Overstock.com Plans To Accept Bitcoin

SonicSpike writes "Overstock plans to become the first big U.S. online retailer to accept Bitcoin, as Patrick Byrne, the company's libertarian chief executive, warms to the virtual currency as a refuge from government control. Mr Byrne told the Financial Times that Overstock planned to start accepting Bitcoin next year – possibly by the end of the second quarter – a decision that he said was driven mainly by his own political philosophy. 'I think a healthy monetary system at the end of the day isn't an upside down pyramid based on the whim of a government official, but is based on something that they can't control,' Mr Byrne said."

Comments

Guesses as to end effect?

[SuperKendall]

It will be really interesting if this creates any stability in the value of bitcoin, or if not how pricing will work with something that can fluctuate in value so wildly... will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?

Re:Guesses as to end effect?

[Anonymous Coward]

So if Amazon follows suit and starts accepting bitcoins, how will they collect/pay sales tax?

Re:Guesses as to end effect?

[rudy_wayne]

.

I think a healthy monetary system . . . . is based on something that they can't control

As fashionable as it is to be anti-government or anti-establishment, or Let's Stick It to "The Man", a monetary system not under government control is not the answer and Mr. Byrne is full of Libertarian bullshit. The recent article "Why I want Bitcoin to die in a fire" says it perfectly. Our current monetary system sucks, but replacing it with Bitcoin would be even worse.

Yesterday I went to a store and bought some items. Today I went back to that store and everything was still the same price, and the dollars in my wallet were still worth exactly the same as they were yesterday, and the day before, and the week before and the month before. An unstable currency that changes value from one minute to the next is an unworkable mess.

Re:Guesses as to end effect?

[Anonymous Coward]

Same way they do at the moment. All BTC conversions would be subject to a known conversion rate to USD and tax would be charged as appropriate, i.e. so long as AMZN feel it is in their best interests to do so.

Re:Guesses as to end effect?

[soupbowl]

Exactly. Bitcoin is to unstable to be worth looking at.

Re:Guesses as to end effect?

[Anonymous Coward]

It will be really interesting if this creates any stability in the value of bitcoin, or if not how pricing will work with something that can fluctuate in value so wildly... will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?

Keeping it in BTC would be considered a particularly risky investment strategy unless there were some way to hedge against sudden changes in the value of BTC (I am aware of nobody that offers such a hedging instrument at this time). It would therefore open the directors of the company to being sued by the shareholders for violation of their fiduciary duty should a sudden collapse in the value of BTC occur (i.e. something like what happened the other day). So, no, I doubt they'll keep it for longer than is practically necessary. They'll keep a small reserve of BTC for everyday trading purposes (they'll have to be able to issue refunds, etc.), but otherwise it would all be converted to USD at the earliest practical moment (probably in batches in order to reduce market costs).

Re:Guesses as to end effect?

[MobSwatter]

Dollars to sense, the U.S. dollar value is controlled, and not by a particularly trustworthy element. The answer is the gold standard.

Re:Guesses as to end effect?

[mishehu]

Why yes, that's an even better idea. Let's all have the gov't hoard all sorts of gold that could actually be used for something useful instead... You'd love for your graphics card to triple in price because now the gold for the contacts and other components is all scarce now, wouldn't you? A gold standard has a big downfall in common with BTC... it's naturally deflationary. A modest rate of inflation is not necessarily a bad thing, but having to go from paying 1/4 of your net income on your mortgage now to 1/2 of your net income in 15 years doesn't sound so hot either does it?

Re:Guesses as to end effect?

[Sqr(twg)]

will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?

From TFA: "Mr Byrne said that if Bitcoin derivatives exist when Overstock starts to accept the currency it would "bank" Bitcoin and use them to hedge the risk of changes in its value. If such derivatives do not exist, he said Overstock would trade Bitcoin into dollars every day."

Bitcoin derivatives would require a major re-write of securities law. That's not going to happen. So he would have to sell the Bitcoin immediately,

So for those wondering what effect this will have on BTC exchange rate: It will create a selling pressure as people use stored BTC to buy from Ovestock, who immediately convert the BTC into USD.

Re:Guesses as to end effect?

[Anonymous Coward]

How can you say with a straight face that a dollar today buys what it will in a month? Are you completely ignorant of inflation? Or has your hatred of libertarians blinded you so that you cannot see it?

All those you say this to in real life believe you are a fool.

Re:Guesses as to end effect?

[MobSwatter]

Can't say the damage created by the amount of time being off the gold standard wouldn't be felt or hasn't already taken it's toll. It is just a stable and proven benchmark for money to keep things honest.

Re:Guesses as to end effect?

[Anonymous Coward]

you're a retard.
the dollar is stable because it's backed by trillions in averaging commerce and billions in liquidity. huge fucking numbers.
bitcoin appears unstable because it has not yet reached that scale.
it has nothing to do with the base currency, be it bitcoin, dollars, or pigs.

Re:Guesses as to end effect?

[Anonymous Coward]

A gold standard can work better than the current fiat regime where nations are in over their heads in unpayable debt. In fact we should go to one just because it would force governments to curtail their reckless spending. The US has historically had a gold standard; Giulio M. Gallarotti wrote about the classical gold standard period (1870-1914) in The Anatomy of an International Monetary Regime:

Among that group of nations that eventually gravitated to gold standards in the latter third of the 19th century (i.e., the gold club), abnormal capital movements (i.e., hot money flows) were uncommon, competitive manipulation of exchange rates was rare, international trade showed record growth rates, balance-of-payments problems were few, capital mobility was high (as was mobility of factors and people), few nations that ever adopted gold standards ever suspended convertibility (and of those that did, the most important returned), exchange rates stayed within their respective gold points (i.e., were extremely stable), there were few policy conflicts among nations, speculation was stabilizing (i.e., investment behavior tended to bring currencies back to equilibrium after being displaced), adjustment was quick, liquidity was abundant, public and private confidence in the international monetary system remained high, nations experienced long-term price stability (predictability) at low levels of inflation, long-term trends in industrial production and income growth were favorable and unemployment remained fairly low.

Re:Guesses as to end effect?

[philip.paradis]

I could spend some time explaining several things to you, mostly things involving international currency exchanges and market volatility concerns, but I suspect that my time would be wasted. Instead, I'll simply note that Overstock.com is not the only large entity considering dealing in BTC, and a lot of smaller companies already do (and in ways that might surprise you), probably more than you suspect. At the end of the day, an old expression applies here: "money talks, bullshit walks." You're standing in a pile of bullshit at the moment, but that's your right and I certainly won't waste any more of my time attempting to reason with you. Cheers.

Re:Guesses as to end effect?

[SuperKendall]

Interesting, honestly I did read the article before posting, but somehow I missed that part. I did see where he said there is no such protection today though...

Re:Guesses as to end effect?

[Anonymous Coward]

you now of course that there a little problems with that too? Like Spain managed to get inflation with gold and silver too and not because they debased it back then. There is also another little problem with that. The amount of money in circulation is limited by amount of gold you have. As one of the users pointed out gold has some practical uses. using it for these few mazillion dollars that only US economy is worth is probably a little challenge you overlooked or? Besides the whole bad money replaces good money on the market story is taken as evil which is not always the case. I can imagine money nobody tinkers with, nobdy prints more except for used up coins etc. (which if you do everything electronically is not needed). You have goods that are worth this much in your economy. So you need appropriate amount of money to represent these goods. Then you have services that for simplicity we have fixed amount per unit of time - you need some amount of money to represent that too. Now imagine that oh unthinkable value of your goods change because your population got old and lazy and could not work this much anymore. Old goods lose value, goods like say good wine from abroad becomes more expensive suddenly - ever wondered why would that be? You see there is a problem with money - it was and always was a proxy not a real thing. Which means if food get scarce (because Monsanto fucked it up so much that the plague destroyed all the rice and potatoes and no patented goods we do not have - another interesting subject in our nice little world of monopolies and idiocy) - what do you think happens to the prices of food? You have inflation going on with your gold not debased gold coinage too....

You know what your real problem is? Your problem is that you try to fix complex problems with a single simple tool which is nice if it works but even if it does in some range of conditions it is never a solution that does it all. You are a geek and want to kill it with a new shiny tool or to use an old adage: silver bullet. I have news for you - it does not work.

Re:Guesses as to end effect?

[Anonymous Coward]

> As fashionable as it is to be anti-government or anti-establishment, or Let's Stick It to "The Man", a monetary system not under government control is not the answer and Mr. Byrne is full of Libertarian bullshit.

Libertarians may be full of shit, but give them a little credit for discussing ideas instead of resorting to ad hominem...

People who dismiss anti-establishment ideas as "fashionable" or use other dismissive language are usually ok with the establishment. That is fine, you were lucky. People who are not ok with the establishment have their reasons too. This is the problem with democracy, the establishment has no empathy for the people who's lives are being made miserable by the "consensus". This is why limiting the government's intrusion (or the government-corporations complex) in our personal lives is a good idea. Nowadays a lot of people feel miserable because of lack of food of shelter, and many others feel miserable because of lack of meaning. But I guess you could call that a fashion.

Also, feeling dismissive towards anti-establishment ideas is usually cyclic with the mainstream, depending on which team is currently winning the reality show.

Re:Guesses as to end effect?

[xQx]

Parent should be modded up.

Also, what is this "plans to accept" BS. There are heaps of online retailers who take bitcoin, and if they were serious they would have just used someone like coinjar.io to do the merchant service for them and convert it back to USD on the fly.

Slashdot - stuff that matters.... It will be news when Overstock.com ACCEPT bitcoin, not when they do nothing more than release a press release that they PLAN TO ACCEPT bitcoin some day in the future.

Thanks Slashdot for your thinly veiled Christmas advertising. Anyone wanna buy some Viagra?

Re:Guesses as to end effect?

[Patch86]

Yeah, because the value of gold is totally stable:
http://www.bullionvault.com/gold-price-chart.do

There's a reason why every country in the world abandoned gold/silver/commodity linked currencies, and it wasn't because of a global conspiracy- it was because they were a disaster.

Re:Guesses as to end effect?

[Spy Handler]

"Money talks, bullshit walks" is exactly right. We just differ on which we think is bullshit. Time will sort that out.

You go ahead and buy all the bitcoins you possibly can and hold on to it. I'll just keep my money in stocks and real estate. Come back in 2 years and let's see where we stand.

Re:Guesses as to end effect?

[Anonymous Coward]

Also, what is this "plans to accept" BS.

It means that they plan to give you the option to pay for the things you buy there using bitcoins.

There are heaps of online retailers who take bitcoin, and if they were serious they would have just used someone like coinjar.io to do the merchant service for them and convert it back to USD on the fly.

And it is quite possible that they will indeed use such a service. After all, when they accept credit cards, it also doesn't mean they created their own credit card processing system, but they just use the existing American Express/Visa/whatever processors. And if they allow you to pay by bank transfer, they also let the banks handle the actual transfer.

Re:Guesses as to end effect?

[Patch86]

The inflation rate in the US is what, 2% per year? 3%? 4? And when was the last time it suffered serious deflation? The difference in value between what I can buy in a shop today and what I can buy in a shop in one month is likely to be a fraction of a percentage point different.

Whereas Bitcoin has inflated by literally thousands of percentage points over the last year, has recently deflated by about 200% in the last MONTH, and regularly moves 10% or more on a DAILY basis. I have literally no idea whether a Bitcoin in my metaphorical pocket will buy me 10x more or 10x less goods by value next month compared to this month. Unless that situation changes, that is simply not a workable situation. As a sort of grand online casino game Bitcoin is great, but as a currency it is an unworkable disaster.

Re:Guesses as to end effect?

[Anonymous Coward]

Bitcoin derivatives would require a major re-write of securities law.

Care to explain? You can buy/sell options not only on money and stock, but also on goods. Why would bitcoins be excluded?

