atlantic City?

[LoRdTAW]

Why was this marked troll?

From what I gather most of /. hates on Bitcoin for little reason other than jealousy. I bet they heard a story where some kid made tens of thousands of dollars by being an early adopter and look for any reason they can to dis it. They didn't care to look into it or didn't know about it or when it first came out and now they are mad they didn't become an early adopter and made money. So they feel left out and therefor have to lash out because its not them driving a new car or whatever.

I know a kid who was mining since the first month btc came out back in 2009. This was when you could leave your PC on overnight and make money mining, before the need for GPU/FPGA mining rigs. He he made around $50,000 and is working on a system to allow shops and stores to easily accept btc payments using an android phone. I sure wish I knew about btc back then myself.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

Isn't the whole world a zero-sum game? I mean, there's only so much money on the world, and we all get rich by passing it around (as opposed to holding onto it), don't we?

Re:Is this in Nevada or Atlantic City?

[horza]

Hmm, seem to be replying to yet another hedwards post on how Bitcoin will fail. Using strange arguments. Nothing needs to be produced in a currency apart from some token that can be validated. Whether a euro coin, a dollar bill, or an EDI transfer over a wire.

You don't appear to know what a zero sum game is or a Ponzi scheme. Similar trolls have posted before so I won't point out the misuse of the former and ignorance about the latter. I'm not even sure where you come up with a concept of a bill. If I buy a Bitcoin then it's mine. Even if it becomes worthless. Nothing is owed to anybody. I lost a third of my savings by not moving it into Euros in time, a number of years ago, because I invested in the "Ponzi scheme" of the currency of the United Kingdom. Sometimes you win, sometimes you lose. Then you randomly throw in digital tokens as being illegal with no basis what-so-ever. Wow, you are BITTER.

Personally I'm curious about the concept of Bitcoin, and am wary even though it appears to be working perfectly well. The wariness is due to your only valid point, which is that large changes in value can occur because of the low volume. There are people that buy Bitcoin as an investment rather than a currency, and speculators distort any market. I can't even buy any quantity of my favourite wines as speculators have already bought up next years production. Frankly speculators can be a pain in the arse. However if somebody working freelance wanted me to pay them in Bitcoin to avoid paying Visa/Paypal fees then I wouldn't have any objection to it. I'd buy a couple $100 worth and then 'top up' buying more as needed.

Phillip.

Re:Is this in Nevada or Atlantic City?

[hedwards]

Are you a fucking moron? These aren't strange arguments they're ones that anybody with any knowledge of the subject or common sense would come to. Just because you're not smart enough to realize what's going on, doesn't mean that it's not going on.

BTC, unlike USD, CAD, Euros or Pounds has no value to it. No government on earth requires that people take it as payment for services rendered or in exchange for merchandise. I can't pay my taxes or buy food with it anywhere in the world without converting it. The GGP is boosting it as an investment.

And yes, I'm fully aware of what a Ponzi Scheme is, it's where you take new investors money to pay off the older investors and where the founders get automatic profits. Any difference between BTC and the famous scam is merely a technicality. It's going to end the same way eventually when no new BTC come into existence.

And yes, this is likely illegal, unlike other commodities markets, the SEC isn't regulating this one, which means there's likely all sorts of illegal activities going on.

Re:Is this in Nevada or Atlantic City?

[hedwards]

We hate BTC because it's indistinguishable from a scam.

The founders get to reap huge profits with little or no work at the expense of suckers that come late to the party. And your post just illustrates the problem. It's a token that's designed to allow for massive profits early on and eventual deflationary spiral when no new currency comes into existence and the liquidity dries up.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

30 grand for your 19.50

I can't even begin to emphasis just how loud I would say BULL SHIT if this were in person.

You are a liar.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

People who find themselves living in the geographic area controlled by the United States Government are finding that it's becoming impossible to get their money out of the area intact. As their currency continues to evaporate relative to commodities and foreign currencies they'll be looking for an anonymous method to transfer their wealth elsewhere.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

> At this point, I've got about 30 grand to show for my original $19.50 investment..

Yeah, exactly the problem with Bitcoins.

Re: Is this in Nevada or Atlantic City?

[Anonymous Coward]

If nobody wants to trade for your paper money, you'd have the same problem. (And as inflation increases, that problem will start to appear more and more. Right now we are "boiling the frog slowly".)

Re:Is this in Nevada or Atlantic City?

[Time_Ngler]

But why are they *suckers*? Can you explain your deflationary spiral scenario as a real world example?

Re:Is this in Nevada or Atlantic City?

[horza]

Are you a fucking moron?

In your opinion, perhaps, because I hold a different viewpoint. Intellectually speaking I would venture I am more intelligent than you.

These aren't strange arguments they're ones that anybody with any knowledge of the subject or common sense would come to.

I have read extensively on ecommerce technology, I feel I am economically literate and have read numerous papers on the subject (though my degrees were in engineering), and have my own investment portfolios. My conclusions differ. The theory appears ok but I doubted at the beginning it would ever gain any traction. The extent of its success has taken me by surprise, not due to any theoritical flaws... quite the contrary. The money markets are quite illogical and 'belief' and 'confidence' play and undue part. Look at the effect the downgrading of the UK by the Moody credit rating agency. I am surprised it has had so much success solely through grass roots.

BTC, unlike USD, CAD, Euros or Pounds has no value to it.

It does. Like any commodity. The value is what somebody is prepared to pay for it. People pay $20k for a mobile phone. It's not worth that if you melt it down but the value has been set by supply and demand.

I can't pay my taxes or buy food with it

The first is true but the second isn't. There was a /. article only last week about being able to order pizza using Bitcoin. If a vendor insists on a particular form of payment then use it. If your government wants to be paid on dollars then use dollars. If somebody else wants to be paid in potatoes then give them potatoes. As long as you have some form of exchange then there is no problem.

And yes, I'm fully aware of what a Ponzi Scheme is

No you are not.

it's where you take new investors money to pay off the older investors and where the founders get automatic profits

That is not correct.

And yes, this is likely illegal, unlike other commodities markets, the SEC isn't regulating this one

That is not the definition of illegal.

which means there's likely all sorts of illegal activities going on

???

Phillip.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

A system like Hawala would likely be far more useful than bitcoin; not to mention that it could have questionable legality and restrictions in law.

Re:Is this in Nevada or Atlantic City?

[Anonymous Coward]

> "The founders get to reap huge profits with little or no work "

You forgot about the months of coding the most secure and successful alternative currency on the planet. That probably took a little work.

Re:Is this in Nevada or Atlantic City?

[PoolOfThought]

I'm somewhat undecided on bitcoins.

However, I am aware that in the old days (before our time) they used to use "trading beads" to handle "currency exchange". Each currency and denomination was worth a certain number of beads depending on the actual value of the currency in question. So, when someone came to you with a green bead it was worth exactly however much a green bead was worth in the culture you planned to trade it on. The good thing about this is that as a merchant you didn't have to know the exchange rates for everywhere you sold product. Instead you just had to know that you product was worth X number of green beads in YOUR currency - maybe this equates to 5 dollars for 1 green bead. So, when you sold a product you demanded one green bead for it no matter where it was sold. If you were in a culture who had a currency of chickens then it didn't matter to you. You still demanded a green bead and they could figure out for themselves how many chickens makes a green bead. All of that was handled based on the local market - not through some central manipulation. As an added benefit, if the beads were sufficiently difficult to manufacture then you could know that your transaction was secure (and that you weren't getting scammed by the buyer). Seems to me that bitcoin actually does all of these things and might be useful if for no other reason than those.

In bitcoins you actually have the added benefit that you know there is a limit. You don't have to worry about the bead manufacturer putting out an infinite number of beads driving down the value of each.

Now, I guess the questions I would have would be "why did they (people) quit using these types of schemes / beads?" and "what does bitcoin do that is sufficiently different so that those items don't come into play again".

uber-geek issues

[YrWrstNtmr]

"I just bought bitcoins from the World's first Bitcoin ATM at Liberty Forum. I created an account using an Android Bitcoin client and held up its QR code to the Raspberry Pi-based device's optical scanner. After I fed in a $20 Federal Reserve Note, I got back a confirmation QR code on its display, which I then scanned and checked the third-party confirmation URL. The machine can function on any wireless network and will soon be available for purchase by merchants, who can make a commission on customers' Bitcoin purchases."

Most of those words mean nothing to the vast majority of the worlds population.

Re:uber-geek issues

[swilde23]

and this is slashdot... not the vast majority of the world...

Re:uber-geek issues

[Anonymous Coward]

and this is slashdot...

...where the majority of people are already bored of Pi stories.

Re:uber-geek issues

[YrWrstNtmr]

and this is slashdot... not the vast majority of the world...

I get that. And this is one of the most geeked out sites going. But holy crap. An article about "buying" bitcoins, via some arcane series of steps?
Why would yo do that?

Re:uber-geek issues

[swilde23]

I guess it doesn't seem all that arcane to me.
1) Install an app
2) scan a qr code
3) insert money
4) scan a qr code

Re:uber-geek issues

[swilde23]

Perhaps. But that's not because of some technological arcaneness to the stories (which is all my rebuttal was about)

Re:uber-geek issues

[Anonymous Coward]

go the fuck back to Ars!

Re:uber-geek issues

[Anonymous Coward]

"I just bought bitcoins from the World's first Bitcoin ATM at Liberty Forum. I created an account using an Android Bitcoin client and held up its QR code to the Raspberry Pi-based device's optical scanner. After I fed in a $20 Federal Reserve Note, I got back a confirmation QR code on its display, which I then scanned and checked the third-party confirmation URL. The machine can function on any wireless network and will soon be available for purchase by merchants, who can make a commission on customers' Bitcoin purchases."

Most of those words mean nothing to the vast majority of the worlds population.

Let me try:

So I used a program running on my handheld telephone (which is also a computer) to open an account with a system that deals in a sort of money that doesn't physically exist but you can trade through computers over this globally connected public computer network called the Internet. Then I went to an automated teller machine made using a very tiny, cheap, versatile computer and held up a bar-code like identifying graphic displayed on my handheld telephone's screen to the teller machine's camera eye. Then I put in some money into the teller machine and it displayed another identifying graphic on its screen. Then I used my handheld telephone (which also has a camera) to take in this image, which it can convert into text. This text corresponds to a unique page created just for this transaction on the Internet, confirming to me that I'm now holding an amount of this non-physical currency that is equivalent to the amount of real money I put in.

Re:uber-geek issues

[Anonymous Coward]

Fortunately, the (current) target market of BitCoins pretty much only includes those who understand those terms. Kind of like back in the 90s if you didn't know how to pronounce "SCSI" you probably didn't need it. :)

Re:uber-geek issues

[tftp]

It can be trivially optimized down to only one step:

3) insert money

Other steps are just to distract your attention.

Re:uber-geek issues

[Anonymous Coward]

Many people here seems to be tired of tech and science stories, and that's why there are plenty of dumb political stories about education and gun control that is sure to keep things interesting. There is really no need to shit up things you don't like by repeatedly voicing your boredom.

Re:uber-geek issues

[Impy the Impiuos Imp]

Remember where you are.

Re:uber-geek issues

[Njovich]

Yes, but adding a chinese translation didn't work with the Slashdot unicode support.

Anyway, there have been way too many Slashdot articles on all of those terms already. If you are a slashdot reader and still don't get them, maybe you can just search the web?

Re:uber-geek issues

[Anonymous Coward]

It's a lot less arcane than the current ways of getting bitcoins that are (if you do everything right on the computer side after the fact) untraceable. And legal, which is always nice.

Goodbye, Slashdot

[Anonymous Coward]

This was the last straw. Seriously, fuck bitcoins, and fuck you.

Re:Goodbye, Slashdot

[Ultra64]

Don't let the Log out button hit you on the way out.

Re:Goodbye, Slashdot

[Anonymous Coward]

..yup, monotonous does, as monotony is.

Seriously, WTF is this constant Bitcoin trolling nonsense at all?

Re:Goodbye, Slashdot

[Anonymous Coward]

Slashdot is losing an Anonymous Coward?
Oh the humanity!

A bitcoin ATM? Awesome

[OhANameWhatName]

I'll say this right now and you can quote me. Bitcoin is going to CHANGE THE WORLD!

An ATM in shopping centres which allows people to exchange actual paper money for digital currency? What vendor wouldn't jump at an opportunity to operate such a machine? And once the machines are in every bar and shopping centre, the vendors will naturally all fall into line and allow people to spend bitcoins. This is a WHOLE new way of exchanging money.

What's next? The Silk Road machine? .. Genius.

Re:A bitcoin ATM? Awesome

[__aaltlg1547]

Exactly what they need, a relatively cumbersome way of getting paid compared to all the other methods they're used to using, and being paid with something that may fluctuate wildly in relation to the money they use to pay their rent and buy their merchandise?

