Slashdot Mirror
Bitcoin Hits New All-time High of $32
Sabbetus writes "Bitcoin tops its previous all-time high of $31.91 and in doing so it proves to be quite a resilient virtual currency. To the supporters of Bitcoin this does not come as a surprise, since we have seen the likes of WordPress, Reddit and Mega embrace it. Recently Namecheap also confirmed that they will start accepting bitcoins. The new record price was reached on the same day that Mt. Gox, the world's largest Bitcoin exchange, reached an agreement with CoinLab to manage the exchange's operations in the U.S. and Canada."
A far cry from the end of 2011.
A far cry from the end of 2011.
And a far cry from the end of 2012!
... on a more serious note (if such a thing is possible with BTC) everything is proceeding according to plan.
Sorry
My work here is dung.
And a far cry from the end of 2012!
What did you expect from a currency that has a fixed supply and thus inevitable deflation?
The only thing Bitcoin has proven to be is incredibly volatile. Great job? I am suprised these exchanges don't advertise on Glenn Beck.
"but money is the God of Algiers & Mahomet their prophet." - Rich. O'Bryen June 8th 1786
I'll be using my Bitcoins as currency as usual. Trading for services or donating to good causes. I'll continue to accept Bitcoin in exchange for services rendered (only 10 Bitcoin for a handjob!).
Sure, for speculators that matters. For people who just want to use a decentralized non-government/non-corporate currency, it continues to just work.
Oh, and it's not an "anonymous currency", it's a "pseudo-anonymous currency". In the future there will be real laundries that operate with a decent reserve. At that point it becomes more anonymous. I'm looking forward to that future.
HELP MY ACCOUNT HAS BEEN HACKED BY AN ILLIBERAL ART STUDENT SET TO DESTROY THE INTERWEBZ!
The "old money" is still sitting on most of the coins and will crash the value again by cashing in even a small percentage. The Bitcoin economy is just too small compared to the wealth of the early adopters.
I'm curious to see how bitcoin holds up. If it sticks around, it would be neat to see a long-term comparison between bitcoin, various fiat currencies, and hard commodities.
Why would anyone consider this a good thing?
It means these coins are being hoarded. If it was real money this would be damaging the economy.
In the bitcoin equivalent of losing loose change in your couch, one of my old hard drives has 4 mined bitcoins on it somewhere. They are rapildly approaching a value high enough for me to stop being lazy and ressurect the machine.
That is a huge problem with this currency. It is a pyramid scheme and now with its rising value it is going to have a nice deflationary spiral.
Can't stop going up, guys! I've got plenty to sell. Please buy, as I guarantee this is nowhere near the top. I'm offering mine for $32, and it's a bargain. I'm a fucking moron, so that is why I want you to have mine at this low price.
Fuck me, the captcha is economy.
Seriously, what incentive is there for me to support BTC now the rush is over?
What good is an anonymous virtual currency?
What incentive is there for me to support Euro/USD etc. now that I can't just print it willy-nilly?
Your post is as bad as those who equate Bitcoin with Ponzi schemes. According to their logic, any profitable business would be a Ponzi. OK, so you didn't invest in a hugely succesful company back in its garage days. That doesn't mean the company is useless today. Quite the contrary.
Escher was the first MC and Giger invented the HR department.
Without the ability to print currency what incentive is there for me to use US dollars?
... because BC is one market the manipulators can't be bothered to figure out.
Wordpress, Mega and Reddit do not take bitcoin. They accept payments through a third-party exchange called BitPay, which converts them into dollars. Why? Because bitcoins are, in fact, worthless and their value depends almost entirely on the liquidity provided by Silk Road and the desire of internet libertarians to get them some Dunning-Krugerands. Until paychecks are issued in bitcoin and you can pay your rent in bitcoin, it's not a currency - it's at best a toy.
Their value is that everyone accepts them and you can pay your taxes with them.
Bitcoins like the currency of some backwater nation can be traded in for currency of immediate use, but is of limited utility itself.
Seriously, what incentive is there for me to support BTC now the rush is over?
Do you ever send (or receive) money outside your home country?
Do you want a bank account no government can freeze if they decide you voted the "wrong" way last election?
Do you believe you have every right to spend your hard-earned money playing online poker if you damned well want to?
Yeah, you can use physical cash for an awfully lot of things. But when you need to get funds halfway around the world, or store more of it than will fit comfortably under your mattress - We finally have a semi-viable alternative. Let the haters hate - In the meantime, I'll just keep using Bitcoin for its intended purpose - As a semi-anonymous digital currency.
