This Whole Bitcoin Thing Could Be Big, Says Bank of America

Nerval's Lobster writes "Bank of America has issued a research report suggesting that the crypto-currency Bitcoin could become 'a major means of payment for e-commerce' on its way to emerging as 'a serious competitor to traditional money transfer providers.' The bank attaches a 'maximum market capitalization' of Bitcoin at roughly $1,300, based on its position as a 'major player in both e-commerce and money transfer' as well as 'a significant store of value with a reputation close to silver.' Bitcoin has come close to exceeding that theoretical ceiling in recent weeks, although its valuation dove today after the People's Bank of China decided to declare it a volatile 'currency' without real legal status; that financial institution is also concerned about its use in money laundering and black markets. Bank of America sees Bitcoins' advantages as low transaction costs, its finite supply (which will protect its value), and its increasing attractiveness as an alternative to 'traditional' cash. As with the People's Bank of China, however, the bank sees the currency's extreme volatility and lack of legal backing as a bad thing, and frowns at the possibility that regulators could step in and increase transaction costs. 'A 50 minute wait before payment receipt confirmation is received will prohibit wider use,' the report adds. 'This is less of an issue for two parties that know each other because they trust the other will not double spend, but when dealing with an anonymous counterparty this creates a high level of unhedgeable risk.' Without a 'central counterparty' to verify transactions and thus mitigate that risk, Bitcoin could fail to break into wider use."

Comments

Of course it could be big.

[FSWKU]

Bank of America is always looking for new ways to screw over their "customers", be it through fees, lying, or trying to steal their (paid off) houses through foreclosure (and blaming it on "computer error" when caught). They're probably drooling like hungry dogs over all the ways they can fleece people with Bitcoin...

Re:Of course it could be big.

[Anonymous Coward]

yes, bofa is a bank, and they will do anything to make a profit a long as it does not cause them lose customers or take on legal fees to the point that they do not profit from their fleecing ways... up to this point their primary competitors are just as 'fleecy' as they are and the customers are stuck with the same fleecing habits wherever they go

bofa seems to be recognizing that bitcoin could become a non-fleecy competitor to their market and they are laying down the claim that good old American Dollars traded through their banking system are both quicker and more trustworthy than bitcoin...

So... what financial processes would be mucked up by a 50 minute lag and what elements of contract law are present in bitcoin that would enforce payment if the bitcoins have been tapped out before you got payment?

there would seem to be a lot of opportunities for scoundrels to game timing and anonymity to their favor... would players like bofa attempt to put themselves as a layer of trustworthiness between bitcoin and consumers?. of course there would be fleecing

Re:Of course it could be big.

[Anonymous Coward]

Glad someone said it, there just saying this so they can get in on the next big gold rush of currency. As if they (banks) haven't already monopolized, and own people and the country, lets let them turn this into a major cluster fuck. I bet they already have programs generating bitcoins for for them, but shhh they don't want other to know.

I could crack a joke on the irony of the banks being concerned about money laundering, since they are experts on that....

Re:Of course it could be big.

[Seumas]

I can't put my finger on why, exactly, but the whole pushing a cashless society thing really makes me uneasy. Especially things like http://betterthancash.org/ , which is targeted at the poor and developing countries. I realize that much or even most of our current financial lives are carried out digitally, but when it comes down to it the only thing better than cold hard cash that can not be directly seized from you, subjected to computer or human errors, or denied to you during emergencies are things with intrinsic value (gold, silver and other items mankind puts real value into as a thing unto itself). When people like Bill Gates, Citi, BofA, the United Nations, Mastercard, and Visa are all on board the "physical money is bad" train, I don't trust it one fucking bit.

Re:Of course it could be big.

[Mister Liberty]

Hear hear.
I'd mod you up, just don't have any points.

Re:Of course it could be big.

[fatphil]

> When people like Bill Gates, Citi, [...] are all on board the "physical money is bad" train, I don't trust it one fucking bit.

Thank you for including good ole Bill on that list. As an igtheist, it really riles me when he is held up as being altruistic. Noone who promotes Monsanto is doing anything positive for the world.

Re:Of course it could be big.

[JavaLord]

Bank of America is always looking for new ways to screw over their "customers", be it through fees, lying, or trying to steal their (paid off) houses through foreclosure (and blaming it on "computer error" when caught). They're probably drooling like hungry dogs over all the ways they can fleece people with Bitcoin...

That's what I found funny about the article. BofA thinks bitcoin could end up with "a reputation close to silver." and all I can think is "As opposed to Bank of America, which has a reputation close to shit, cancer, and child molesters."

Re:Of course it could be big.

[Anonymous Coward]

BoA 2007: "Countrywide is gong to be a Big and important part of our business"

Re:Of course it could be big.

[davidwr]

the only thing better than cold hard cash that can not be directly seized from you
Cold hard cash can be directly seized from you. In fact, if it's in your physical possession (vs. in a bank's safety-deposit box or "on deposit" with a bank that takes gold deposits) that's the only way it can be taken from you - directly.

subjected to computer or human errors, or denied to you during emergencies are things with intrinsic value (gold, silver and other items mankind puts real value into as a thing unto itself)

Gold, silver, etc. have industrial uses and aesthetic uses. Beyond that, their value is based only on faith that others will consider it of value in the future. If, hypothetically, the world started believing that owning gold for the sake of owning gold was unethical (as is the case in some influential circles with ivory that isn't "old" and with "conflict minerals," for example), the demand and therefore the value would go down. If a cheaper replacement were found for its industrial uses, its value would go down or at least not rise as fast (if gold were still used in dentistry as it once was, the demand and therefore the value would be higher than it is).

My point is that a large part of the value of gold and silver is the "faith" that people have in it that people will still want it when it is time to sell - whether that time is later today (day traders), during the next period of inflation (for those buying as an inflation hedge), or decades or centuries from now (for those buying so their kids/grandkids will have something "when the revolution comes").

Re:Of course it could be big.

[davidwr]

As long as I live in a society with a stable government and a stable economy, I'd rather use a fiat currency that the central bank can manipulate to mitigate a recession or inflation than a currency or "currency" like BitCoin or precious metals that are largely outside of its control.

On the other hand, if I'm in a society where I don't trust the central bank to look out for the interests of the whole economy (i.e. one that is incompetent, corrupt, or just plain ineffectual) then I might look to use another country's currency, precious metals, Bitcoin, or just chuck the whole thing and go to barter.

Now, as to whether I use a physical medium or its equivalent (say, a bitcoin wallet stored on my own device) or use a "cashless" means such as checks, credit/debit cards, direct wire transfers from one bank account to another, bitcoins stored on a device I don't control, etc., is going to be a matter of "do I trust that the cashless system is stable now AND do I trust that it will not SUDDENLY become unavailable without giving me time to make necessary withdrawals?"

In the United States, if you live in an area where ATMs, banks, etc. may become "suddenly unavailable" to you and you are smart, you have several days worth of cash stored somewhere on your premises. For example, before a hurricane comes, most people are going to hit the bank or ATM and load up on cash, in case the stores re-open as soon as the storm passes but the credit-card machines aren't working.

Re:Of course it could be big.

[avandesande]

Make bitcoin 'bills' where the private key can only be accessed by tearing them open.... problem solved.

Re:Of course it could be big.

[DanielRavenNest]

> what elements of contract law are present in bitcoin that would enforce payment if the bitcoins have been tapped out before you got payment?

The same elements of contract law that apply for any other contract. If you make a contract with "unknown user on the internet", it's likely to be unenforceable no matter what currency unit you choose. If you make it with a known person, get their signature, and specify "X Dollars worth of bitcoins at the time of payment", then you are covered like anything else if they breach the contract.

Re:Of course it could be big.

[DanielRavenNest]

Those already exist: https://www.casascius.com/

Re:Of course it could be big.

[Seumas]

Gold, silver, and other precious metals and gems have intrinsic value that can not be erased by government or corporation and has a history of being valuable, what, more than ten thousand years? If all forms of government vanished overnight and we all regressed to grunting beasts coming out of trees, we would probably *still* give value to gold and silver and other pretty, shiny, rare items.

The problem with currency is that it is only representative of an agreed-upon make-believe value, but it does benefit from being something you can hold and possess and control (physically), if not having any influence over its value which isn't tied to anything "hard".

The problem with "cashless" currency is that it is only representative of an agreed-upon make-believe value *and* is only allotted to you at the whim of technological stability, human accountability, and government. It is different from hard cash in that hard cash that is in your hand does not accidentally get sent to the wrong account, seized (unless physically by force), deleted, siphoned, etc.

Of course, it's an ideal dream to have all of your money in life entirely stable and secure sitting on a server somewhere digitally that can not be stolen, can't be hacked, can't be lost, can't be seized, etc . . . but until someone discovers something much better than anything we have today, it has all the negative aspects of all the forms of currency/trade and pretty much none of the benefits.

PS: I'm not saying to become a Glenn Beck nutjob and start filling your pantry with gold coins -- just using it as an example of a form of established currency and valuable items dating back pretty much since the dawn of man's history to reference off of.

Re:Of course it could be big.

[Anonymous Coward]

My first reaction as well. B of A has just seen a new way to steal and launder money.

Re:Of course it could be big.

[lgw]

Aren't you a little old to be a hipster? There's nothing sadder ...

Re:Of course it could be big.

[Anonymous Coward]

Physical money is bad because they steal it by printing more. Even gold is better than that. But, you can't shove gold at your screen to pay for things online. So, bitcoin.

Re:Of course it could be big.

[Anonymous Coward]

u forgot corrupts on that list.

Re:Of course it could be big.

[hairyfish]

Because cashless makes it harder for crooks to hide, which in-turn means better for society overall. I know you think the govt is out to get you, but you should spend some time in places that have no govt. Then you will appreciate it a bit more.

Re:Of course it could be big.

[hairyfish]

Because in Internet forum world there are only two colours...

I understand how to value

[purnima]

shares in a remittance company that is likely to take Western Union to Blockbuster territory. But valuing these assumes you are buying shares that will eventually pay dividends, and when not paying dividends will appreciate because profit was is reinvested.

But Bitcoins are not shares. When you buy a Bitcoin you are not buying equity in the Bitcoin environment. Wonder what model BoA valuers have in mind for this. It weirds me out.

Re:I understand how to value

[Derec01]

Honestly I find that one of the most interesting things about it. There is no intrinsic value. None! And yet it's indestructible* and peer to peer confirmed. Therefore (ultimately) the only cue anyone has to the value is what others value it at. Gold is sometimes considered to have become valuable for similar reasons. Sure, it's pretty, and that likely helped, but it doesn't have enough use to justify its value other than what everyone has previously valued it at.

* I can't say that with absolute certainty, given how software goes, but as a thought experiment it's fascinating.

Re:I understand how to value

[Anonymous Coward]

There is no such thing as intrinsic value to begin with. People place value in things.

Re:I understand how to value

[Anonymous Coward]

There is no intrinsic value. None! And yet it's indestructible*

Actually, it's quite destructible. Think of it as a research paper that hasn't been saved in the last three hours, just before it needs to be printed or submitted, destructible.

That's why everyone is so attuned to describing how your wallet should be backed up, which only creates multiple copies of the coin. Unfortunately that creates an issue, as one need only steal one copy of the bitcoin to have stole the bitcoin.

Re:I understand how to value

[Narcocide]

BofA's angle is probably the same as with your money. Charge you to hold it, charge you to transfer it, charge you to talk to a phone support rep about holding it or transferring it, and while holding it for you, gamble with it on the side.

Re:I understand how to value

[Derec01]

There is no such thing as intrinsic value to begin with. People place value in things.

Absolutely correct. However, it's that process of how humans value things that make it an interesting case. We have in our economy a network of things that have some generally agreed upon value. When people try to value something, they look at the activity its used for and the value of that activity within the current network, and so the value is subject to the changes in that object's use.

Ignoring mining, with Bitcoin there is no function within the current universe of things we value. The only cue I have is what others have previously valued it at, and what it is currently valued. I think that's very interesting, especially when you consider the kind of objects that humans have used as currency throughout history (gold, metals, durable objects like shells, etc.)

Re:I understand how to value

[pjviitas]

Ummmmm....the model of we can participate in money laundering schemes a lot easier now....just as simple as that

Re:I understand how to value

[fuzzyfuzzyfungus]

There is no such thing as intrinsic value to begin with. People place value in things.

Capital-V "VALUE" is a purely mental abstraction, about which one can wax Platonic and ultimately empty; but the distinction between commodities or instruments with substantial utility (iron, aluminum, books, potatoes) and ones that are kept around mostly because they symbolize 'value' ($20 bills, gold, bitcoins) is arguably still relevant.

I don't entirely like the term 'intrinsic value', 'utility' might be closer; but some commodities are like D-list celebrities, who are famous primarily for their fame, and are valued primarily for their value, while others are valued because of the various purposes they serve. The lists overlap (gold, say, has a number of specialty applications in electronics; but would be extremely unlikely to command its present price if it had the same prestige as iron); but even when they do, the delta between the assigned value and the value in utility is usually pretty noticeable.

Re:I understand how to value

[Derec01]

I didn't say it couldn't be lost or stolen. If it's stolen, it still exists. If it's lost, likewise, it still exists and could be found.

I could commit the wallet code to memory and destroy the hard drive it's on, and theoretically bring it back. If I lost it forever and a million monkeys figured out the code, it would have value in the system.

That's pretty dang indestructible.

Re:I understand how to value

[pjviitas]

The only thing that has intrinsic value to me is water, food , shelter and bullets...all the rest of the smoke and mirrors out there is BS

If there is a currency out there that takes banks and governments out of the equations "thank god"

Re:I understand how to value

[rtb61]

Straight up money laundering no fucking about, be you Dictator, Gangland criminal, Corrupt politician, Bank of America is the bank for you, now with untraceable bitcoins and supercomputers to generate more ;D.

