Slashdot Mirror
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."
Actually the bitcoin is worth more because it's very difficult to expand the bitcoin supply while expanding the currency supply is trivial.
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.
i thought once I was found, but it was only a dream.
Congratulations.
#DeleteChrome
Incidentally, this whole article is rather meta, due to the whole "first" aspect of it.
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"?
A lot of people use US dollars without concern. Ignorance is bliss
to drop... I am waiting for some kind of bad security hole. How many bitcoin sites have been laughably insecure?
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.
I thought gambling was illegal most other places.
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.
I love Jesus, except for his foreign policy.
"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.
I'll say this right now and you can quote me. Bitcoin is going to CHANGE THE WORLD!
.. Genius.
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?
Android, Raspberry Pi, and Bitcoin in a single summary? Just needs an Apple or 3D printing angle and it'll be slashdot buzzword bingo.
I disagree. Ever try to give a stripper or hooker bitcoins? Bad idea...trust me.
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.
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.
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.
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?
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
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.
Are agnostics skeptical of unicorns too?
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.
...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...
You do not have a moral or legal right to do absolutely anything you want.
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.
Life is not for the lazy.
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...
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.
I said - don't look Ethel!..., but it was too late..., she'd already looked.
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.
Mit der Dummheit kämpfen Götter selbst vergebens
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.
--Udo.
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.
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).
Taxation is legalized theft, no more, no less.
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.
Don't disappoint your bird dog. Go to the range.
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?
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.
Taxation is legalized theft, no more, no less.
(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.
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/
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.
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.
By my understanding, the current generation is not falling under the better off trend for the vast majority of its members.
Freud might say that Intelligent Design is religion's ID.
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.
My only political goal is to see to it that no political party achieves its goals.
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.
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.
Better to be despised for too anxious apprehensions, than ruined by too confident a security. --Edmund Burke
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
"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.
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".
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)
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.
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).
The US dollar is backed up with a very large military which enforces its use as the common currency of the world.
https://en.wikipedia.org/wiki/Inverted_totalitarianism
You can buy drugs relatively safely on the internet. It's a pretty popular use.
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.
Better to be despised for too anxious apprehensions, than ruined by too confident a security. --Edmund Burke
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.
"It's such a fine line between stupid and clever" -- David St. Hubbins, Spinal Tap
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.
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.
Property for sale in Nice, France
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.
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.
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?
That that is is that that that that is not is not.