Re:A bitcoin ATM? Awesome

[Anonymous Coward]

Exactly what they need, a relatively cumbersome way of getting paid compared to all the other methods they're used to using, and being paid with something that may fluctuate wildly in relation to the money they use to pay their rent and buy their merchandise?

Left out more fees on the conversion back and forth in those transactions than a banker best wet dream could ever imagine.

LOL revenues for a captcha ...

Re:A bitcoin ATM? Awesome

[Rockoon]

..and cant pay their taxes with it..

Re:A bitcoin ATM? Awesome

[Anonymous Coward]

1) Laser/Master/Visa/American Express cards... Widely accepted now, right? How is bit-coin gonna be different?
2) Why the Silk road? I can buy not only drugs with it!

Re:A bitcoin ATM? Awesome

[GNious]

Have [part of] your income in BitCoins - since it is worthless (see 50% of comments on every BitCoin article), taxation on it would be 0.

Re:A bitcoin ATM? Awesome

[asylumx]

(see 50% of comments on every BitCoin article)

Hate to tell you, but comments on slashdot articles do not equate to tax law.

Re:A bitcoin ATM? Awesome

[GNious]

:)

Re:A bitcoin ATM? Awesome

[mattr]

The Japanese Yen jumped 21.4% from 77.6 to 94.2 JPY/USD Sept 28 to Feb. 24.
This has a huge impact on an export-led economy like Japan.
http://www.xe.com/currencycharts/?from=USD&to=JPY&view=1Y

Re:A bitcoin ATM? Awesome

[Anonymous Coward]

...because you already pay them with paypal.

First!

[Anonymous Coward]

..to troll yet another new way of Bitcoin scamming gullible fooks on /.

Re:First!

[Anonymous Coward]

gullible fooks on /.

Is that a charming Limey way of saying 'fucks', or just a typoing of 'folks'?

Re:First!

[Anonymous Coward]

Oh, give the personna management seat a break.

It's probably a portmanteau of 'folks' and 'fools'. So he's wrong three ways. SCORE!

Excellent!

[Anonymous Coward]

One of the main problems Bitcoin has at the moment is the difficulty involved with trading it for fiat currencies. I hope some adventurous merchants in the Bitcoin hotspots take advantage of this!

Android, Raspberry Pi, Bitcoin in a single summary

[Anonymous Coward]

Android, Raspberry Pi, and Bitcoin in a single summary? Just needs an Apple or 3D printing angle and it'll be slashdot buzzword bingo.

Re:Android, Raspberry Pi, Bitcoin in a single summ

[Anonymous Coward]

Android, Raspberry Pi, and Bitcoin in a single summary? Just needs an Apple or 3D printing angle and it'll be slashdot buzzword bingo.

Nevermind - the article mentions an iPhone app, too. Bingo!

Talking Points of bitcoins

[Anonymous Coward]

Why is every bitcoin article start with the talking points about bitcoins? The only issue with bitcoins is their volatility. Its the same issue gold has. Someone has to decide to buy into it with the plan of selling it latter for you yourself to be able to sell it.

Re:Talking Points of bitcoins

[Anonymous Coward]

..so, a pyramid system then?

Re:Talking Points of bitcoins

[__aaltlg1547]

..so, a pyramid system then?

No. Nobody promises you that the bitcoins will increase in value or that they will magically multiply, or even buy them back from you, ever.

Re:Talking Points of bitcoins

[brokenin2]

Bitcoin is still relatively unstable, but it's a lot more stable than it used to be.. Time and growth will make it more stable. Of course time and recession would make it less stable but at this point, it seems pretty unlikely that it'll go that way. So far, overall, Bitcoin has seen a lot of growth (exponential growth actually.. look at a graph using a log scale.)

Re:Talking Points of bitcoins

[AHuxley]

When your VICE, American Excess and MasterRace cards wont pass on a payment...
It's every freedom fighter you want to be.

Re:Talking Points of bitcoins

[arth1]

Why is every bitcoin article start with the talking points about bitcoins? The only issue with bitcoins is their volatility. Its the same issue gold has.

No, bitcoin also has the issue of likely being illegal in many jurisdictions.
And gold does not have a risk of becoming worthless - it has actual uses. It is a decent electrical conductor, highly malleable, and corrosion resistant. And I can take pills containing gold to help fight my autoimmune disease.
What can I do with Bitcoins except sell them, for as long as there are buyers?

Re:Talking Points of bitcoins

[Anonymous Coward]

Sell them across the world? With gold you have to have someone willing to buy it right there.

Re:Talking Points of bitcoins

[brokenin2]

You can buy drugs relatively safely on the internet. It's a pretty popular use.

I don't mean to be picky but...

[rjr162]

Isn't this more of a "deposit box" machine seeing as an ATM (automated teller machine) allows withdrawal of money, checking account balances, transferring funds from one account to another etc? (And technically shouldn't the machines that only dispense be MAC (money access center) machines?

Re:I don't mean to be picky but...

[wbr1]

ATM is correct in this context, as it also stands for "Automatically Takes Money".

It's one of few anonymous ways to obtain bitcoins

[stoploss]

It is actually quite hard to obtain bitcoins anonymously.

The days of CPU-based mining are long over, and even the current "economy" of multi-GPU-based mining rigs is about to be eclipsed by the ASIC-based devices coming online this year.

There are effectively no services that will take anonymous payment for bitcoins. Paying via bank account ACH or check is certainly not anonymous, and the same goes for credit/debit card payment. Furthermore, any credit/debit based payment is potentially reversible via chargebacks, etc, so most places don't take that kind of payment due to the fact that bitcoin transfers are irreversible.

Services like Bitinstant claim to take cash for bitcoins, but what that really means is that they require payment via MoneyGram, which requires you to present government-issued ID when sending payment. This is linked to the Bitinstant anti-money laundering policy, which requires your real name, etc. Dwolla wants a name, SSN, government ID, etc, to setup an account. As for Mt. Gox? Heh, they require everything but a DNA sample in order to use the exchange. Any service registered as a "money services business" in FinCEN will have these kinds of restrictions.

Obtaining bitcoins locally requires finding someone offering them for sale, negotiating price each time, and likely a face-to-face meeting to hand over cash. If one is really patient and trusting, a deal might be able to be struck for sending cash in an envelope. However, the bitcoin market is extremely volatile, which tends to undermine these types of deals.

Anyway, this ATM seems very convenient and anonymous; ergo, it likely will fall afoul of the anti-money laundering laws in one way or another.

Freestaters are ruining NH

[Anonymous Coward]

Little fascist twerps are hell bent on tearing apart the social contract. To hell with them, and OP.

Re:Freestaters are ruining NH

[Anonymous Coward]

What social contract? I never signed any social contract.

Newsflash. Without a signature, there is no contract. So, why don't you take your hyperbolic left wing bullshit and shove it where the Sun doesn't shine.

Re:Android, Raspberry Pi, Bitcoin in a single summ

[Anonymous Coward]

Android, Raspberry Pi, and Bitcoin in a single summary? Just needs an Apple or 3D printing angle and it'll be slashdot buzzword bingo.

Nevermind - the article mentions an iPhone app, too. Googloo!

Let me fix that for you.

ATM only?

[Anonymous Coward]

If this works as an ATM only, it will have limited usefulness. OTOH if it can work as a POS system it definitely has possibilities. At least until the Feds find out and crush it like they did with the Liberty dollar (http://en.wikipedia.org/wiki/Liberty_dollar).

Re:ATM only?

[Anonymous Coward]

Oh, Point of Sale. Read that as Piece of Shit at first.

Re:ATM only?

[__aaltlg1547]

It DOES work as a POS terminal. That's what it is. You buy a commodity (bitcoins) with money (dollars).

Re:ATM only?

[Anonymous Coward]

Yes, it certainly works as a terminal where you buy pieces of shit that have no value, THANKS TO OBAMA!

If the dollar was backed by gold, then these bitcoins would be backed by something with value, but they aren't! They're backed by American dollars, which are WORTHLESS!

When Obummer removed the gold standard and failed to replace it with something tangible, it (and I'm referring to Obama here as an "it" because it is neither human, nor does it have a gender) started a chain reaction which resulted in the total devaluation of American currency, and the long, painful descent into massive amounts of national debt.

Obama is a puppet of the Illuminati. He was human. It is not human anymore. It is an empty shell that the Freemasons manipulate to serve their twisted desires. How can this be, you ask? This happened as a result of Hitler's failure to eradicate the Jewish race, and their eventual rise into becoming one of the most nefarious organizations to ever exist. Every Zionist is a Freemason. Every Freemason is either a Jew or a puppet that is being manipulated by the Jews.

I work tirelessly to expose this fraud. Many mock me, or choose not to acknowledge the truth. Laugh, and watch as your country gets flushed down the toilet by the Jews. The Jews are destroying us from the inside, and we are letting them. Read 'The Protocols of the Elders of Zion' if you truly want to understand their evil.

"The constitution scales of these days will shortly break down, for we have established them with a certain lack of accurate balance in order that they may oscillate incessantly until they wear through the pivot on which they turn. The GOYIM are under the impression that they have welded them sufficiently strong and they have all along kept on expecting that the scales would come into equilibrium. But the pivots - the kings on their thrones - are hemmed in by their representatives, who play the fool, distraught with their own uncontrolled and irresponsible power. This power they owe to the terror which has been breathed into the palaces. As they have no means of getting at their people, into their very midst, the kings on their thrones are no longer able to come to terms with them and so strengthen themselves against seekers after power. We have made a gulf between the far-seeing Sovereign Power and the blind force of the people so that both have lost all meaning, for like the blind man and his stick, both are powerless apart."

Obummer better watch out!

[Anonymous Coward]

Now that money can be transferred anonymously among members of the Republican party, it's only a matter of time before he is defeated.

Baquack Obamailure, you will NOT win the next election! Thank God for Bitcoin!

You will never take away our guns and our freedom of speech! We will fight any attempt to have our rights taken away, and if that fails, we will inject ourselves with an experimental serum and turn ourselves into zombies, so we can continue to fight, even in death. We will end the tyranny of the majority of the minority through all means possible!

Thank God for Bitcoin.

Re:Obummer better watch out!

[Nimey]

IGTT 2/10.

want can go wrong??

[Joe_Dragon]

It seems like there is a lot that can make this fail.

Can it refund your cash if there is any fault?

Can it run out of bit coins to pay out? and you end up losing cash?

How fast can it update the exchange rate?

What happens with a network lost midway though an transfer?

Can it store and transfer at a later time?

What about an power loss?

Hacking? and will be even be crime to hack it? and what will happen in a court if some one sues or they try to change some with breaking a law dealing with any to do with this?

Re:want can go wrong??

[Anonymous Coward]

>Can it refund your cash if there is any fault?

Yes. You are putting physical money into it. The money doesn't get burned. If you have a problem, you talk with the company and they retrieve your money. If the company refuses, the police retrieve it. The machine may even have a way to spit the money back out at you if it automatically senses a fault.

>Can it run out of bit coins to pay out? and you end up losing cash?

I'm sure it could run out of bitcoins. At that point, unless the designers are grade A idiots (in which case see above for a solution) it will stop accepting money.

>How fast can it update the exchange rate?

Doesn't matter as long as you can see what you're going to get when you make the transaction. It's in the best interests of the ATM owner to update it quickly, though, since if they don't they'll either lose customers or they'll lose money.

>What happens with a network lost midway though an transfer?

See the first answer.

>Can it store and transfer at a later time?

How is that going to make an ATM fail?

>What about an power loss?

UPS. Or, the ATM turns off. If it was in a transaction at the time, see the first answer.

>Hacking?

It's an ATM. Sure it could be hacked. ATMs across the world as it is have been hacked. Yet they are still popular. This type of failure seems to have been worked around well enough to satisfy current customers.

>and what will happen in a court if some one sues or they try to change some with breaking a law dealing with any to do with this?

The same thing that always happens? I don't see this as a valid point.

So, in summary, your complaints kind of suck, sorry.

Re:want can go wrong??

[Anonymous Coward]

It probably is no different than a "change machine" at an arcade where non-monetary coins are issued to play games. Why everybody thinks this is illegal or will create a problem is beyond me.

Re:want can go wrong??

[Anonymous Coward]

What's a henway?

Re:want can go wrong??

[cryptizard]

Most of these things apply to regular ATMs too you know.

Re:want can go wrong??

[Anonymous Coward]

Can it refund your cash if there is any fault? - will works same as any ATM.
Can it run out of bit coins to pay out? and you end up losing cash? - No. Simple check is sufficient here.
How fast can it update the exchange rate? - Automatically, from Bitcoin market places. API for that are already implemented in many of them.
What happens with a network lost midway though an transfer? - How is it different from usual ATM?
Can it store and transfer at a later time? - Why not?
What about an power loss? - I am pretty sure it would have a UPS, it's there and it's cheap.
Hacking? and will be even be crime to hack it? It will be a crime, since money are involved, real physical money.