Once Bitcoin reaches some level of critical mass, it will attract the attention of the entrenched banking system and their lap dog regulators. If it takes outlawing the possession of graphics cards to stop mining, they'll get that law passed.
If your hard drive will serve as a bank or credit card, you are a serious threat to the banking industry.
Have gnu, will travel.
1. Lots of legal ways to do that
2. No, I would rather keep my country from being corrupt.
3. No, nor can I spend it on drugs, hookers or the blood of innocent children
How much money do you have that you cannot store it? Ever held $10k? I have, it is just one little bundle of $100s about the same thickness as a deck of cards.
You don't have a semi-viable alternative you have a currency that is going into a deflationary spiral.
Somebody who's trying to pump up the price so they dump all their delicious sperggold?
Because human lifetimes are limited, and the value-to-you goes to zero when you die.
I don't think you understand what gives money value. It has nothing to do with taxes.
This is probably being driven by online gambling. Satoshi Dice is now doing more Bitcoin transactions than all other users combined.
US dollars are accepted by many magnitude more businesses, banks, etc. than Bitcoin.
Tulip Speculator
-- January 1637
Right now, bitcoin has a huge presence in the news and other outlets to the masses ... I think a lot of the reason for the current increase in value has much to do with the very same folks that destroy basically all monetary systems. We've got prospectors jumping ship from the dollar to the bitcoin, increasing the difference between the two artificially.
BitCoins might be a GREAT idea for Pot Businesses in Washington State and Colorado.
As we know, Pot Business is now legal in these two states. The folks gearing up to participate seem to just be tooling along not really thinking about the Feds because thus far, the Feds have not gotten nasty over this.
But they almost certainly will. How? Itâ(TM)s not going to involve DEA raids or Black Helicopters. Itâ(TM)s the money.
These business will need banking, and the Feds will simply shut that down, seizing accounts and preventing banks from doing business with Pot Farmers and Retailers.
BitCoins may offer a solution.
If you want news from today, you have to come back tomorrow.
I think you are mistaken.
Money has value because it can be spent. Since I have to spend some USD on taxes, they have value to me. I must have $X/year no matter what to pay my taxes. I can also spend them at the grocery store and everywhere else.
Bitcoin is literally a ponzi scheme. It takes in dollars either in cash or in electricity to generate tokens that increase in value as more suckers enter into the scam. The folks who bought in early can make money by selling to suckers down the line, until they run out of suckers and the whole thing crashes.
All they have to do is keep the sale rate below one per minute to match the birth rate of suckers, and they should be fine.
When our name is on the back of your car, we're behind you all the way!
Valuation of bitcoin, or BTC, in other sovereign currencies isn't the point here - neither is 'cashing out' or any of that nonsense. The end-game here is to supplant and possibly replace sovereign currencies entirely. It may seem overly ambitious, but from all the financial scandals and other daily scams that are perpetuated by the banking and financial industry - people are getting *sick* of how the current system operates.
Edge exchanges will dominate for a while, but as things change, and end-to-end supply chains form that are BTC denominated, the conversion demand will change and people will be able to keep their entire activity within the BTC realm. This is important, because then true monetary freedom has been achieved. Nobody telling you what you can spend your money on, or stipulations as minimum balances or hours of operation.
This is the biggest revolution in finance taking place right in front of you, and most commenters here dismiss it out-of-hand.
You don't have a semi-viable alternative you have a currency that is going into a deflationary spiral.
Would you care to explain that, given that we have another 130 years before the last BTC-generating block issues?
Yes, at some point the BitCoin community will need to figure out how to avoid exactly that deflationary spiral. You can't, however, use that argument to explain the current exchange rate.
For a currency to be useful as a medium of exchange, you want it to be STABLE in regards to the value of whatever it is you want to purchase. (And if it can't be stable, it should at least be predictable.) High volatility, with and edge towards deflation (due to irreplaceable currency loss and any increases in the size of the BitCoin "economy"), makes for a rather poor currency. (You'd have to be completely, utterly, nuts to ever even THINK about taking out a loan in the things)
It's deflated by about 100% in the last month, and as I type this, the current bid/ask spread is 66 basis points. It's what you would expect with a thinly-traded stock; not a serious currency.
An increase in the value vs. the USD is only useful if you are using BtC's as an investment.
Sure, but I could just wait for the next one to come along (alternatives are already available) and get in early, making lots of money for little effort.