Re:Guesses as to end effect?

[Anonymous Coward]

Currency is just a measure of wealth. It does not need to be controlled anymore than a metre or a kilogram is. You want to be able to distinguish US Dollar from Zimbabwe Dollar but that's about it.

Controlling currency has one big problem - you cannot trust anyone to do it. Not even USA, although we used to think they are trustworthy because of their position and the fact it was built on sound money.

Currently it just happens that Chinese government is subsidizing US Dollar so you do not see the inflation in imported products (you do see a massive inflation in markets isolated from other countries, so called "bubbles"). But take the sponsor away and the illusion of stability is over.

Re:Guesses as to end effect?

[Anonymous Coward]

You don't even understand the concept of value. No, when you went to the store the next day, the value of USD had changed, in reference to other currencies(which is what I assume you mean). If you had gone to a store that was based on a different currency, then the conversion would have been different.

Re:Guesses as to end effect?

[Anonymous Coward]

stocks

Are you trying to suggest that stocks are...stable?

Re:Guesses as to end effect?

[physicsphairy]

The value of a dollar can and does fluctuate wildly (consult any market crash) and certainly alters slowly over time. What makes it "stable" is the heavy inertia it enjoys from being tied to so many aspects of a large economy, particularly goods whose value are themselves stable. This makes it stable on average, but your analogy wouldn't work if instead of going into a store and buying an apple you went to the stock market, and it doesn't work if a major part of what the dollar is exchanged for comes under duress, such as the real estate market or the American government.

Bitcoin is fluctuating in value right now precisely because people are betting on its future usefulness as a currency. It's sort of like you are buying stock in the Bitcoin Digital Currency company, but the currency itself is being immediately exchanged for the stock. How is it supposed to have a stable value when the only thing it's good for is making bets on an uncertain future? If I had 10 bit coins right now, I really wouldn't know what to do with them, except for look up what they are selling for and get some dollars in trade.

But the simple progression of the future is going to make its more intrinsic value obvious, and once it's tied to companies like Overstock, the value will start to derive increasingly from the goods you can buy with it.

Hasn't bitcoin been specifically designed to have an investor-centric mining phase before plateauing?

Re:Guesses as to end effect?

[serviscope_minor]

I think that a very large retailer like that one takes a while to integrate a new payment system. They might also wish to do the trading themselves to avoid paying the fees to the other operators.

But anyway it does show that that the profile of bitcoin is going up.

Re:Guesses as to end effect?

[meglon]

Certainly, as long as you don't want economic growth. I suppose we can always resort to the guillotines like France did to weed out some of that over-population when it becomes another problem because of lack of economic growth too.

http://blogs.reuters.com/great-debate/2013/09/17/why-conservatives-spin-fairytales-about-the-gold-standard/

Re:Guesses as to end effect?

[pspahn]

They most certainly are... depending on where your option is.

Re:Guesses as to end effect?

[Mr0bvious]

Excuse me if I'm just showing my ignorance but can we really determine what is changing in those graphs? Is it the value of the currencies to which it is measured against that changes or the value of the gold? There has been some serious money printing going on world wide which may explain the steady rise since 2003. I would speculate that the significant bullish trend in gold is a symptom of currency not being backed by something akin to a gold standard - the effect of 'Quantitative Easing' and speculation of more QE. Its fall since 2011 can be attributed to the speculation that more QE is not likely.

If I was to chart gold against silver it will tell a different story than charting it against xx$ (xx = pick any major currency). If our currencies were backed by a gold standard would these graphs tell a different story yet again? I think it would.

Again, I'm no economist and I'm just taking guesses, but if cash was backed by gold would it not decrease the need to speculate and trade against gold and aid in its 'apparent' stabilisation since there would be no benefit of gold over cash?

As far as I can see the gold standard was dumped due mostly to governments being in so much debt that they could never honour their debt obligations with gold. Also, it's harder for a government to manipulate a currency backed by gold (less control).

I'm not convinced that the gold standard was a bad thing - it had its problems, but I think having a baseless currency is far worse and unsustainable.

There's a reason why every country in the world abandoned gold/silver/commodity linked currencies, and it wasn't because of a global conspiracy- it was because they were a disaster.

They were a disaster how? The inability to manipulate their currencies? I don't think there is any global conspiracy - but if you're going to trade with countries that do not use a proper standard (eg gold) then you're putting your self in serious disadvantage with regard to trade and currency manipulation. They basically had no choice once the US decided to do so.

Re:Guesses as to end effect?

[Anonymous Coward]

No, he doesn't want to use a silver bullet. He wants to use a gold bullet.

Re:Guesses as to end effect?

[Pentium100]

A modest rate of inflation is not necessarily a bad thing, but having to go from paying 1/4 of your net income on your mortgage now to 1/2 of your net income in 15 years doesn't sound so hot either does it?

You know what would be better? Being able to actually save money for years to buy something and no having the money lose value until I save enough of it.

Re:Guesses as to end effect?

[AmiMoJo]

200% deflation? So it was worth $-1000? Maybe you added an extra zero?

Re:Guesses as to end effect?

[Anonymous Coward]

A modest rate of inflation is not necessarily a bad thing, but having to go from paying 1/4 of your net income on your mortgage now to 1/2 of your net income in 15 years doesn't sound so hot either does it?

You know what would be better? Being able to actually save money for years to buy something and no having the money lose value until I save enough of it.

If your savings actually are losing value you are doing it wrong.

Re:Guesses as to end effect?

[Cornwallis]

Oh good. Would you like my hyperinflationary Zimbabwe $10 trillion bill?

Re: Guesses as to end effect?

[Anonymous Coward]

By today's standards all your ancestors were libertarians. By their standards you are, at best, a communist. They were using sound money that encouraged savings and investments. You are praising inflation that, with some help from outside, encourages borrowing and consumption. They were building the strongest country in the world. You have bankrupted it. Conclusion?

What today's libertarians are failing to understand, though, is that it is simply too late to act (note that naive != moron). Surveillance in the USA far exceeds one in the USSR, so does the government wealth to personal wealth ratio, or government military strength to personal defense means. Democracy is now an illusion maintained to keep you quiet - you are no longer allowed to alter any of the core policies of the party.

Merry Christmas.

Re: Guesses as to end effect?

[Patch86]

Compared to it's year start value. Apologies, not the most sensible way of expressing it- the dangers of unqualified percentages and all that.

You understand my point though. Massive value moves in either direction. Not stable. Etc.

Re:Guesses as to end effect?

[Joce640k]

It will be really interesting if this creates any stability in the value of bitcoin, or if not how pricing will work with something that can fluctuate in value so wildly... will the company convert BTC to cash right away, or will it keep it for a while before conversion (if ever)?

More like:
a) When Bitcoin is high they'll charge a percentage and convert them straight away.
b) When bitcoin is low they'll charge a percentage and use them speculatively, hoping to make extra money.

ie. The "libertarian owner" believes he has the bitcoin market figured out.

Plus it also generates a lot of publicity for Overstock, who I'd never heard of until Slashdot gave the a free plug.

Re:Guesses as to end effect?

[Anonymous Coward]

I suppose we can always resort to the guillotines like France did to weed out some of that over-population

Oh please. We all know that we'll be getting our guillotines from China for half the price ... once they start taking Bitcoins again.

Re:Guesses as to end effect?

[supremebob]

Yeah... If Overstock.com really wanted to start taking Bitcoin right away, they could just use the Bitpay API and be done with it. I couldn't see setting that up taking more than a few days of development and QA testing.

It's actually a pretty good way of accepting Bitcoin, as the conversion to US dollars is done almost instantly.

Re:Guesses as to end effect?

[Anonymous Coward]

Gold is artificially scarce, do you think gold mines release everything they dig up? The miners control that market like a puppet, in the same way the maple syrup and oil markets are puppeted and many other resource commodities, all controlled via stock piling. If the product is not perishable it is more likely to be stock piled to gain market stability.

Re: Guesses as to end effect?

[XcepticZP]

Simply put, libertarians aren't serious. They're ideological.

We most certainly are serious, thank you very much. Not only that, but we pride ourselves on the consistent morals that back our ideology. We may not have the best solution in the world, but it most certainly is the only moral and workable solution to have a cooperative society. Meanwhile, statists like you find it perfectly reasonable to include theft, imprisonment, torture and kidnapping as part of your utilitarian ideology to solve problems. How about no thank you. I'll take my supposedly "failing libertarianism" over your "working" piece of shit state any day.

Re: Guesses as to end effect?

[LF11]

You clearly have never used bitcoins to buy real goods. As someone who does use bitcoins to buy groceries and household goods, the volatility is nowhere near the problem you think it is.

Go ahead, keep missing out. Today's millibitcoins will be tomorrow's microbitcoins.

Re:Guesses as to end effect?

[thue]

> Excuse me if I'm just showing my ignorance but can we really determine what is changing in those graphs? Is it the value of the currencies to which it is measured against that changes or the value of the gold?

The prices in dollars of commodities in inflation indexes have been relatively stable. For example the price of gold doubled between 2009 and 2011 - do you remember the dollar-price of commodities doubling in the same time interval, as would be the case if it was just the dollar halving in value and gold being stable? No, obviously not.

There is no real doubt that it has been the price of gold which is unstable, and not the price of dollars.

Re:Guesses as to end effect?

[MightyYar]

Bitcoin will always be unstable, because it is deflationary at times. You are rewarded for holding on to Bitcoins, until some critical mass is achieved and the value is high enough to spark a sell-off. You will always have a boom and bust cycle. The same thing happened when we were on the gold standard. Low levels of stable inflation discourage hoarding, with pretty mild side effects.

Re:Guesses as to end effect?

[MightyYar]

Stock prices aren't stable, but there are plenty of hedging options. You can make the stock market as stable as you choose.

Re:Guesses as to end effect?

[Anonymous Coward]

Apparently government knob slobbery is very en vogue...

"a monetary system not under government control is not the answer"

^^ No economics background.

Re:Guesses as to end effect?

[Anonymous Coward]

Again, I'm no economist and I'm just taking guesses

Then why don't you get off your dead ass and educate yourself rather than making wild ass claims and spreading FUD based on your "guesses"? Is your tinfoil hat that comfortable?
 

if cash was backed by gold would it not decrease the need to speculate and trade against gold and aid in its 'apparent' stabilisation since there would be no benefit of gold over cash?

No, it would not. When countries were on the gold standard, it's value was quite volatile.
 

As far as I can see the gold standard was dumped due mostly to governments being in so much debt that they could never honour their debt obligations with gold. Also, it's harder for a government to manipulate a currency backed by gold (less control).

Wrong on both counts. The first big reason the gold standard was dumped is that gold was inherently deflationary due to it's limited supply. The second is that hard money economies are inherently limited in size due to the same limited supply. The latter is an important reason why governments historically sought to debase their gold currency. (Which also shows that gold economies are just as liable to manipulation - and why manipulation, even though it's currently a boogyman scare word isn't necessarily a bad thing.)
 

They were a disaster how? The inability to manipulate their currencies? I don't think there is any global conspiracy - but if you're going to trade with countries that do not use a proper standard (eg gold) then you're putting your self in serious disadvantage with regard to trade and currency manipulation. They basically had no choice once the US decided to do so.

How were they a disaster? In addition to the deflation and inherent limitations on the size of the economy? Well, there were also constant financial panics caused by shortfalls in the money supply. There was the need for constant manipulation of the price of gold to maintain the currency, etc... etc... Again, get off your lazy ass and study economics and history. Or shut the fuck up and admit you're an ignorant ass and stop making claims and taking positions based on "guesses".

(Posted AC quite frankly to avoid a million responses from the tinfoil hats and gold bugs all as ignorant as the poster to whom I'm responding. As is usual on /., their ignorance will be modded "insightful", and I'll be down modded into oblivion for telling the truth.)