'and what will happen in a court if some one sues or they try to change some with breaking a law dealing with any to do with this?' - What?

Re:want can go wrong??

[Anonymous Coward]

At first, i thought this was going to be a cool poem (from the lay out). :(
It seems like there is a lot that can make this fail.

Can it refund your cash if there is a functional bail?

Can it run out of bit coins to pay out? and you end up losing cash via time out?

How fast can it update the exchange rate?

What happens with a network lost midway though a transfer of HATE?

Can it store and transfer at a later time?

What about an power loss, no fault of mine?

Hacking? Fracking? Relaxing? and will be even be crime to hack it? and what will happen when courts whack it! They sues or they try to change, some with breaking a law way out of range?

Anxiously Awaiting

[Anonymous Coward]

The first IRS. Bitcoin takedown. Should make for some interesting, er, bits....

Re:Anxiously Awaiting

[Impy the Impiuos Imp]

I know state governments like to define sales as exchanges of goods, not just money, so farmers exchanging stuff for stuff suffers from the same sales tax as dollar equivalent.

Government won't care until it starts to eat into their cut of transactions. I'm still waiting for some government jackass to tax as sales the in-game exchange of "paid month" items some people buy, then trade to kids with too much time on their hands for big piles of in-game "gold", e.g. "Plex" in Eve Online.

Re:It's one of few anonymous ways to obtain bitcoi

[theskipper]

Seems like payday loan and those "cash quick" places would be logical businesses to start offering bitcoin sales, assuming they could get enough inventory. Since not all users of the currency will care about anonymity, simply buying them for speculation or online use would be worth a 5-10% transaction fee. There's been a lot of press lately in magazines like Forbes which will catch the attention of Joe Public (and further fueling the BTC-USD bubble).

Just what I always wanted!

[femtobyte]

Brilliant! An ATM that I put cash *into* to get magic numbers out --- for all those times when I've been standing in a market thinking "gee, it would be handy to have a bit less spending cash in my wallet right now."

Re:Just what I always wanted!

[slashrio]

Maybe we should call it an 'AVM': Automatic (bitcoin) Vending Machine?

Kritterbox.com forum allows anonymous users to pos

[Anonymous Coward]

http://www.kritterbox.com/

Remain anon and post as much as you like. Second best to Tor hidden services forums.

What's with all the hostility?

[mathimus1863]

Yes, there's a lot of people who are in Bitcoin because of become-a-billionaire-overnight fantasies. But you remove all that and you're left with a really fascinating system that should appeal to everyone on Slashdot. It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics -- most of us here dig that stuff.

Get over the hype and take Bitcoin for what it really is: a fascinating experiment that has, so far, withstood the amazing barrage of publicity, hacking attempts, legal uncertainties, and remains valuable for reasons completely contrary to everyone that says it's worthless. It may become worthless one day, but consider the possibility that Bitcoin is disproving all your wildly oversimplified assumptions about what makes something valuable. It is completely different, and there's plenty of reasons to believe that it could succeed as much as it could fail.

Why does gold have value? Nothing is backing gold. Yet it has value, mainly because of its properties: scarcity, fungibility, density, beauty, etc. Bitcoin is really quite similar but with some different properties. Ease of transfer over the internet, fungibility, scarcity, storage efficiency, near-anonymity and built-in escrow.

I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value. And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use gold, credit card or paypal, which all require me to remember log-in creditials, give away information and/or pay a bunch of third party fees. There's plenty of value in being able to pay people across the world, instantaneously, without sacrificing your privacy, and without paying any fees. Why is that not valuable? Seriously... quit focusing on the get-rich-quick kids, and start appreciating Bitcoin for it's unique properties and philosophy.

Re:What's with all the hostility?

[Nidi62]

Why does gold have value? Nothing is backing gold.

You can make stuff with gold: jewelry, electronics, shielding, etc. Other metals used for currency such as copper and silver have other uses to. They have value and uses far beyond that of a simple currency. What can you make out of a bitcoin?

Re:What's with all the hostility?

[Anonymous Coward]

I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value. And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use gold, credit card or paypal, which all require me to remember log-in creditials, give away information and/or pay a bunch of third party fees. There's plenty of value in being able to pay people across the world, instantaneously, without sacrificing your privacy, and without paying any fees. Why is that not valuable? Seriously... quit focusing on the get-rich-quick kids, and start appreciating Bitcoin for it's unique properties and philosophy.

BS you paid plenty of fees to get them BTC.

Re:What's with all the hostility?

[Anonymous Coward]

So can you make $1700/oz worth of shit out of gold? I think not.

Re:What's with all the hostility?

[Anonymous Coward]

Exactly!

I share your fascination with this and I have been looking into options to accept BitCoins in my business since I sell online services and BitCoin was designed with that use-case in mind.

Re:What's with all the hostility?

[Anonymous Coward]

You could make a $2500 piece of jewelry.

Re:What's with all the hostility?

[Anonymous Coward]

Gold is shiny.

When it comes down to it, for most of history, gold maintained its value because gold enabled you to have shiny stuff that other people couldn't get. It had intrinsic value. Gold substitutes tarnished, so they were not as good as gold. Gold adulterated with silver looked just as good as gold, but it couldn't be sold to goldsmiths who needed the real deal, so it wasn't as good either.

Bitcoins are not shiny. You can't make jewelry out of it -- it is really just a medium of exchange, and nothing else. When Bitcoin 2.0 is made, it will be as good as Bitcoin 1.0 or better, unlike gold 2.0 which was of lower quality.

None of this means that bitcoin is doomed, but let's just say I don't want to be heavily invested in Bitcoin 1.0 when Bitcoin 2.0 comes out.

Re:What's with all the hostility?

[Anonymous Coward]

Yes, there's a lot of people who are in Bitcoin because of become-a-billionaire-overnight fantasies. But you remove all that and you're left with a really fascinating system that should appeal to everyone on Slashdot. It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics -- most of us here dig that stuff.

Bitcoin is very cool from a technical standpoint (and I'm kicking myself for not getting early when CPU mining was cheap). However the ridiculous libertardianism that surrounds Bitcoin practically welcomes trolling and flames. Easy targets abound.

Regarding PMs, gold and silver are quite unique and have been considered valuable for most of human history. Meanwhile Bitcoin still hasn't exited the hipster phase. If people decide that "Bitcoin used to be cool, but it changed", then it will become worthless.

And functionally, Bitcoin right now is far closer to "prison cigarettes" than "gold".

Re:What's with all the hostility?

[Anonymous Coward]

Mining karma, are we?

Got you, you self-plagiarizing dolt

Re:What's with all the hostility?

[Darkness404]

Gold has value because it has unique properties. As does silver, aluminum, etc. Indeed every physical object has unique properties which give them value. Aluminum is good for making soda cans out of (along with a lot of other things), you can't substitute lead for aluminum and get the same product. Because these things are physical, they also have scarcity. Oxygen is incredibly useful, but its also virtually limitless making its value (in normal situations) quite low. Gold, while arguably less useful than oxygen is much more scarce and has a known rarity.

Bitcoins though do not have unique properties, they exist as nothing more than electrons and variables in a computer system. As they are only data, they have no real scarcity. Now, Bitcoins may be -artificially- scarce, but there's no physical limitation to suddenly printing a couple trillion Bitcoins. You might have faith that they won't just suddenly appear and indeed that faith may be quite reasonable, but there's nothing physically stopping that. On the other hand, try conjuring up more gold. The alchemists of old couldn't do it and indeed there's no easy way of creating gold with modern science (it's possible, but certainly not practical and won't be practical during our lifetimes). Gold has true scarcity, Bitcoin (and other fiat currencies) do not.

Bitcoin requires faith in Bitcoin, faith that:

A) The service will keep running
B) The service is secure (you can't physically hold bitcoins like you can gold)
C) The service will continue operating (with mining and the like) as is and there won't be any major changes that will devalue a bitcoin.

Gold requires faith that:

A) We haven't invented a Star-Trek style replicator

Re:What's with all the hostility?

[Anonymous Coward]

Bitcoin is the currency of choice for drug addicts and pedophiles. Normal people wouldn't touch that shit with a ten foot pole.

People hate bitcoins because the people that use bitcoins deserve to be hated. Nobody wants to trade real money for some fake currency that is popular with worthless potheads.

Re:What's with all the hostility?

[Anonymous Coward]

The monetary value of gold has next to nothing to do with its actual utility. Faith in the former requires much more than faith in the latter.

Re:What's with all the hostility?

[aliquis]

You can make stuff with gold: jewelry, electronics, shielding, etc. Other metals used for currency such as copper and silver have other uses to. They have value and uses far beyond that of a simple currency. What can you make out of a bitcoin?

It's a matter of acceptance but because you think other things matter:

As much as with dollars. Or well, you can wipe your ass with dollars if you don't mind the grime and drugs but that's about it. Expensive heating source?

("Mind? I love them!")

Re:What's with all the hostility?

[keyidol]

Jewelery yes but as far as electronics, etc., gold has been valued long before we even knew what an electron was. Gold is valuable because it is scarce. Bitcoin is also scarce. Thus it has value. Human nature.

Re:What's with all the hostility?

[Anonymous Coward]

Gold does, money... Right, tell it to inflation.
Bitcoin's value - it's transformational needs are marginal.
Bitcoin has scarcity you dumb ass. Seriously tired of comments of idiots like you.

'scarce, but there's no physical limitation to suddenly printing a couple trillion Bitcoins.' what a muppet, can you print me bazzilion dollars onto new Visa Card? I mean, its obviously artificial.

Currency requires faith in it.(i sel 20000000 millions Zimbawian $, 1 to 1 with American)

Value of any currency changes, so does bitcoin, it's stupid to expect value not to change. Dollar from 70 years ago and now - are different things.

Gold can be artificially created, it's just not valuable enough to create it artificially just yet. But technology is there. An when it happens... I wonder what are you going to say than?

Re:What's with all the hostility?

[Anonymous Coward]

It's actually not good if you can use "money" for other purposes than transfer of "value/debts". For example if coins have value beyond theyr face markings thay will get bits of them sgaved of etc- If things get real bad the coins will get melted alltogerher. That's not healthy for a payment/money system.

Re:What's with all the hostility?

[Leomania]

It's a mix of cryptography, freedom of speech, computing, networking, finance, economics, and even politics -- most of us here dig that stuff.

Yes, but we usually recognize things as belonging to one or more of these categories. For better or worse, trying to explain to the vast majority of the population what a Bitcoin is has been akin to saying "Play Minecraft for fun and profit!"

I don't think it's any more ludicrous for Bitcoin to have value than it is for gold to have value.

That's quite possibly fair. But if you buy into the theory that all of the gold on Earth was likely created during numerous supernova billions of years ago, you just might have a hard time comparing that to a Bitcoin.

Re:What's with all the hostility?

[Anonymous Coward]

Now, Bitcoins may be -artificially- scarce, but there's no physical limitation to suddenly printing a couple trillion Bitcoins. You might have faith that they won't just suddenly appear and indeed that faith may be quite reasonable, but there's nothing physically stopping that.

Somebody doesn't actually understand how Bitcoin works.

Re:What's with all the hostility?

[Anonymous Coward]

Bitcoin's scarcity is limited by definition. It matters not what other people say or do, or even what physics does, so long as mathematics, logic, and my sanity endure, bitcoins are scarce.

The network helps a large number of people who have this same rule to communicate and trade with one another. If some of that network decide to use a different rule they will automatically be rejected from the network. Again, this is purely a matter of mathematics, logic, and sanity. The danger is that too few people respect the basic rules (leave the Bitcoin network); Bitcoin is much less useful when fewer people are using it.

Gold on the other hand most certainly does not have the same level of scarcity. There's plenty of gold in the earth and sea that simply needs to be collected. It's quite possible to "synthesise" gold in a number of ways including through controlled fission reactions. There is also heaps of gold floating around in asteroids in space. Compared to Bitcoin, gold is laughably abundant. However, our current technology and thousands of years of gold being valuable (begging countless attempts for people to make/aquire gold cheaply) gives us a coarser kind of physical scarcity which is good enough for our purposes.

When we have the Star Trek style replicator, bitcoins will still be scarce.

Re:What's with all the hostility?

[Anonymous Coward]

Obviously, if convert my bitcoins to fiat currency and back between each transaction it's going to be expensive. The fact that the fees involved in this are comparable with normal PayPal and credit card fees only serves to underscore the laughable state of the established payment systems.

However, if I receive bitcoins for providing some good or service and later spend those same bitcoins on something else, the fees are minimal. This happens now but is not so common because Bitcoin is not widespread. If Bitcoin became "mainstream" the efficiencies would be realised.

Re:What's with all the hostility?

[slim]

Some people can make $2500 worth of sculpture out of $20 worth of clay. That in itself doesn't make the raw materials worth valuable.