Re:I understand how to value

[edibobb]

Sounds like fiat money, such as U.S. Dollars. http://en.wikipedia.org/wiki/Money

Re:I understand how to value

[diamondmagic]

Intrinsic value means there's value placed on it other than it's secondary/exchange value. For instance, people buy gold because it's useful for electronics or jewelry. The dollar has no such uses, so it is said to have no intrinsic value.

Re:I understand how to value

[Anonymous Coward]

There is no such thing as intrinsic value to begin with. People place value in things.

Which is meaningless unless you are an invincible robot with a built-in energy source that last for eternity.

Unfortunately, for mere mortals, we have intrinsic need. We need air, water and food just to survive. So in a human society, water and food always have intrinsic value to any human being.

And, from that, by extension, anything that can be used to exchange for food and water will also have value (not intrinsic, though).

And mere mortals can also be coerced. If you live in a society with laws and taxes, backed up by lethal force from the government, then anything that can be used to pay tax will have intrinsic value, including funny paper issued by the government.

Fact is, if someone has the capability to physically harm or kill you, then WHATEVER that someone wants will automatically have intrinsic value to you. This is reality.

Re:I understand how to value

[bkmoore]

But Bitcoins are not shares. When you buy a Bitcoin you are not buying equity in the Bitcoin environment. Wonder what model BoA valuers have in mind for this. It weirds me out.

BoA's model means that they want to sell you BitCoin at $1300. Anytime a bank puts a price on anything it usually means they are looking to sell it at that price. Afterwards they'll probably short it, but that's another story.

Re:I understand how to value

[Vintermann]

Some things we are very free to put value in, others we have very little freedom to. If I'm starving, I can't really choose to assign food no value. If I assign value to things wildly out of step with my fellow humans, I'm going to have a hard time ("Give me that sandwich? You can have my car!")

When something is of such a character that we pretty much have no choice in the value we assign it, and there's no plausible way it's going to change, we say that it has inherent or intrinsic value. Maybe a little sloppy, but you know what is meant.

Re:I understand how to value

[Anonymous Coward]

The US dollar has one unbeatable use: paying taxes. If you hoard gold and bitcoins, the sheriff of Nottingham is going to come after you for some US dollars.

Re:I understand how to value

[Anonymous Coward]

>There is no such thing as intrinsic value to begin with

How about drinking water?

Re:I understand how to value

[Stolpskott]

When you buy a Bitcoin you are not buying equity in the Bitcoin environment. Wonder what model BoA valuers have in mind for this. It weirds me out.

Almost certainly they are using a Commodity Futures Contract model that is used for precious metals, oil/petroleum, wheat and so on, on places like the Chicago Board of Trade or the London Metals Exchange. With those, there is a finite new supply of "product" and for the vast majority of people dealing with them, there is no physical product - the contracts being traded are for future delivery of a specific quantity of a specific product on a specific date. The product will be delivered to a specified place, and it is the responsibility of the person receiving the product (the contract owner as of the contract maturity date/product delivery date) to move it from that delivery point to a storage location of their choice.
As such, the traders who buy and sell these contracts do not want to hold them until maturity, because they have no storage space, so they buy the contracts (for example) 12 months before the delivery date for a specified price, and sell them before maturity, hopefully for a profit.

With bitcoins, there are no physical deliverables, but in every other important sense they resemble these Commodities Futures contracts.
If they became widely accepted and centrally traded, with a central body guaranteeing transaction integrity (basic ESCROW systems would probably be the starting point for that), they would almost certainly be traded as a "standard" currency on FX markets (exchanging Bitcoins for US Dollars, Euros, Japanese Yen, etc.), but without that central body guaranteeing the transactions, they would probably be traded as Commodities Futures.

The "problem" with both of those routes is that there is heavy auditing on every stage of every transaction, so the anonymity aspect of Bitcoin goes right out of the window. The parties involved in any given transaction would be known and recorded, and even if those are brokers acting on behalf of the real Bitcoin owners, the brokers would still need to have records showing who the real owner is.

Re:I understand how to value

[Kjella]

Ignoring mining, with Bitcoin there is no function within the current universe of things we value. The only cue I have is what others have previously valued it at, and what it is currently valued. I think that's very interesting, especially when you consider the kind of objects that humans have used as currency throughout history (gold, metals, durable objects like shells, etc.)

I don't see what's so novel about that, cash doesn't serve a function either. You might say it's to pay taxes but kings and lords knew how to take payment in real world goods. It's just a value token, there's no intrinsic value to small bits of paper in a post-collapse economy. If the price of something I like doubles, did it get more expensive or did my money become less worth? Potayto, potahto. Your money is only worth what it buys you.

Re:I understand how to value

[DarkOx]

Intrinsic value certainly is real. A chicken has intrinsic value, it can feed me for days and I and everyone else I know likes to eat.

Re:I understand how to value

[ultranova]

Ignoring mining, with Bitcoin there is no function within the current universe of things we value.

Sure there is: accounting. Bitcoin is a distributed accounting system with access controls on account transactions. Every trader in history would find that valuable.

Re:I understand how to value

[BitZtream]

A million monkeys could also magically resurrect the atoms of a pile of cash you burned up as well, but in reality neither are actually going to happen so try again.

Re:I understand how to value

[Anonymous Coward]

But if everyone already has plenty of chickens, your chicken that you're trying to trade has no value.

"Value" is determined by how much people want a thing, which of course depends on what they can do with it. With a chicken, they can eat it or eat the eggs. With cash, they can spend it. "Price" is the number placed on that value.

Re:I understand how to value

[ScentCone]

Charge you to hold it

You mean, charge you to provide the service of holding it, which includes people, infrastructure, legal and regulatory costs, and more.

charge you to transfer it

You mean, charge you to provide the infrastructure, support, people, reporting, and security around transferring it.

charge you to talk to phone support rep

Right. Charge you for making a person's time available to you when they already provide no-charge mechanisms to get the same information by other means.

gamble with it on the side

Sure, interest rates are low right now. But where do you think interest comes from? How do you think loans happen?

Re:I understand how to value

[Anonymous Coward]

But many I know refuse to eat meat. A chicken has to such value to them. All value is subjective.

Re:I understand how to value

[Saethan]

I challenge a million monkeys to retrieve my wallet.dat file for the litecoin mining I did two years ago when the network went live(was getting at least block a minute for the first few hours as the difficulty ramped up.) I'll pay $50,000 for it, as long as all the litecoins remain attached.

Warning: only one copy existed, and it was on an encrypted hard drive with a 27 character key, and said hard drive was later reformatted and re-encrypted with a different key. (at the time litecoins were next to worthless so I had 'better' uses for the drive)

Go!

Re:I understand how to value

[kumanopuusan]

But where do you think interest comes from?

Are you kidding? The bank isn't the one paying interest! The grocery store doesn't make Frosted Flakes, either. Anyone who's paid on a loan knows exactly where interest comes from.

The bank doesn't create anything at all. It acts as a mediator between willing parties on both sides and then takes as large a cut as it can. If those parties instead cooperate, there's no need for a profit-seeking third party. That's the whole idea behind a credit union. Providing those same services in a wholly automated way through software running on a peer-to-peer network potentially removes the risk of mismanagement and reduces fees to the bare minimum needed to pay for the electricity used in processing (e.g. losses to mining).

Re:I understand how to value

[alexander_686]

That is not quite true – we can’t measure value but we can measure dollars. If I am promised to be paid $110 a year from now, and the time value of money for me is 10%, then the intrinsic is 100 – in dollars.

We may debate what value is and how that links to dollars. It can’t be measured directly, how to measure inflation / deflation, etc. However, currency (be it dollars, gold, of BitCoins) has no intrinsic value. If I have a 100 units of currency today, and I have a 100 units of currency in a year, then the time value of money just falls apart.

Re:I understand how to value

[Cajun Hell]

Dollars are not shares which pay dividends either, but BoA has somehow assigned as value to those, too.

Re:I understand how to value

[Richy_T]

At which point you sell some gold or bitcoins. Meanwhile the person who kept cash finds that their cash is now only worth 95% of what it was last year because King John is running the presses through the night.

Re:I understand how to value

[alexander_686]

Errr – no, or not very much. About 5% of gold production goes into manufacturing. We could close down all gold mines and use our reserve for centuries before we would need to start mining again. About half is bought as bullion and about half is bought for jewelry – which for a lot of people is the same thing as bullion.

Re:I understand how to value

[Cajun Hell]

the sheriff of Nottingham is going to come after you for some US dollars.

Please go correct the wikipedia entry. Some arsehole has typed in the wrong country name!

Re:I understand how to value

[Copid]

The rough definition of the "intrinsic value" of an item is the value you (a person) would place on it when "I can trade it for something else" is not part of the valuation process. It's not some physical constant, and it was never implied to be.

Re:I understand how to value

[davidwr]

there's no intrinsic value to small bits of paper in a post-collapse economy.

I'm not sure what you mean by "post-collapse." If you mean "post-cancellation-of-the-currency" economy like after a civil war and the losing side's currency is declared worthless, then you are mostly right - the only intrinsic value is the value of burning, recycling, or otherwise using the paper itself. There may be some non-intrinsic value as a collectable (e.g. Zimbabwe's gazillion-dollar bank notes have no currency value but have fetched over USD 5 as collectables "post-collapse").

If you mean "post-collapse" as in "post-depression" or "post bank panic" then I'll point to United States currency printed before 1929 - a paper dollar backed by "the full faith in credit of the United States" printed in 1928 and a silver dollar minted in 1928 were both worth a dollar at the end of the Great Depression. Prior to the creation of the Federal Reserve system, a bank note denominated in US dollars and issued before a bank panic by a bank that survived and which did not devalue or de-monitize its notes likely had the same value relative to the United States Dollar after the panic ended as before the panic.

Other forms of cash, such as the United States penny and nickle, do have "intrinsic" value in that the metal is worth about as much or more than the face value of the coin. This value comes largely from the value of the zinc, copper, and nickle in industrial uses. This is in contrast to US silver coins before 1964, where the non-currency value was based on the non-intrinsic value people placed in silver as a "store of value." I call this a "non-intrinsic" value because, like gold, the value of silver is largely based on the belief that it will hold its value over generations and the demand that such belief creates, on on the demand for its use in industry or artistic works such as jewelry.

Re:I understand how to value

[davidwr]

the sheriff of Nottingham is going to come after you for some US dollars.

Now why would some English Sheriff want US Dollars? What's wrong with British money???

Re:I understand how to value

[davidwr]

I heard recently on NPR or BBC radio that the number was closer to 10-13% that was used in manufacturing and other non-jewelry/non-bullion uses, but I could be wrong. Whatever it is, it's well over 80% split between bullion-or-other-pure-store-of-value uses and jewelry/art/aesthetic uses.

Re:I understand how to value

[davidwr]

then anything that can be used to pay tax will have intrinsic value, including funny paper issued by the government.

To quote Granny from a pre-1965 TV episode of The Beverly Hillbillies when she went to the bank and tried to make a large withdrawal and the bank tried to pay her in paper money:

SILVER!!!!!!!!!!

Re:I understand how to value

[alexander_686]

Value, or Utility, is an economic concept.
Ordinal i.e. we can rank but not measure different things for value.
Subjective, so no interpersonal comparisons can be made.
As such it can never be directly measured.

Intrinsic Value is more of a financial concept.
It is cardinal (can be measured) and objective.

You can’t bridge the gap between these. There are some partial solutions out there – such as the Consumer Price Index and surveys, but they make assumptions that you correctly state are wooly.

Re:I understand how to value

[alexander_686]

Last year it was 4%. Over the past 20 years it has averaged about 10%.

Whenever prices shoot up, the amount used in manufacturing goes down which implies there are many close substitutes – or that audiophiles are not willing to pay for gold plated cables (a.k.a. Monster cables)

Re:I understand how to value

[JazzLad]

You seriously only paying a nickle/monkey? What is this, 1913?

Re:I understand how to value

[Narcocide]

When the monthly charge for a checking account with 500USD was only 6$ and paper checks and phone support were free, I might have believed this bullshit. Now that its almost 13$ you can fuck yourself, astro-turfer. What part of the "infrastructure" do you think they'll be claiming to provide for previously free-over-public-network-lines bitcoin transactions?

Re:I understand how to value

[Anonymous Coward]

They could breed the chickens and use them/their eggs for barter.

Re:I understand how to value

[lgw]

The government running the presses through the night is a vastly better system than the government sending out the troops to collect all the gold it can find, rule of law be damned. That seems to happen with every government.

As much as QE is messing with the economy, it's far better than the government going after the big vulnerable targets: 401Ks, university endowments, and insurance company floats. Any big pool of money, really, is vulnerable, and constitutional protections against property taxes would only matter if we had a SCOTUS who gave a shit about constitutionality.

Re:I understand how to value

[ScentCone]

When the monthly charge for a checking account with 500USD was only 6$ and paper checks and phone support were free, I might have believed this bullshit.

I'm sorry that you're too lazy to shop around, but not too lazy to troll here. I've got several checking accounts, spread around four different banks. None of them carry a monthly fee. None of them charge me anything to write checks (though I do have to pay to get checks printed, which I do very cheaply at Costco), and none of them have ever charged me to talk to them, because I've only ever had to talk to them about opening or closing accounts, or about something they wanted to talk about. Everything else is self-service via dial-up or online, and via mobile apps, and costs nothing.

What part of the "infrastructure" do you think they'll be claiming to provide for previously free-over-public-network-lines bitcoin transactions?