Re: Guesses as to end effect?

[Anonymous Coward]

Yes, a multimillion dollar company want to use some fly by night run out of a bedroom closet service ... Because you think it's great...

Re:Guesses as to end effect?

[Charliemopps]

Yesterday I went to a store and bought some items. Today I went back to that store and everything was still the same price,

No they weren't.

and the dollars in my wallet were still worth exactly the same as they were yesterday, and the day before, and the week before and the month before

No, the value of the money in your wallet decreases every day of the year. It has no intrinsic value so it is not volatile, it only looses value.

An unstable currency that changes value from one minute to the next is an unworkable mess.

ALL currency is unstable. Bitcoin is just a bit more unstable. But at least with Bitcoin the instability is solely based on market conditions and not the whims of politicians. I'd argue that the "Stable" value of the dollar is mostly illusion. The dollar could crash just as quickly as bitcoin, we just have a government that's constantly meddling with it to make it appear stable. The problem with that is it's all based on faith. Once 100yrs of faith in a currancy fails, it'll take anouther 100 to get it back. If Bitcoin crashes on you, just wait a week.

Re:Guesses as to end effect?

[Anonymous Coward]

200% deflation? So it was worth $-1000? Maybe you added an extra zero?

How would deflation result in a negative number?

Deflation means that each unit of currency becomes more valuable (exchange rate goes up so each BTC is worth more USD than yesterday) which deflates the economic system, the negative consequence is an increase in hoarding which reduces liquidity and slows markets.

Re:Guesses as to end effect?

[tompaulco]

The inflation rate in the US is what, 2% per year? 3%? 4?

Well, that is the government's stance. In reality, the cost of the everyday items that a consumer has to buy increases by much more than that. Utility costs have gone up by a 300% in the last decade, gasoline has doubled. The cost of hamburger has doubled or more in about a decade. A "case" of soda has gone up in price, while also going from 24 cans to 20. A "Family Size" bag of chips is smaller than it was just a few years ago. Many manufacturers are keeping the price the same, while slightly reducing the count, hoping no one will notice. The cost of the average new car has doubled in the last decade.
With compound interest, I guess that still comes down to only 7 or 8%, but that is still significantly more than any interest you will get from a bank, especially after taxes, and it is 7 or 8% more than the Cost of Living Adjustment or raise that the average employer gives.

Re:Guesses as to end effect?

[Anonymous Coward]

That's bullshit. A gold standard works out OK if the rate at which you're able to mine more gold is roughly the same as the rate at which your economy is growing. However, since the economy in the US has grown at such a tremendous rate since WWII, we would have had an astonishing amount of deflation that would likely have killed off most of the investments needed to make that happen.

Why risk investment when you're gold is going to be worth more tomorrow than it is today?

Re:Guesses as to end effect?

[tompaulco]

The instability will get less as it is used more. Ideally, if everyone was using bitcoin, it would be deflationary in exact correlation to the growth in worldwide product output.

Re:Guesses as to end effect?

[Anonymous Coward]

As long as you're properly evaluating the underlying company, stocks are stable. And generally growing somewhat over time. The instability is generally in penny stocks and ones that are being traded on a speculative basis that have instability problems.

Re: Guesses as to end effect?

[Anonymous Coward]

you mean the years start value of around $100 per BTC, yeah it really deflated 200% from there. Here's the thing that you guys don't realize about BTC, it's got a consistent and known production rate that only cuts in half every 4 years. It's got a magic profitability number that miners will fight hard to keep the value above (as long as their extremely expensive rigs can produce enough BTC/month at the current difficulty to pay the power bill they generate they are happy, but every 2 weeks the difficulty changes).

Before you start bashing bitcoin learn how it operates, learn why people are investing in the so called "pyramid scheme" (the funny thing about that statement is the value of the US dollar is controlled by 1 man in the world, and that's not a pyramid scheme?)

Re:Guesses as to end effect?

[Anonymous Coward]

Possibly by annonuncing this they are hoping that the market stabilizes before they start taking bitcoins rather than after?

Re:Guesses as to end effect?

[Anonymous Coward]

How fucking stupid is that?

Currency is only a measure of wealth because it's relatively constant. The US has the Bureau of Weights and Measures because a foot needs to be a foot and a pound needs to be a pound, it's a common scam in parts of the world where the units aren't enforced to label .9kg as 1kg and pocket the difference in price to pad ones earnings and cheat the customer.

As far as the Chinese go, that's the wrong way of looking at it. They aren't so much subsidizing the dollar as they're devaluing the Yuan with respect to all major currencies to keep the cost of their goods and services cheap. You make it sound like they're specifically targeting the USD for increased valuation.

Re:Guesses as to end effect?

[swalve]

Which is exactly the problem. It amplifies the effects of economic expansions and contractions, which makes things worse.

Re:Guesses as to end effect?

[zippthorne]

bitcoin is none of those...

Re:Guesses as to end effect?

[SonicSpike]

The value of the dollar has lost close to 98% since the Federal Reserve was created in 1913 and took us off the gold standard. That's not exactly "stable" and it punishes people who save their money plus it hurts the poor because price inflation increases faster than their wages do making their buying power less and less.

And the reason governments took their currencies off of the precious metal standards was so that they could inflate (tax) their citizens. People get up in arms when a new tax is raised, however when their currency is devalued by the wholesale printing of money by their government, they are not as quick to understand the reasoning behind it. Governments have inflated and devalued their currencies forever, even the Roman Empire did it by reducing the amount of precious metals in their coins.

Search for "Austrian Economics" if you want to understand more about this subject.

Re:Guesses as to end effect?

[MobSwatter]

Economic growth is not limited by adhering to a standard, the more gold a nation is enriched with the more chips it has to play with, government does have options to control spending and up to present hasn't observed any of them when it comes to a seemingly automated process of deficit spending...

Re:Guesses as to end effect?

[Anonymous Coward]

Sorry, Bitcoin cannot inflate in value. Bitcoin's maximum value is set at 21,000,000.000,000,000,00 BTC. There will never be more than 21 million bitcoins in any wallet. So, how can Bitcoin inflate when it can't?

Don't you mean appraise?

Re: Guesses as to end effect?

[RyuuzakiTetsuya]

What's the libertarian solution to global warming?

What's the libertarian solution to child labor?

What's the libertarian solution to the lopsided inequalities of those with wealth versus those who don't? How do you solve a problem like scrip? or problems like exhaustion from forced 10-12 hour days with no days off?

Education?

Food and product safety?

Healthcare costs?

Re:Guesses as to end effect?

[Sanians]

I'm not sure that comparing costs of anything oil-based is really fair. The idea of judging currency based on how much it buys is that you want to choose commodities which have the same value over time, but oil isn't known for being stable. It's not far off from judging inflation by tracking the cost of bitcoins. (well, actually it is -- bitcoins are quite unstable) Cars aren't necessarily fair game either since safety standards change over the years, and given that a higher investment in a car can save you money over the long term in fuel, such technology arriving can cause car prices to increase by consumer demand as they want what that increased cost pays for, meaning that the cost increase isn't an actual cost increase, but instead it's consumers choosing to buy more than what they were buying before.

That's why these things are usually done via average of the cost of many different things, and exclude things known to vary in price a lot.

Anyway, from what little I can remember of the past, I've noticed that common payments for simple fixed-cost utilities (like telephone, cable bill, internet -- things you could do without if you wanted) way back in the late-eighties were all basically $20 a month. Some time between then and now, I noted that they were all $40 a month. Now they all seem to be $60 a month. That's a 25 year time span, and the 25th root of 3 is 1.045, meaning the inflation I've observed in this case has been 4.5% per year. Certainly at the higher end of the 2-4% the GP mentioned, but within the range. Given that such prices aren't actually based on costs at all (they're all provided by monopolies), but rather what sort of value people feel comfortable disposing of for cool things they want, it's hard to say how reliable this is (and let's not forget the accuracy of my memory) but I suspect it's not a terrible measure.

Contrast that with bitcoin which a year ago was valued at $14 or so, and at the present moment is $661, which gives us a *monthly* deflation rate of 38%, which understates the issue by pretending it's a constant change, whereas it's really quite random.

Re: Guesses as to end effect?

[XcepticZP]

A lot of the questions you ask are very centered around your statist thinking. You came up with them, and phrased them as such so that the only answer you could possibly come up with in your head is "MORE GOVERNMENT".

What's the libertarian solution to global warming?

Wouldn't be a problem. You pollute my property = you damage my property = you infringe on my property rights = you owe me money in damages. Everything else is fair game. You can pollute your own property as much as you want. Just don't come crying to me when after a decade of destroying it, it is worthless and unusable to you.

What's the libertarian solution to child labor?

I'm actually not sure about this one just yet. You would first have to solve the ethical question of whether child labor is wrong. You need to define the problem first, and draw the boundaries. But you, you're coming at it purely from a state-imposed solution to the problem you see as "child labor". If you were hard pressed, you couldn't even come up with a full-proof definition of child labor. Child doing paper route for extra money? Child being given money for good grades? Child being thrown into a sweat shop so they can feed their younger siblings? Orphan being put to work at an orphanage so that they can afford to help kids in the first place?

What's the libertarian solution to the lopsided inequalities of those with wealth versus those who don't? How do you solve a problem like scrip? or problems like exhaustion from forced 10-12 hour days with no days off?

That's not a problem. In a free society, free from intervention and coercion, inequality is merely an indicator of who worked hard/smart, and who didn't. You only see this is as some sort of problem because you've been told by the socialist/nationalist state that it is a problem that begs solving. Just work harder, and if you're not getting what you think you deserve, then move or get a new job or fucking realize that maybe what you have to offer society just isn't worth as much as you hoped/expected. Simple, buddy.

Education?

Education was fine before the government stepped in, thanks. I will pay for my own child's education, you pay for yours, and the orphans will get it through charity.

Food and product safety?

Independent safety rating agencies. Heck, when we have a free society, I plan on starting one. I'm looking for partners in this venture, are you game?

Healthcare costs?

Lol, what? I pay for my healthcare, you pay for yours. Simple.

And at the end of this long fucking "answer" to your silly questions. I want you to answer them for me as well, and replace "libertarian" with "democratic" or "statist".

Re: Guesses as to end effect?

[Anonymous Coward]

The libertarian solution is "I don't give a shit because I don't perceive it affecting me." You know, the timeless head-in-the-sand philosophy.

Re:Guesses as to end effect?

[mic0e]

Except that gold is a speculative bubble as well.
Only a much slower, much larger one.

Re:Guesses as to end effect?

[Anonymous Coward]

You sure your dollar is worth the same amount? Since yesterday the FED printed (on average) 2.83 billion more dollars that compete with yours for those same goods.

Re: Guesses as to end effect?

[RyuuzakiTetsuya]

You ask if child labor is a problem and yet you don't know why you're not being taken seriously?

I revise my statement. It's not just that you're a moron it's that you have no heart.

Re:Guesses as to end effect?

[Anonymous Coward]

Of course it's news. Isn't it news when a new consoles/games/tech get announced? Or should slashdot embargo posts about those until launch day?

Re:Guesses as to end effect?

[Richy_T]

Heck, they might even be looking to branch out into being a payment processor for others in the same way that Amazon parlayed their infrastructure work into AWS. There's an opportunity waiting there for an established player (Though I hope the current innovators do well). I wouldn't be surprised if Paypal is being quite active behind the scenes. They already handle foreign currency transactions.

Re:Guesses as to end effect?

[Richy_T]

Unless you have huge amounts to invest, you will need to keep your first-stage savings in low-yield, high liquidity investments. Inflation damaging the value of these savings makes it harder to get to the next stage where you actually make a return on what you can put away.

Re:Guesses as to end effect?