Re:What's with all the hostility?

[Anne Thwacks]

Nobody wants to trade real money for some fake currency that is popular with worthless potheads.

AHA - now you understand how most of the world feels about USD, and why they would prefer to use BTC.

Re:What's with all the hostility?

[angel'o'sphere]

Bitcoins though do not have unique properties, they exist as nothing more than electrons and variables in a computer system. As they are only data, they have no real scarcity.
This is true for every currency. Or what you think how high the percentage of the total amount of $US is that is in fact represented (existing would be more correct) in terms of paper money and coins?

but there's no physical limitation to suddenly printing a couple trillion Bitcoins. Here starts your misunderstanding. It is indeed impossible to create more coins than defined in the mathematical function that describes bitcoins.

A) The service will keep running
There is o bitcoin service running. Bitcoin is based on a peer to peer distributed system.

Re:What's with all the hostility?

[makomk]

Gold is probably not the best comparison, since it seems to be in a massive speculative bubble right now which is presumably going to pop, just like the previous gold bubbles did.

Re:What's with all the hostility?

[UnCivil Liberty]

And in the end, when I want to sell WoW weapons, buy webserver space, or play a few games of poker online, why would I use gold, credit card or paypal, which all require me to remember log-in creditials, give away information and/or pay a bunch of third party fees.

In the United States banks were ordered to block these transactions under the Unlawful Internet Gambling Enforcement Act of 2006 ( http://en.wikipedia.org/wiki/Unlawful_Internet_Gambling_Enforcement_Act_of_2006 ), though there are some poker sites that continue to accept US players following Black Friday.

For BitCoin poker SealsWithClubs.eu (available in the US) runs exclusively on BTC deposits and withdrawals while SwitchPoker (US players not accepted) takes it as a deposit method and then converts it to fiat. Another site, InfinityPoker, which has been in beta for close to 6 months plans to also be available to US players and will accept BTC as a deposit method and convert it to fiat (and back to BTC when you withdraw).

Re:What's with all the hostility?

[djmurdoch]

It is indeed impossible to create more coins than defined in the mathematical function that describes bitcoins.

That's assuming that no way is found to cheat. There are 21 million bitcoins possible, and currently about half of those are in circulation. However, you have to trust the underlying system to know whether the bitcoin being offered to you hasn't already been sold to someone else. If you could fake that, you could indeed create trillions of bitcoins. They would be counterfeit, but indistinguishable from real ones.

Re:What's with all the hostility?

[foniksonik]

Sure. OTOH gold is useless to me as anything other than currency. It's real scarcity has no impact on its value to me and practically it can be split into enough fractional quantities as to make its scarcity a non-issue and no better than an artificially scarce currency such as promissory notes or bitcoins. In fact gold value would have to be propped up with the exact same artificial scarcity as it is not practical at all to require accurate assessment of raw gold and so would need backing by a mint to authenticate its value at which point the mint controls the scarcity.

So to use raw gold as currency we would have to have a cheap and fast way to verify its purity (melting it down would not be viable). Even then it could inflate / deflate on the value per weight scale, down to nano grams if necessary, making its "scarcity" pointless.

The above reasons are why paper/digital currency is as good as any assuming you don't just jump straight to the actual reason. Currency is simply a proxy for work done or promised to be done. It has no value outside of this proxy agreement. Anyone who says otherwise is scamming you. Why should I value the work of gold miners anymore than the work of a doctor? Why not trade in health credits instead? It would have way more transferable value than a bit of shiny yellow conductive molecules.

Go back to your hidey hole with your prepper shelves full of canned fruits and beans. The rest of us will continue to build civilization just fine without you.

Re:What's with all the hostility?

[Anonymous Coward]

+1. I have some anecdotes.
1) I have done some translation jobs for people met over a web forum that allows you to use a nickname and hide your email and real name. However when they pay me via PayPal, PayPal tells me their real name as well as an email address I didn't know before. This information should not be necessary to get paid, and I wonder if PayPal discloses my name too (I don't mind regarding customers but would prefer it not to be published). And I think it would turn people away from using PayPal if they knew PayPal outs them. Though this is not my own use case, imagine a web forum for gays to come out of the closet that outs its users without their knowledge. I would much prefer using bitcoins.
2) I have been considering using bitcoins to rent a webserver (some sites let you do so) to host a web shop that doesn't connect to my other servers and have any chance of interfering with my main business. You can do this in the real world by walking down the street to another shop but you can't do that in the endlessly googlable identity-tied net.
3) Another persone tried to pay me for a similar job and their PayPal account was frozen (I don't know why that was, but it can happen easily, for example it happened to me just by making a mistake when signing up for a PayPal debit card). Eventually I got paid through Moneybookers (now called Skrill). I hesitated, based on horror stories of Moneybookers taking a long time or getting halted. In fact mine was halted too, temporarily. However it worked and I got paid. I suppose all of this would have been a breeze if bitcoins had been used.

Re:What's with all the hostility?

[Beerdood]

What can you make out of $100 bills? Besides crappy paper airplanes.
Better question, what can you make out of a $100 bill with a value close to $100?

Re:What's with all the hostility?

[Anonymous Coward]

Gold requires faith that:

A) We haven't invented a Star-Trek style replicator

Or, managed to mine into the previously and as of yet inaccessible parts of the planet where much larger quantities of gold exist than we have in total currently.

Re:What's with all the hostility?

[slashrio]

Every currency has both
1. an objective (intrinsic) value,
2. a subjective (speculative) value.
The objective value of the dollar is zero, that of the bitcion is the energy put in generating it, that of gold is the gold itself.
That would make me prefer gold over bitcoin over dollar.

Re:What's with all the hostility?

[angel'o'sphere]

If you could fake that, you could indeed create trillions of bitcoins. They would be counterfeit, but indistinguishable from real ones.
Coins and transactions are digitally signed ... so this is impossible.
The second one getting the "same coin" would receive an error during the transaction.

Re:What's with all the hostility?

[djmurdoch]

If you could fake that, you could indeed create trillions of bitcoins. They would be counterfeit, but indistinguishable from real ones.
Coins and transactions are digitally signed ... so this is impossible.

I think you have a different definition of "impossible" than I do. Clearly a brute force attack could fake the signatures. That's not currently feasible, but not impossible.

A much more likely attack is to steal the certificates used for signing. That might be hard, but it's definitely not impossible. We hear about certificates being stolen every few months, so presumably it happens even more frequently than that.

Re:What's with all the hostility?

[angel'o'sphere]

Clearly a brute force attack could fake the signatures. That's not currently feasible, but not impossible.
Clearly you have not read up how the bitcoin system works.
The second one, regardless weather it is the legitimate owner doing a transaction or the one who "faked" to get the "forged" bitcoin will fail in doing the transaction.
A much more likely attack is to steal the certificates used for signing. That might be hard, but it's definitely not impossible. We hear about certificates being stolen every few months, so presumably it happens even more frequently than that.
There are limitless ways how to do a certification. Bitcpin does not use "site certificates". There is basically nothing to steal. I suggest you read up the simple mathematics on the wikipedia page.

That's just pure criminal counterfeiting.

[Andy Prough]

southworth cv 100% cotton paper

It's unfortunate that slashdot is such a magnet for such blatant, felony-level criminality. Even just posting that information to encourage others is quite possibly a federal crime.

Re:That's just pure criminal counterfeiting.

[Anonymous Coward]

It's also comically incorrect since the correct linen paper is only 25% cotton.

Resume paper is inappropriate for other reasons as it contains both watermarks, fluorescent dyes, and starch to improve absorption of ink. The dyes make it fail a black light test, and the starch makes it fail an iodine pen examination.

Speaking of irony, the treasury is too cheap to dispose of their toxic waste properly so they package it as a novelty and sell money paper at a 99.55% discount:
http://www.moneyfactorystore.gov/5lbbagofshreddeduscurrency.aspx

Entertaining movie on the subject:
http://www.imdb.com/title/tt0813547/

Re:That's just pure criminal counterfeiting.

[Anonymous Coward]

Even just posting that information to encourage others is quite possibly a federal crime.

I think it's unfortunate that someone can't search using the internet to find out if it *is* a federal crime and cite it, but instead just leave a statement lying out there like a young boy showing his parents "Ain't I clever, my first shit not in a diaper, it's nearly in the potty in fact" kind of way.

Re:That's just pure criminal counterfeiting.

[allston]

It is called the First amendment, and except for certain extremely defined circumstances it held at a near absolute, So I can along with anyone else say what I wish.

What gives fiat money value?

[__aaltlg1547]

Fiat currency, contrary to what they say, has value for a very particular reason: the government gives it value. It does this by demanding payment of taxes in the fiat currency. The failure to pay your taxes results in losing your very real assets, like your business, your home and in the worst case, your freedom. It also mandates that the currency is "legal tender" meaning it can't be refused as discharge of debts.

Every other thing it can buy is in relation to how much you want to keep the things the government can take from you. (Or private parties can take from you because you have collateralized debts.) It is this coercion that gives it power to pay for everything else.

The freestaters know this. If they can get you and the government to the point where the government has to accept something other than the government's own money to pay taxes, they know it will then take just a little nudge to push the whole thing over. And they figure that somehow they will come out on top when that happens. Ever the optimists, these guys.

Re:What gives fiat money value?

[udoschuermann]

No, the value of any currency (exchange medium, fiat or otherwise) is derived from the trust that currency-exchanging users place in it. This trust may be derived from trust in the issuer (government), but that is no requirement. The value of BTC is derived from a combination of its limited supply and the usefulness of anonymous exchange. Governments need not be involved until you want to convert BTC to a tangible currency (such as US$), but that is not a required feature for those who deal only in BTC. So long as BTC is difficult to come by and those who value it are willing to exchange it solely based on perceived (or real-world) value, then BTC will thrive, and with increasing scarcity, rise in value.

Re:What gives fiat money value?

[Anonymous Coward]

It's not that "Freestaters figure they will come out on top". It's that the people you worship as your protectors and saviors, the very same people that set up the educational system where you were brainwashed to worship them and their institutions, and to hate and fear anyone who objects to what they do, are the worst sort of criminals who willing to even murder you for your disobedience. Free Staters obviously want them to not have any more power.

Even as we speak, that hate and fear you were indoctrinated into, shows.

Re:What gives fiat money value?

[Anonymous Coward]

If this were correct, why are black markets operated with currency other than the government approved one? (Drugs being a significant black market currency.) The government doesn't force you to pay your taxes with drugs. If you tried, they'd put you in federal prison, yet drugs have purchasing power in such markets.

How about hyperinflation? In cases where hyperinflation has occurred, the "government approved" currency has become worthless - so worthless in the 1920s that families were burning piles of it for heat. The fact that the Zimbabwe government endorses their own currency didn't stop it from becoming completely worthless. Markets fall back to bartering and other forms of trade in these case because the people think the currency is worthless - food tends to be more important in such times - regardless of what the government says.

If no-one accepts currency in exchange for goods, currency becomes worthless for acquiring them. Currency has value because a critical mass of people believe it has value. One can exchange goods for money, knowing that that money can later be exchanged for other goods with other parties. That's it. Government power has nothing to do with it.

Re:What gives fiat money value?

[TubeSteak]

So long as BTC is difficult to come by and those who value it are willing to exchange it solely based on perceived (or real-world) value, then BTC will thrive, and with increasing scarcity, rise in value.

Just wait until someone forks bitcoin by starting with a new seed.

Re:What gives fiat money value?

[Anonymous Coward]

That's already happened a great many times. No such "alt coins" have even approach the original Bitcoin in popularity. The two most vibrant alt coins today are Namecoin (Bitcoin with extra functionality to act as a completely decentralised free-market DNS) and Litecoin (don't even get me started on the stupidity behind this).

If you want to fork Bitcoin then you're welcome to try. There's also the possibility of hard-forking the main Bitcoin chain yourself. Go nuts!

Re:What gives fiat money value?

[angel'o'sphere]

Fiat currency, contrary to what they say, has value for a very particular reason: the government gives it value. It does this by demanding payment of taxes in the fiat currency.
This nonsense gets repeated continually on /.

*If* I earn $1,000,000 this year. I have to pay roughly $500,000 taxes next year.

*If* the inflation is 25,000%, I happily pay the worthless $500,000 to the government. However I very unhappily starve on my worthless remaining $500,000 because I can not buy anything for it ... they are worthless. How does the fact that I could pay my taxes with that pile of paper give that paper any value?

Looks like an honest typing mistake.

[Andy Prough]

He seemed to spell most everything else correctly.

Re:Looks like an honest typing mistake.

[Anonymous Coward]

BUT WHAT ABOUT THE GRAMMAR!

Re:Looks like an honest typing mistake.

[ScentCone]

He seemed to spell most everything else correctly.