I like the concept of BitCoin, just not the fact that lots of people got piles of cash for free and then the tap was turned off.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
I've been saying this ever since Slashdot started carrying every last bit of news about BitCoins. I get flamed every time. Without fail. (Apparently, I "enjoy" inflation, am a crude fighter against innovation, and any understanding of economics I have is not relevant because apparently the entire discipline is invalid. (Unless, of course, it agrees with whatever said BitCoin fanboy is saying.))
Do you ever send (or receive) money outside your home country?
Constantly, and there's a dozen established ways of doing it.
Do you want a bank account no government can freeze if they decide you voted the "wrong" way last election?
I have that. It's called "living in a civilized country".
Do you believe you have every right to spend your hard-earned money playing online poker if you damned well want to?
Got that as well, it's called "not living in the USA".
Don't get me wrong, I'm a big fan of electronic cash. I'm not convinced that Bitcoin is it, but that's besides the point. The reasons you give are weak and alarmist reasons that only appeal to a small minority of people.
Why would I want electronic cash (anonymous, untraceable, etc.)? Because it's nobodys business what I spend my money on, and not leaving a trail is the best precaution against everyone and his dog finding out because someone somewhere in the chain of payment providers has crappy security.
Assorted stuff I do sometimes: Lemuria.org
you have a currency that is going into a deflationary spiral
What exactly is wrong with that? Eventually people start spending money again because ultimately, a currency doesn't have any value to you, if you don't spend it. You'll want to buy stuff as well since the whole point of holding on to bitcoins is to eventually buy something with them.
Bitcoin is literally a ponzi scheme.
I dread each and every story on Bitcoin, because inevitably, someone rolls this particular turd out.
A Ponzi scheme pays its yield on an investment (possibly bogus, but not necessarily) out of capital. Bitcoin functions as a currency, not an investment. The exchange rate rises and falls based on supply and demand, "Bitcoin" itself has no expected yield. It doesn't pay dividends, it doesn't go to harvest, you can't eat it or burn it.
Yes, you have people speculating on it - Just as you do with the USD:GBP exchange rate, on the price of gold, on corn futures, on who will win the next big game. Speculation in a market doesn't make the underlying asset a Ponzi scheme, no matter how many times you claim it.
Sure that's an incentive to favor US dollars over bitcoins, but it's got nothing to do with the fact that the ability to mint bitcoins (or print dollars) isn't supposed to be the main incentive to use them.
I was interested in the technical workings of BitCoin and what the user experience was really like, but I just couldn't wrap my head around it without, you know, USING it. So I purchased about $40 worth of BitCoin via Western Union to one of the exchanges. At the time, that net me about 3 BTC. I started playing around with it, transferring it from my PC wallet to my phone wallet... getting an idea of how transfers went. It was an interesting concept "loading" my phone with BitCoin from my PC "safe" and then carrying that around with me. Then I started looking for things to do with it... I got on BitMit and purchased a few Steam games, some USB cables... All at a pretty hefty USD discount. And it was pretty neat just scanning a QR code and bam, payment sent. Granted the USB cables haven't arrived yet because they're shipping from China... But, whatever.
After actually SPENDING it, I decided to start accepting it at my GunBroker auctions. PayPal doesn't (knowingly) handle transactions related to firearms or firearm accessories, and a lot of buyers were interesting in this "BitCoin" thing. An instant way to transfer funds with almost no fees? Yes please. Unfortunately, most of them got stuck at obtaining it, much as I would be confused about how to obtain Euros if someone accepted only Euros. So far, no one has paid in BTC.
However, I am seeing more BTC accepting auctions out there, which corresponds to its value increasing. That's pretty neat.
I don't plan on keeping my money in BTC, as I don't trust it that fully, but I've gotten comfortable enough with getting money in and out of BTC-land that the transactions have become pretty fluid. Right now, my only concern is its volatility. It sucks to buy something for the $20 USD equivalent and then having it arrive when that $20 worth of BitCoin is now worth $50 USD. It works for me, though.
What is the difference between a currency and a investment? There is an intersection between the two.
One of the roles of money is a store of value. There are people who invest in currencies because they believe it will go up in value.
Now I don’t think BitCoin is a Ponzi scheme. I do think it is an asset bubble – think Dutch Tulips, Dot Com Stock, or un-built Miami Condos.
This is an old and tired argument. There is no central issuer of bitcoins promising high gains to new investors and paying off old investors with the proceeds. New bitcoins are issued in a decentralized fashion for verifying the transaction history. Therefore it does not meet the definition of a pyramid scheme.