Gee, I don't know ... offering to provide a service where you don't lose your BC when you lose a disk drive? Providing protection against double-spending in the latency? That sort of thing? Or you could get over your laziness and shop around - though you seem more inclined to sit on your ass and complain than to type in the URL of another bank. Grow up.

Re:I understand how to value

[Narcocide]

OH, and I suppose all these "other" checking accounts you have that don't charge a monthly fee to hold your money don't provide any infrastructure or service that BofA provides, making BofA's egregious charges totally justified as your prior post implied? How much do they pay you to post this shit, really? I'm just curious.

Re:I understand how to value

[ScentCone]

How much do they pay you to post this shit, really?

Ah, yes. The classic ad-hominem-strawman combo! Anything to avoid substance, of course, right?

We just talked about this. Banks make money putting money to work. That's how mine make money, and it's why I chose them. BofA has all sorts of accounts without fees. Walk in, talk to a branch manager, and get one. Of course, you'd have to get off your but and put aside the shrill whining for a few minutes, and I know that's upsetting to you. Your mom can drive you.

Re:I understand how to value

[Narcocide]

Curious you chose not to actually address the real point of my post that time. Almost as though you had no counter argument and had to just repeat your earlier attempts to devalue my statements by simply calling me juvenile and lazy.

Re:I understand how to value

[Narcocide]

Just to be clear here, I'm accusing YOU of in fact being the one whose arguments have no substance, and in addition to that I see your accusations that I'm lazy and juvenile and raise you that you're a liar and a shill. Moreover, I'm pretty sure I'm a lot older than you and one day you'll look back on your misplaced loyalty to that horrible company and realize which of us was actually more mature and feel ashamed. Food for thought for the future: maturity isn't 100% about "keeping your mouth shut and not rocking the boat."

Re:I understand how to value

[Anonymous Coward]

If they're vegans, they will refuse to "use" chickens for anything. Eggs are rape, you see.

Re:I understand how to value

[ScentCone]

Liar and shill? Hilarious.

If you're really going to maintain that you can't find a bank with free checking, then you're some kind of extra special uninterested in looking. It's almost like you don't want to bother opening such an account because that would take the fun out of whining about The Man and pretending that everyone else is being paid by The Man just so The Man can keep you down. You're just embarrassing yourself.

There's only one person trying to make a point, here. You. I'm just telling you the facts. You're the one trying to pretend they don't exist, and resorting immediately to telling someone else to fuck off so you can distract from reality. What do you get out of pretending that hundreds of banks aren't out there competing for your business? Is it really that important to you that prop up your silly world view by pretending that trivially demonstrable basic facts aren't real? Do you understand how that makes you sound? Let me guess. You also think evolution isn't real, right? Get a grip.

Re:I understand how to value

[Narcocide]

NO, see now you're putting words in my mouth. What I said was that BofA's rising prices are egregious. You changed your argument from your first post which was basically "BofA's charges are perfectly justified" to "BofA's charges are easy to avoid by finding a cheaper service" while insinuating that I 1) still have a BofA account 2) have no other accounts 3) didn't know this 4) live with my mom. It is a classic astro-turfing technique to try to devalue a poster's statements indirectly by discrediting the poster, but in this case in your earnest desire to do this you completely changed your argument 180 degrees and don't seem to even have noticed.

So, either you REALLY wanted to start an argument with someone and didn't care about what but found me most happy to comply, or you're a fairly shitty astro-turfer, or an exceptionally bad troll. MOST of what you've stated so far is in fact not factual, its at best bad guessing. I in fact am not trying to pretend cheaper banking solutions exist... why would I even do that when it supports my original point that BofA overcharges? You seem to have lost the plot in your desire to discredit me by any means necessary.

Re:I understand how to value

[Narcocide]

I in fact am not trying to pretend cheaper banking solutions exist

I in fact am not trying to pretend cheaper banking solutions don't exist. :) typo.

Re:I understand how to value

[aces_of_clubs]

I think about bitcoin more as "commodity" or "liquid trade asset" than currency. And yes, we going to have all types of market. The traditional exchanges (trading, clearing, settlement processes, etc) and Over-the-counter trading as well. I don't know why government and legislators are get freaking out about the pseudo-anonymity that bitcoin got. Bitcoin has a global and immutable ledger that would be a very good start for trading transparency and economics flow analysis. Btw how "darkpools" really works ?

Re:I understand how to value

[hairyfish]

Well apart from water and oxygen and a few other things...

Re:I understand how to value

[Stolpskott]

I think about bitcoin more as "commodity" or "liquid trade asset" than currency. And yes, we going to have all types of market. The traditional exchanges (trading, clearing, settlement processes, etc) and Over-the-counter trading as well. I don't know why government and legislators are get freaking out about the pseudo-anonymity that bitcoin got. Bitcoin has a global and immutable ledger that would be a very good start for trading transparency and economics flow analysis.

Btw how "darkpools" really works ?

Anonymity (for a Government that fears either its own people or someone else's) is, in my opinion, a direct threat to that government, because they seek leverage/power over those individuals or institutions that they fear, as a means of control. But that is my very Orwellian 1984-type negative opinion of people who seek power through political office speaking... I am sure that nobody in the US political machine is actually like that...

As for dark pools, they work on a double-blind system, for fungible assets (a fungible asset is one that is directly and equally swapable for any other identical asset - a $10 bill can be swapped for any other $10 bill in the system without gaining or losing any value, with the only real difference being that one is slightly dirtier, more crumpled and more bacteria-ridden than the other - a bank will still give you $10 for it if you take it in).
In simple terms, a dark pool allows me to say that I want to sell 100 of a particular item at a particular price, usually shares in a company, but fundamentally it could be anything fungible. You might post that you want to buy 150 of that particular item, again at a particular price. Neither of us sees that the other has posted something relevant to our request, but the dark pool system will see both requests and pair them up if the prices we are both looking for match. Once the trade has been completed and ownership is transferred, then the trade can be examined to see who the two parties in the transaction were (if you want truly anonymous trading, then most of the major trading exchanges for fungible assets - NASDAQ, LSE, NYSE, and so on - have anonymous exchange trading platforms which keep the identities of the parties involved in the transactions secret even after the trade has completed, although this information can be obtained by law enforcement agencies with a court order, or probably by the NSA without one...).

Re:I understand how to value

[Richy_T]

The government running the presses through the night is a vastly better system than the government sending out the troops to collect all the gold it can find, rule of law be damned. That seems to happen with every government

Thing is, they're doing both.

Inflation is more pernicious. If the government is taking taxes, they're taking taxes. When they print the money, in the current environment, they're giving it to their rich buddies.

Failsauce

[Anonymous Coward]

This just in, BOA needs bailout after investing everything into bitcoin.

Re:Failsauce

[bkmoore]

nope...BOA is probably shorting BitCoin.

Re:Failsauce

[Anonymous Coward]

This just in, BOA needs bailout after shorting bitcoin.

Re:Failsauce

[Anonymous Coward]

This just in, BOA needs bailout after shorting bitcoin

Help me. I'm a dimbulb.

If bofa needs bailout after shorting bitcoin, does that mean bitcoin's worth actually increases after bofa shorted it ?

Re:Failsauce

[Anonymous Coward]

How would you short bitcoin?

Re:Failsauce

[CimmerianX]

You borrow someone's bitcoins... say 1,000 of them. Sell them high, expecting them to fall. You sell them for 500 Each so you have 500,000 dollars. Wait for them to fall in price. Then buy back the 1,000 bitcoins at 200.00 each and spend 200,000 dollars. Return the 1,000 bitcoins back to the original owner and pocket the 300,000 Profit.

Re:Failsauce

[darkwing_bmf]

That's mostly true. But there are a few extra things to note. The first is you'd owe the "someone" interest for loaning you the bitcoins. And second is if you bet wrong and the price goes up, you'll have to find some money from somewhere to buy the bitcoins back at the new higher price.

Re:Failsauce

[alexander_686]

Yes. I doubt it they did or if they did it would be a large enough position to cause them troubles.

Of course, BoA is saying it’s worth $1300, which implies it wants the price to go higher, which – if shorted – would hurt it even more.

Re:Failsauce

[Anonymous Coward]

nope...BOA is probably shorting BitCoin.

Who's be dumb enough to take the other side of that bet? Do you want to go long on BitCoins? I know at least two people who'd love to bet against you.

Re:Failsauce

[flargleblarg]

Uh, where are you going to find someone to loan you $1,000,000 worth of bitcoins and return them as $200,000 worth of bitcoins? You expect to profit $300,000 while losing someone else $800,000? HAHAH, good luck with that.

we've all been here before

[bkmoore]

1. An "investment" vehicle that is based on an arcane mathematical model that nobody understands...check.
2. A gold rush mentality and lots of media interest...check.
3. Banks and other prominent "investors" that are saying that "this time it's different"...check.

“I can calculate the motion of heavenly bodies but not the madness of people.” -Sir Isaac Newton after losing a fortune in the South Sea Company bubble.

Re:we've all been here before

[Anonymous Coward]

an arcane mathematical model that nobody understands...

I've found that people who say that about anything in finance usually has no idea what they're talking about. YOU don't understand the mathematical model. You're no better than an Occupy protester who objects to someone making a living "just by moving money around".

Re:we've all been here before

[r2kordmaa]

Only your second point is valid. First one doesnt apply because if you look at bitcoin as an investment vehicle, its the same as all the other, good old demand and supply mechanics apply to all investment vehicles the same, be it rocks or bitcoins. Last one doesnt apply because, well banks and investors dont really think much of bitcoin other than looking at this wierd newfangled thing with puzzlement. Only engieneers and programmers who actually bother to find out how it works say "hey this is something i have never seen before - interesting"

Re:we've all been here before

[bob_super]

I, on the other hand, understand that a "currency" which is not backed by the need of a government to keep its value at a minimum in order to preserve the purchasing power of its people, has no reason to not crash hard.
Real currencies have cyclical values, but there's an anchor in the reality of pitchfork-equipped people having to get food (unless they eat UN rations, or you're a hardcore dictator zimbabwe-style and provide food banks).

The mathematical model may be sound, but the usual checks and balances don't exist, making the risk and volatility very high. It's a speculative investment for disposable income, not a currency.

Re:we've all been here before

[Anonymous Coward]

Real currencies have cyclical values

What would you call a currency whose value is always going down?

Re:we've all been here before

[bob_super]

Reichsmark.

Re:we've all been here before

[CauseBy]

I'd call it bad for the rich and good for the poor -- by which I mean, I'd call it good.

First

[Anonymous Coward]

they laugh at you, then they fight you, then you win, right?

Re:First

[jones_supa]

I wonder if Bitcoin is to get any more popular, will some bank executive some day bang his fist on the table and shout "we're gonna destroy Bitcoin with thermonuclear".

Replacement for cash not bank accounts

[Derec01]

One thing that I don't think is usually appreciated is that Bitcoin isn't necessarily a replacement for a bank account. It's supposed to be a replacement for *cash*. Bitcoins can be stored in a wallet, lost, stolen, and handed to the wrong person just like cash can, except with the added advantage (danger) that I can transfer it to anyone on the planet almost seamlessly. Credit cards, bank accounts, etc. that offer me asset protection and such will be just as useful for Bitcoins as they are for cash, but they will be denominated in a currency independent of any given country.

Honestly, I don't see the transfer time as a huge issue. Let intermediaries spring up to make that faster; it's probably safer to keep instantaneous transfers on a separate level than the asset itself.

Re:Replacement for cash not bank accounts

[Billly Gates]

No its like gold which is a way to get rich.

It is not worth the risk to use it like cash. It is worth it to gain more of it though

Re:Replacement for cash not bank accounts

[fuzzyfuzzyfungus]

Were you transported by time-traveling mercantilists from somewhere in the mid 17th century?

Re:Replacement for cash not bank accounts

[Derec01]

The deflationary part pretty much assures that. I do think that some of the other cryptocurrencies that incorporate a simply determined inflation rate are more likely to achieve a stable value.

Re:Replacement for cash not bank accounts

[gl4ss]

you can chop the coins up to a certain pretty high point - and bitcoins had an inflation rate of sorts built in, the mining itself.

but with any cryptocurrency since the value is determined by what people are willing to trade it at, you can't just have a "simply determined inflation rate".

Re:Replacement for cash not bank accounts

[mysidia]

Credit cards, bank accounts, etc. that offer me asset protection and such will be just as useful for Bitcoins as they are for cash, but they will be denominated in a currency independent of any given country.

That makes sense for joe average consumer. Let a third party "bank" do the heavy lifting of keeping your wallet and private keys; the bank is responsible for security and providing convenient access.

When you want to go to a store and buy something; you do something that directs your bank to execute the bitcoin transfer.

By the same token; you can go online, withdraw some bitcoins from your bank account to a local wallet -- and pay the vendor.

Re:Replacement for cash not bank accounts

[mysidia]

I do think that some of the other cryptocurrencies that incorporate a simply determined inflation rate are more likely to achieve a stable value.

Perhaps.... banks such as BOFA; should love a deflationary cryptocurrency; if that is indeed what Bitcoin turns out to be. The problem is; much economic activity is unlikely to happen, if the currency is indeed deflationary

For folks borrowing money (E.g. Borrowing Bitcoins) ---- many consumers with credit cards;

A deflationary currency sucks, because over time, you will be paying back your loans over time in deflating BTCs that are worth more and more in real money terms, than the money you borrowed.

Re:Replacement for cash not bank accounts

[FhnuZoag]

If it is a replacement for cash, its value should decrease over time to discourage people from hoarding it, and so keep the currency liquid.

Re:Replacement for cash not bank accounts

[ftobin]

A deflationary currency sucks, because over time, you will be paying back your loans over time in deflating BTCs that are worth more and more in real money terms, than the money you borrowed.