No. He also used an apostrophe incorrectly, which demonstrates that everything else he says is based on incoherence and random mental noise. The correlation is unmistakable. In a response he will say that he "could care less" about punctuation, further demonstrating my point.

when private currency is prefered to federal.

[Anonymous Coward]

A sea change will occur.

Re:It's one of few anonymous ways to obtain bitcoi

[TheEffigy]

Has anyone actually laid their hands on one of these purported ASIC miners? I see a lot of hyperbole, pictures and hand waving on videos - but to me they appear to be vapourware with nothing other than pre-order status.

Flooz!

[HisMother]

Damnit, where's Whoopi Goldberg when you need her! Or P.T. Barnum, anyway.

No it's not

[Sussurros]

Counterfeiting money is really hard, even with paper notes such as you use there. Southworth is well known though as *the* paper to print resumés on because the paper feels like money and people like it without even knowing why. Its success in getting jobs has even been measured in a psychological test as I recall.

This is quite common knowledge and can be found in 2 seconds by searching for "paper feels like money". You Sir, need to relax a little and appreciate the humour. No knowledge has been passed on that will result in any conterfeit notes being put into circulation that wouldn't have anyway. Put a bit RX into your TX.

Re:No it's not

[Anonymous Coward]

Counterfeiting is hard?

Nobody bothered to tell the Fed.

Re:No it's not

[Sussurros]

Well their counterfeits have the backing of the US Government and its attendant resources. Americans as a whole are pretty good at solving any given problem. It's natural that they would find counterfeiting easy.

It's hard for others to counterfeit American currency, although I've often heard a little story that doesn't go away that there is a nation which has mastered that skill. The nation involved changes but South Korea and North Korea are most often mentioned. I imagine it's just a story though. If Nazi Germany couldn't manage it I can't see anyone else doing it now.

Re:No it's not

[Kreigaffe]

Er, it's never been South Korea? I've never once heard that.
Now, North Korea, that's frequently mentioned. I've never heard of any other nation, state, or organization having a sophisticated USD counterfeiting operation going..
http://www.nytimes.com/2006/07/23/magazine/23counterfeit.html?pagewanted=all&_r=0

there's a link, it's been going on for a while.

Re:No it's not

[Teancum]

The counterfeiting operations that Nazi Germany was running had purposes other than simply buying a few items and making the people running the presses wealthy. Their goal and aim was to deliberately devalue the British Pound (their main target.... not really the U.S. Dollar) so as to cause economic turmoil in the country. It was an operation intended to be far more involved than just passing off a few notes but rather to literally flood England with so much money that rampant inflation would take hold.

The Federal Reserve is pretty much trying the same idea out on an even larger scale with their quantitative easing policies and performing an interesting social experiment to see what would have happened had the U.S. Dollar been targeted in WWII, only this time doing it in the 21st Century.

Re:It's one of few anonymous ways to obtain bitcoi

[udoschuermann]

True, but ASIC mining rigs are being built by relatively small outfits, not by the likes of Intel or AMD. The work is tricky, involves a lot of different suppliers, and isn't anything like grabbing a bunch of off-the-shelf components. The vaporware aspect arises from overly optimistic expectations, but mere GPU miners are really beginning to hurt badly against the ever-increasing difficulty, which is driving up the price of BTCs because there is a clear demand for them, and that makes ASIC delivery ever more important and lucrative. ASICs a matter of time, not a matter of "ifs".

Because it is designed to fail

[Sycraft-fu]

It will never work as a currency because it has built in deflation, which if you've taken ECON 200 you'll know is a really, really bad thing for an economy.

Nor is it being used as a currency right now. A currency is something people hold, spend, get paid in, etc. Bitcoin is basically used only for three things:

1) Money laundering. Sites that do illegal things, like the Silk Road, use Bitcoin to launder money. They take payment in it but immediately convert that in to an actual currency. They are just using the payment system to launder the money from the client to them.

2) Speculation. Traders play the Bitcoin market to try and make a quick buck. Hence one of the reasons for the extreme volatility in price. If any actual currency had that kind of daily volatility it would be said to be in crisis, yet somehow the BTCtards want to act like it is perfectly ok for Bitcoins to fluctuate like that. It also, of course, makes it even less suitable as a currency for people to hang on to.

3) "Mining." People literally wasting CPU cycles and electricity to generate new Bitcoins. Most because they are bad at math and don't count the total cost of all their stuff and realize that they aren't actually making any money on it.

The inherent deflationary property of it makes it a failure as a currency out of the gate. There may be many other problems it would face on a large scale of usage, nobody has yet to convince me it has a good solution to timing attacks, but it doesn't matter because it fails as a currency.

The people who think deflation is good are people with no understanding of economics past their wallet. They think "Deflation means the money in my wallet is worth more so it is a good thing!" That is not the case, you have to look at the larger economic consequences, and then you discover deflation is very, very bad.

Re:Because it is designed to fail

[Darkness404]

Deflation is a silly thing to be worried about.

How many hyper-deflations have occurred? 0.
How many hyper-inflationary events have occurred? A lot. (Zimbabwe, Germany, Hungary, Former Soviet Republics, etc.)

The idea of this gigantic "deflationary spiral" is also a myth

http://mises.org/daily/1254

Does a good job of explaining it.

Re:Because it is designed to fail

[maztuhblastah]

Nor is it being used as a currency right now. A currency is something people hold, spend, get paid in, etc. Bitcoin is basically used only for three things:

And you base this on....

What exactly?

No, really. I mean, with a traditional currency you have a variety of financial sources you can draw stats from, but with Bitcoin? Given the nature of Bitcoin, there's only one place you could have pulled that figure...

Re:Because it is designed to fail

[Anonymous Coward]

There is no "built in deflation" into bitcoin. Look it up, seriously. It's an open protocol. Anyone can see that the monetary base of bitcoin continues to inflate for eternity, at a predictable decreasing rate. Please don't spew this unqualified FUD.

Re:Because it is designed to fail

[Anonymous Coward]

1) Money laundering. Sites that do illegal things, like the Silk Road, use Bitcoin to launder money. They take payment in it but immediately convert that in to an actual currency. They are just using the payment system to launder the money from the client to them.

And money are not used for that?
2) Speculation. Traders play the Bitcoin market to try and make a quick buck. Hence one of the reasons for the extreme volatility in price. If any actual currency had that kind of daily volatility it would be said to be in crisis, yet somehow the BTCtards want to act like it is perfectly ok for Bitcoins to fluctuate like that. It also, of course, makes it even less suitable as a currency for people to hang on to.

And this doesn't happen to currency and shares?
3) "Mining." People literally wasting CPU cycles and electricity to generate new Bitcoins. Most because they are bad at math and don't count the total cost of all their stuff and realize that they aren't actually making any money on it.

The inherent deflationary property of it makes it a failure as a currency out of the gate.
No it does not. If we talk about currency of one country it is, but BT are not bound by those rules. So over all, it's better. No such thing as inflation with BT! Which is root cause of all problems with economy today.

And this is different from mining gold how? Or producing physical coins and paper money how?(that CONSTANTLY are lost, defaced, destroyed or wearied out). At the end of day, Bit-coin will finish being mined.(they are limited) Means damage theoretically is limited.

Re:Because it is designed to fail

[angel'o'sphere]

The inherent deflationary property of it makes it a failure as a currency out of the gate. There may be many other problems it would face on a large scale of usage, nobody has yet to convince me it has a good solution to timing attacks, but it doesn't matter because it fails as a currency.
That is nonsense. Perhaps you should read up how BTC is supposed to work ... There is a huge differene between a traditional currency that accidentally moves into a deflation trend and a currency that has a thoughtfully built in deflation. On top of that: BTC is not supposed to replace an existing currency that is bound to an existing economy. It is an additional currency with its own use and properties.

Re:Because it is designed to fail

[moeinvt]

1) There's a reason the bitcoin folks were invited to the LIBERTY forum. The concept of legal/illegal is a government fiction which has lost all correlation with the concepts of right or wrong / moral or immoral. Consider this a form of political protest against the criminal (but legal) actions of the banking cartel and the insanity of the "war on drugs".

2) What's wrong with speculation? As long as there are competing currencies, there will be speculation. This is also a relatively new phenomenon so there's opportunity for early adopters. At least these "speculators" won't be looking for a bailout if their bets go wrong.

Price stability is the ideal situation but "defaltion" isn't the bogeyman that the mainstream economists, politicians and bankers pretend it is. In fact, it should be the natural condition of things. There is no good or just reason that $1 earned by generating economic surplus (wages, profits, etc.) should have lost 95% of its real purchasing power over the course of a century. That wealth was STOLEN by those who control the currency and get to spend it into the economy first. Technological innovation should make goods LESS expensive over time. Therefore, purchasing power should grow, not shrink.
These are the same idiots who think deficit spending is "good" for the economy.

Re:Because it is designed to fail

[gox]

if you've taken ECON 200 you'll know

I want to invoke philosophy of science here. You won't "know". Almost everyone I know has taken ECON 200 (yeah unfortunate but everyone I know is either a physicist or an economist), and almost all are sympathetic to Bitcoin. I have discussed it with several academics too, and I don't remember them bringing up the deflation. Therefore I think your argument is a (mild) appeal to authority.

You instead need to describe why and how deflation is bad for the economy, then see if it applies to Bitcoin. While describing the mechanism, you will realize that completely open and fluid economies can't be hurt by deflation, nor the other way around.

If I create incentives for you to use my money (legal tender laws, accounting regulations, etc.), then deflation could at least has the potential to hurt the resulting economy. I don't know how you can say an increase in the price of, say, gold, hurts gold economy, or the entire economy though, as long as I am completely free about exchanging it with whatever currency I prefer.

Using Bitcoin is, and always will be, voluntary.

Re:Because it is designed to fail

[Anonymous Coward]

>Money laundering

That happens much more often with "real" money than it does by bit coin. At least by the value being laundered. In fact, I can't see much value in laundering bit coins, it isn't hard to anonymously handle them.

>Speculation

And this doesn't happen with "real" currency? We've had several financial collapses due to the US dollar.

>Mining

If you spend a few cycles on google, you'll find that most of the bitcoin sites explain how much electricity the various popular mining methods use per hash, and how many hashes it takes to make a bitcoin. Most of them do all the hard math for you even show you how many bitcoins per watt you can expect at today's difficulty. And the best sites (I'll admit, there's fewer that go this far) even show you how many US$ per kilowatt you can expect to earn based on today's exchange rates and difficulty.

I'll admit, it is complicated to compare $/kw to $/kw... Nahhh, just joshing ya, you're being an idiot.

Re:Because it is designed to fail

[Anonymous Coward]

if you've taken ECON 200 you'll know is a really, really bad thing for an economy

Yeah, if you've taken a midlevel course in the failed and untestable Keynesian-theory based system, you'll have been told that. But empirical evidence shows that deflation is beneficial to an economy and heals the prior inflationary damage.

The Keynesians failed to predict the crash, predicted a real recovery by now, fail to see how their money printing is continually re-injuring the economy - in short, it's time to call their theory for what it is - an excuse to enable big government, and a monetary system that's utterly unable to fix a failing economy.

Re:Because it is designed to fail

[Anonymous Coward]

You need an education:

http://www.buzzle.com/articles/historical-periods-of-deflation.html

Re:Because it is designed to fail

[Anonymous Coward]

It will never work as a currency because it has built in deflation, which if you've taken ECON 200 you'll know is a really, really bad thing for an economy.

That depends on whether or not you're taught the Keynesian school in ECON 200. If this stuff was established fact, our economy would be much more stable right now. If you insist anyways, then you should check out Freicoin - it's a fork with demurrage to stimulate spending.

Nor is it being used as a currency right now. A currency is something people hold, spend, get paid in, etc.

People are doing all of those things with Bitcoin right now.

Bitcoin is basically used only for three things:

1) Money laundering. Sites that do illegal things, like the Silk Road, use Bitcoin to launder money. They take payment in it but immediately convert that in to an actual currency. They are just using the payment system to launder the money from the client to them.

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

2) Speculation. Traders play the Bitcoin market to try and make a quick buck. Hence one of the reasons for the extreme volatility in price. If any actual currency had that kind of daily volatility it would be said to be in crisis, yet somehow the BTCtards want to act like it is perfectly ok for Bitcoins to fluctuate like that. It also, of course, makes it even less suitable as a currency for people to hang on to.

Do you have dollars in your pocket right now? Are you holding them because the paper is useful, or because you think you'll be able to exchange them for something else later? That's what I thought... congratulations, you're a speculator too. And furthermore, more speculators means more stability - look up "market depth" on Wikipedia.

3) "Mining." People literally wasting CPU cycles and electricity to generate new Bitcoins. Most because they are bad at math and don't count the total cost of all their stuff and realize that they aren't actually making any money on it.

So thousands of people doing something professionally for years is just because they're bad at math. That's weird, because the mining section of the Bitcoin forum has people calculating ROI based on hardware, electricity, etc...