What it is closer to is a collaboratively built database which tracks account balances. What value is put on those balances in terms of other goods (including local currencies) is purely a supply and demand situation, there never was a promise of any future value made. What value people find in it is the features the software and database provides - privacy, fast transfers around the world, low fees, predictable growth rate, etc.
Would you care to explain that, given that we have another 130 years before the last BTC-generating block issues?
Sure. Plain vanilla monetary economic theory says that you will have deflation if your currency expands slower than economy you will have deflation.
I believe that 99% of bitcoins have been mined, so we can expect a total of a 1% growth.
If the world economy grows at 2% for the next 130 years (which I think is conservative), GNP would grow at 1,312%.
If BitCoin’s market share remained constant – well – that would be a deflation rate of over 99%
People are sick of the current currencies because they are realizing the currencies are FIAT only. BitCoins are also FIAT currency, but unlike national currencies, are limited resource (deflationary). AND with most other currencies being inflationary, BitCoins will only INCREASE in value, especially as they become more popular (FIAT) for normal trading (buying/selling items).
My only concern is how does BitCoin handle fractions of coins? Is it built into the protocol and if so, how.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Umm – just the opposite. If you sit on the money today it would be worth more tomorrow. You use eventually. True – but it rewards those who have wealth today and discourages investment in tomorrow. Relatively speaking, we are worse off.
If you invested your money you could lose it. Even if you create value you could still lose money. Invest $100 in a company – have 2% deflation – get back $99. I mean – yes – you have made money in the sense that you have more value – but you have also lost money because now you have less.
Wealth people get free value for holding onto money – so they tend to do so. Debtors are at a disadvantage – want to finance that college education?
Financial assets (government bonds, loans, etc) get an advantage over real assets.
Look at the 1930s to Japan today.
Comparing Bitcoin to a small nation is actually a valid one. $33/coin at the moment x 10.84 million coins in circulation = $358 million in circulation. That puts it between Swaziland and Burundi, two small African nations. It just happens that the "Bitcoinians" are a distributed online nation, instead of tied to geography. That there are 23 smaller national money supplies, and 167 larger ones does not invalidate Bitcoin, in fact it shows it has already reached the scale for a national currency, if not the world's largest. Given the value was trivial as little as 2 years ago, that is quite an achievement. It show how fast adoption can be for an internet-based tool.
Bitcoin is not an anonymous currency. Every single Bitcoin transaction is permanently recorded in a public, globally replicated database. True, there may not be any way to link the transactions to your identity now (that you know of anyway!) but you don't just have to worry about whether anyone can now, you have to worry about whether they'll figure out some way to extract it from the transaction history in the future as well.
For instance, for years there was a ridiculous bug that made it a lot easier to figure out that different addresses belonged to the same person than the public documentation claimed it was. The bug's been fixed now, but all the past transactions affected by it are still affected and there's nothing anyone can do about that.
I see it as an inherently transnational currency, where other currencies are locally issued and controlled, although they may be traded and used outside their native region. Removing national borders as toll booths and inspection stations is a plus for trade, just like removing river and bridge tolls was in early European trade.
Need to update my post - I guess we are at 50% coins mined. So the situation is not quite that dire – but you still have over 99% deflation in the long run.
Yeah... it's more of a "pump and dump" scam than a ponzi scheme.
I think of Bitcoin along the same line as penny stocks... something that is basically worthless, but can be easily inflated with some good story and enough suckers to buy into it.
Then you sell out of your position quickly, and watch the whole thing crash. If you're lucky, people will forget what what happened in a few months and then you can pull the same scam all over again.
Hell, Bitcoin has already crashed before once when Mt Gox got hacked in 2011. Do you really want to invest in a "currency" that can go from $30 to $1 in less than a day?
How divisible are bitcoins? A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction. If necessary, the protocol and related software can be modified to handle even smaller amounts. https://en.bitcoin.it/wiki/FAQ#How_divisible_are_bitcoins.3F
Good to know. Because that is going to be needed eventually.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
No, it's a nerd trap and no more a currency than limited edition plates with pictures of magical ponies on them. You can trade them with other enthusiasts, but that doesn't make them a currency.
The end-game here is to supplant and possibly replace sovereign currencies entirely.
The problem with replacing sovereign currencies is that there's no one steering the ship when things get ugly.
Europe is a prime example where sovereign currencies were replaced, everything has gone to shit, and there's 27 competing agendas.