Most of the time you are baying back more money in real terms than the money you borrowed -- it just depends on the APR of the loan.

An APR of %0 in bitcoins based against a 2% USD inflation would be a equivalent to a 4% APR in USD against the same inflation rate.

Re:Replacement for cash not bank accounts

[Chalnoth]

Bitcoins are absolutely terrible as a currency, however, as their value fluctuates wildly. This is by design, because the quantity of Bitcoins is independent of how they are used. If more people decide to hold onto Bitcoins instead of spend them, then their price will go up. As the price goes up, fewer people want to spend them and more want to hold onto them as stores of value.

As fewer people decide to hold onto Bitcoins, their price will go down. As the price goes down, more people will want to spend their Bitcoins and fewer will want to hold them as stores of value.

Thus, by design, Bitcoins are an extremely volatile currency. That makes them a horrible currency: what makes a currency good is that its value is predictable and understandable. It's a very good thing to be able to go to a grocery store and have a reasonably-good idea how much the food will cost. It's a very good thing to be able to take out a loan and be able to understand how much it's going to cost you to pay that loan back over a period of years. Bitcoin doesn't allow this: nobody knows how much the currency will be valued at a year or five years from now. Whatever its value, it will probably be very different from the present-day value.

Re:Replacement for cash not bank accounts

[DanielRavenNest]

> The problem is; much economic activity is unlikely to happen, if the currency is indeed deflationary

Reality disagrees. First, in the past year the exchange rate for bitcoins has gone up 70 times (extreme deflation), while the number of merchants accepting bitcoin has risen 12 times. Second, if adopted on a mass scale (which it is not, yet), people will still need to pay for shelter, food, and utilities, regardless if it's deflationary or inflationary. Third, bitcoin is currently inflationary, at the rate of 11% a year in theoretical coin production, and higher in reality since "mining" (block generation) is above the theoretical rate.

Re:Replacement for cash not bank accounts

[ADRA]

Which is exactly why BitCoin solves nothing that a national currency doesn't do for you already (besides the ability to trivially embezzle money).

Question, if BOA holds your wallet, and receives a large (lets say $1,000,000 value transfer into the account). is there any regulatory requirements to the government?

Same question but in reverse, I send 1,000,000 to an unnamed party. Same question, but now its discovered 'I' didn't send it but some fraudster posing as me.

Re:Replacement for cash not bank accounts

[Anonymous Coward]

I think the word inflation is being used in an odd way. Inflation is a measure of the increase in prices of goods and services denominated in a certain currency. It is basically a measure of the relationship of the amount of money in an economy and the amount of goods and services (output). It measures the increase in prices of all goods and services, rather than particular item.

If you double the amount of money but there is no increase in output, then prices will double more or less. (since in time all economic actors will realise that everyone has more money and can therefore bear a higher cost for their produce)

In this conversation inflation seems to be used to describe the price of bitcoins in relation to some other currency. This is usually called the exchange rate.

Having a fixed rate of increase in the number of bitcoins wont necessarily stop inflation (in the original sense) because inflation is a relationship between money supply and output - since output isn't controlled then neither is inflation. Output in this sense would be the amount of goods and services traded in bitcoin - it this increase at a rate greater than the increase in bitcoin then prices will fall (over time, not immediately)

Re:Replacement for cash not bank accounts

[mysidia]

An APR of %0 in bitcoins based against a 2% USD inflation would be a equivalent to a 4% APR in USD against the same inflation rate.

What possible motivation could you find for a bank to make a 0% APR in bitcoins and incur risks of nonrepayment? The bank can hold the BTC themselves, and still enjoy the deflation's benefits.

It would only make sense if it were possible to loan out bitcoins that don't physically exist but only on paper, a.l.a. fractional reserve banking, that the customer would still have to repay.

But since the federal reserve can't just will more bitcoin notes into existence: that won't work.

Re:Replacement for cash not bank accounts

[mysidia]

Question, if BOA holds your wallet, and receives a large (lets say $1,000,000 value transfer into the account). is there any regulatory requirements to the government?

I suspect; in the long run, the rules for BOA don't change, just because the transaction is denominated in Bitcoin.

If the large value transfer is from another bank, then it's the same as wiring or writing a check $1M dollars.

If the large value transfer is from a non-financial institution, then it's the same as bringing a briefcase into the bank with $1M in 100 dollar bills, and requesting the bank deposit this into a specific account.

It's official

[simonbp]

Whelp, it's official. If Bank of America thinks it's a great investment, Bitcoin is going to expand rapidly to biggest bubble anyone has ever seen, and then murder several developed economies when it bursts. Look for the Countrywide Bitcoin Exchange coming soon!

Could be worse though, they haven't come out with a Beanie Baby Bitcoin yet...

Re:It's official

[Derec01]

I'm not going to argue that Bitcoin won't dip in value in the future, perhaps precipitously, but the fascinating thing about Bitcoin is that after that happens....it will still be there. They don't disappear, and other than signalling from other participants in the market, nothing will have changed about it.

Beanie babies fall apart. Penny stock companies go bankrupt. Tulip bulbs and all that eventually rot, burn, or get destroyed.

I don't think that persistent state is a trivial difference. Bitcoin will still be there, with a price history that will encourage speculators again. The Bitcoin network will be running on some networked computers on the planet for decades to come, no matter what. The net present value calculation for Bitcoin really does have to go out much much farther than almost any other object besides precious metals and gems.

Re:It's official

[jafac]

When the maximum number of bitcoins has been mined - who is going to have an incentive to run miners? At that point, nobody's going to compute hashes, and transaction chains won't be verified any longer. It works great as long as all those people out there dedicate their clock cycles to pounding out hashes. But without an incentive, it's all going to evaporate.

Re:It's official

[Anonymous Coward]

When maximum coind will be mined, the sun is going to explode. By then we would have transitioned to a other digital coin system and will never really mine the last bitcoin.

Re:It's official

[robinesque]

Just like any other service that sends money -- fees. http://bitcoinfees.com/

Re: It's official

[greenrom]

Miners will still receive the transaction fees for all the transactions included in the blocks they mine. There's a recommended transaction fee formula built into the clients, but you set any transaction fee you want. Set it too low and some miners may choose not to include your transaction in their block, causing your transaction to take longer to complete. Thus, there will be incentive to pay miners sufficient transaction fees to make it worthwhile to process your transactions.

Re:It's official

[TubeSteak]

There's no particular reason to assume that bitcoin is the cryptocurrency that will win the future.
There are plenty of contenders and nothing to stop [large financial institution] from latching on to one of those.

Re: It's official

[Anonymous Coward]

Miners will still receive the transaction fees for all the transactions included in the blocks they mine.

Transaction fees are key but there's a subtle issue here: while there are a finite number of bitcoins, there are an infinite number of (possible) digital currencies.

Sure, a few years from now bitcoin is going to be supported by transaction fees. But what happens when, say, Google, comes along with their own digital currency and offers lower (or even no) transaction fees? And what happens when (not if) someone develops a currency that is clearly technically superior to bitcoin - e.g. with a more (space) efficient mechanism to record transaction in the block chain.

One way or another there's eventually going to be another digital currency that is clearly superior to bitcoin. And people are going to start flocking to the hip new digital currency. So, not only will bitcoin be fundamentally inferior, it will also be losing value (i.e. massive inflation) - while the other currency will gaining value making it all that much more attractive.

That's not to say that there isn't a lot more money to be made it bitcoin before that happens - just that eventually someone's going to be left holding the bag (i.e. a whole lot of nearly worthless bitcoins.

Re: It's official

[Anonymous Coward]

Maybe. Maybe not. If your looking at bitcoins as an investment your doing it wrong. Its a means of doing business. When I receive bitcoins I don't keep those coins in significant quantities. I do the same thing with dollars. I don't leave hundreds of thousands of dollars sitting around in my checking account. I buy things that will result in profits over time. Either stocks, bonds, money market accounts, or real assets, like cars (they have value to me even if its not making me money directly), houses (I need a place to live after all and its cheaper than paying someone elses mortgage), etc.

Re:It's official

[Anonymous Coward]

Actually that is not true. There is an option to charge for running hashes (processing transactions) Right now it is pretty much free due to the miners.

Re:It's official

[Anonymous Coward]

I doubt it. Righ now, I bet there is a company that has set up a GPU farm just for the purpose of grinding these out. Bitcoin sounds great on paper, but at the end of the day corporations know how to squeeze out all of the resources required and it will just become another tool.

BTW, when the EMP hits and computers go down, Bit coin is not going to exist.

Re:It's official

[Anonymous Coward]

Mining coin become exponentially harder, the last coin will never be mined. We will have moved to a new system long before that happen. And unlike the ip4-ip6 migration, peoples staying with the old stem will eventually lose all their money so there is a monetary insensitive to migrate.

When your mystical EMP hit, the US dollar, along whit all the world's economy, will also cease to exist. So what your point?

Re:It's official

[Anonymous Coward]

The last bitcoin will be mined around 2140, assuming anyone is still mining them. This is well known, so I don't know why anyone's arguing over it. There is a general assumption that mining will remain profitable after that due to fees, but realistically I doubt the system will survive that long.

There is an exponential component to mining, which reduces the reward for mining over time. However, the dominant factor is the automatic adjustment of difficulty, which keeps the rate at which blocks are generated to about 6 per hour. You can't make a farm of GPUs (or anything else) to mine them much faster than that, because the network will compensate by making the task harder.

Re:It's official

[Anonymous Coward]

Miners decide which transactions they include in the next block. If a miner decides to only accept transactions with some minimum fee, then he won't process your "free" transactions. The difference between incoming and outgoing value is the fee, which is automatically given to the miner who adds the block to the block chain. It is not a fixed amount set in the protocol. This creates an interesting market situation: While there is no motivation to include zero-fee transactions, even the smallest possible fee only adds to the miner's income (the marginal cost of including a transaction is practically zero), so this fee will always be very low as long as there is a working market of miners.

Re:It's official

[Vintermann]

Not to mention states. There has been talk of a government-run electronic payment infrastructure for a long time (why shouldn't there be one? After all, paper bills and coins are government-run payment infrastructure too).

But the owners of the private payment infrastructure (Visa, Mastercard, Paypal, banks) lobby against it with tooth and nail.

Now the little people, cryptographers, libertarians and online geeks, have actually managed to build up a decentralized payment infrastructure without government or corporate help. That's a damn impressive achievement, but one of the consequences is that it'll be harder for governments to sit on their behinds and let their own payment infrastructure remain in the 7th century.

Re:It's official

[Anonymous Coward]

Network Transaction fees. http://blockchain.info/charts/transaction-fees

Re:It's official

[codebonobo]

Yes, the bitcoin code being open source and certain tools can be copied and forked. This has been done many times with 30+ Alt currencies already. What does the Bitcoin Network have that other alt currencies fail to have? 1) First mover advantage via the networking effect 2) 1+ Billion dollars of hardware securing the network and more being created daily 3) a thriving and growing market place of merchants, tools, exchanges 4) A large developer and support infrastructure These are things that cannot easily be duplicated simply with a fork. Even if a better cryptocurrency comes along those features can easily be integrated into the Bitcoin code. Expect many cryptocurrencies to persist but only a few to dominate in value , I.E. Bitcoin, namecoin.... If Bank of America creates an Alt with better features than Bitcoin and lower fees(good luck) than we all win in the end and our bitcoin investments were investments into motivating a whole new set of technologies which benefit humanity.

Re:It's official

[r2kordmaa]

"who is going to have an incentive to run miners?" Read faq first ask stupid questions later. When mining a block you are getting more than just the block reward, you also get transaction fees. These are voulountarily included with transaction. You can not include the fee, but then you are depending on a goodwill of someone to include your transaction in a new block. The idea is that as block rewards diminish and eventually(sometime next century?) go to zero - the transaction fees will replace them as the incentive. Amount of transaction fees you need to include for someone to include your transaction in a new block is pretty much self regulatory.

Re:It's official

[r2kordmaa]

Mining does not arbitarily become harder or easier on its own. It self regulates so that on avarage new block would be created every 10 minutes. Put more hashing power to the network and mining becomes harder, take some power away and it becomes easier. But regardless of difficulty new blocks are generated every 10 minutes(average).

Re: It's official

[r2kordmaa]

For an altcoin to win out its not just a matter of technical superiority, the new coin would have to win out economically and thats really hard to do when bitcoin has a head start. Take a look at all the altcoins out there, i bet some of them have valid technical improvements over bitcoin, are they winning? Naah, they are worthless and are going to stay worthless because bitcoin simply got a head start. For example its worth nothing to avarage bitcoin user how large block chain is, they do however care about the value and history of their chosen currency. Between choosing bitcoin that has been around for couple of years and is actually worth quite a bit or some altcoin that is worth nothing and started last month, what choice do you really have?

Re:It's official

[DanielRavenNest]

Too late, they have: http://noagendaartgenerator.com/sites/default/files/imagecache/fivetwelve/artsubs/113/10-03-2013/BC%20SQ%20copy.jpg

Re: It's official

[avandesande]

Wait till a country like Sweden releases a pre-mined digital currency and pegs their 'regular' currency to it....

Re: It's official

[Anonymous Coward]

This is likely, but not certain. It is possible to upgrade the technical infrastructure for BitCoin, and it would be possible to completely replace how it does what it does. It does require a lot of maneuvering to get enough of the network to upgrade, but as long as people do not lose their bitcoins in the transition, there may be sufficient motivation to do it.

Re:It's official

[Anonymous Coward]

It's not the existence of bit coins that matters it's their specialness that makes them valuable. If some alt-coin becomes more popular bit-coins will fall in value perhaps to 0 forever.