[Mr0bvious]

Then why don't you get off your dead ass and educate yourself rather than making wild ass claims and spreading FUD based on your "guesses"? Is your tinfoil hat that comfortable?

What an arrogant arse you are. I explicitly stated that I do not know, these are my thoughts and are posed in such a manner - FUD spreading? What a tosser! (post as your real name if you want to be such a tosser).

My dead arse works 12 hours a day 7 days a week - sorry I don't have time to educate my self on everything, I have different interests that take my time. I'm sure there's hundreds of things I'm more educated at than you - get off your arrogant dead arse and learn about them (Oh, did I mention you're an arrogant tosser?)

But according to you, I'm not allowed to involve myself in discussion if I'm not an expert! You're awesome!

No, it would not. When countries were on the gold standard, it's value was quite volatile.

Perhaps, what level of volatility is unacceptable? Is gold not more volatile now? (these are questions, not FUD) Oh and you're awesome!

The second is that hard money economies are inherently limited in size due to the same limited supply. The latter is an important reason why governments historically sought to debase their gold currency. (Which also shows that gold economies are just as liable to manipulation - and why manipulation, even though it's currently a boogyman scare word isn't necessarily a bad thing.)

Is that really true with fractional reserve banking? It seems there is still a limitless supply of cash using this method? (a question, not FUD).. Hey awesome! I never said manipulation was bad (I may or may not think that) I said it's easier to manipulate when its not backed.

Again, get off your lazy ass and study economics and history. Or shut the fuck up and admit you're an ignorant ass and stop making claims and taking positions based on "guesses".

Fuck you're the most arrogant person I've ever conversed with. Fuck you tosser. (AC fucking loser, grow some balls)

Can you fucking read? I expressed MANY times in my post that I am ignorant and taking guesses, that does not make me lazy, fuck I bet I work twice as hard as you, you fucking arrogant tosser!

(Posted AC quite frankly to avoid a million responses from the tinfoil hats and gold bugs all as ignorant as the poster to whom I'm responding. As is usual on /., their ignorance will be modded "insightful", and I'll be down modded into oblivion for telling the truth.)

No, you posted AC because you're a coward and fucking arrogant wanker that takes pleasure in insulting others at the first possible opportunity. Arrogant arse.

Get off your lazy arse and fix your fucked up attitude, tosser.

Re:Guesses as to end effect?

[Richy_T]

You need to understand the definitions of "inflation" and "deflation" in economic matters before you comment further.

Re:Guesses as to end effect?

[blue trane]

What's the problem with deficits, exactly?

The gold standard was regularly suspended in times of (regularly occurring) crisis. The private banking system evolved the clearinghouse to try to provide some needed elasticity. Quoting the Lecture 5 Notes from the Economics of Money and Banking, Part 1 MOOC:

Of particular interest is what happens in a financial crisis, when all member banks find themselves short of gold, because of outflows into circulation or abroad. Then there is no chance of solving the problem by arranging for weak banks to borrow temporarily from strong banks. Instead, weak banks borrow from the clearinghouse, which creates additional reserves from thin air simply expanding both sides of the balance sheet.

[Can't post the table because of slashdot's junk character and whitespace filters :(]

In effect, what happens is that intraday deficits and surpluses are not paid but rather put off to another day.

The advantage of a central bank off the gold standard is that much-needed elasticity in times of crises can be created, in a more equitable manner than when a private individual like J. P. Morgan controls the clearinghouse, and expands credit only to his friends.

There are other reasons why the gold standard is impractical, and banks themselves evolved away from it: it's impractical to transfer physical quantities of gold each day to meet intra-bank payments, for example. So banks started giving each other credit, and treating the gold as a virtual reserve anyway. Doing away with the gold standard altogether was a natural step.

A longer exposition of the natural need for elasticity, which the gold standard fails to satisfy, from the Lecture 3 Notes:

Already in 1873 the country experienced the first of a series of financial crises, all of which
followed a similar pattern.

In slack times the farm banks would find themselves with excess funds for which they
could find no local outlet. They might use them to buy a security (bond) but they had always to
keep in mind that they would need the funds come fall. So they tended to deposit the funds in
New York where they could earn interest. New York banks would therefore find themselves
with excess funds, which they also knew were only seasonal, so they wanted a short term
investment. They would buy liquid securities or make short term loans. Of particular interest is
the phenomenon of the call loan made to stock market speculators. Thus in slack periods (late
winter) we might find something like what Young shows (p. 302), where country banks have
excess reserves. He mentions the number 50 million as the withdrawal at harvest time, which
note is pretty close to the excess 2% reserves. At harvest time there is a cash drain from the
system, and that means a cash drain from New York, which New York seeks to remedy by
calling in loans and raising reserves from abroad.

Thus the cash drain spread into the stock market, causing selling by those who were using
call loans to finance their speculative positions. And it spread to the international money
market, pulling in gold from London. The consequence was a very definite seasonal pattern in
interest rates, as the harvest expansion of credit took place on a fixed reserve basis. The result
was not only a seasonal interest rate but also periodic financial crises, caused whenever banks
had to make cash payments but lacked the cash to do so. Young makes the correct point that the
problem was the inelasticity of reserves. If somehow reserves could be reduced in slack times
and expanded in tight times, the problem could be solved. How to make reserves elastic? The
answer was to make reserves a form of credit.

Re:Guesses as to end effect?

[blue trane]

Liquidity was not abundant. The inelastic money supply created problems for farmers who built up deposits during the slack season and then wanted to spend them during harvest time. This caused a sort of seasonal run on New York banks, which then called in loans, which affected the stock market, which caused periodic crises. The natural solution that the private sector itself evolved was to create clearinghouses which could create money out of thin air. But the clearinghouses were controlled by private individuals like J. P. Morgan, who might not lend to someone because he didn't like them. So the Fed was created to be more equitable in its distribution of credit, not enforcing personal relationships.

Anyway the point is that elasticity was necessary for the private sector to function, and the gold standard was unable to supply that. So the private banking system itself evolved away from the gold standard.

Re:Guesses as to end effect?

[MobSwatter]

Deficit spending is government living beyond it's means.

Re:Guesses as to end effect?

[Mr0bvious]

I'd be a fool to disagree with you since I'm not overly knowledgeable in economics, I have but a passing interest only.

But I still have an suspicion that the recent (2003 - 2011) volatility/instability in gold is a symptom of market manipulation, QE, baseless currencies et al. Could it be that trust in cash and stocks have had some swings and a lot of speculation moved to gold causing its instability - this coupled with the belief that gold is a safer haven for one's wealth in these times of uncertainty has at least contributed to the instability of the gold price. If cash was backed by gold (ignoring other issues) would these same patterns have emerged? It's hard to guess at, there are so many variables and it's almost impossible to determine what are the causes and what are the symptoms.

Has the manipulation of currencies masked the real changes in our currencies vs gold?

This chart doesn't look too dissimilar to the gold chart: http://www.indexmundi.com/commodities/?commodity=food-price-index&months=120 - that is just a random chart, and I'm sure that for every chart I find that shows food going up, there will be one showing it going down - I think it all depends on what the author wanted to show.

I'm not saying that gold is stable. I question whether we can even tell - there's too many variables and too much manipulation in all markets to make any real sense of it all.

Re:Guesses as to end effect?

[blue trane]

Money is created all the time, at an exponential rate, by the private sector. Government can, and the US govt has since the first administration, spend more than it takes in without consequence. The Fed can simply expand its balance sheet to buy govt bonds and return interest to the Treasury as required by law, and keep the loans rolling over forever. Thus the cost of borrowing is zero.

Government spends in the public interest. As Cheney noted, Reagan proved deficits don't matter.

Re: Guesses as to end effect?

[Mullen]

Then why would you comment on something you clearly stated you dont know anything about? I dont know any thing about brain surgery, so I dont give advise about brain surgery. Just kinda makes sense.

Re:Guesses as to end effect?

[MobSwatter]

Since 1971 the US has existed on float and credit, consistently in and out of recession, hostile tax environments that do not promote business, state government creating jobs just to cut the unemployment rate, mega corps fleecing the lower class that are targeted by the highest tax rates. Mega corps up in arms about falling sales and oblivious to the larger picture. What was that about "without consequence"? Not sure if you live in a big city but have you smelled the human excrement coming from the freeway overpasses? It is the growing number of homeless, it is the unseen unemployment rate, the percentage of attrition in that capacity is large and is growing.

Re: Guesses as to end effect?

[RyuuzakiTetsuya]

See what I mean!?

It's like some sort of bat shit crazy pseudo-economic, pseudo-legal and pseudo-historical madlibs.

I think the only thing this post is missing is calling me a "statist."

Re: Guesses as to end effect?

[XcepticZP]

Ah yes... I should have known better than to expect a reasonable discussion on the matter. However, you jumped at the first sentence you could latch on to, just so you could dismiss everything that your brain is uncomfortable dealing with. Good for you, buddy. Just stay the fuck out of my life with your silly laws and lack of morals.

Re: Guesses as to end effect?

[Mr0bvious]

I didn't "give advise" I entered into discussion - you know, that thing that people do?

I never claimed to "not know anything" - I just don't consider myself a subject expert. I can still have my own thoughts, express them and discuss them with others. Just kinda makes sense.

I don't necessarily think that the AC I was responding to is any more knowledgeable than I on this subject matter (though they are sure they are, Dunning Kruger springs to mind). But not being a subject expert I'm not about to go making concrete claims to argue against them. But I have no issue with expressing what I think as just that, my thoughts.

I just don't get this "oh shut up, you're not an expert, you can't join in, go home little boy" attitude, it's arrogant supremacism nonsense.

If I stated that it's fact and I argued as such I would accept the arrogant attitude - but that's just not the case.

I am well aware of my lack of expert knowledge about economics but that does not mean that I know nothing and does not automatically mean that all my ideas are without basis.

Let's face it, is there any such thing as an expert in economics? For every following in one system there is an equal contrary following (for example Austrian vs Keynesian). So to argue any economics as fact or concrete is in my mind nonsense (how often are expert economists correct?). For the record I don't swallow much of Keynesian economics, but again I'm not a subject expert so I will only discuss my thoughts and not tout my views as the 'right' one. I'm open minded and like discussion, fuck anyone who says I can't participate because I'm not a self proclaimed expert.

Re:Guesses as to end effect?

[aminorex]

It doesn't matter how much the price of bitcoin fluctuates when you are just using it to form a contract. When I send USD using bitpay or any of its competitors, it saves me money, and bitcoin is invisible.

Re:Guesses as to end effect?

[aminorex]

I have tripled my money in 2 months of bitcoin investing. Wake me up when you triple your money.

Re: Guesses as to end effect?

[aminorex]

Anyone who finds it useful to call people useless fucking morons is a useless fucking moron.

Re:Guesses as to end effect?

[Anonymous Coward]

I did it in a week! I had $10 and grandma gave me 20 more.

Seriously, "triple your money" is not a useful metric if you don't say how much you had before it.

Re:Guesses as to end effect?

[tompaulco]

Your stance agrees with the government. We should not include the cost of anything fuel based in the CPI. However, what is the point of ignoring something which the average person spends about 10% of their monthly income on? Businesses take the CPI into consideration when they do a Cost of Living Adjustment (assuming there are business out there that still do this. Mine sure as hell doesn't). So, if your actual cost of living goes up by 7 or 8% due to the cost of gasoline, utilities which use oil based products, products which are delivered by oil consuming freight companies, etc , then if your company gives you the 3% the government claims, you will have to LOWER your standard of living to compensate for the actual REAL increase in cost of goods.

Re:Guesses as to end effect?

[Sanians]

However, what is the point of ignoring something which the average person spends about 10% of their monthly income on?