I'm happy to see bitcoins form the foundation of a parallel economy, but fuck no I don't want it to supplant or replace the dollar.
It may seem overly ambitious, but from all the financial scandals and other daily scams that are perpetuated by the banking and financial industry - people are getting *sick* of how the current system operates.
This could be fixed, but the bankers and the regulators are far too tightly intertwined.
Look at the shit show created by Republicans because Obama and Elizabeth Warren created the Consumer Financial Protection Bureau to be independant of Congress.
Republicans have held a gun to the CFPB's head since its inception, because Obama wouldn't neuter the organization.
[Fuck Beta]
o0t!
You would rather keep your money vulnerable to being stolen by strangers, who are by and large the most corrupt people in your society (checked their criminal records lately? how about the scandals on the papers?), and this is supposed to protect it from being corrupt?
BAAAHAHAHAHAHAHAHAHA!!!!
Such religious nonsense! It's like I'm watching a person say they must allow pederast priests to have access to their priests, to prevent the Holy Church from becoming corrupt.
Fine, if you want your money to be stolen -- either by tax or by inflation -- it's your money. You'll be the poorer person. Enjoy.
Rudd-O - http://rudd-o.com/
Any real currency with fluctuations of this magnitude would be said to be in a crisis and there would be massive stabilization efforts going on. If it was actually a currency (it really isn't, it is a speculation and money laundering tool) it would be experiencing the first ever case of hyper-deflation that I'm aware of.
Anyone who thinks this bodes well for Bitcoin's future doesn't understand money very well. This is NOT good. A good story on Bitcoin would be "For the past two years BTC has remained remarkably stable compared to a basket of important world currencies." If it was functioning as a stable store of value, then maybe there would be some validity to using it as a currency.
As it stands, with the massive the huge deflation and massive volatility (it moves up and down a LOT in a day) it is completely unsuitable as a currency.
At the end of the day, money is Power. Those who hold monopoly-on-violence decide what objects can contain and transmit Power. The entire valuation of bitcoin could be wiped up with the stroke of a pen because it is not Power and cannot be Power without Sovereign backing.
Good-bye
There's no possible way to have a deflationary currency work, why do you think everyone gave up gold decades ago. If instead bitcoin's supply grew exponentially, it would have the possibility you mention. Unfortunately, it's demise was promised from the beginning with it's design flaw of limited supply.
That's actually the problem with bitcoin, is that it's deflationary. This makes it completely useless as actual currency, unless of course you're a billionaire gold advocate that just wants to hoard it and become even richer.
If you're in the US and you don't pay your taxes in US Dollars, the government will seize your land and other property, like the computer your bitcoins are stored on.
Barter transactions count as taxable income.
Bitcoin is in a position like state-level legalized pot, the feds will tax you on everything you gain; but you will be unable to deduct any expenses.
Litecoin has been going up and is now valued at 7 cents.
I always vote up these stories, because when one comes out it's funny watching you guys howl
The other main difference is that Bitcoinia doesn't issue its money. Whereas other countries issue the money and use the proceeds to build roads and purchase other items that, ideally, will benefit all residents of the country, Bitcoinia doesn't generate any such shared benefit. Instead, that benefit is given to the early adopters who mined Bitcoins when mining was simple.
That's what people object to about Bitcoin and why people liken it to a Ponzi scheme. It's not a Ponzi scheme, but it shares the property that people who buy into it early profit while those who come later get ripped off. And that's why national currencies are more fair. The only early adopter is the issuing government and its understood that buying into that market means, essentially, investing in that country's infrastructure. Meanwhile, buying into the Bitcoin market means making early adopters exceedingly wealthy.
The problem with a deflationary currency is that it discourages investment. If your currency is deflating by, say, 1% per annum, you can, without any risk at all, increase the buying power of your money just by sitting on it.
This is in comparison to an inflationary currency where, if you don't invest it, its buying power eventually dwindles away to nothing. It encourages people with a large reserve of money to make it available to others via the mechanism of investing.
Just because you're paranoid doesn't mean there isn't an invisible demon about to eat your face
With a 60 basis point spread, plus your transaction costs for sweeping, plus the volatility induced by the lag between your transaction and when you can unload the things, that's a pretty steep surcharge. While that may be worth it as an "anonymity shield", as a general-purpose currency, why would you use this instead of USD?
Again, it's value going up is great if you want to use it as an investment. There are lots of different things you can use as a hedge against USD inflation. But I'm referring to BitCoin's alleged use as a general purpose currency. And I think I make a pretty convincing argument that as a currency, it's less than ideal, to say the least.