The main value of bit-coins, outside of bubble activity, will be based on how much money is flowing through them during money transfers. If the velocity of money through bit-coins increases more bit-coins will be needed and they will rise in value.

Re: It's official

[crtreece]

what happens when, say, Google, comes along with their own digital currency and offers lower (or even no) transaction fees?

Outside transaction fees, let look at some of the advantages bitcoin has over this theoretical googlecoin.

• Chargebacks. I expect any googlecoin is going to work more like paypal than bitcoin. If transactions are not reversible, why is a vendor going to accept googlecoin over bitcoin? They can already accept credit cards or paypal, which have this feature.
• Distributed accounting. Is google going to run the entire accounting system? Why should I trust them any more than the Federal Reserve to not inflate their currency? If the accounting system was truely distributed, why would I participate without compensation?
• What happens when google or one of their friends don't like your politics or actions? See wikileaks and how Visa, Mastercard, PayPal and other payment processors stopped processing payments to them.
• Do you think you are going to be using googlecoin without providing government issued ID? We already know they are giving your personal data to the US government and cannot tell you about it. Transaction data for googlecoin will be going right along with your email, IM, and text messages.

Re:It's official

[hairyfish]

Now the little people, cryptographers, libertarians and online geeks, have actually managed to build up a decentralized payment infrastructure without government or corporate help. That's a damn impressive achievement,

Is it really? I mean most of this type of stuff is invented by the little people. Edison, Bell.. even Gates and Jobs were all little people when they started out. I'd be more impressed if something like happened with government involvement

People Aren't *That* Irrational

[cervesaebraciator]

Chill. Relax. Folks aren't going to throw money into an investment with no value beyond fleeting popular perception. Nothing like that will ever happen. Just calm down. Enjoy life. Stop and smell the tulips.

Re: People Aren't *That* Irrational

[Njovich]

I wonder if people who make the tulip comparison actually get what happened there. Tulips take years to grow, and can be multiplied. Suddenly a new type of tulip came into existence because of a viral interaction. A handful of rich traders (and some others trying to get in on the action) tried to corner that market, so the initial bulbs were extremely valuable. They took very large future options on them. Then at the height of the bubonic plague, the society temporarily collapsed and tulip prices went along with them. As it was mostly option contracts, they were largely not executed, so it didn't end up being a major issue. There are some lessons to learn there, but even if Bitcoin collapses, it will be completely different.

Re: People Aren't *That* Irrational

[Anonymous Coward]

Lol, I love it when people who parrot cliches get told off by people with superior knowledge of the topic at hand.

Re:People Aren't *That* Irrational

[jones_supa]

Stop and smell the tulips.

Ahh...the smell of old electronics...

Re: People Aren't *That* Irrational

[FhnuZoag]

This is a bunch of non-sequitirs. "As it was mostly option contracts, they were largely not executed, so it didn't end up being a major issue." Really? The damage caused by tulipmania and so on has nothing to do with whether or not the options are executed. Even if they aren't, people spent money on those options contracts, and so lost massive amounts of money when the prices collapse. The characterisation of the prices collapsing due to 'the height of the bubonic plague' is also incorrect. The height of the bubonic plague was 200 years earlier in the 15th century, and plague outbreaks occurred before, during and after tulipmania.

Re: People Aren't *That* Irrational

[Anonymous Coward]

There are some lessons to learn there, but even if Bitcoin collapses, it will be completely different.

For someone versed in a bit of economic history, you're still bieng quite naive! If the past 2 decades has taught you nothing about modern banking behaviors and their disregard for stability, a 2000 years of history won't.

You are right in 1 respect though: it will be completely different. It will be unimaginably catastrophic to the global currency economy if Bitcoin goes where the Banks want it to!

Re: People Aren't *That* Irrational

[Jesrad]

How was this modded "informative" when it fails to give any accurate information ?

If you knew what you were talking about, you wouldn't pretend there was a corner of the tulip market at the time - which there wasn't. Instead there was monetary debasing due to the huge influx of precious metals from the Americas (thanks in no little part to the invention of amalgamation), causing inflation on a massive scale (in about a decade this region's entire money supply grew by half), and a flight of savings to evade this debasement. Tulip bulbs were an asset of choice at that particular time and place because that's the asset that had the most efficient markets (there were lots of trading clubs and even a futures market which opened in 1636) and was thus deemed the most liquid. There were other investment bubbles too, we just remember tulip bulbs best because of how incongruous it sounds to us that a flower bulb may cost more than a house, and also because this asset exhibited the wildest price take-off. The final collapse had nothing to do with the plague, and all to do with the sudden decision of the Amsterdam Bank - Holland's central bank of thence - to cease free coinage and value depositors' accounts by metal weight instead of facial value.

Today the USD and EUR are quickly and massively debasing too, and many investors are trying to avoid the accumulating monetary risk by moving their wealth into another asset. Same causes, same effects, and I fully expect that, shall the monetary risk not realise, BTC valuation will come down towards something more reasonable and in line with its utility as a payment method.

Re: People Aren't *That* Irrational

[Anonymous Coward]

There are some lessons to learn there, but even if Bitcoin collapses, it will be completely different.

It's a New Paradigm!!!

Re: People Aren't *That* Irrational

[Njovich]

Nonsense, the Tulip contracts were not ratified in courts, effectively anulling them: in real documents there is not much real evidence for 'massive amounts of money lost.' Obviously I was refering to the height of the bubonic plague in Haarlem at the time that directly coincided with the crash, this wasn't the middle ages. This is well documented, I take it you can't read dutch source documents and are just reading random english blogs for your info or such?

It only makes sense

[Anonymous Coward]

in light of all recent frauds on bitcoin of course BofA is interested... Theyre always looking for new and interesting ways to commit fraud.

It was only a matter of time.

[tlhIngan]

Initially the Wall Street guys were against Bitcoin because they couldn't figure out how to make money off of it. But now they've studied it and studied it and studied it, and now you're seeing the results of the research - they've found ways to manipulate it in the same fashion as regular currency markets.

BoA is just the start - expect the rest of Wall Street to start investing heavily in Bitcoins as they try to eke out fractional coins on every transaction. And the Bitcoin infrastructure is near the point where it's "too big to fail" - even if it crashes, there's too much entrenched to abandon it completely, creating a perfect opportunity for the suits to actually acquire even more cheaply.

Oh yeah, they'll probably also find a way to do HFT using it, so get ready to parse billions of new entries in the blockchain. Don't underestimate the mathematical prowess of bankers - once they show interest, they've found ways to make money off it.

Re:It was only a matter of time.

[Anonymous Coward]

BoA is the *END* of it. Merill has consistently been left holding the bag after the rest of Wall Street has eaten out the real value of a given market.

Re:It was only a matter of time.

[lister king of smeg]

Oh yeah, they'll probably also find a way to do HFT using it, so get ready to parse billions of new entries in the blockchain. Don't underestimate the mathematical prowess of bankers - once they show interest, they've found ways to make money off it.

Actually Bitcoin can't have High Frequentcy trades. While many people complain about bitcoin transaction times being to long this protects the network from high frequency trading.

Re:It was only a matter of time.

[Anonymous Coward]

New proposals to include transaction confirmations of orphaned blocks might make that statement false in the coming months.

Re:It was only a matter of time.

[Krishnoid]

Don't 'high frequency' (at least stock/equities) trades take three days to settle anyway?

Re:It was only a matter of time.

[NewYork]

Wall Street and Al-Qaeda have been ABUSING every sophisticated technology invented.

Hahaha!!!

[fuzzyfuzzyfungus]

Hmm... good thing that Real finance has honest, dependable, known, counterparties like AIG to keep risk in check!

(Please note, the above should not be construed as implicit endorsement of bitcoins; but merely an observation that so long as the rewards for gambling with other people's money are so good, people will find ways of doing risky things in basically any asset class.)

Go Away, BoA

[Anonymous Coward]

The day my mother walked into a BoA, where my account was, tried to cash a check that I had written her, and was told that they wouldn't cash it unless they got her thumbprint was the day I withdrew $40,000 and took it to a credit union. Haven't done any business with BoA since, and never will.

50 minutes?

[greenrom]

How long does it take a check to clear or do an ACH transfer? Longer than 50 minutes? In reality, you don't have to wait 50 minutes to be reasonably certain a transaction will complete. You can see the transaction broadcasted to multiple peers within seconds. For small transactions, that's probably enough. Usually a transaction will make it into the blockchain in about 10 minutes. At that point, the only way to invalidate the transaction would be for a miner to fork the blockchain by computing an alternate longer chain. Since there are many competing miners, in practice this would be very difficult. After a few more blocks have been added to the chain, it would be virtually impossible to reverse the transaction. For very large transactions involving thousands or millions of dollars, it probably makes sense to wait 50 minutes for multiple confirmations, but for smaller transactions it's definitely overkill.

Re:50 minutes?

[cdrudge]

How long does it take a check to clear or do an ACH transfer? Longer than 50 minutes?

It depends on what type of service to move the money is used.

For ACH, the submitting bank sends their batch of transactions to the clearing house, the clearing house processes all the batches, and when the receiving bank picks up their processed batches. Typically it's a next-day service. The bank collects all the days requests, sends them at say 5PM. The clearing house processes them overnight. And the receiving bank picks them up a 6AM. (Times are all just for illustrative purposes). If the requesting bank sits on the request for a day or two, or doesn't have the necessary authorization/paperwork yet, then it could take longer.

For checks, it depends if the check is electronically presented. Wal-Mark for instance will scan the check, send the image to their bank, and then their bank to your bank, all electronically obviously. That process can be completed in as little as a few hours although typically I think it's usually a one day turn around similar to ACH.

If a paper check is used, and the payee doesn't electronically present it themselves, then the check has to reach the bank where it might be electronically presented. Then it all depends on when the payee does their bank deposit and when the bank processes the check. So it could be but isn't guaranteed to be a day or two if not more.

An actual bank wire transfer, as long as it's performed before the banks' cutoff times, is the fastest. The banks talk more directly with each other and as long as both sides are on there game, could be almost real time. In practice, 10-15 minutes if you cross your fingers.

Re:50 minutes?

[r2kordmaa]

"wait for 6 blocks" is a historic tradition and in my opinion no longer makes any sense but only slows down transactions. With 6 blocks the level of "no-takebacks" certainty is on the order of "the entire bitcoin ecosystem will explode before you can do a takeback". The tradition is from a time where almost any supercomputer could have overpowered bitcoin network to make takebacks possible, this has not been a reality for a long time. For anything less than transaction worth a fortune, id say single block is plenty of certainty.

Re:50 minutes?

[JesseMcDonald]

You really only need to worry about confirmations if you're planning on delivering the good or service immediately and have little or no chance of recovering the lost value in the event the payment falls through. In these cases you can generally afford to wait for 3-6 confirmations, depending on the size of the transaction.

• If you're delivering physical goods from an online store, you have the recipient's street address on file and will probably have more than six confirmations by the time you actually ship the product anyway.
• In a brick-and-mortar store the buyer can't expect to get very far away before the transaction confirms at least once, and you probably have their face recorded on your security tapes in the event something goes wrong. You could also require a photo ID.
• A hosting or VPS provider isn't risking much by providing the first 10-20 minutes of service on credit before the transaction is confirmed.

More generally, if you also accept credit cards, the risk of a successful double-spending attack with Bitcoin is significantly less than the risk of a chargeback from a credit card up to several weeks (or months) after the transaction is supposedly completed. Even checks and ACH transfers are reversible long after the fact, though not as easily.

Re:50 minutes?

[CauseBy]

I recently used Chase Bank "QuickPay". It took six days for the money to get from my account (at a different bank) to the Chase account.

So, six days is "quick" when the world is run by people like the people who run Chase. I could have literally driven the money across six states, and back again, ten times in the amount of time it took two banks to subtract a number from one account and add it to the second.

wait and see...

[Anonymous Coward]

It would be stupid to think that govts would allow an independent untraceable currency flourish..

it's banned in china as of today.

Re:wait and see...

[Anonymous Coward]

and heres related article

Re:wait and see...

[lister king of smeg]

no that not true, only banks and financial institutions are banned from trading in bitcoins in china no one else.

Are they the only one ?

[Taco Cowboy]

Bank of America is always looking for new ways to screw over their "customers", be it through fees, lying, or trying to steal their (paid off) houses through foreclosure (and blaming it on "computer error" when caught). They're probably drooling like hungry dogs over all the ways they can fleece people with Bitcoin...

I'm afraid that Bank of America is not the ONLY bank which screws their customers.

In fact, I have yet to find a bank which has failed to screw their customers.

Re:Are they the only one ?

[Anonymous Coward]

Have you tried a credit union?

Re:Are they the only one ?

[Anonymous Coward]

Bank of America is the only bank(or credit union) that has NEVER tried to screw me. Not once. EVER. I've held an account with them since 2006. I've fired every other financial institution I've dealt with in under 12 months. BoA may be evil for the 2008 crash, but they're a seductive temptress. NOTE: Banking experiences vary by state, YMMV.

Re:Are they the only one ?

[AlphaWolf_HK]

BoA, Wells Fargo, and Chase are the douche banks. Most banks will do better but not much, but some are pretty good.

I'm with USAA myself - haven't ever had to pay a single fee for anything I get from them. My checking account even yields interest, and features that the 3 douches charge money for are included for free. USAA was actually the first bank to offer deposits using smartphones in fact, and it always has been free.

Re:Are they the only one ?

[Paradise Pete]

BoA, Wells Fargo, and Chase are the douche banks. Most banks will do better but not much, but some are pretty good.

I switched from Wells Fargo to Chase for my routine banking and unlike with WF I've been very happy, bordering on delighted. I've never paid a fee for anything. They've even waived wire transfer fees for me. The manager at the local branch is the most helpful banker I've ever encountered, so maybe it's actually more him than Chase, but I'm happy.