I only want to ignore it when trying to track the changing value of a currency because its price is particularly likely to change for reasons that have nothing to do with changes in the value of the currency. It certainly has a lot to do with cost of living, however, and so it should be included when trying to calculate that. At least until other energy alternatives are not only more cost effective but also easily utilized by the average consumer instead of oil, or until we all decide that driving everywhere isn't an essential part of life.

If Wikipedia is to be believed, the CPI's purpose is to track inflation, not to track cost of living, and so they'd be correct to exclude it, but then "consumer price index" would seem to be a bit of a misnomer. The article also seems to say that mortgage rates are included, which to me would seem to be an item that wouldn't accurately reflect inflation, particularly if we have the Federal Reserve adjusting interest rates in order to control inflation according to what we measure it to be using the CPI (if that's how they do it) since that creates a feedback loop. I'd guess it suffers from lack of a clear goal, and so everyone wants to include or exclude certain things depending on what they imagine the CPI should represent, and so it's just another government clusterfuck which only manages to be useful simply because the number of people involved ensures that it can't go completely off track before too many people notice.

I can't say I disagree with businesses using a metric which tracks only inflation when performing such calculations either. Imagine the cost of oil just keeps going up, and for some reason our alternatives vaporize and so we have no alternatives to that higher price... It'd be wonderful if our employers could all just pay us more to compensate but that money has to come from somewhere. In reality we'd all either have to work harder to keep doing the same things (as that increase in the cost of oil represents an increase in the work necessary to produce it) or we'd have to adapt to a lifestyle that doesn't require so much oil.

On the other hand, increases in wages to match inflation are to be expected. Your work has a certain value, and you expect to be compensated for that value, but our money slowly declines in value by design. So if your wages don't increase with inflation then you're getting the opposite of a raise, which is a "lower" I guess. A raise that merely matches inflation isn't a raise at all. ...and that may be why companies don't like to give automatic raises according to inflation. If they don't have an official policy of doing so, then they can pass off such raises as an actual increase in pay, and most people, being largely unaware of inflation, will see it as such.

I have a friend who every year has a talk with his boss about what his pay needs to be, and is certain to point out that if it doesn't increase to match inflation then his boss is telling him that he's not worth as much to him this year as he was last year. It seems to work for him, as does his apparent philosophy that one should never stop looking for better employment, as he makes more money than anyone I else I know. I don't know if he spends an hour a day looking for jobs or what, but from what I've seen, over the years that hour a day has earned him more money than all of the hours he spends at work as he's managed to double his pay by constantly finding a new employer to pay him 10% more than the previous one.

Re: Guesses as to end effect?

[Anonymous Coward]

crazy pseudo-economic, pseudo-legal and pseudo-historical

Sounds like a pretty accurate description of the system we are living in.

Re:Guesses as to end effect?

[blue trane]

Count the technology that has increased since 1971. Remember when TVs didn't have remote controls? Before there were computers? What about civil rights, Joe McCarthy? The Depression lasted much longer than the most recent crash, because the Fed acted quicker and created more elasticity. The greatest economic expansions have occurred since 1971. Have you heard of Hoovervilles?

Anyway the point is that the solution is to create more money. The government can and should spend more to guarantee a basic standard of living, and encourage innovation through challenges which the private sector can also hold (Google bug bounties for example). Innovation should be the real focus. As long as we keep advancing the pace of knowledge advancement, we can create as much money as we want.

Re: Guesses as to end effect?

[Anonymous Coward]

Gold is naturely deflationary except when it is Inflationary. The historical example is when all that Aztec and Inca gold arrived in Spain. At that point Mercantilism was know to be flawed at its base.

Let us suppose there is a cubic km of gold in hoarding. If this all dumps into the market, you had better be a first mover. Reference here a category of nay saying about bitcoin.

In term of standard fiat currencies, this also happens regularly. You get paid and immeadiately, like the same hour, buy food. Very messy. The Volker hyperinflation was certainly interesting.

Now I at least Know I am mostly clueless.

Re:Guesses as to end effect?

[thue]

> Has the manipulation of currencies masked the real changes in our currencies vs gold?

The main currencies (dollar and euro) have been relatively stable to each other and to a basket of commodities, while gold has not. The result is what counts.

As for there being manipulation: Central banks exist to manipulate currency prices to be stable. That is a feature, not a bug - stability is good. But the US Central bank's manipulation has actually had the goal weakening the dollar (by printing more) compared to doing nothing, not strengthening it. There is no reason to believe that the US Central Reserve has been manipulating the US dollar in a dangerous way - if the dollar was to begin falling, it could sell of some of the many assets it has been buying for newly printed dollars, thereby unprinting those dollars again (reducing the money supply), which would make the remaining dollars worth more.

> http://www.indexmundi.com/commodities/?commodity=food-price-index&months=120

On your food price chart: I remember a number of global food crisises caused by crop failures in recent years, such as the drought in Russia. That food prices have been swinging a lot says something about the wheat market, but doesn't necessarity say anything about the dollar. To get a fuller picture of combined dollar price swings, you have to average the price swings of all commodities. Such an averaged price index is called an inflation index, and shows the dollar to be stable (and the price of gold not to be stable).

Time to short OSTK

[Anonymous Coward]

Perfect timing! I'm always in need of new stock market ideas! Thanks Overstock.com...you made my day!

Re:Time to short OSTK

[Trepidity]

Maybe you're already referencing this, but shorting OSTK makes their CEO very angry.

Re:Time to short OSTK

[Anonymous Coward]

Of course, his analysis of the end result of short trading is rather different to other peoples, and is somewhat contradicted by the fact that short trading was blamed for the sudden rise in the price of oil only a little while after he wrote that diatribe.

In the end: short trading introduces extra reasons to trade into the market. It therefore encourages greater fluidity. But every short-sold share has to be bought by somebody in the end, so it should (averaged over a long period of time) have no net influence on the value of the equity that is being sold.

Re:Time to short OSTK

[Anonymous Coward]

In the end: short trading introduces extra reasons to trade into the market. It therefore encourages greater fluidity. But every short-sold share has to be bought by somebody in the end, so it should (averaged over a long period of time) have no net influence on the value of the equity that is being sold.

No, but a concerted effort can help dry up a company's cash flows, and such stop in cash flows can take down even relatively healthy companies....

Re:Time to short OSTK

[Trepidity]

It's also weird to oppose it if you're a libertarian, as Byrne claims to be. A "naked short" is just a contract written against a stock. Why should the government interfere to prevent people from writing such contracts? Requiring that short sellers have the underlying security as "cover" is just a government regulation.

Re:Time to short OSTK

[Anonymous Coward]

Yeah, I'm also against naked short selling. I mean, the traders could at least wear pants when selling short. ;-)

Re:Time to short OSTK

[Anonymous Coward]

In the end: short trading introduces extra reasons to trade into the market. It therefore encourages greater fluidity. But every short-sold share has to be bought by somebody in the end, so it should (averaged over a long period of time) have no net influence on the value of the equity that is being sold.

No, but a concerted effort can help dry up a company's cash flows, and such stop in cash flows can take down even relatively healthy companies....

Not really - if a company's stock price goes down that doesn't suck any money out of the company. It is third party investors who lose out, and even then they only lose out if they sell the shares into the artificial-created slump and don't wait it out (short selling is expensive so it is hard to do for more than a few months). The only way it affects the company would be if the company was planning to raise money by doing another issue of shares at precisely that time.

There is a slightly stronger case in relation to banks, because if you can make an artificial slump in the price of a bank's shares you might be able to affect general confidence in the bank and so cause a bank run, which will cause it to collapse. In early September 2008 Alex Salmon, the leader of the Scottish Nationalist Party, blamed the problems of the Scottish banks (RBS, Lloyds, HBOS etc) on 'London hedge funds' (the SNP think that everything bad in Scotland is somehow due to England). Of course it turned out that the quality problems at the banks were more than just rumours.

Re:Time to short OSTK

[Anonymous Coward]

Why should the government interfere to prevent people from writing such contracts? Requiring that short sellers have the underlying security as "cover" is just a government regulation.

Because there's a business model in which you write such contracts, and take the money if the gamble pays off; and if it doesn't pay off, you throw up your hands, say "sorry, I don't have that stock", and have your company declare bankruptcy to get out of paying your debt.

The pure libertarian position is that this business model is only made possible by bankruptcy law and the shield offered by limited-liability corporations: without such things, the cheated party would be free to extract payment from your worthless hide. But, assuming that we keep the concepts of bankruptcy and corporations, additional regulation is necessary to prevent this sort of cheating.

Re:Time to short OSTK

[Trepidity]

Isn't that true of any future promise? You could have a business model where you sell a contract for delivery of oil on February 1, but you don't really have that oil right now and plan to buy it later. If the price goes up too much from the contract price you can't afford it, and you declare bankruptcy instead of delivering the oil.

Typically we consider that up to the buyer's due diligence to sort out: you shouldn't buy oil futures contracts from fly-by-night operations where you don't have confidence they are actually going to deliver the oil. Basically, let the market handle assessing and pricing the counterparty risk.

Re:Time to short OSTK

[Anonymous Coward]

That's true: there's a slight difference, in that it's easier for someone to monopolize the stock of a single company and prevent you from carrying out your obligation to purchase it than it is for them to do the same with oil, but they're qualitatively the same.

And the same argument applies: government intervention in the marketplace, by shielding the assets of the owners of a limited-liability company, skews the market in favour of players who break such contracts. More government intervention, by requiring players to possess the assets they're promising (or some fraction of them: see fractional-reserve banking) skews it the other way. Ideally, the two should balance out, and we should get the same result as a pure free market but with a few extra safeguards, and saving the effort that would otherwise be spent doing due diligence by armies of accountants.

Comment removed

[account_deleted]

Comment removed based on user account deletion

overstock.com?

[Trepidity]

I think you mean "O.co".

Overstock.com still exists?

[Anonymous Coward]

Overstock.com still exists?..... Oooooh I see what they did there.

This press release brought to you by O.co, just a few days before Christmas!

Re:Overstock.com still exists?

[Anonymous Coward]

Exactly...I hadn't used it since the very early days and went there recently on a whim a few weeks ago...its a crap-site that's gone from selling true overstock items at clearance prices to an overly ambitious e-commerce site that has traded great deals for inventory completeness. Of the three things (all wristwatches) I was looking at, Amazon was cheaper on two of them, and almost exactly the same on the third.

Upside-down pyramids

[NoNonAlphaCharsHere]

Yikes. What this guy knows about monetary policy and central banking is - staggering. While national backing-free fiat currency may not be the most desirable way to do things, multiple entities issuing highly volatile (think internet speeds) banknotes of dubious value (CPU cycles? really?) is an insane step in the wrong direction.

Re:Upside-down pyramids

[Greyfox]

Seems to me it just points to demand in that arena. If I were to take a wild guess (knowing very little about currency) I'd say people have fairly low faith in government-backed currencies and are looking to diversify. US treasury bonds are still the safe haven of choice for investors worldwide, and with Fox news and the US Government's own actions undermining confidence in that medium, investors are probably desperate for any place else to put their money. I'd guess like any other bubble, it'll pop eventually. The question is, when?

Re:Upside-down pyramids

[NoNonAlphaCharsHere]

Well, the NASDAQ is at levels it hasn't been at since 2000, and gold is trading at a 3-year low, so if I thought that the bubble was about to pop, which I actually do, and the choice of which "currency" to trade dollars for, gold or bitcoins, I know which one I'd pick. #include <std-disclaimer.h>

Re:Upside-down pyramids

[Anonymous Coward]

Seems to me it just points to demand in that arena. If I were to take a wild guess (knowing very little about currency) I'd say people have fairly low faith in government-backed currencies and are looking to diversify. US treasury bonds are still the safe haven of choice for investors worldwide, and with Fox news and the US Government's own actions undermining confidence in that medium, investors are probably desperate for any place else to put their money. I'd guess like any other bubble, it'll pop eventually. The question is, when?