Since you're so smart, I invite you to go short Bitcoins. You'll make a lot of money off of willfully ignorant idiots who don't deserve it.

Re:Because it is designed to fail

[Anonymous Coward]

Hi,

  To your points:

0. People hold, spend, and get paid in bitcoin.

1. What you describe is not money laundering. Money Laundering is the process of making illegally obtained money look legal.

2. Daily Currency Trading Speculation approaches 4 Trillion per day. FOREX serves a valuable purpose in the economy.

3. People waste money in all sorts of investments. A bad investment is still an investment. A bad currency is still a currency

4. Bitcoin has been around for 5 years, has 100k users and 275 million in total value. You call this a "failure out of the gate?" What is your measure of success?p

--AC

Re:Because it is designed to fail

[Anonymous Coward]

Seems odd to consider yourself such an expert when you spout such blatant misinformation.

Re:Because it is designed to fail

[Anonymous Coward]

Deflation and inflation might sound symmetric, but they're not. A little inflation helps the movement of money by encouraging some spending, while a little deflation encourages everyone to stop spending currency of increasing value, "tighten their belts" and can be pretty damaging. The thing about hyper-deflation is that it's not a requirement for great damage: a little deflation is enough, under the right circumstances. Hyperinflation is something countries have survived before, even if the cost was great and painful. The Weimar Republic survived the 1923 hyperinflation. The 1931 deflation? Not so much: ask Hitler. The link you gave is laughable in that respect. "Decades to settle deflation-induced legal disputes? It's a myth!" Yeah, that's the important part, not that the germans where so hurt by the situation they elected a monster as their leader and promptly got rid of their republic, something they didn't do in 1923.

Re:Because it is designed to fail

[Anonymous Coward]

damaging to state created ecomomic bubbles.

Re:Because it is designed to fail

[slashrio]

1. People that do illegal things, like drug dealers, use dollars as an exchange.

2. Traders play the dollar market to try and make a quick buck.

3. Maybe they're not so bad at math, but accept some losses in dollars for helping create a 'greater good', i.e. a non-centrally controlled currency.

The deflation part also concerns me a bit, but that will be resolved as soon as all bitcoins have been minted. Then we'll see what's the reality with bitcoins.

Re:It's one of few anonymous ways to obtain bitcoi

[gman003]

Or there's another way: accept it as payment for a good or service. As (or "if", I suppose) Bitcoin grows and becomes a more legitimate currency, I expect that that will become a more common, or even primary way of obtaining them. (It wouldn't always be anonymously, but it would be possible to do it that way).

I mean, how do most people get Euros, or Dollars - by converting some other currency, or by working for them?

ASIC VS FPGA?

[ArchieBunker]

Can anyone explain why ASIC is supposed to be way better than the current FPGA chips?

Re:ASIC VS FPGA?

[sconeu]

Speed.

Re:ASIC VS FPGA?

[ArchieBunker]

http://25.media.tumblr.com/tumblr_m57xd65swZ1qjvxfho1_500.jpg

Re:ASIC VS FPGA?

[Impy the Impiuos Imp]

Way better? Probably not, but better because it would be custom-designed for exactly this problem. While an FPGA could be programmed in essentially the same way, I have to believe there are overheads a custom chip wouldn't have problems with.

Use Bitcoin for transactions, not investment

[Anonymous Coward]

People holding bitcoins have to accept this serious volatility.

At this point in its evolution, Bitcoin is a transaction currency, not an investment currency. For the purpose of making transactions (buying and selling within a short span of time) their volatility matters little to nothing.

Things might change, but for now, the volatility means that holding onto bitcoin as a form of investment doesn't make a lot of sense unless you enjoy the fun of the gamble. In contrast, transacting with bitcoin makes a lot of sense as it has numerous advantages, exactly as designed.

Re:It's one of few anonymous ways to obtain bitcoi

[Anonymous Coward]

http://www.btcguild.com/halloffame.php
User 67117 is ASICMINER

Monkey learn, monkey repeat

[Okian Warrior]

It will never work as a currency because it has built in deflation, which if you've taken ECON 200 you'll know is a really, really bad thing for an economy.

The funny thing about economics is that it's not scientific.

Sure, it uses math and all, in the manner that astrology uses math, but it's nothing more than feel-good storytelling.

In the case of inflation/deflation, there is no analytic theory which describes the situation - nothing based on conclusions from testable assumptions. It's all guesswork from historical evidence.

Don't believe me? Can you tell me the best value for inflation? If the answer is "it depends", then what does it depend on? Is the function strongly peaked or relatively flat? (IOW, is it important to hit the "best" value exactly, or can it be off by a little?) How much is too much?

Or how about the elephant in the room: how is inflation measured? (Does it include luxuries? Should it include gas prices?)

Here's the scoop, the part that your ECON 200 professor didn't teach you.

The economy is healthiest when people have the most choice. Not the greatest "number of choices" - that's different - but the most "choice" of what to do with their money.

Negative inflation encourages people to forego spending, because saving money gives you more spending power in the future. Positive inflation encourages people to spend, since their money will be worth less in the future. Both situations reduce choice by encouraging one action over another without regard to the merits.

Zero inflation is the point at which people will consider a purchase entirely on its merits, which is the point of maximum choice.

This thing about "a little positive inflation is good" is a fallacy. It encourages people to invest when they really don't want to. It forces people into financial markets which are, at their core, corrupt and unfair to the small investor.

The other thing about positive inflation is that it causes bubbles. Inflation is essentially the amount of money more than the total value of goods and services. The extra money goes somewhere, and because money tends to earn more money it forms "pools" in the economy. These pools are areas where the monetary value is greater than the actual value. The very definition of "bubble".

Positive inflation causes bubbles which eventually burst, positive inflation forces people to gamble with their money, and positive inflation is a hidden tax on the population.

Rather than parrot your religious teachings, take some time to think things through logically, as a scientist would.

You've been fed a load of crap. Stop repeating it.

Re:Monkey learn, monkey repeat

[Anonymous Coward]

The economy is healthiest when people have the most choice. Not the greatest "number of choices" - that's different - but the most "choice" of what to do with their money.

Rather than parrot your religious teachings, take some time to think things through logically, as a scientist would.

You should take your own advice. You've just made a completely unsupported assertion that sure looks like a religious teaching to me.

Re:Monkey learn, monkey repeat

[Anonymous Coward]

You've probably spent 5 minutes thinking about this, and now you're an expert. None of this garbage reflects reality - it's all in your head.

Re:Monkey learn, monkey repeat

[Anonymous Coward]

Yes.

Vending machine, not ATM

[Animats]

This is not an ATM. It's a vending machine. It's like one of those machines that adds value to a transit card, or a gift card vending machine. If you could show it a QR code representing a Bitcoin on your cell phone screen, and it then dispensed currency, it would be an ATM. If people could do transactions in both directions, it would be taken more seriously. That would demonstrate that Bitcoins are worth something. As a one-way device, it's just another money-sucker.

It isn't even a deployable vending machine. It's a wooden prototype of one. Anything that takes $20 to $100 bills needs to be built up to money safe level.

sounds more like bitcoin vending machine than atm

[Anonymous Coward]

this is no more an atm than the pepsi machine in the student lounge...

Cool! How do they feel in your hand ?

[Anonymous Coward]

What size are they...

Oh, what's that ?

You can't ?

Surely they are accepted anywhere cash is accepted ?

Oh..

Well then, nevermind.

Re:Cool! How do they feel in your hand ?

[UnCivil Liberty]

What size are they...

Oh, what's that ?

You can't ?

While this ATM doesn't dispense them there are physical Bitcoins you could carry on your persons, https://www.casascius.com/

So long as they can be kept physically secure in the machine there is nothing to stop future BitCoin ATMs from being able to dispense said coins.

ECON 200 carries a ton of old baggage

[Anonymous Coward]

It will never work as a currency because it has built in deflation, which if you've taken ECON 200 you'll know is a really, really bad thing for an economy.

Wrong. Volatility affects only one specific role of currency, namely its direct use as savings, Outside of that role, neither inflation nor deflation matter one iota.

In many ways, hoarding of currency is a perversion of the concept of currency as a token of exchange, because a hoarded token is no longer current in the sense of flowing through the economy. We've got used to that misuse of currency, but that doesn't make it right nor necessary. It doesn't work well even with "real" money, which isn't actually any more "real" than Bitcoin anyway.

ECON 200 carries a lot of historical baggage and presents many things as if they were fixed in stone, but they're not.

This could be protected against.

[robbak]

As coins sold by this machine are instantly available on the public key it provides as a QR code, It would by loaded up with private keys preloaded with certain amounts. In this case, stealing this device would be lust like stealing a normal ATM - you could demolish it at your leisure and extract the cash.

There are, however, ways to secure digital devices against this type of attack - Eftpos machines have their keys stored in a memory chip that is erased if the chip detects interference. Externally, they have normally closed switches that open if the case is disturbed, forcing the chip to erase itself. Some of these switches are blind keys on the keypad, held down by the case. They also surround the chip with very fine, fragile conductors potted into the epoxy surrounding the chip. Any attempt to gain physical access to this chip will break these conductors and, again, erase the security keys.

This sort of setup could erase the private keys held inside the device if it is tampered with. This would, of course, require an off site copy of the keys, which would itself be a security target.

Of course, this device just a Raspberry Pi with a bit of hardware, so this sort of thing hasn't been done, However, it certainly is on option for future devices.

Re:This could be protected against.

[fluffy99]

As coins sold by this machine are instantly available on the public key it provides as a QR code, It would by loaded up with private keys preloaded with certain amounts.

That certainly sounds like a design flaw to me, unless the keys are not located on the machine but rather at a central "bank" facility and this machine is just a remote interface.

No actually I understand it pretty damn well

[Sycraft-fu]

I understand that money is just a theoretical construct, something that facilitates trade. Trade, people doing things, making things, that is what the economy actually is. Money is just what we use to make that efficient by allowing an arbitrary level of indirection in both time and space for trades. You don't have to barter anymore, you accept money for what you do, and so does everyone else.

This is also why it doesn't matter what money is, it can be anything, gold, salt, teeth, rocks, paper, bits in a computer, whatever (all these have actually been used). It just has to be something everyone agrees on to use.

However that then implies something: Money is only money if you can spend it. If very few people, or nobody, will take your "money" then it isn't. Doesn't matter what claims you make of it, doesn't matter what its value is supposed to be. If you can't spend it, if people won't take it in trade for goods and services, it isn't money.

There's another side to that though: Money is only money if people DO spend it. Since the whole purpose is to facilitate trade, to act as grease for the economy if you like, it only works if people do actually go out and spend it. If people just hoard it, then it is useless. Doesn't matter if it is something that everyone would accept as payment, if it isn't used as payment, if nobody spends it, then it doesn't act as money.

Well now this starts to bring us back to the problem with deflation. It encourages hoarding, the higher the deflation the worse it is. It makes borrowing and lending hard to impossible. It freezes things up because it makes the money stop acting like money. People want to just hold as much as possible for as long as possible.

Now while it might simplistically sound like that's a good thing, more savings right? It isn't when you evaluate it. Again, the only thing real in the economy is trade, people actually doing things. All this higher level theoretical stuff is just to make that work. So if people don't spend money, it means that people are sitting idle, not doing work, it means that the economy does poorly.

Money is not some magical force or substance. It is just a convenient theoretical construct to solve the problems of a barter system. Money that does that well is useful. Something that does not doesn't work as money.

What I find amusing about your carriage-return filled rant is that you love the idea of no inflation it would seem but you seem to then be ok with deflation. No inflation is a good goal, Bitcoins cannot have that by design. They will have deflation, period, because there are a fixed number and the economy is not a fixed size. You either misunderstand how deflation works, how Bitcoin works, or you are smoke screening and really do think deflation is a good thing.

The amusing thing is if you are big on the idea of zero inflation, then fiat currency is currently the best answer. It can have zero inflation. It doesn't, in any actual implementation I am aware of, but it can. The controlling group could carefully balance the supply to make sure that it maps the changes in the overall economy so that there is no inflation. However something with a limited supply? Nope, it'll deflate so long as the economy grows. The economy will get larger, the currency supply will remain fixed, deflation is the inevitable result.

So I reiterate: Go take ECON 200. Stop with the Smartest Motherfucker in the Universe Syndrome(tm) that so many geeks seem to have, thinking you know all the answers. Go learn about some basics of how the economy actually works.

Re:No actually I understand it pretty damn well

[Anonymous Coward]

There is no problem with deflation. You didn't give one argument how it is bad. One BT can be broken into hundreds of thousands if not millions of parts. Unless you going to conquer Universe and pay for every rock on the planet - it's going to be enough...

IF you want to prove him wrong, than explain how deflation is going to affect all countries in the world?(since bit-coin doesn't know boundaries)
Ability to traid will not be affected, simply value of BT will grow once again.