Did you read me (or the GP) arguing that BitCoins are useless because an entire BitCoin is worth too many USD? No. (I'm aware many people that don't like BitCoins make this argument, but I'm not one of them.)
The fact that you can keep slicing BitCoins into tinier and tinier pieces doesn't solve the problems deflation introduces. It helps somewhat with it's usefulness for individual transactions, that's all. The basic problem introduced by the fact that a BitCoin now is worth WAY more than one a year ago remains.
As I said, apparently economics is invalid when an economist says something you disagree with, but the absolutely trustworthy when an economist makes a point in the other direction?
The deflation/depression study was a single study using a limited set of data points, and acknowledged limitations (which you conveniently overlooked.) I don't think that it demonstrated conclusively that any particular theory was right or wrong (nor did it pretend to.) It certainly made some good points, but that's a long way away from what you are claiming.
I don't understand. Why does it need to be "stable" to be used for exchanges? By some measures, the US dollar has dropped by a factor of 100 in a century; is that stable?
The USD has never changed in value by a factor of two inside of two months. Yes, compared to BitCoins, the USD is solid as a rock. I was referring to short-term fluctuations, not long-term trends. (Long-term trends can be accounted for... wild intra-day fluctuations that would drive any normal economy into economic paralysis cannot.)
If a currency's value relative to other goods is increasing, it does indeed make for a nice store of value. (That is what investments are for.) But as a medium of exchange (what most people refer to when they say "currency"), a rapid increase in value makes it considerably LESS valuable.
My "deflation phobia" doesn't refer to long, gradual, deflation. Whatever. Japan has had it for years, and while their economy isn't thriving, it's not in the depths of depression. Deflation can be countered against via interest rates to a limited amount. My "deflation phobia" refers to the extremely rapid deflation of the BitCoin, which is another matter entirely.
BitCoin is not a form of money, yet.
I know that. That's the point I keep repeating. (That it's an investment, not a viable general-purpose currency.) So what point are you making, exactly?
But if there is true "deflation", i.e. the price of goods keeps getting cheaper and cheaper relative to a currency due to productivity increases, then only the most promising entrepenurial endeavors can hope to improve the situation further. Most ideas would be malinvestments and the discouragement of borrowing makes sense.
Deflation of 100% in two months doesn't "discourage" borrowing; it makes it completely, utterly, impossible. 100% 60-day interest rate makes the most ruthless loan shark look like a screaming bargain.
Speaking as a small-time "old money" person (wearing my "I remember when a Bitcoin only cost a nickel" T-shirt), I think you're wrong. If you've got a lot of bitcoins, then it is dumb to sell them all at once. You drive the price down and end up with either a huge capital gains tax bill that you have to pay or a huge potential problem if the IRS audits you and asks you where you got the $50,000 that suddenly appeared in your bank account. Much better to sell slowly over time. And even better to just use your bitcoin wealth to purchase things that you can buy with bitcoin, so you avoid exchange and wire transfer fees. More bitcoin trade helps make your remaining bitcoins more valuable, too...
Think about it:
A slave is a product. Murder is a service.
It's not backed by anybodies reputation and it has a built in cap to help the scam mature. It's no more a currency than limited edition dinner plates with pictures of magical ponies - it only has barter value among enthusiasts.
It's not actually a currency backed by anyone's reputation - it's a token like the original ponzi was.
Previous posters have pointed out how the extreme volatility of bitcoins makes them unsuitable as a currency. I'll add that the risk of loss (due to technical problems with one's own equipment or to hacks at repositories) seems uncomfortably high too.
They are REAL, I mine them, I bought them low 2-4 USD , I use them (a lot), I sold some 28-31USD, they are damn profitable... I really don't understand what the speculation is about their value, they work pretty damn well and unlike the US Dollar their buying power is going up and up. Best part is they are not being manipulated by corrupt governments or the creeps from the Federal Reserve Bank. People bagging on BTC are either trolling, under informed, or simply hating due to the lack of their own BTC :)
I will not be pushed, filed, stamped, indexed, briefed, debriefed or numbered. My life is my own.
You're arguing semantics here. The curve that they're using with regards to adding new BTC into the system ensures that the early adopters get money essentially for nothing and that later adopters pay more to enter.
The fact of the matter is that this looks an awful lot like a Ponzi scheme, ducking out of it with technicality doesn't change the fact that there's an inherent benefit to getting in early and hyping it up, trying to lure in suckers. And the ending will be more or less the same as in any Ponzi scheme.