You can a spin a globe blindfolded and pick a random spot with a nearby currency that is more stable than bitcoin, your wild guess is scary.

You don't diversify into something wildly risky, you do it to minimize risk.

Treasury bonds are not on the same planet as bitcoin. Nobody is _desperate_ to move money into bitcoin. NOBODY.
Eager? Maybe, to each his own.

Re:Upside-down pyramids

[Anonymous Coward]

multiple entities issuing highly volatile (think internet speeds) banknotes of dubious value (CPU cycles? really?) is an insane step in the wrong direction

I don't think you entirely understand bitcoin, or where the value of a currency comes from. First of all, there is only one issuer of bitcoin: the bitcoin network, acting in aggregate, according to a pre-agreed algorithm. Secondly, the value of almost any modern day currency is entirely a perceptual value caused by the notion that people will accept that currency at some approximately-known rate for payment for goods or services. The only reason bitcoin is highly volatile at the moment is that not many people are using it as a currency -- it is still far more popular as an investment vehicle than for its actual intended purpose. Only when more mainstream retailers start accepting it will we see its value reach long-term stability.

Re:Upside-down pyramids

[Anonymous Coward]

I'd guess like any other bubble, it'll pop eventually. The question is, when?

And more importantly, what will its value settle down as after it bursts? As only BTC 21M will ever be created, if anyone is using them for actual commerce they will retain some residual value. Their price at the moment is driven by the investment market, but I believe there is a nontrivial market for people who actually want to use them for commerce, and announcements like this will only serve to increase the value of that market. I'd say it is unlikely that the value of the system as a whole is $14B (which is what the current quotes for BTC/USD would value it at were all BTC currently issued), but maybe it will be worth $1-2B, which suggests a final end value of somewhere in the $50 to $100 range for a bitcoin is perhaps realistic.

Re:Upside-down pyramids

[MrEricSir]

First of all, there is only one issuer of bitcoin: the bitcoin network, acting in aggregate, according to a pre-agreed algorithm.

Which is to say, the number of bitcoin can be changed as long as a sufficient number of people agree to change the algorithm.

Secondly, the value of almost any modern day currency is entirely a perceptual value caused by the notion that people will accept that currency at some approximately-known rate for payment for goods or services.

In theory, sure. In reality, there's a reason that countries with strong currencies have strong militaries to protect those currencies.

Re:Upside-down pyramids

[bill_mcgonigle]

In theory, sure. In reality, there's a reason that countries with strong currencies have strong militaries to protect those currencies.

Not everybody feels that a currency backed by violence is an ethical arrangement. Nor do they feel that allowing politicians to destroy the value of a currency is a wise course of action.

Re:Upside-down pyramids

[MrEricSir]

Not everybody feels that a currency backed by violence is an ethical arrangement.

Of course it's not. The question comes down to this: what's the alternative? So far, nobody has come up with a method to protect physical assets that doesn't involve physical security. Bitcoin doesn't solve this (nor does it attempt to.)

Nor do they feel that allowing politicians to destroy the value of a currency is a wise course of action.

How is letting a group of bitcoin power users alter the currency's value any different?

Re:Upside-down pyramids

[bill_mcgonigle]

Of course it's not. The question comes down to this: what's the alternative?

Well, the churches that feel strongly about this use gold-backed assets. Any kind of asset-backed (non-fiat) currency would qualify.

How is letting a group of bitcoin power users alter the currency's value any different?

Bitcoin users are concerned with protecting the value of the currency. Politicians are happy to destroy a currency to gain a victory in the next election cycle. So, they're pretty much opposites.

Re:Upside-down pyramids

[MrEricSir]

"Bitcoin users" sounds an awful lot like the democratic ideals behind most modern government currencies. Aside from being more globally representative, the question still comes down to how the users of the currency are more representative than, for example, that of USD.

Only Temporary

[Anonymous Coward]

This will be shut down in no time. Governments will not tolerate flouting of their control over commerce.

Nice publicity stunt, but almost certainly no real effect.

But how much will it cost?

[Animats]

But will it be cheaper or more expensive than using a credit card?

Accepting Bitcoins is surprisingly expensive. There's a volatility risk, and for a currency that can change by 10% in minutes, that's a real problem. Coinbase (which is a dealer, rather than an exchange) has a posted buying price, good for one minute, and some shopping cart systems use that. But that price is usually lower than the prices on the major exchanges; there's a conversion cost. So, as with retail money-changers, you pay a conversion fee. Also, like most money-changers, Coinbase will briefly stop buying during periods of high volatility or if they have trouble unloading their Bitcoins.

Then, of course, there's prying the money out of the Bitcoin broker or exchange. Overstock is probably in a strong enough position to demand a daily sweep into a real bank account, with serious penalties for failure to deliver.

If you look at the few Bitcoin-accepting businesses that sell real products with typical mail order retail markups, the Bitcoin price is usually significantly higher than the US$ price. Most of the stores that currently accept Bitcoin are selling T-shirts, posters, remaindered goods, and similar crap. Of course, that's what Overstock does, so it may be a good fit.

Re:But how much will it cost?

[rudy_wayne]

But will it be cheaper or more expensive than using a credit card?

Accepting Bitcoins is surprisingly expensive. There's a volatility risk, and for a currency that can change by 10% in minutes, that's a real problem. Coinbase (which is a dealer, rather than an exchange) has a posted buying price, good for one minute, and some shopping cart systems use that. But that price is usually lower than the prices on the major exchanges; there's a conversion cost. So, as with retail money-changers, you pay a conversion fee. Also, like most money-changers, Coinbase will briefly stop buying during periods of high volatility or if they have trouble unloading their Bitcoins.

And there's the problem. Bitcoins aren't real money. Before you can spend them you have to convert them into something (dollars, euros, whatever). Meanwhile, the paper in my wallet doesn't need any conversion.

Re:But how much will it cost?

[satuon]

Even if it is more expensive, it doesn't matter, because if you're holding Bitcoins, you need to convert them anyway, so you'll be hit with the conversion cost no matter what.

Re:But how much will it cost?

[Anonymous Coward]

it wont be any cheaper, because to get in or out of any exchange (or downstream exchange equivalent such as bitpay) costs the vendor just as much as the swipe does.
but it's massively more cool, so there's the win.
the bitcoin price is higher because they presume early miners are their customers, it's called rape. the market will sort that out and prices will fall. then it's just implementation cost.

Re:But how much will it cost?

[Anonymous Coward]

another advantage is you're saying FUCK YOU, to the old credit power broker industry and bringing in the new digital currencies.
you also have no idea how much vendors want to get out from under the thumb of credit contractual obligations.
and pci dss credit card number computer security shit.
you can't steal someone's source address and use it in romania. duhr.

Re:But how much will it cost?

[Anonymous Coward]

The paper in your wallet doesn't flow as easily over the internet though...

Re:But how much will it cost?

[blackraven14250]

I'm not sold on the idea of Bitcoin, but that's not exactly a solid argument against Bitcoin over the long term. You'd have trouble converting any currency into goods before the currency became widely accepted. There's a lag time for adoption with any attempt at a currency, even ones mandated by law, so it's no surprise that a currency that's essentially discovered and adopted by word of mouth takes a long time to be truly useful in all situations.

Re:But how much will it cost?

[Anonymous Coward]

The conversions costs (1%) are usually much lower than the swipe (3% or more), plus no risk of chargebacks.

Re:But how much will it cost?

[Bert64]

Meanwhile, the paper in my wallet doesn't need any conversion

Assuming you are trying to spend it in retailers which accept that particular type of currency... Try spending it in a foreign country and you'll have to convert it. Bitcoin is no different, some retailers will accept it and some will not.

Re:But how much will it cost?

[SuricouRaven]

It'll become real money when enough people start accepting it for goods.

Though if that happened, it'd also become a tax-evasion, embargo-busting, money-laundering criminals' dream. Government would have no option but to intervene and regulate, putting everything right back where it started.

Re:But how much will it cost?

[Anonymous Coward]

At least they can't print it so easily, and if they choose to spend money in Bitcoins it will be more transparent to the public than other means. It looks like a small change, but by chipping away power from the government like this we will eventually see a whole different world.

Re:But how much will it cost?

[Anonymous Coward]

last time I checked my credit card was accepted at millions more places than bitcoins. Bank transfers and paypal are also available and seem to come with far lower fees than that imposed by bitcoin exchanges and traders.

Re:But how much will it cost?

[meglon]

Actually, i use my US DOLLAR based credit card fairly often with a couple UK POUND based businesses, and their carts do the exchange for me. Why? Because US DOLLARS and UK POUNDS have the backing of their countries, as opposed to bitcoin which has the backing of.... what... rabid anti-government idiots, and financially questionable con men looking for the next score?

I'll take society over criminal wanna-be's any day of the week.

Re:But how much will it cost?

[Anonymous Coward]

Interestingly, a friend who runs a business that accepts BTC using BitPay has elected to keep some of the revenue in BitCoin... and convert some to his local currency. He gets the extra customers, can still pay his local accounts, and for part of his revenue has almost no transaction or conversion costs, and the probable up side of increasing valuation in the BTC he holds.

This strategy leaves him in control of how much exposure he has to the speed of the growing acceptance of BitCoin .. but lets him be seen as an early mover.

The main point is that doing this does not mean an either/or choice has to be made... and that means he can gradually accept a transition to a more stable global monetary paradigm (BitCoin), but use his retention percentage as a risk management technique. He gets to choose how much risk he takes with BitCoin, but also gets the extra business by being an early adopter.

Re:But how much will it cost?

[AmiMoJo]

I guess he is looking at the longer term view that bitcoin will become a more useful currency that doesn't need exchanging so much. More interesting to me is that overstock sell hardware for mining BTC, so there must be a point at where using it to mine would be cheaper than selling it.

Re:But how much will it cost?

[ihtoit]

the Government doesn't control the currency or the money supply, THE BANKS DO!

Re:But how much will it cost?

[Anonymous Coward]

The scare-mongering. If I were you, grandpa, I wouldn't use the computer or the Internet. You might get INFECTED by one of those crazy viruses. How did you get on slashdot? Do you work for the government that you are spreading your foul propaganda against bitcoin? Perhaps you should go to a site where they love corrupt governments and where they hate technology and freedom. Now go off, grandpa, and suck the state's tit like a good little boy.

Re:But how much will it cost?

[Anonymous Coward]

If vendors accept Bitcoins, consumers don't need to convert them to anything before spending them...

Re:But how much will it cost?

[Anonymous Coward]

last time I checked my credit card was accepted at millions more places than bitcoins.

Your credit card is made of paper?

Re:But how much will it cost?

[Anonymous Coward]

You're an idiot. Posting AC as I don't have time to explain to you how what you just said makes you an actual idiot. Not only that, but you'll plug your ears and go "LA LA LA" because you can't handle the truth.

Re:But how much will it cost?

[lexman098]

Meanwhile, the paper in my wallet doesn't need any conversion.

Try giving the paper in your wallet to Overstock.com

Re:But how much will it cost?

[rubycodez]

what a silly thing to say, most dollars are information in computer systems. I can send dollars far more places than bitcoin

Re:But how much will it cost?

[SonicSpike]

Federal Reserve Notes (dollars) aren't real money either in case you haven't noticed. The difference between BTC and USD? One is centrally controlled by the government, the other is peer-to-peer.

Re:But how much will it cost?

[Anonymous Coward]

Every argument here was figured out years ago by Bitcoiners. We know the problems, we know how to fix them, it's all in the FAQs if anyone bothers to read them. This is why I rarely come to /. anymore, it's the antithesis of what it use to be, now nobody RTFMs and that's a real problem.

Re:But how much will it cost?

[Anonymous Coward]

> last time I checked my credit card was accepted at millions more places than bitcoins.

Your credit card is not "real money" by any stretch of the imagination.