Re:Are they the only one ?

[Anonymous Coward]

Oh fuck off with your logical fallacy. OJ's defense wasn't: There are other murderers, so let's not talk about me, you hypocrites.

Re:Are they the only one ?

[Anonymous Coward]

There actually are a lot of banks that aren't bad, just that they tend to be smaller and more localized. The problem is when they get bought out by bigger banks that have shitty policies in place, and it happens without adequate warning needed to move your finances before being negatively affected.

But going to a credit union is still a fairly good way to avoid this 99% of the time.

Re:Are they the only one ?

[dreamchaser]

Bank of America is always looking for new ways to screw over their "customers", be it through fees, lying, or trying to steal their (paid off) houses through foreclosure (and blaming it on "computer error" when caught). They're probably drooling like hungry dogs over all the ways they can fleece people with Bitcoin...

I'm afraid that Bank of America is not the ONLY bank which screws their customers.

In fact, I have yet to find a bank which has failed to screw their customers.

I've never seen USAA do it. I'll be a customer for life. From their insurance products to their banking and my mortgage they've always acted with nothing but the highest standards of customer service.

Re:Are they the only one ?

[Anonymous Coward]

I can see this conversation happening:

CEO "Why haven't we screwed them over yet"
Manager "I''m sorry sir, we've tried everything. Somehow we keep delivering stellar customer service"
CEO "This is unacceptable, let me show you how its done"
Customer "I'd like to make a change to my account"
CEO "That's unfortunately not possible, however for a fee we'll make sure you can access your funds"
Customer "That's not fair, I put my money in an account with ÿou so I could access it when I want"
CEO "Yes, but that was yesterday. Today's policy is different. Please pay $20 to access your account"
Customer "Oh, $20? That's ok. My last bank charge me $40"
Manager "See sir?! Our competitors are way better at screwing over customers! Customers love us!

Re:Are they the only one ?

[McGruber]

I've never seen USAA do it. I'll be a customer for life. From their insurance products to their banking and my mortgage they've always acted with nothing but the highest standards of customer service.

My understanding is that USAA is a Federal Savings Bank, a savings and loan association federally chartered in the United States, which is different than how other banks are chartered. That's why they haven't screwed you like a regular bank would have!

Re:Are they the only one ?

[alexander_686]

I think you mean “mutual” if we are going to compare apples to apples and not to oranges. I have not read the brief, but I am going to assume that it was issued by the investment bank side, a.k.a. the stocks and bond people, a.k.a. Merrill Lynch. These people don’t offer much in the way of traditional banking services.

On the investment side you choices are pretty limited. There are mutual which are member owned. And don’t confuse mutual with mutual funds. Fidelity is a for profit corporation that offers mutual funds. Vanguard is a mutual that offers mutual funds. Think Mutual of Omaha, etc.

Unfortunately mutuals tend not to do much in the way of investment research – such as the value of BitCoins.

Re:Are they the only one ?

[JavaLord]

I'm afraid that Bank of America is not the ONLY bank which screws their customers.

In fact, I have yet to find a bank which has failed to screw their customers.

My piggy bank has always been good to me. No interest, but no fees either. Seems fair enough.

Re:Are they the only one ?

[alexander_686]

BoA was one of the more responsible players. They were conservative and had cash so when the shit hit the fan they had the spare cash to buy Merrill Lynch and Countrywide, to institutions that were not responsible and in Countrywide perhaps criminal. BoA is currently regretting the purchase of that one.

Re:Are they the only one ?

[Richy_T]

I guess you don't live in a country that is running the presses until they glow red hot. Where is that?

Re:Are they the only one ?

[Anonymous Coward]

The best thing about credit unions versus other banks is that, for the low cost of a mirror, you can look one of the owners in the eye and say "you're an asshole!"

Re:Are they the only one ?

[nucrash]

Usually a bank that doesn't screw their customers properly is one that fails. Screwing customers is how banks manage to stay afloat. Occasionally banks fail when they don't screw their customers enough. Think of each bank as a species which needs to screw a certain amount to maintain the species. If they don't do enough screwing, the species will thin out and probably go extinct.

Re:Are they the only one ?

[DewDude]

I have BoA. I do not have a "full" checking account; just the basic eBanking account. Works like a checking account; the only difference is I can't go in and use a teller for deposits. I've never paid a fee. Never. Even when I accidently overdrew once; I was easily able to get the overdraft fee refunded. Maybe you people aren't reading *all* the fine print when you sign up for an account; therefore when you get hit with a fee you aren't expecting it. Flat out calling a bank a douche because *you're too damn lazy to read every bit of fine print* isn't the bank's fault, it's yours. It's like an EULA, you gotta read it.

Re:Are they the only one ?

[Grizzley9]

I've been with Chase for well over a decade. They even invited me in once to change my checking account to one that earned interest. Having said that, their normal checking and savings are fine though they don't like to (but will) setup multiple accounts like other banks do for ease of budgeting. Their managed brokerage accounts don't do very good and they recently cut back on their rewards points with their credit cards.

They fill a role as good as anyone, but not better than anyone else really. I mean, it's a bank. Keep my money for me to use, let me move it around and maybe earn a little interest. I don't have a low enough account to know if their fees for overdraft and such are comparable.

Re:Are they the only one ?

[Anonymous Coward]

My 6.5% APR credit card from my credit union vs. the 22%-27% APR offers from credit card companies is pretty significant to me. Also no ATM fees ever.

Re:Are they the only one ?

[Plebis]

Have you tried banking in Canada?

Re:Are they the only one ?

[stoploss]

Dude. I'm as libertarian as they come, but your anger is misplaced. USAA is a credit union: think "coop" vs. "typical for-profit entity".

Coops have membership requirements. So do credit unions. These can be almost anything... USAA was founded for military personnel and their families, which is why you don't qualify. Other credit unions have different requirements... I know one around here is for "residents of xyz county".

The reason USAA and many other credit unions are so awesome is that they are managed for the benefit of their members. Thus, they aren't set up to gouge you whenever possible or nickel and dime you with bullshit fees. So, the reason USAA is so great is not due to some sort of leech-like conspiracy against the taxpayers—you could probably find similarly great deals from a local credit union that you *do* qualify for. Don't have sour grapes.

I'm done with banks. Credit unions are just nicer to deal with because they aren't vociferously seeking profit.

Re:Are they the only one ?

[Anonymous Coward]

I'm afraid that Bank of America is not the ONLY bank which screws their customers. In fact, I have yet to find a bank which has failed to screw their customers.

I have. Then a bigger bank bought them. They changed all the rules and added lots of new penalties and fees. Before I could move my account an even bigger bank bought that one. I got out as fast as I could. That was 15 years ago and I've been using a credit union ever since. They haven't screwed me once. I wish they'd kept my home loan, but selling those is to be expected.

Re:Are they the only one ?

[Anonymous Coward]

Nobody said they were the *ONLY* bank trying to screw people...

Re:Are they the only one ?

[lgw]

Chase is very fee happy, but I pay none of those fees since they're all voluntary.

I despise WF because they would keep losing my records. They'd "forget" they shouldn't charge me a monthly fee for my checking account because I also had a CD with them, and so on. Something would go wrong every month, always "accidentally" resulting in them charging me some fee inappropriately.

Chase so far hasn't done any of that BS, and the people I've talked to at branches when I needed help were all cheerful and, well, helpful. They don't pay interest worth caring about on anything they offer, of course, but I have better places to put real money.

Re:Are they the only one ?

[Anonymous Coward]

You're an idiot. Military veterans are NOT IN THE MILITARY. Veterans are civilians who were in the military in time of war. I'm one. I'm eligible to join that credit union, because I served from 1971 to 1975. I've been a civilian for almost 40 years now.

Moron.

Re: Are they the only one ?

[segin]

My bank does not charge overdraft fees for negative balances under $10.

Re:Are they the only one ?

[CauseBy]

USAA is like a credit union, in that they aren't a bunch of motherfucking bloodsucking assholes like every other bank I can think of; but structurally it is a bank.

Re:Are they the only one ?

[hairyfish]

How do they screw their customers? I have a bank account and I have to say it's a pretty good service. I mean, I know we should automatically hate banks for some unknown reason, but why exactly? A bank offers a service, you can choose to use it or not. Most banks offer basic accounts without fees, and offer premium accounts with fees if you require extra facilities. I get electronic payments, credit, mobile and internet banking, all for a pretty trivial sum. I know of no other business which offers such convenience for so little. Which part of this do you disagree with?

Re:Are they the only one ?

[Anonymous Coward]

That's what she said

Re:Are they the only one ?

[Gryle]

USAA also has a much smaller pool of potential clients so I doubt they can afford to alienate many of their customers. Around 1% of the US population is currently serving in the military (source: http://www.npr.org/2011/07/03/137536111/by-the-numbers-todays-military). Accounting for former military and for USAA's inclusion of spouses and children for eligibility I'd estimate their customer pool is maxes out around 10% of the total US population. Their competitors (I'm not including small local banks in this) can go after anyone.

weird gateway currency

[globaljustin]

I read through the report and it was weird to me as well...

I can't place it exactly...it had a 'Stepford Wives' sheen to it. It seemed fake.

Wonder what model BoA valuers have in mind for this. It weirds me out.

It seems unthinkable to me, but BoA could be looking to be a BTC exchange like Mt. Gox or Bitpay.

It's all about controlling the gateways. BoA loves fees, and they'd make a ton of $$$ charging people to convert BTC to a currency of choice.

Until you can buy gas, groceries, and pay credit card, mortgage, and government fees/taxes with Bitcoin the true power and value of the currency is in controlling the gateway to **actual currency**

That's the final unavoidable pinch point where everyone has to "pay the man"

BoA wants to be that "man"

Re:weird gateway currency

[module0000]

BoA is a household name as a bank (and everyone knows they are rotten to the core). That household name status would make people feel like bitcoin is more "real" though, since they can goto their neighborhood BoA to cash out or buy in, etc. This would be a huge step towards de-anonymizing BTC transactions - linking real humans to all those block chain transactions. Very very bad.

Re:weird gateway currency

[darkwing_bmf]

Not that bad. You'd still have the ability to make anonymous addresses but a large company (or even a legit small one) doesn't care that the bank knows that it made a large deposit. They care more that they can convert the bits to dollars safely. That's not a bad thing for anyone.

Re:weird gateway currency

[ADRA]

Until the currency becomes 1000% less volatile, "we'll" never buy things with it period. You think cash is risky, imagine having '1000' bitcoin worth 100 the next. Real people need a strong foundation under their feet. Real people live pay check to pay check, may of which have practically no savings. Real people need to pay for groceries, and can't be affected by investment hedges. End of line / end of story.

Gold plating

[tepples]

Therefore (ultimately) the only cue anyone has to the value is what others value it at. Gold is sometimes considered to have become valuable for similar reasons.

Apart from jewelry, gold is useful for plating electrical connectors.

Let's start another!

[Anonymous Coward]

Perhaps we should start one more, I'm to late to the bitcoins game.
Perhpas something like cryptedecoins.com

Just sit on a big bunch of them, and wait until they get any value.
Might as well start a dozen competing coins, you'll never know which one gets big :)

The biggest thing since...

[Guppy06]

Mortgage-backed securities!

I feel more confident already!

BTC can't replace "cash"

[globaljustin]

It's supposed to be a replacement for *cash*.

You're mistaken there. BTC is simply an electronic record of a sum. BTC is not hard currency.

You can't use BTC for any non-electronic transaction. That's alot of transactions.

That's not a replacement at all. BTC can't replace currency...unless it *becomes* a physical currency.

Re:BTC can't replace "cash"

[Vintermann]

> You can't use BTC for any non-electronic transaction. That's alot of transactions.

You can, if you're really good at doing math in your head.

Seriously, though, you can use tricks to print redeemable coins on bits of paper. Using these, you can make transactions enitrely offline... but since the recipient can't know that the paper is worth anything until he uses a computer to check it, you need a bit of trust.

Since these days even poor people prioritize getting a cell phone, there's really little need for non-electronic transactions.

Re:BTC can't replace "cash"

[hairyfish]

More importantly you can't do a simple, casual transaction that requires no thought. That means at least half the population will never use it, and probably 90% of the other half too. I don't want to have to think every time I spend money. I pull out a piece of paper with a 10 on it, everyone knows the score. BTC will never have that.

0.0001 BTC has become real money

[tepples]

With the recent rise in value of Bitcoin, the 0.0001 BTC fee may approach that of more traditional online payment methods such as Dwolla, which charges 0.25 USD.

In other news...

[p00kiethebear]

...Lead researchers at the Massachusetts Institute of Technology have also determined that water is occasionally wet.

Know your customer

[tepples]

How much of that is related to federal know-your-customer laws passed to slow down money laundering? A lot of those laws kick in for cash transactions over about $9,900.

Imagine that

[Smerta]

Huh, imagine that.

Bank of America saying that a "central counterparty" is required to verify the transaction and mitigate risk. Wonder if they have anyone in mind?

Re:Get your red hot Tulips right here!

[Anonymous Coward]

I see that a moderator is hoarding bitcoins hoping for another 1000x gain before the bubble pops.