Re:No actually I understand it pretty damn well

[dunkelfalke]

Well, to be honest, I think GP is not that far from truth. Economics is neither a law, nor a hard science. It is a grossly simplified model of human behaviour, and economists far too often operate on assumptions and even religious-like beliefs.

Re:No actually I understand it pretty damn well

[thoromyr]

heh. Take ECON 200? Their too busy pontificating on a subject about which they are ignorant and their CPU is too busy mining bitcoins to even consider working on something else. :)

The life cycle of a bitcoin proponent:

  - this is great, I can make money quick!
  - this is great, but I need other people to believe in it so that my hoard will grow in value and I can cash out
  - crap, where's my exit plan :)

In all seriousness, people who fall for scams often fight very hard against anyone trying to educate them. I don't personally know anyone who has taken the bitcoin plunge and needs an intervention, but I *do* know people who have fallen for the iraqi dinar scam. They will wax eloquent about how its just a matter of time before it pays off. To prove their point, they will give even more of their life savings to the scammers. Some will even take on debt to keep the fantasy going. They can't bring themselves to admit that they've blown thousands of dollars -- it would be too embarrasing.

Bitcoin has a manifesto that is all fluff without substance. I thought it was a good joke until I realized people were taking it seriously. It is designed to appeal to the naive, in particular the naive geek. For all the talk about how deflationary money is good, its amazing how many miners are trying to increase supply at considerable expense.

Your point about how it *must* be spent to be considered money is, unfortunately, lost on people who are willfully ignorant. In medieval Europe there was a serious problem with the economy: there was no effective way to effect large transfers of wealth due to lack of coinage. Europe was poor in silver, but that was what was available for use as coin. Consequently it was heavily debased causing significant inflation/crash cycles for currency. Charlemagne tried to fix things by establishing a standard coin of good silver. It helped, but in the end succombed to debasement.

All of this while there was ample supply of gold. There were few gold coins in circulation, all foreign currency. Why? Because the gold was tied up in hordes. Either some petty lord clung to his pile of gold or it was held by the Church. And as time went on more and more was held by the Church.

What allowed the economy and trade to (eventually) flourish was an arrangement of ficitious currency. Merchants established a non-existent coinage (theoretically gold-based) and tracked and traded in that.

Money doesn't have to be physical. It does have to be an agreed upon standard and it *must* be used, otherwise it isn't money any more than the gold hordes of medieval Europe were.

They have answers to them though

[Sycraft-fu]

"Can it refund your cash if there is any fault?"

Yes, or rather the bank can (and must under the law). I've had an ATM eat a check. You just call the bank and have them deal with it.

"Can it run out of bit coins to pay out? and you end up losing cash?"

If an ATM runs out of cash, it refuses to process your transaction. No money is debited from your account. Likewise if its in hopper is full it will refuse to accept your deposit.

"How fast can it update the exchange rate?"

Instantly. The ATM itself doesn't store any of that, the bank does. It just communicates with the bank. So it is always current to the rate the bank offers you. Also, this is not an issue with normal ATM operations since you access the same currency your account is denominated in. This only applies internationally, and then the rates shift slowly. BTC shift multiple dollars in a day.

"What happens with a network lost midway though an transfer?"

The transaction doesn't happen. The ATM only does things if the bank says it is ok. So if it loses connectivity before it is complete, the transaction is stopped. You either don't get your money in the case of a withdrawal, or it hands you back your deposit in that case.

"Can it store and transfer at a later time?"

No, ATMs are dumb terminals, after a fashion. While they run all their interface locally, they don't have any account data. They just contact the bank and say "This account number wants to do this, is this ok?" The bank then says yes or no, the transaction happens, everything is updated on the bank's computers.

"What about an power loss?"

Same deal as anything else, you call the bank. They'll have to come and get your card out, also if you had a deposit in the hopper but not processed they'll have to get that out too.

"Hacking? and will be even be crime to hack it? and what will happen in a court if some one sues or they try to change some with breaking a law dealing with any to do with this?"

It is a crime to hack an ATM though it is nearly impossible, since again they are dumb terminals. The crypto between them and the bank is top notch (IBM makes these real cool crypto cards for them). In the event the ATM is attacked and the money stolen, it is an issue for the bank, not you. The risk to the end user is skimming, someone capturing your account information and then using it, same basic deal as credit card fraud and the like.

That the same questions apply doesn't mean the same answers do. Really, there has been a lot of time to think about and work on answers with ATMs. The big reason they work well is that they are just terminals for the bank. They don't store anything, other than the physical cash they dispense. They just transact back to the bank. Also, there's rather a lot of tracking that goes on with regards to bank transactions at many levels. If something happens, there's logging, there's a record, it can almost always be undone.

Money is data nowadays

[Anonymous Coward]

I agree, and I've wondered about how the various monetary systems keep nefarious actors from expanding the money supply with shall we say, informal means.

If I were to set up a bank in (pick your favorite loosely-regulated island banking haven), wouldn't I control the bits that represent the bank's account balances? Couldn't I just load in whatever initial account balances I wanted to? Within reason, of course - I imagine if I put a few trillion in my bank, it might call attention, but why couldn't I just load 20 accounts with $500K each when I set up the account? Who would know that I didn't receive cash for those starting balances? When a check came in for payment against an account, couldn't I simply pay the demanded funds by a few keystrokes? I run the bank, after all.

I have no idea about how the banking world operates (probably obvious from the simplistic nature of the questions I pose), but I do know that banking regulations are quite "relaxed" in some nations and that corruption that employs digital systems can be executed rapidly and in high volume.

So in general, how does the world financial system keep bank owners from printing their own digital money? I'm just curious how that works. Or if it actually does.

Re:Money is data nowadays

[Bengie]

It is just as easy for the federal system to monitor and electronically audit in a near real-time fashion. Whoops, more money going out than coming in? Something is amiss.

In school, I had a guest speaker who talked about their money-laundering detection system. All it did was monitor money flow of businesses across the country. It was able to find all kinds of incidents of money-laundering with a very low false-positive rate. If they can detect money-laundering with a high rate of accuracy, I can't see a bank easily slipping in a few extra deposits.

Stopped quoting in US dollars several years ago

[dinther]

My company is located outside the USA and until a few years ago we would quote projects in USD and absorbed the diminished value of the USD over the term of the project. That changed a few years back because of the 2008 crash. We simply don't do business in USD. This means clients in the US are required to buy foreign currency and on a year by year basis drastically see our perceived cost go up in terms of funny money (USD)

Re:Stopped quoting in US dollars several years ago

[ledow]

And I bet the US companies always quote in US dollars because when they quote prices to foreign markets (to customers or in suppliers agreements), their currencies fluctuate so much in respect to the USD that they have to adjust everything.

Same for anyone who doesn't use the native currency of the country where the majority of the work is done. Neither other currencies, nor Bitcoin, will stop that happening anyway.

And any company dealing in international deals will base their cost price in their own currency and then quote a limited-time offer in other currencies "subject to exchange rate fluctuations", or even just quote in Euros or whatever directly and let the other end sort it out.

What's new here that you're telling us? Are you going to base internal prices on Bitcoin and hope it will never fluctuate in respect of any other currency in the world?

another pyramid scheme, it will take a while...

[Anonymous Coward]

another pyramid scheme, it will take a while...

Barter is legal too

[betterunixthanunix]

Barter is legal too, but you are required by law to pay taxes on it.

It's not just taxes, of course. Most businesses have debts to repay, of one form or another, and the law makes provisions for debts in USD and not in BTC or cigarettes or livestock. There are also things like child support, various torts, civil fines, fees, and payments for government services of one form or another. All these things are done in dollars because all these things involve the US government.

Re:Barter is legal too

[BlueStrat]

Barter is legal too, but you are required by law to pay taxes on it.

I've always wondered how a dollar-value could be calculated for tax purposes in the case of something like "if you pinch the pimples on my back, I'll pinch the pimples on yours" type of service-barter scenario. It's not like the IRS has spreadsheets of average rates for pinching pimples or a market of pimple-pincher commercial businesses to ascertain common rates/fees/charges from.

Strat

The concept worked in THIS series...

[JoeKeegan123]

http://www.amazon.com/Daemon-Daniel-Suarez/dp/0451228731/ref=sr_1_1?ie=UTF8&qid=1361773310&sr=8-1&keywords=daemon+by+daniel+suarez

Re:It's one of few anonymous ways to obtain bitcoi

[TheEffigy]

I agree it is a matter only a matter of time, but it appears that most people have given up (at least anecdotally) on FPGA systems simply on a rumour and maybe a prohibitively expensive prototype someone once threw together. Or perhaps I just haven't been reading the right scriptures.

Haha

[Anonymous Coward]

I normally refrain from characterising people as stupid, but don't be sheep/cow .. bitcoin is a joke and the jokes on you for pioneering into fantasy with this. There's enough false economy and bloated finincial mal-instruments in the wild - we don't need to invent any more. This ""currency"" needs to die..

Re:Haha

[Anne Thwacks]

I presume you are referring to US Dollars.

From the perspective of anyone outside the US, Bitcoin is a safer bet than the USD, although the risk is of a somewhat different nature: Bitcoins can go up or down. The USD only goes down, and there is no obvious reason why the rate of decline should not accelerate rapidly. (Ask around in a few African countries if military threats can prevent currency decline - many have tried the tactic, and none have seen it work!)

Re:Haha

[tripleevenfall]

You should call up the guy who made all those Liberty Dollars.

Re:Haha

[arkenian]

I presume you are referring to US Dollars.

From the perspective of anyone outside the US, Bitcoin is a safer bet than the USD, although the risk is of a somewhat different nature: Bitcoins can go up or down. The USD only goes down, and there is no obvious reason why the rate of decline should not accelerate rapidly. (Ask around in a few African countries if military threats can prevent currency decline - many have tried the tactic, and none have seen it work!)

This is true, except one key point: USD investments pay interest, bitcoins are just like stuffing gold (but way more volatile) in a high-tech mattress. So a USD investment may not necessarily go down, and is generally likely to hold about par, whereas a Bitcoin can go up or down.

Re:It's one of few anonymous ways to obtain bitcoi

[adolf]

But why would I accept BitCoin for my services, when in buying the things I really need (gasoline, rent, utilities, food), only USD is accepted?

Want to collapse the Bitcoin market?

[Anonymous Coward]

Make an innumerable amount of nearly duplicate, but non-compatible currencies. Bitcoin', Bitcoin'', Bytecoin, etc. There's nothing stopping you and you would just need some amount of adopters. All you would have to do is wait until the last Bitcoin has been mined and their value has made them too cumbersome. It would be laughably easy to pull this off.

Re:Want to collapse the Bitcoin market?

[UnCivil Liberty]

All you would have to do is wait until the last Bitcoin has been mined and their value has made them too cumbersome. It would be laughably easy to pull this off.

So... the year 2140 then? Have fun with this plan in 127 years, good luck!

Re:It's one of few anonymous ways to obtain bitcoi

[sFurbo]

Because some of your customers prefer to pay in them, and will go to your competition if you don't accept them?

Though that ultimately comes down to "in what ways are they better for anyone than traditional money". I guess I can see four answers to that: (illusion of) anonymity (see: Silk Road), speed of transfer over long distances (physical money beat this, but can't be used over the internet. Banks can take a long time to transfer money, if you count the time they can take them back), lack of censorship (Blocking payments to e.g. Wikileaks would have been much harder with bitcoins than with VISA/Mastercard), and moving money to and from places with little financial infrastructure (they are easier to use than the cell phone credits I hear are used to move money around certain African countries).

Whether this will make up for the downsides of Bitcoin depends on how big these downsides will be in the future, and how the well the banks will respond to the competition.

So?

[Anonymous Coward]

...nobody is legally obligated to accept 99.99% of the rest of the worlds currencies outside your own, either. Want to pay off US debt, in the US, in Indian rupees then your flat out of luck...

What nobody seems to remark...

[vikingpower]

...between all the trolling, flamebaiting and ranting, is that this seems another small step for Bitcoin to gain acceptance.

In and by itself, it is quite amazing that we still, all of us, tacitly accept state-issued currencies as the only trustworthy ones, isn't it ?

Wow

[Anonymous Coward]

Is Slashdot just a advertising platform for scams and shitty blog articles now?

Re:It's one of few anonymous ways to obtain bitcoi

[Anonymous Coward]

Because you're trying to sell drugs over the Internet and all the systems for transferring USD over the Internet are too traceable.

Or is this Slashdot Doublethink Day again, where I need to pretend that Bitcoin would be anything other than a failed curiosity for retarded internet lolbertarians if it wasn't for Silk Road?

Bitcoin and Raspberry Pi?

[csumpi]

That sounds like the almost perfect slashdot story. Your phone, wasn't that a Nokia? Just because that would make it totally perfect.

For people who like gambling...