Your quote is just a distraction since as written it cannot apply to bitcoin without a redefinition of the word "money".
Sort of. They're more like penny stocks or junk bonds. The moment people actually cash them in, the value that they have collectively drops. So, if there's just one that goes for $5, the value drops to about $50m, which isn't good. And then suddenly, people rush to get in and it can easily quadruple or more all of a sudden.
This is a similar problem to looking at Apple's market cap and concluding that if everybody sold, that amount of money would be required. In practice it wouldn't because the act of selling would depress the share price pretty quickly.
Which works fine, as long as you don't have an economy that's growing. In an ideal world, the USD supply would increase and decrease at roughly the rate at which the economy in general increases or decreases leaving approximately the same buying power.
The BTC, depends upon being divided in order for that to work out. The problem though, is that you can only divide coins that already exist. So, if the people who currently own the coins don't want to sell, you have to offer more money until they will sell rather than just printing more of them. This is ultimately bad as once deflationary expectations set in, there's no way of breaking it other than convincing people that it's their self interest to sell even though it's going to be nominally more valuable tomorrow. But, any rational self interest would lead one to refuse to sell and let other people take their profits early.
It's "decentralized" while its main players are still mostly middle-class individuals and small-mid sized businesses. If a Goldman-Sachs or Citi got involved and sucked up most of the transaction validation/mining, they could falsify transactions.
True â" but it rewards those who have wealth today and discourages investment in tomorrow.
To the contrary, if you hadn't invested in getting bitcoins when they weren't as popular and their value as a result was lower, then you wouldn't be sitting on wealth. This dynamic is rewarding an existing investment.
It has to stop at some point. Bitcoins aren't ever going to be worth trillions of current dollars apiece.
Wealth people get free value for holding onto money â" so they tend to do so. Debtors are at a disadvantage â" want to finance that college education?
And when things transition from deflation to inflation, how is that money doing? It has risk just like any other investment.
If your currency is deflating by, say, 1% per annum, you can, without any risk at all, increase the buying power of your money just by sitting on it.
The risk is that this money doesn't continue to deflate at a constant rate.
This is in comparison to an inflationary currency where, if you don't invest it, its buying power eventually dwindles away to nothing.
If you don't do anything with your deflationary currency either, then it is functionally equivalent to a inflationary currency. This is the time value of money. At some point, a holder will spend that currency, or the currency is effectively worthless.
It's also worth noting that in practice, inflation is brutal to any investment in a situation where you have a capital gains tax. Even if the investment keeps up with inflation, you're having to pay taxes merely because the notional value of your investment went up due to inflation. For example, suppose I have an investment made in 1980 that exactly matches the US consumer price index (CPI) and I pay a capital gains tax of 35% on it. The CPI increase over that time was 2.8 times higher. So for tax purposes, the investment is considered to have gone up roughly 180%. 35% of that is 22.5% of my total investment. So I get to pay a capital gains tax of 22.5% of my investment for something that barely tracks one index of inflation. That's pretty bad.
According to my calculations, the CPI inflation rate over that time period (including some rather high inflation in the 80s) was roughly 3.2% and you'd have to earn 4% per year or better over that time frame to keep up with CPI in an environment with a capital gains tax that applies when you sell the investment. If you have to pay capital gains at the end of each year, then you have to earn almost 5% per year in order to keep up with CPI.
But with some sort of long deflation in the same taxation situation, even minor ROI generates positive return.
Until recently, I was regularly shuffling money back and forth between the US and Europe. No matter whether I did an international wire transfer or wrote a check, there were always quite substantial fees associated, although they were considerably lower than with "specialized" sevices like Paypal or XE. I haven't done the full math, but looking at the fee structure of various Bitcoin exchanges, it seems you could end paying much less.
OS Reviews: Free and Open Source Software
Do you really want to invest in a "currency" that can go from $30 to $1 in less than a day?
See... here lies the problem. Just because you cannot see any use for it other than scamming other people or "investing", doesn't mean other people are as short-sighted as you.
The claims that "Bitcoin are a good investment" are simply a funny strawman: they can be perfectly fine as a _currency_ (i.e. serve the purpose of value _exchange_, at short time-scales), even if they are not being particularly safe/risk-free as an investment (i.e. serve the purpose of value _storage_, over larger time-scales). Being STABLE (in terms of value over time) has NEVER been a required property of currencies: aren't you using USD despite the fact that its value is anything but stable (over large time-scales)?