We should all like this Bitcoin *concept*

[mathimus1863]

We should all like this Bitcoin *concept* even if we don't all like Bitcoin itself or the culture that has evolved around it (and the get-rich-quick Bitcoin fan-boys). But all the bashing of the Bitcoin concept is disappointing, because Bitcoin represents everything that us nerds reading slashdot should like: 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 than anything else we know, and there's plenty of reasons to believe that it could succeed as much as it could fail. (and in many ways it has already succeeded as a proof-of-concept of the idea of decentralized currency)

Why does gold have value? Nothing is backing gold, and if it was for its material properties alone, its value would only be a fraction of $1,300/oz. Yet it maintains value because of its properties to behave as a transferable store of value: scarcity, fungibility, density, identifiability, etc. Bitcoin shares a lot of those qualities and adds some new ones: ease of transfer over the internet, negligible transfer fees, 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 credit cards or paypal, which all require me to remember log-in creditials, give away personal information to be [improperly] protected by a third-party and/or pay a bunch of 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?

When you want to bash Bitcoin by saying it has no intrinsic value, ask yourself this: "what other system of payment/transfers allows someone to move $10,000,000 worth of value, to or from anywhere in the world, 24/7, nearly instantaneously, without fees, can't be debased or printed, irreverible, and without anyone being able to freeze or seize it (without direct access to your wallet)?" Regardless of its downsides, that's pretty f***ing powerful. There's a reason it's "could be a big deal."

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

...ask yourself this: "what other system of payment/transfers allows someone to...

An infinite number of them actually - but they haven't been invented yet. An optimistic future for bitcoin is that owning bitcoins becomes like owning foreign currency: a handful of major (digital) currency exchanges allow people to buy and sell from a selection of thousands of different competing digital currencies. A less optimistic future is that bitcoin goes the way the Mosaic web browser - a major player in the early days but now superseded by other, more capable, technology.

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

I find it facinating that Bitcoin could be the single little needle that will pop the gigantic political/financial system that squats down on everything in the world. Right now the leak of air is slow, but I can hear the whistle getting louder.

Re:We should all like this Bitcoin *concept*

[dbIII]

We should all like this Bitcoin *concept*

That's the thing - to be a confidence trick baited for geek it needs the window dressing to make it attractive for geeks. It's as if somebody read crytonomicon - saw the digital currency described there and then removed all the portions that made sense leaving only a shiny layer of tinfoil.
The whole "mining" thing is a distraction and a mechanism to force a pyramid structure. Those people buying mining rigs or farming compromised hosts now are missing the point that they are too late to the scam which initially did not require serious hardware or botnets. I suppose at least it's getting some of the botnets out of the hands of spammers so that's something good about bitcoin.

Re:We should all like this Bitcoin *concept*

[dbIII]

See also the Afgans that thought they had destroyed both the USSR in the 1980s and the USA in 2008 for the same sort of thinking.

Re:We should all like this Bitcoin *concept*

[petes_PoV]

But all the bashing of the Bitcoin concept is disappointing

All it amounts to is an individual holds an asset. They can transfer part or all of that asset to another individual without going through a governemnt monitored agency.

Ho hum

People have been using gold in exactly that way since humanity started bartering. The concept is thousands of years old. The only thing that is novel with Bitcoin is the implementation - not the concept. And we have yet to have all the problems, weakenesses and drawbacks of this system come to light. For the one thing we can guarantee is that there will NEVER be a foolproof, faultless and totally secure "financial" system - there's too much (illicit) money to be made).

Re:We should all like this Bitcoin *concept*

[Kjella]

When you want to bash Bitcoin by saying it has no intrinsic value, ask yourself this: "what other system of payment/transfers allows someone to move $10,000,000 worth of value, to or from anywhere in the world, 24/7, nearly instantaneously, without fees, can't be debased or printed, irreverible, and without anyone being able to freeze or seize it (without direct access to your wallet)?" Regardless of its downsides, that's pretty f***ing powerful. There's a reason it's "could be a big deal."

Except that value is entirely independent of the value of bitcoins themselves. It doesn't matter if I need to buy 1 BTC @ $10M or 1 billion BTC @ $0.01 and if you argue there's not actually 1 billion BTC, we could do it $100 at the time. It's a money scheme where it pays to get in early, which usually means it's bloody stupid to get in late. It's just not clear when "late" is just yet.

Re:We should all like this Bitcoin *concept*

[KramberryKoncerto]

I share your sentiment but it's unfortunate this is the way the world has progressed.

People get hold of land when it's cheap, then a city is built around it. These landowners may have helped a bit to develop the city over generations, but ultimately it's the many other people who choose to come to the city and settled down that make the city a good place to live, and the land valuable. Early land owners reap the benefits of the increased economic activity on the land they own, then they become rich and powerful.

Up to a less peaceful level, wealth and power disparity induce revolution, but after every revolution the society is just reshuffled and new self-serving elites pop up the same way they did before. But over history, the lives of people are improving, and the world becomes a teenie bit fairer. Bitcoin may just be like that; it's all the same crap but overall it's a big change that might promise a better world.

I personally hope Bitcoin would fail but the many better versions of it would succeed, so that there is a better likelihood that things would turn out "fair".

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

Look at this cocksucker, reposting the same propaganda.

Re:We should all like this Bitcoin *concept*

[TeknoHog]

I share your sentiment but it's unfortunate this is the way the world has progressed.

People get hold of land when it's cheap, then a city is built around it. These landowners may have helped a bit to develop the city over generations, but ultimately it's the many other people who choose to come to the city and settled down that make the city a good place to live, and the land valuable. Early land owners reap the benefits of the increased economic activity on the land they own, then they become rich and powerful.

Yup, I like to tell people that Bitcoin is like any succesful business. You may have been one of the lucky first shareholders, but even if you're not, you can still use it for plenty of nice things, including profit. Also, while being an early adopter involves a lot of luck, there's also the obvious investment of time, effort and money into something that you believed in.

This isn't quite straightforward though, you may have been an early miner without contributing any code, but the act of mining itself is the fundamental way of maintaining the Bitcoin network. Also, many people got interested in the technical aspects through mining, and thus ended up contributing code. Of course, others saw business opportunities in using BTC for commerce, which is probably the most important step.

I personally hope Bitcoin would fail but the many better versions of it would succeed, so that there is a better likelihood that things would turn out "fair".

The myriads of altcoins are a mixed blessing. So far, very few have actual technical innovations over the original Bitcoin. Nevertheless, it is nice to see competition in many forms; if you only use these coins for transfer, instead of long-term storage, it doesn't really matter which one you use. Then there is the obvious biodiversity argument: for example, if SHA256 turns out to have a weakness, we have alternatives like Litecoin and Blakecoin with different hash functions.

Re:We should all like this Bitcoin *concept*

[codebonobo]

You are solely focused on bitcoin as an investment opportunity rather than its intrinsic utility. Bitcoin benefits everyone by allowing: 1) A secure frictionless transfer of wealth internationally for very little costs 2) Ability of foreign dissidents and whisteblowers to take donations 3) A whole new set of useful tools that eliminate counter party risk - en.bitcoin.it/wiki/contracts 4) An open public ledger with an open source protocol for anyone to develop 5) A deflationary currency that cannot be manipulated by any central authority Everyone benefits from the aspects above whether they buy 0.00001 bitcoins when bitcoin sells for 1 million or 1 bitcoin for 1k now.

Re:We should all like this Bitcoin *concept*

[Coryoth]

You are solely focused on bitcoin as an investment opportunity rather than its intrinsic utility.

Sure, but as far as intrinsic utility is concerned it doesn't matter when I get involved with bitcoin ... well, in fact it does: right now the price instability and general uncertainty mean it is far better to not get involved, wait for all this nonsense to sort itself out and join the game once everything is settled, stable, and bitcoin is actually being used purely for its intrinsic utility. In other words, it's better for me to ignore it for a few more years at least.

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

You do know that "mining" is also the way that transactions are added to the transaction record, right?

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

You hit the nail on the head. Bitcoin is not a naturally based thing, but rather, an invention. It is therefore absolutely vulnerable to more capable technology.

The doomsday scenario is one where the transfer out of BTC to the better currency imposes sliding scaracity > 0 but less than the scarcity of BTC itself. That is, at first it will be easy to migrate out, and then as time progresses one gets trapped in the less capable technology. At some mid-point this will cause a run on transfer out and permanent value crash.

This may not even have to be engineered into the new currency as the market may well do this just on its own. But, for whoever wants to mint the new currency, if you bake in the notion of block chains to throttle your ability to convert into BTC, and refrain from using block chains for authorization yourself, then you will become the new champion of the day.

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

I'm interested to see where Bitcoins go, but...

Gold *does* have intrinsic material value, even if it's not equal to its monetary value.

No one said there can't be gold bubbles either.

Money has its value from the value we bestow on it--that's true--but usually there's something behind it. E.g., the value of the US dollar probably comes from things like the US military (for better or worse), the actual volume of trading by real people in real goods in the US, etc. (Similar arguments could be made about the euro, etc.) I'd argue that the value of bitcoin actually has derived from the black market. I don't mean to cast aspersions on it in that way, I just mean that if it weren't a good vehicle for money laundering and illegal transactions, it wouldn't have gotten that far. Maybe that's enough to maintain its value, but who knows.

Bitcoin is a limited resource, and I think that has important implications for understanding how it will be used in the future. In some ways it's a good thing, but in some ways it's a really bad thing.

Finally, people are concerned about hacking, but I have a hunch the real problem to emerge will be fraud, or counterfeit bitcoins. How that will affect the value, who knows.

Re:We should all like this Bitcoin *concept*

[Anonymous Coward]

The whole "mining" thing is a distraction and a mechanism to force a pyramid structure.

Nobody knew how to securely implement secure decentralized currency until 2008, and mining is *precisely* the reason why it is possible. Go read Satoshi Nakamoto's paper - it's only 8 pages long.

Re:We should all like this Bitcoin *concept*

[ahabswhale]

It's value right now is primarily driven by speculators rather than any actual demand. And please don't compare it to gold which is something that must actually be mined and has actual real world value. They aren't even remotely the same.

Additionally, it has a fatal flaw: tax avoidance. Eventually the government will realize that it's getting screwed on taxes because people are using an alternative currency and then it's game over. Businesses will be forbidden from accepting it which leaves it purely for illicit purposes (which is what it's mainly for anyway).

Re:We should all like this Bitcoin *concept*

[ADRA]

Congratulations on learning copy / paste. I'm glad you're spreading new and relevant dialogue to the conversation. BitCoinTroll+1

Not for cash but for valuable metals

[dutchwhizzman]

Cash is a piece of paper that is only worth something if the issuer is still somebody. If you have one billion German Reichsmark, you have a piece of memorabilia, totally worthless. That is because the government that issued it declared it worthless.

Valuable metals are nothing more than shiny stuff. Yes, they are of some use in the industry because they tend to corrode very little and have a good electrical conductivity, but almost all their value is based on the fact that they are rare and we humans all agree on their value. The big difference is that there is no signle government that can declare gold worthless and however you have of it is only going to be worth something if you put it through their systems, thereby revealing yourself. Bitcoin and other e-coins are the virtual equivalent. If you want to do a payment and not rely on some form of government-backed currency, you used to pay in gold, silver, diamonds or something like that. Since physical payments don't work very well on the internet, the internet needed a virtual equivalence. This is virtual gold, silver, diamonds or whatever trinkets you fancy, not virtual cash. We have that already in the form of paypal, e-banking and all that.

Birds of a feather...

[SeaFox]

Bitcoin has proven popular with criminals already thanks to Silk Road so I'm not surprised Bank of America is interested in it.

Re:Birds of a feather...

[jones_supa]

You're criticizing Bitcoin for its potential of being a useful tool for criminal activities. These kind of views are not accepted by the Slashdot robotic hive mind.

Re:Birds of a feather...

[Anonymous Coward]

Yeah, but criticizing the banks for being criminals should get him some votes.

Re:Birds of a feather...

[Anonymous Coward]

Right! Dollars never ever have been used for illegal activities.

Maximum market cap of $1300???

[Anonymous Coward]

Already ONE single bitcoin is worth over $1000, so how do they get a total market cap of just $1300???

Re:Maximum market cap of $1300???

[Applehu Akbar]

I was wondering about the glaring typo myself - and yet the figure is repeated in the article.

Re:Maximum market cap of $1300???

[Anonymous Psychopath]

Already ONE single bitcoin is worth over $1000, so how do they get a total market cap of just $1300???

Obviously they are referring to the value of a single Bitcoin. Although that still doesn't explain their math.

Central counterparty?

[Pallas Athena]

"Without a 'central counterparty' to verify transactions and thus mitigate that risk, Bitcoin could fail to break into wider use." Really? And no doubt the BoA would gladly take up that role of central counterparty, if it could? I'd say WITH a central counterpary bitcoin will definitely fail to break into wider use - because what would be the point of bitcoin?

47.000 USD per coin ?

[Anonymous Coward]

This is a gross under estimation of the potential value of bitcoin as a store of value.

Although it is highly uncertain, there is at least 10 trillion USD equivalent in cash in the world.
In addition, there is 171.300 tonnes of gold, or about 7.3 trillion USD at current market price (I cound all gold, but do not count silver, platinu8m etc. for simplicity).
That is 17.3 trillion USD.
Assuming 5% of is is replaced by bitcoin (+very+ likely, given that 20% of the economy is "grey"or "black"), that gives us very roughly 1 trillion USD for the "market size" of bitcoin.

Per bitcoin, assuming 21 millions bitcoin, that is 47.000 USD per coin. There is still a long way to g(r)ow...

pump and dump and dump and dump

[Anonymous Coward]

NOTE: This concept is used a lot in the stock market (penny stocks) and would seem to work best when there is a low float (basically limited availability) of whatever it is that is being pumped. Low float = bigger price movements on action in the direction of the market (buying higher/selling lower).

The basics of pump & dump:
1: Buy up tons of $whatever and watch the prices soar as you buy buy buy
2: Seizing the upward price momentum you've just created, get the masses to believe that $whatever is a wise investment for smart people who follow the moves smarter people.
3: Sell them all the $whatever you just bought.