Re:But how much will it cost?

[KramberryKoncerto]

I won't say they're "figured out". Many A's are not very laid out very adequately, some aren't comprehensive and thoughtful. In the long run there are still many concerns; for example, network security scales with mining pay out which gets exponentially smaller, which is a sustainability issue of which the effects are not fully predictable. All in all it's still in experimental phase but the initial goal was noble and the outlook isn't too bad. I share you sentiment, however, that too many of the comments here are ill-informed.

Re:But how much will it cost?

[Richy_T]

The credit card company typically does the conversion. And they'll charge you handsomely for it too.

Re:But how much will it cost?

[Anonymous Coward]

credit cards most definitely ARE real money. money is not a physical dollar, they are merely means of easily carrying in your wallet for simple exchanges, you don't need physical representations of the currency for it to be real and a credit card Is certainly more "real money" than a bitcoin.

Re:But how much will it cost?

[bloodhawk]

What arse backwards countries use money made of paper? money is generally stored electronically nowadays, some is printed on plastic or cotton materials for convenience but that is certainly only one form it can take and not the definitive one.

Re:But how much will it cost?

[Anonymous Coward]

ThinkPenguin.com's got more than just crap- they sell computers, accessories, and other peripherals. This is just ONE example.

Conversion costs aren't bad at all either. If your turning bitcoins into dollars at the time of receipt and sweeping that money into a real bank account you'll find your transaction costs are actually less than accepting credit cards or paypal without the hidden risks (charge backs).

And you don't have to convert to USD. There are lots of other places besides ThinkPenguin to buy good stuff. There are virtual private server service providers, telecommunications companies, and others.

Damn now I have to buy from Overstock

[future assassin]

not because of the Bit Coins but beacause of the risk they are taking and thinking outside of the box. I love when companies think outside of the box and against the grain. Now only if politicians took the same stance.

Re: Damn now I have to buy from Overstock

[Anonymous Coward]

Don't worry about it. Making an outrageous statement for a bit of free publicity just before Christmas is a very old and well known technique, and quite safely inside the box.

Re:Damn now I have to buy from Overstock

[SuricouRaven]

I don't want polticians to think outside the box. I want them to settle down and focus on actually keeping their countries running smoothly, rather than constantly trying to rebuild society to their own ideals. As soon as one set of reforms is finished, power changes hands and a new regime is announced to undo the reforms and impose new ones.

Re:Message to those who will complain in 2014:

[Anonymous Coward]

Gert fucked. I'm not "investing" in a POS ponzi scheme

A bit off topic

[Anonymous Coward]

Apologies in advance as I don't know much about the specifics of how currencies work. From what I can read, the unwillingness of widespread adoption of bitcoin and other crypto-currencies is conversion fluctuation. I would assume another reason is that governments would never allow a currency that they had no control over get to a point of popularity that could threaten the official currency. However in a hypothetical situation, could Bitcoin achieve stability if the use of it got to a point where individuals and companies could use them in the day to day lives/operation without the need to convert them to official currencies or at least rarely?

Re:A bit off topic

[SuricouRaven]

Yes, in theory. But even long term it's high risk, because in the event it did grow to that level of popularity it would likely become subject to strict government regulation or outright prohibition. It wouldn't be stable in the same way as other currencies though - it's intentionally deflationary in nature, which has some serious economic implications. Good for savers, but it'd make obtaining credit near-impossible. Credit, though it can be a source of disaster when overused, is also essential for economic growth. If it did somehow take over, it wouldn't be an economic panacea. It'd just eliminate current problems and bring in new ones.

Re:A bit off topic

[Anonymous Coward]

Thanks SuricouRaven. From the sounds of it cryptoCurrrencies are not a perfect alternative for current currencies but if enough Bitcoins were kept in circulation, could it be possible to use it as a local currency like The Wörgl Experiment in Austria in the thirties?

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

Re:A bit off topic

[Anonymous Coward]

It would never displace traditional money. Anyway, if you want an inflationary crypto currency, you can get that, too.

Re: A bit off topic

[g4sy]

You need to get into freicoin

The Slashdot of the past...

[Anonymous Coward]

The Slashdot of 1997-2002 would have loved Bitcoin. The Slashdot of 2013 hates it for some reason. I wonder what changed?

Re:The Slashdot of the past...

[DogDude]

The Slashdot of 1997-2002 would have loved Bitcoin. The Slashdot of 2013 hates it for some reason. I wonder what changed?

That's easy. Most of the Slashdot crowd has grown up.

Re:The Slashdot of the past...

[Anonymous Coward]

Based on their comments it seems like many of the fanboys are early adopters (and miners, holders) of BTC with dreams of the value skyrocketing. These folks probably see the skeptics as nothing more than jealous because they missed the boat.

And on the flip side of the Casascius, it seems like many of skeptics and nay-sayers are simply sick of hearing about the Bitcoin revolution once or twice a day on Slashdot. These folks probably see the fanboys as engaging in a pump-and-dump scheme -- get folks jazzed to the point where everyone is following the Winklevii lead, pushing a ton of money into BTC futures and causing the per-coin value to skyrocket.

Both sides are making good and bad arguments.

Re:The Slashdot of the past...

[aaarrrgggh]

Yeah... Pretty much. Using bitcoins for transactions is a lot like using gold. It adds conversion costs, and price stability is nill. Looking to gold, higher volume in trading and ownership does not really increase medium-term stability.

Living abroad, but getting your money in your home currency can be similarly frustrating. Another not-insignificant change since 97-02 is the Euro.

It really comes down to what problems is bitcoin designed to solve, what does it actually solve, and is the complexity worth the hassle? The transactional costs are substantially higher than credit card right now when you add in price hedging.

Re:The Slashdot of the past...

[Anonymous Coward]

That's easy. Most of the Slashdot crowd has gotten old and conservative.

There, FTFY. HTH. HAND.

IRS to Overstock:

[Anonymous Coward]

please come in for an audit.

The poeple versus the mob

[Anonymous Coward]

If it is not controlled by the government (the people) it will be controlled by the mob.

the WORST thing for a healthy economy

[ihtoit]

...is a monetary system under private control. Take the commercial banking sector. The banks are on a roll here, they're "losing" money hand over fist, and world Governments are rolling over to ensure they don't fail. Who are the winners here? With the exception of Iceland, it ain't the Governments. In fact, the banks tried to fool the Icelandic Government into the belief that if a bank failed then so does the economy, the bankers were jailed and the banks sacked. The Icelandic Government is now in charge of the money supply, and as it stands now Iceland has the LOWEST deficit in all of Europe.

Re:the WORST thing for a healthy economy

[XcepticZP]

Of course, letting the government print/create debt whenever they need money is such a great idea. +1 cookie for you. You do realize that means they're taxing your children's as-yet unearned productivity? Btw, on a side note, the only reason banks have such power is because of the government in the first place. Government creates money and causes inflation. Government allows banks to fraudulently lend out money they don't have. Government doesn't prosecute banks for negligence/fraud. Government skews the market and forces people to get into debt, it forces people to invest in funds and retirement funds. It allows any entity out there to skew the public in their favor, and your solution is to give them MORE power? As if power is going to fix the problem, power is the problem.

Re:Message to those who will complain in 2014:

[Anonymous Coward]

Message to those who will complain in 2014 about how bitcoin is "not fair" because they failed to buy today:

See the signs. Read the news. Understand the protocol. And, consider investing. And, if you don't buy now, then for heavens' sake, don't complain in 2014 about "unfairness" after the overstock thing happens. It's not others' fault that you don't buy in time. Rewards (may or may not) come to those who take the risk.

I have read a lot of arguments against Bitcoin, but have never once coming across somebody complaining about it being unfair because they didn't get in early, before in your post now. There is nothing unfair about losing or earning money speculating in something as wildly unstable as Bitcoin, it is very similar to speculations in volatile stocks, just captures the interest of nerds more than the stock market usually do.

Another publicity stunt...

[psymastr]

If you have a company and some money to burn (for coding the bitcoin business logic which will net you no profit), hurry and declare that you will be accepting bitcoins... The publicity stunt will get you on every news website and this will raise your non-bitcoin business, the only one that matters that is.

Re:Another publicity stunt...

[Anonymous Coward]

Mod +1 Insightful

Re: Message to those who will complain in 2014:

[LF11]

There are a lot of very bitter people complaining that they never thought it would get this big.

So Overstock's CEO is a frothing libertarian

[GameboyRMH]

Now I have a reason not to give them my business, I didn't before.

Re:So Overstock's CEO is a frothing libertarian

[drinkypoo]

You're funny, but you make no points of substance.

Confidence in the USD is falling. The only truly substantive difference between USD and Bitcoin for the user is the confidence level. And confidence in the USD is falling in part because of deliberate manipulation of the currency by The Fed. It's quite rational to believe that supporting alternate currencies is itself a rational act.

You may have heard before that the government which can do anything for you can do anything to you. It's still true. The government which controls the currency wields extraordinary power. If you believed that they would wield this power for good, then you would have a point — but you'd be provably delusional.

Re:So Overstock's CEO is a frothing libertarian

[GameboyRMH]

Confidence in the USD is falling. The only truly substantive difference between USD and Bitcoin for the user is the confidence level.

Not accountability? I'd prefer the currency that is vastly less useful for tax evasion and money laundering, even if it's not quite as convenient for some things that governments don't like for stupid reasons. Not being able to order pot online is a small price to pay for keeping the Crime Finance Singularity from happening IMO.

Not even the deflationary nature of Bitcoin that libertarians fawn over? That seems like a pretty big difference. I'd prefer the currency that doesn't encourage hoarding and speculation of the currency itself.

Re:So Overstock's CEO is a frothing libertarian

[zippthorne]

The US dollar doesn't record transaction information. Bitcoin records every transaction ever made. How is the dollar better for preventing tax evasion than bitcoin would be if adopted as a currency?

Re:So Overstock's CEO is a frothing libertarian

[drinkypoo]

Confidence in the USD is falling. The only truly substantive difference between USD and Bitcoin for the user is the confidence level.

Not accountability?

HAHAHAHAHAHA

I'd prefer the currency that is vastly less useful for tax evasion and money laundering,

Completely common in USD.

Not even the deflationary nature of Bitcoin that libertarians fawn over?

That encourages spending, which is a good thing.

Re:Message to those who will complain in 2014:

[Anonymous Coward]

Same thing different decade. You could have domain names back in the early mid 90's. Instead of buying my 1990 Thunderbird, I could have invested that 25K in MS or Apple and be retired right now comapred to have a 25 year old piece of shit car in my driveway. I could have bought property in 2001 and sold it in 2005 in my area and be sipping drinks on the beach in France. There is no secret here, you win some you lose some, if things were that easy, predictable, and consistent, everyone would be retired right now. Bitcoins and investments are not perpetual motion machines. The money and value had to come from somewhere. In the traditional world, future sales, stuff pulled from the earth, amount of people you could advertise to was used to determine value. With bitcoin, it is time and electricity. Neither of which have any intrinsic value or future use or value once they are used. Bitcoins value is based on "Hey this is pretty hard, do it and you earn something. With nothing actually "there" it would seem the potential is endless and could keep going. It can't. Eventually it may actually succeed as a popular currency but the speculators will have to go down to just about 0.0001 percent of the overall market and it will have to be fluid for that to happen. At that point, no one is "making" any real profit from it and bitcoin will just be another option when paying for something and there will only be five articles a year on Slashdot about Bitcoins just like there are for other forms of currency. Checking out on a web site? Would you like to pay with Paypal, Bitcoin, Visa, Mastercard, ISIS, AMEX, Google Wallet, Litecoin. That is about all the hype it will have then. With that, the incentive for the average Joe to keep mining and processing transactions will go down. Until another electronic bitcoin clone comes around and starts over.