[sjbe]

Bitcoin aims to offer a better way to transfer wealth than we had today.

It may aim to offer a "better" way to transfer wealth but it fails miserably. I can easily exchange dollars for any currency or good available today. I cannot say the same about Bitcoin. Bitcoin carries huge unnecessary risks, is accepted by virtually no one except for drug deals and other illicit transactions, has huge volatility with the attendant exchange rate risk, and has all the trappings of a Ponzi scheme. it doesn't even really avoid transaction costs once you factor in all the externalities. Frankly you'd have to be either a degenerate gambler or a naive fool to put any money into bitcoin. The fact that a few people have used it successfully doesn't make it a good idea.

Re:For people who like gambling...

[fastest fascist]

The people who rely on "illicit" transactions probably don't find the dollar quite as convenient for some purposes. Ask Wikileaks how well that worked out for them.

As for the ponzi allegations - again - there's no ponzi here. A ponzi is where someone fraudulently promises returns on investment, and uses the money received to pay investors the promised returns in order to make it appear as if the business were functioning. There is no promise of return on investment with Bitcoin. There isn't even anyone to make such a promise, so calling it a ponzi is a bit daft.

Please, do criticize the system as much as you can. Just please also stick to the facts.

Infrastructure already exists

[sjbe]

It seems bitcoins would be the easiest (and cheapest) way to transfer money to and from places without much financial infrastructure.

To send dollars via bitcoin the dollars have to already exist on both sides of the transaction. As such the financial infrastructure already exists making your argument moot. Furthermore I defy you to give an example of some place where it would be meaningfully easier to do a bitcoin transaction with dollar conversions on both ends than to use existing infrastructure. I can do a wire transfer pretty much anywhere in the world in a matter of minutes and there are services like Western Union that can turn it into cash if needed. Bitcoins certainly aren't easier and once you factor in all the costs and risks it's very debatable whether bitcoin is cheaper.

Re:Infrastructure already exists

[Time_Ngler]

Bitcoins certainly aren't easier and once you factor in all the costs and risks it's very debatable whether bitcoin is cheaper.

Those costs and risks you're talking about aren't constant, but are constantly being reduced as more and more companies are working to build infrastructure on BTC, (hence the rise in value).

Cool

[Anonymous Coward]

Bitcoin adoption is increasing and reaching new businesses every day. This machine will help expand the adoption to those who are in the streets. The more people who get into this virtual currency, the better! For those who haven't joined the revolution yet, check out http://thebitcoinmaster.blogspot.com and get started!

I see...

[Jawnn]

...an episode of "Pawn Stars" in the not too distant future.

Rick: So what have you got there?

Geek: It's a BitCoin ATM

Chumley: Cool! I remember those. They were, like, supposed to replace ATM's for real money with this Internet pretend-money thingy. Bunch of people got totally scammed into buying them, man. Those things are totally collectible now.

As long as interest charging is not allowed:

[Anonymous Coward]

As long as usury is kept out of the system, this can become a powerful alternative currency.

I'm sure the evil doers of the planet will do their best to prevent it from staying clean, however, should it ever actually become truly a possibility for wide spread change.

The current money system is totally and completely broken.

Existing currencies exist only through the process of lending (from banks of one kind or another), and THAT is the true pyramid scheme, because all money lent must be repaid with interest, which demands that there be more money available than exists.

Bitcoin's mining system is unique because it doesn't automatically create debt simply through the creation of more bitcoins.

People who hate this are not thinking clearly; are probably simply feeling fear at having a comfortable set of chains threatened by something new. People who fear the new without examining it properly are just reaction machine fools.

See "Win8 Hate" and the out of proportion howling madness of complaint which some people are expressing for an example.

must use android?

[Anonymous Coward]

so what happens if i want bitcoins but i don't have smart phone or Android? can i put in US dollars and enter my bitcoin address using keyboard? not everyone has expensive smart phone. can i write down the URL and use an internet cafe to check the confirmation? just asking i already have bitcoin 7 on my windows desktop so i don't really need Android

Re:Android, Raspberry Pi, Bitcoin in a single summ

[Archangel Michael]

The Raspberry Pi was encased in a 3D printed design created on a Mac?

So how long before they make a movie about this?

[patchouly]

Shortly after this all falls apart and some folks become rich and others lose their life savings, I think this will all make for a great movie! "Bitcoin; The Movie" ;)

reminds me of real estate

[schlachter]

When America was settled, the Brits and later the US Gov gave land away for free to people who would take it. As more and more people came and wanted that land, it became more valuable. So the people who bought the swampland called Manhattan for a few hundred bucks several hundred years ago benefited immensely, whereas the schmuck who bought a one bedroom apartment in Manhattan for $1M in 2007 didn't do so well.

It's not a ponzi scheme. Just the way things get value in the world.

value as a "just in case" currency...

[schlachter]

I see value in having something of value off the grid in virtual/digital format. For when the shit hits the fan.

It's like keeping some gold in a safe in your home. Perhaps less stable/reliable but differently accessible/spendable for increased diversification.

Prepaid Visa

[brunes69]

Just walk into any store and buy a prepaid visa with cash. Use prepaid visa to buy bitcoins. Done and done.

Collapse?

[GPS Pilot]

When the supply of BTCs stops increasing -- assuming demand for BTCs continues to increase -- you're correct, there will be deflation.

And deflation means that all existing BTCs will gain in purchasing power.

How exactly does that constitute the "collapse" of BTC?

Re:Collapse?

[sylvandb]

People with only a Keynesian understanding of monetary theory tend to believe, as did Keynes, that all deflation is as bad as the deflation caused by the bursting of a credit bubble. You can point out all the real world examples of good deflation you like, but they still don't believe deflation can be OK, much less beneficial.

Correction...

[GPS Pilot]

You can pay your rent in BTC if your landlord chooses to accept them, and you can't if your landlord doesn't.

Re:Correction...

[arth1]

If your landlord accepts it, you can pay your rent reciting Vogon poetry too. That makes neither Bitcoins nor Vogon poetry a legal currency.

Trust is relative

[GPS Pilot]

Sadly, it seems like BTC derives value not so much from trust placed in it, but from the way people have lost trust in the traditional alternatives.

Interchange Fees

[Anonymous Coward]

This forum has not addressed a key benefit to any crypto currency: electronic value transfer with no interchange fee. While these fees are typically hidden in our transactions, they allow the banks to syphon 1%-2% off of the top of our entire retail economy. There is no reason to fork all that money over to the banks for electronic funds settlement when we are all carrying computers in our pockets.

Generalizing, banks are obsolete. There is no need to aggregate money at a middleman when it can move from source to destination freely and instantaneously. There is no need to pay a bank to manage deposits and lending when we all have access to information used to vet a potential borrower. Nothing a commercial bank does cannot be done by people working with each other directly, utilizing today's information and communication systems.

To Slashdot, thank you for the posting identity. Very welcoming.

Deflation: o really?

[GPS Pilot]

Yes, someday the supply of BTC will stop increasing. At that time, deflation will happen if demand for BTC continues to increase. If deflation happens, people will tend to hang on to their BTCs instead of spending them.

But you can't say there is increasing demand for a currency that nobody spends. An equilibrium will be reached. And so, this system self-regulates away the problem of deflation, does it not?

Claim needs further explanation

[GPS Pilot]

Why some economists recommendation of "printing money" to solve financial problems works at least for the USA is because the US dollar is used by the majority of countries in the world to buy and sell petroleum, wheat, CPUs, edible oils, milk, manufacturing equipment, toys, etc from each other.

I'm skeptical. If Italy buys a tanker full of oil from Kuwait, and pays in US dollars, how does that transaction transfer wealth to the USA? How would the USA be worse off if Italy had paid with Euros?

If using dollars constitues a tax paid to the U.S., why do other countries voluntarily subject themselves to that tax, when they could easily avoid it by switching to a different currency?

And finally, if the USA is in the sorry state it's in, in spite of having "taxed the rest of the world" for a number of decades, that makes the USA look especially incompetent, economically.

Re:Claim needs further explanation

[TheLink]

It means Italy needs to have large amounts of US dollars in order to buy that oil and Kuwait will end up with large amounts of US dollars after selling oil. And the price lists are done in US dollars. So when the US prints trillions of US dollars that oil becomes cheaper for the USA, till someone goes "hey hang on I should be charging more".

More importantly the billions of US dollars that Italy and Kuwait have to buy oil and other stuff becomes worth less. This is because there now are more US dollars in the world, and they hold relatively less of it. They then have to buy more US dollars in order to buy stuff (and thus increasing the value of the US dollar). While the USA can simply buy the oil with their newly created dollars.

Now assume a world where all international trade is done in Euros. If everyone was selling oil in Euros, even when the US prints trillions of US dollars, that oil still remains the same price in Euros. The US would have to buy Euros with their US dollars. This does not make the Euros that Italy is holding go down in value. It makes it go up in value relative to the US dollar as the traders of currency notice the increased demand for Euros vs the US Dollar.

And if the rest of the world doesn't buy as much from the USA as the US buys from them, that means the rest of the world doesn't need to buy US dollars as much as the US needs to buy Euros. And that makes the US dollars go down in value.

At a certain point of course it means the US made goods would be cheaper and people might start buying more from the USA. But by that time it would also mean the US people would be poorer compared to the rest of the world - they won't be able to buy as many French handbags, Australian Wine, German cars or Chinese toys as they used to be able to.

The US can keep its trade deficit for so long and still print money without the US dollar collapsing in value because the OPEC sells oil in US dollars. The US Gov prints US Dollars. The countries around the world buy the US Dollars, then use the dollars to buy oil, which they then burn to keep their economies alive. So there's always a demand for US dollars. Same goes for other consumable commodities sold in US dollars.

Not so much

[stoploss]

Just walk into any store and buy a prepaid visa with cash. Use prepaid visa to buy bitcoins. Done and done.

Have you actually tried to do that? The approach doesn't work.

Yes, you can buy an anonymous prepaid Visa with cash, but it's effectively worthless for purchasing bitcoins. As I said before, services don't take credit/debit card payments for bitcoins because those payments are reversible and bitcoin transfers are irreversible. Furthermore, PayPal will not let you setup a payment using these cards (it's automatically detected based on card number and the payment blocked)—not that many sellers take PayPal for bitcoins anyway because it's likely against the PayPal AUP (cf. "currency exchanges").

I have seen a few individual seller offers to take preloaded value cards such as MoneyPak or Visa gift cards for bitcoins, but they require you to either physically mail the card to the seller and/or wait until the value is drained from the card before they will transfer the bitcoins. Some individual sellers might take MoneyPak with a scanned image of the receipt (which can then be used to immediately load the seller's PayPal account), but sellers get nervous about this due to fraud, chargebacks, etc.

In synopsis, you might find individual sellers who take these kinds of payments, but it's just as slow, inefficient, and insecure as paying with literal cash, except with the added overhead of the prepaid card fees. Furthermore, the approach definitely doesn't work for any bitcoin exchange service (at least not while preserving anonymity).

Re: artwork?

[almechist]

every product is as valuable as the energy used to craft it

So what about the value of artwork, then? Have they finally quantified and measured creative energy? Are they able to determine the precise amount of beauty that resides in the eye of a given beholder? No, I didn't read the paper, but the whole thing sounds a bit too simplistic. True value is what people are willing to pay, nothing more, and nothing less.

How about:

[slashrio]

1) Install an app
2) scan a qr code
3) insert money

4) battery low
5) try to get your money back :)

Re:Bitcoin is going to CHANGE THE WORLD!

[slashrio]

I'm not sure.
Governments can...
- order ISPs to close bitcoin-specific ports
- close down the exchanges
- make transactions illegal
- insert all kinds of tyrannical measures they can take in order to protect the interests of the private banks (and of their--the private banks', that is--central banks).
- oh, and they (especially US/NATO) can bomb the hell out of countries that continue supporting transactions in bitcoin.

By then the situation will be back to what it was before bitcoins were used.

Great machine!

[Anonymous Coward]

Bitcoin adoption is increasing and reaching new businesses every day. This machine will get the people in the streets to adopt it faster. The more people who get into this virtual currency, the better! For those who haven't joined the revolution yet, check out http://thebitcoinmaster.blogspot.com and get started!

the value of any currency

[szleaves]

the value of any currency (exchange medium, fiat or otherwise) is derived from the trust that currency-exchanging users place in it. [http://www.szwipes.com]

Congratulations, you've been digitally mugged.

[BitZtream]

After I fed in a $20 Federal Reserve Note

And what you ended up with was no different than giving $20 to Zynga via Farmville.

The only difference is the Zynga isn't hasn't sunk so low as to realize that you are so much of an idiot that you'll by things that aren't even worth anything in farmville.

You have in fact just spent $20 on bits of data that are easy to duplicate, in fact, you got a duplicate, not the original, and that is only 'of value' to people selling them to other morons like yourself.