IMO, I expect all many different big players will pummel BTC in this manner until people are scared shitless of keeping "money" in this form of currency, nevermind holding it as a longer term "investment".

Tulip market

[Anonymous Coward]

You can't win at tulip trading if the thing you're buying tulips with is in near infinite supply to your opponent.

Bitcoin has lots of value

[Anonymous Coward]

Americans or Europeans could probably not understand it, but in some countries in the world taxes are almost on confiscating levels, leaving nothing to people.

I send glasses to Argentina and they tax 15$ per item, way more than the 3$ it cost to make and send, then they tax again and again like crazy. End result is that what used to cost 9$ to the final customer now cost 100$.

This happens all around South America now, Venezuela, Bolivia...

The same happens with money transfer, governments consider money from the people their own, they tax it to death and they spend the money mostly on their own, using military force and police to subjugate them.

So bitcoins means the people could transfer money very easily and fast, without being watched so they could survive.

Again this is something that people in the first world can't really understand. Their "crisis" is a joke compared with what most of the people in the world have to life.

Re:Bitcoin has lots of value

[Anonymous Coward]

Interesting that you mention Argentina. My wife is Argentinian and a couple of times she has had to send money to her family over there from Germany. The first time we sent a bank transfer and it never actually arrived to its destination. Our bank had the proof that the money had been sent but the receiving bank made up all kinds of excuses and blamed it on the government who was supposedly blocking incoming money transfers for anti-money laundering reasons. After several days wasted agueing with bureaucrats we eventually gave up and wrote off the loss. The next time I was already inside the Bitcoin world and all I had to do was find a BTC buyer on Localbitcoins and have someone meet him in person to hand over the cash. In a few hours the money was in her pocket, with a "blue" exchange rate (about 60% better than official exchange rate). With all the money transfer restrictions "socialist" countries are imposing I see this as the greatest potential of Bitcoin at the moment.

Re:Bitcoin has lots of value

[Anonymous Coward]

Mod parent up.

Re:Bitcoin has lots of value

[petes_PoV]

Surely the reason a few countries impose such levels of tax is because there is so much fraud, tax evasion and avoidance going on?

If all the people paid what was an honest and reasonable proportion of tax, the "take" would be higher and the authorities would not have to extort monies from the few cases that they discovered and the low-hanging fruit (usually foreigners who were either brought up to be honest or don't know all the plays)

In those cases, Bitcoin is just another way of avoiding taxes, thus making the problem (of collecting a fair rate of tax) even more difficult.

Re:Bitcoin has lots of value

[Anonymous Coward]

Vote for different dictators then. That's what we do in the US.

Re:Bitcoin has lots of value

[Anonymous Coward]

Yes, like the price of CDs and DVDs must be high to compensate for those who pirate music and movies.

You are confusing the effect with the cause.

Re:Bitcoin has lots of value

[Anonymous Coward]

It's the other way arond. High taxes force fraud, tax evasion and avoidance. Even people that SUPPORT high taxes evade them, no joke! A fair tax rate is one that people don't commit fraud, evade or avoid.

Re:Bitcoin has lots of value

[Anonymous Coward]

You'd think that. Recently in Argentina, the government has granted a pension to millions of people that never has worked in their life. Where do you think the money to pay that each month comes from?.

Re:Bitcoin has lots of value

[DanielRavenNest]

What you are talking about is called "international remittances" (sending money internationally person-to-person). It's a $500 billion/year activity, and the average fees are 9 percent! This is the killer app for bitcoin at the moment.

Wrong

[Anonymous Coward]

What a shitty summary. The quote from the alleged BoA report says

Assuming Bitcoin becomes (1) a major player in both ecommerce and money transfer and (2) a significant store of value with a reputation close to silver, our fair value analysis implies a maximum market capitalization of Bitcoin of $15bn (1BTC = 1300 USD). This suggests that the 100 fold increase in Bitcoin prices this year is at risk of running ahead of its fundamentals.

The summary made it sound like BoA were taking those assumptions for granted.

Re:Wrong

[FhnuZoag]

Yeah, what BoA is saying is that *even if* Bitcoins were successful and popular in commerce, and as trusted as silver (which it's not), the prices it is commanding now is approaching the maximum of what it should be. Basically BoA is saying there is a huge bubble.

But hey, the Bitcoin pump-and-dumpers will push any lie that will nudge the prices up.

Market Manipulation

[Anonymous Coward]

Here's how i think B of A operated:
1. Take up large positions in BTC
2. Conduct a "study", praising the future of BTC, release the study to the public to maximize profits
3. Profit, by selling the previously acquired BTC positions

Anyway, If BTC would become a 'major' currency in any way, would a flaw discovered in it's cryptographic algorithms be the start of the next market crash?
The next recession?

Somebody bought some Bitcoins....

[nine-times]

It sounds like somebody big at Bank of America has bought a bunch of Bitcoins and wants to sell them for a profit.

an IOU isn't taken as cash

[globaljustin]

you can use tricks to print redeemable coins on bits of paper. Using these, you can make transactions enitrely offline... but since the recipient can't know that the paper is worth anything until he uses a computer to check it, you need a bit of trust..

c'mon man...

that's not a replacement for cash

that's the same as an IOU...whether you use BTC or $$$ for the units of the IOU doesn't matter it's still just a fucking IOU

until you can pay bills, taxes, buy a hot dog at the corner vendor, etc with *non-electronic* transfer of physical currency with BTC this whole thing is like a big game of Risk.

HAHAHAH

[Anonymous Coward]

If Bank Of America says it, then it MUST be true.

Most banks aren't "screw-u" businesses

[davidwr]

There are many small and medium-sized banks out there who aren't out to put their stockholders so far ahead of their customers that they deserve the label of a "screw-u" business.

However, if you asked what the average "screw-u" level of consumer-oriented* banks were weighted by influence, capitalization, or assets, then you'd have a valid point.

*Since this is about "screwing customers" i.e. ordinary individuals and small businesses and organizations, I'm not counting banks that don't cater to such customers. Those banks may have a "screw u" mentality too, but their customers are "big boys" and can stand up for themselves.

By the way, in America at least, individuals and in some cases small businesses and non-profits have an alternative to banks: They are called credit unions.

Observed Strangeness

[Anonymous Coward]

I noticed that yesterday's article, saying that China was banning financial institutions from using Bitcoin didn't carry the Bitcoin heading or icon. But, this article, a favorable opinion form Bank of America, gets the Bitcoin heading and icon.

So, what gives, Is Slashdot also trying to manipulate how Bitcoin is perceived by classifying unfavorable references to it under heading not related to Bitcoin?

I generally don;t get classified with the tinfoil hat crowd, but this has me wondering.

Bitcoins can be destroyed

[davidwr]

Erase the wallet, the coins inside are destroyed.

China Sucks

[Anonymous Coward]

China complains about ethics when in fact they inflate their currency all the time and have no ethics themselves. They steal all kinds of stuff from every other country and call it their own and they worry about the blackmarket. What a joke.

You can bypass accounting in bitcoin

[davidwr]

If I have a wallet full of bitcoins and give you the whole wallet in exchange for something, there won't be record of that in the ledger unless one of us wants there to be a record of it.

The downside is that such transactions are subject to being "beaten to the ledger" by an unscrupulous double-spender, limiting their application.

Delta-v??? Re:I understand how to value

[davidwr]

delta between the assigned value and the value in utility is usually pretty noticeable.

I think you just created a new definition for the term "delta-v" :).

Wholesale vs. retail

[davidwr]

The "problem" with both of those routes [a currency-exchange-trade model or a commodities-futures-exchange model] is that there is heavy auditing on every stage of every transaction, so the anonymity aspect of Bitcoin goes right out of the window.

This would only apply at the "big-money" level. "Retail" users would continue to use retail-oriented exchanges like we have today or perhaps some other model, such as direct bartering such as you might find over Craigslist. Government regulations would ensure that in countries like the United States, any legal trade over a certain US-dollar-equivalent amount was not anonymous.

Here's how I see it:

If a local or online (but US-based) merchant is willing to sell dollars for bitcoins 10 years from now, you'll be able to buy small amounts without any government-mandated paperwork, but if you want to buy large amounts either all at once or over time in a way that should arouse suspicion that but for the government rules you would have done it all at once (i.e. "willful blindness" on the part of the money-exchange business won't protect them from government penalties), you'll need to prove your identity.

What about altcoin-as-dollar-certificates?

[davidwr]

There is a completely different use for alt-coins besides as an alternative currency: As the equivalent digital paper money of an existing currency or an existing commodity?

The nice thing about paper currency is that it is relatively anonymous. Sure, theoretically the serial numbers can be tracked and fingerprints can be scanned but that's impractical and wouldn't cover every transaction anyways.

Imagine a bitcoin-like setup where all of the coins were "pre-mined" by a sponsoring country, bank, or other entity and that entity backed all of the "coins" by something that already exists, such as United States Dollars, Euros, or even grams of gold.

As long as the sponsoring country is stable enough that people have faith in it to protect the actual items that back it and to buy back or redeem the virtual coins on demand, you now have a functioning electronic way of conducting business in US dollars, Euros, gold, or whatever with the limited-anonymity advantages of bitcoin.

In the case of gold, it would be equivalent to how gold certificates or gold coins used to work way back in the day.

By the way, if you think this can't work, a non-virtual equivalent of this is in use in many communities in the United States: "Local currency." In many communities, banks and business get together and agree to print and accept "local money" that is backed 1-for-1 by real United States dollars. This is usually done to promote spending money locally but sometimes as a novelty for tourists.

Re:What about altcoin-as-dollar-certificates?

[r2kordmaa]

I think a while back there were news about a project aiming to build an overprotocol to bitcoin that would affix ownership of any sort of property to some particular marked coin. Stocks, cars, houses, whatnot. So if you want to transfer ownership you just trade that coin away. The idea is to make away with all the expensive notarized paperwork that is involved in usually transferring ownership of properties and just stating whoever can present bitcoin x owns that particular property. Its more of a legal challange really that an engieneering challange.

True, tulips are probably not the best example

[davidwr]

Other examples of things that were once in demand in the USA but now are not, or at least not as much:

* Tobacco
* Anything supporting the Whaling industry that isn't used elsewhere
* Raw paper for newspapers
* Typewriters and carbon paper
* leaded gasoline
* ivory, other than "old" (legal) ivory
* silk clothing

And the list goes on.

There are also many things that have gotten less valuable over time in inflation-adjusted dollars even though demand has remained high or increased, either because the cost of providing the good or service has gone down or because alternatives exist that put an ever-lowering ceiling on the prices people are willing to pay.

Examples for the United States include:

* Most "silicon-based" technologies and the services they provide (e.g. telecommunications costs)
* Food staples (commodity prices have slowly fallen over the last 80+ years)
* Out-of-season foods (including non-staple foods)
* Non-local transportation

and the list goes on.

As to which one(s) of these, if any, will prove to be the closes match for Bitcoin's future value trajectory, I have no clue. But I agree with you, it's probably not tulips.

Who knows, BC's long-term trend against the dollar might even be parity or positive.

correction

[davidwr]

The last line should read "stable" rather than "parity."

Several important historical factors

[davidwr]

1) Even in ancient times, coins generally contained less metal value than their stated sovereign-imposed value. Unless I've been misinformed, during certain times in the Roman Empire, the metal value was less than half of the stated value, making this the 1950s-equivalent of a paper dollar bill with a silver quarter taped to it.

2) Unlike some other rare metals, gold has the property of being easily identifiable by its color and softness.

3) Shiny, malleable, low-melting-point items can be turned into things of beauty like jewelry, which gives them a non-monetary value to any society that shares our sense of aesthetics and which has developed the ability to melt and shape metals. This and other uses provide the "intrinsic" portion of the metal's value. Any value above this is a result of people's faith that people in the future will buy the metal back at today's prices and is therefore non-intrinsic and subject to fluctuation based on human-emotional and other factors not related to the metal's intrinsic value.

4) some of the disadvantages of modern money that you mention I see as advantages. For example, if I don't have to keep my money on my person or stored on my property, that makes me less of a target for what used to be called bandits.

Bank notes

[fiannaFailMan]

Without a 'central counterparty' to verify transactions and thus mitigate that risk, Bitcoin could fail to break into wider use.

The amount of trust in a currency depends on custom. If Bitcoins become widely used in some Chinese regions then they'll gain acceptance, and it might spread.

Northern Ireland bank notes, which are printed by various banks according to their own designs and are branded as "pounds sterling", are not actually legal tender. They're a hangover from an old law that let regional banks print their own money in place of currency issued by the Bank of England. But people in Northern Ireland use them and think nothing of it, including transactions between total strangers. The notes are met with a bit more scepticism when you try to use them in England though.

The only thing stopping Northern Ireland bank notes from gaining wider acceptance in Britain is the Irish Sea which has a tendency to slow down the flow of money across the water. Plus, seasoned travelers change their local notes for Bank of England notes when going to England because they know that the regional notes are going to be harder to spend. So that keeps a vicious circle going of unfamiliarity that undermines trust.

they're priming

[kbx911]

they want more people to buy bitcoins over christmas, 'their bitcoins', so they will rake in the $s from the sales of 50% of their BTC holdings, then the other 50% they will absolutely dump into the market at throwaway prices, making BTC value plummet, then they will buy back. It is obvious isn't it, that the people who should be most threatened by bitcoin, like BoA, would never say a good thing about it unless they had some selfish motive in doing so.

SO afraid of Money laundering...

[the.emmef]

... the big banks are. Because they don't? Did we forget about HBSC that was too big to be brought to justice? Banks just know how to hide their ugly business better.

How different is Bitcoin from

[NewYork]

http://www.lietaer.com/2010/03/the-worgl-experiment/