I have no interest in bitcoins right now because it brings nothing to the table that I need. I have lost nothing because of that and never will.

Does bitcoin really have no value?

[Anonymous Coward]

The reoccurring sentiment I see about bitcoin is the fact that is based on nothing and it has no value. One thing it does offer is the transfer of ownership of something which can be tracked across vast distances. like several million miles. that quality is what gives it value.
If I'm in space and I want to purchase something, what good does a dollar do me if I'm in orbit around Saturn and you're at earth? can you transfer me a dollar? or an ounce of gold? You can transfer a bitcoin.

Thoughts on this? It seems to me that bitcoin or something similar to this will be required for a currency once we really establish ourselves as a species that travels beyond our planet. I realize we're probably a hundred years from this being a reality, but that's where I see the benefit.

 

Same problem..

[Anonymous Coward]

Gold's value fluctuates too (not as wildly as bitcoin, but still if gold was your 'currency' it was massively deflationary leading up between 2008 or so and 2011, and has been pretty inflationary sinze 2012).

You are ultimately left with things like Fiat currency (yes, with some valid concerns about corruption and ulterior motives of a small set of people) versus things like Gold standard (effectively 'mob rule' deciding value, which history has demonstrated to actually be worse).

Thanks for the link, it's a must read!

[Anonymous Coward]

"Byrne financed and largely wrote a full-page advertisement in the Washington Post which said "Naked short-selling ... is literally stealing money from the widows, retirees, and other small investors."

Since 2005, Overstock has filed two lawsuits relating to the matters under Byrne's direction."

What a whiner this guy is..... first it's "get the government off my back and out of market regulation", then when some traders do something that reduces his comapny's stock price, off he runs to the big bad government to file lawsuits to try and get them stopped. One more libertarian who hates goverment until something happens that is too big for him to personally defend himself against.

They will love it

[zippthorne]

From wikipedia:

Integral to Bitcoin is a public transaction log, the blockchain, that records bitcoin ownership currently as well as in the past. By keeping a record of all transactions, the blockchain prevents double-spending. Cryptography is used to protect the integrity of the block chain

They are going to love tracking everyone even more. They might even mandate bitcoin (or come up with their own, I guess..)

Bitcoin's value is irrelevant for its usefulness.

[Sanians]

Bitcoin is fluctuating in value right now precisely because people are betting on its future usefulness as a currency.

Actually, they're merely betting on its future value. This idea that the value of a bitcoin is related to the usefulness of a bitcoin is false. It's merely an effect of supply and demand, to which usefulness is a factor, but hardly the only one, and probably not even the largest one at present.

Are dollars any less useful today than they were a hundred years ago, despite the much lower value they have today? The value of a currency is irrelevant to its usefulness. If it's worth less, then you're simply paid more of it for your work, and you pay more of it for things you want. If it's worth more, then you're simply paid less of it for your work, and you pay less of it for things you want. The value is in work and in property, the currency is just a measure, like meters and feet. You'll note that the length of a meter has nothing to do with it's usefulness of a unit of measure, and it would be useful as a unit of measure no matter what its length, just so long as its length is constant over space and time.

That's kind of what's driving this insane deflation Bitcoin is seeing. People want to invest in it, and so they decide how much they want to invest, say $100, and then they buy $100 worth of bitcoins, however many that is at the moment. It doesn't matter to them how many they get since the value of the currency is simply what they expect to exchange it for in the future, and they expect that to be more than they exchange for it in the present. Indeed, I guarantee you they're all looking at it not as "now I own 0.15 bitcoins" but rather "now I own $100 of bitcoins" -- bitcoins themselves are such a poor measure of value that people measure the number of bitcoins they have in terms of another currency rather than in terms of bitcoins because "0.01 bitcoins" doesn't hold any meaning to anyone because what it means changes far too often to be worth learning.

The same thing is certainly going on with gold. Is that 1 gram of gold really worth $50 to you? If so, it's probably only because you can exchange it for $50, not because you have anything you can do with it that you feel is worth its $50 cost. The same is true of bitcoins, but even worse because bitcoins are ultimately useful for nothing other than exchanging for other value, and people don't end up holding some small piece of metal in their hand wondering "why did I pay $50 for this?" They're told that 0.075 bitcoins are worth $50 and so they're worth $50 to them.

Dollars are really no different in that regard. What makes them different is that their value is regulated by the Federal Reserve. Bitcoin's (and gold's) value will vary depending upon supply and demand. Dollars would do the same thing, but the federal reserve regulates the value by changing the interest rate it charges for loans on money it creates out of thin air (or, actually, cotton). When it wants the value of a dollar to go down, it lowers the interest rate, so people are more easily able to acquire money and so the value goes down. When it wants the value to go up, it raises the interest rate, making money harder to acquire, and also pulling money back out of existence as the previous loans are repaid and not renewed and so that money is destroyed. The result is that supply and demand can be factored out of the currencies value, and it can become useful as a measure of value, since its most important quality in measuring value, like the meter, is that the measurement is stable over time. Bitcoin, of course, has no such mechanism in place, and so the value is always going to fluctuate randomly. It may become more stable over time as it sees more use, but whereas you can predict that dollars will see about a 4% annual inflation rate, and be worth about half what they are now in 20 years, you'll be unable to make any such predictions for bitcoin.

As for that inflation the federal reserve creates, I su

what about fluctuations.

[Anonymous Coward]

Any currency thats value fluctuates as much as bit coins is essentially worthless. Why would I spend any when tomorrow it could be worth twice as much, and why would I accept it if it may be worth half as much.

Re:what about fluctuations.

[aminorex]

It doesn't matter what bitcoin costs when it is used to transmit USD. Bitcoins are just elements of a protocol for secure transmission of funds. Because they are in limited supply, they are valuable, but you don't need to speculate in bitcoins to use them to transmit funds at much lower cost than other systems allow.

1/2

[Holi]

After watching it lose half its value in one day, and after watching its value fluctuate from 200 to 1200 in under 3 months them drop by half overnight wouldn't affect its purchasing power at all.

misinformation

[Holi]

Sure they printed a shit ton of bills as you claim, but what you guys always fail to mention is that they destroy bills too. Now go back and rethink what you said and maybe take an economics class.

it is

[Holi]

And we can prove that the dollar holds its value. I can buy the same thing day after day and spend the same amount of money in dollars. How does that work for bitcoin whose value changes hour by hour?

Who controls

[manu0601]

Obviously the guy has some problem with how his government controls money creation.

But instead of attempting to fix the way the government works, he want to jump on bitcoin, for which money creation rules are not obvious. We have no proof there is not someone with a secret way to create bitcoins.

Re:Message to those who will complain in 2014:

[tompaulco]

I have read a lot of arguments against Bitcoin, but have never once coming across somebody complaining about it being unfair because they didn't get in early, before in your post now.

Are you reading with your eyes shut? Every single article is riddled with people who say it is a Ponzi scheme (take for example the post right before yours). Then somebody corrects them, pointing out that a Ponzi scheme is one in which later investors money is used to pay off the early investors and therefore bitcoin is not a Ponzi scheme. And then the original poster fires back saying that the early investors got in when it was cheap and now investors have to pay full price (nevermind that the early investors paid full price when it was cheap, and people were naysaying it back then, too). So, yeah pretty much multiple times in every article, it boils down to people complaining that they can't get in for what the original miners or investors got in at.

Re:Message to those who will complain in 2014:

[Anonymous Coward]

That's quite a jump from "complaining it's a Ponzi scheme" to "complaining they couldn't get in".

Do you imply that, despite their posts, they don't actually believe it's a Ponzi scheme, or that they find noting wrong with Ponzi schemes as long as they get to profit?

Really?

[Anonymous Coward]

I don't know about where you are, but here in the UK you can get a 3% return in an easy-to-open instant access account. Depending on how exactly you measure it, inflation has been between 2.1% and 3.3% over the last year.

Re:Really?

[Richy_T]

That "depending on how you measure it" is important. The government would like you to think it's 2.1% but that's due to hinky accounting. The actual rise in the cost of living is north of 3%.

If you are willing to defer fulfillment on spending your earnings, you should be able to enjoy realistic returns on those savings. That you can't is due to higher-than-it-should-be inflation. That is, the government is stealing your wealth.

Sending dollars

[Anonymous Coward]

Yes, but you have to accept arbitrary rules from the banking system in order to do so:

* You have to give them proof of your identity
* You have to accept that your money might be seized at any time if they have any suspicion that you are using their services fraudulently, or if you have a debt outstanding to anyone who can get a court order against you, or if the government decides to investigate you for tax evasion, etc.
* If you're receiving money via a card transaction (by far the easiest option), you have to accept that the sender can claim it back without much proof of you doing anything wrong, that you'll have to prove you did everything in the transaction according to the letter of your agreement (can you?) and that you'll have to pay fees for having the money taken away from you as well.

Bitcoin works far more like the actual paper in your wallet than the arbitrary and baroque banking systems we have designed. There's no paperwork requirement beforehand. There's no risk of a third party just taking your money without you being able to stop them (at least not via legal means, anyway). There's a short transfer delay while you make sure the transaction is properly registered in the block chain, but after that the transaction is final.

Re:Sending dollars

[rubycodez]

in various countries, bitcoins have been siezed by governments. bitcoins have been regulated by governments. bitcoins have been banned by governments. bitcoins have been taxed by governments.

debit cards

[Anonymous Coward]

Actually, i use my US DOLLAR based credit card fairly often with a couple UK POUND based businesses, and their carts do the exchange for me.

If you had a bitcoin backed debit card you'd find you could do exactly the same thing with bitcoin.

Re:Message to those who will complain in 2014:

[Anonymous Coward]

I have read a lot of arguments against Bitcoin, but have never once coming across somebody complaining about it being unfair because they didn't get in early, before in your post now.

Are you reading with your eyes shut? Every single article is riddled with people who say it is a Ponzi scheme (take for example the post right before yours). Then somebody corrects them, pointing out that a Ponzi scheme is one in which later investors money is used to pay off the early investors and therefore bitcoin is not a Ponzi scheme. And then the original poster fires back saying that the early investors got in when it was cheap and now investors have to pay full price (nevermind that the early investors paid full price when it was cheap, and people were naysaying it back then, too). So, yeah pretty much multiple times in every article, it boils down to people complaining that they can't get in for what the original miners or investors got in at.

I don't see how you arrive at the conclusion in the last sentence. This is coming from you, not the other posters. There are many possible motivations people might have for criticizing Bitcoin. I did not read these posts as proof that people were just jealous, quite the opposite, I imagine many of the people criticizing would never contemplate buying Bitcoin regardless of timing or profit opportunity. Just like some people would never contemplate buying volatile penny stocks (which behaves very similar to Bitcoin in valuation) and still might criticize "the ponzi scheme" of financial speculation instruments today.

Newer payment processor

[DrYak]

And the good thing with bitcoin is that it's basically just a very well standarized protocol meaning that all site using bitcoin are all compatible with each other.

With Amazon's payment, that is "yet anoter site where I need to have an account, in addition to PayPal and co" (luckily, lots of people are already buying stuff from amazon, and thus had an account anyway. Meaning that Amazon didn't have much problem carving it self a place on the payment scene, even if it came after PayPal. But that won't necessarily be the case for any newcomer on the USD/EUR/etc. payment scene).

Whereas with bitcoins, it doesn't mater if the merchant is using coinjar.io (as suggested above) or bitpay or coinbase. As long as it follows the bitcoin protocol, it plays nicely with everyone else. You don't need to have an account at coinjar.io or at a potential new in-house payment processor from overstock. Just send the requested amount of bitcoin (the total amount of USD of the goods your buying converted in whatever is the current exchange rate du jour) to the specific public hash for this transaction using the source of your choice (official bitcoin-qt client, a web wallet, the withdraw funciton of some exchange, the wallet associated with your mining pool, whatever)