And it's not its _VALUE_ that goes from 30$ to 1$: it's the RATIO between the apparent value of Bitcoin and USD that goes from 30/1 to 1/1 (or... "did"). You forget that it's actually a good idea to "invest" in that "currency" when the RATIO between the apparent value of Bitcoin and USD afterwards goes from 1/1 to 30/1 (which is the current situation, in fact).
TL;DR: Despite all the people calling Bitcoin a "Ponzi scheme" or a "pump and dump scheme" from day one, its popularity and apparent value have only gone up over large time-scales (which is more than can be said about most currencies), even if there are/were instabilities at short time-scales. "Bad investment"? Sure... whatever.
Currency is a placeholder for value. The value of currency is that someone else is willing to exchange it for something of actual value. The value of Euros and Dollars is that large numbers of citizens have obligations to their governments that can only be discharged in those currencies. Even if all of your income is in Zimbabwe Dollars or Bitcoins, if you are a US citizen or resident then you must pay your taxes in US Dollars. This means that there are a few hundred million people with a strong incentive to accept Euros or US Dollars in exchange for goods or services.
With gold, or some other commodity, there are people who have an actual use for the commodity who will be at the end of the chain of trades. There is a demand for as long as there are people with a real use for that commodity.
With Bitcoin, there are only speculators. People accept Bitcoin because they think that the value will go up and they can pass it on to someone else. The currency is not backed by anyone or anything. There is no central bank that guarantees to accept it in exchange for some commodity, there is no government guaranteeing to accept it in exchange for tax liabilities.
I am TheRaven on Soylent News
the likes of WordPress, Reddit and Mega embrace it (...) Namecheap also
Such massively powerful supporters! Impressive indeed! USD, JPY, EUR, GBP, be afraid, be very afraid of the new cyber currency!
And again, what does that have to do with the ability to personally print your own money being an important factor in usage of a currency?
Every bubble is different. But they all finish same way.
Bitcoin does not function as a currency. It functions as a tool of barter. This is in the same way that gold is not a currency.
Speculation has nothing to do with my objection to bitcoin. The objection is that it is designed to deflate. That is a recipe for disaster. It concentrates wealth in very few hands that have no incentive to spend that wealth. If this were a real currency for a real nation they economy would come to a near total halt.
The problem with a deflationary currency is that it discourages investment. If your currency is deflating by, say, 1% per annum, you can, without any risk at all, increase the buying power of your money just by sitting on it.
Which is, in fact, a form of investment. By sitting on your money you are reducing the effective supply, which raises the purchasing power of everyone else's money. Essentially, you've loaned the value of your savings out to everyone else holding that currency; the increase in value is your interest on that loan. It's rather like investing in an index fund, but even more diversified.
Given a fixed money supply, the rate of deflation is equivalent to the rate of growth of the economy. Any investment that can't produce a enough of a return to pay positive interest on top of the deflation rate is less productive than the average. It is better—for the individual investor and the economy as a whole—to "hoard" the currency, and thus invest indirectly in the overall economy, than to put money into such an investment and bring down the average.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
As an aside, who here really thinks deflation in bitcoins is risk free?
As opposed to the current system where just to keep up with inflation you need to invest your money in a corporation you likely think is evil?
At the moment, monetary wealth is incredibly disproportionately held. Doesn't stop fiat currencies working.
If Bitcoin takes off as an international currency, then the initial enthusiasm of early adopters will have played a large part in this. Those bit-billionaires deserve a very hefty reward for getting a currency started that governments can't print at will, or track.
To the extent they spend their money, they redistribute it throughout society, and they'll have to spend it in order to get, at the very least, food, water, and utilities.
True, an eeeevil bit-zillionaire could crash the value of bitcoin. But two observations spring to mind about this:
1. What happened to Zimbabwe's currency? What happened to the mark during the Weimar Republic? What the hell do you think the bank bailouts and Quantitative Easing have been doing to the Dollar, Euro and Pound Sterling recently? You don't need eeeeevil bit-zillionaires in order to monkey with the currency, you just need an unscrupulous government, which can be had for tuppence ha'penney. At least you can't print Bitcoins.
2. If you're worried about the value of Bitcoin crashing (reasonable), don't keep your savings in Bitcoin! Keep it in something else (gold?), and use a service that will easily exchange your gold for bitcoins when you want to cash in some of them. Such services would spring up pretty readily in the event that Bitcoin took of but remained volatile.
Everyone gave up gold because the government stole it by force of law...