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Paypal Jumps Into Bitcoin With Both Feet
retroworks (652802) writes The BBC, the Wall Street Journal, Bloomberg, Forbes and several other business sites are buzzing with Paypal's incorporation of Bitcoin transactions. According to Wired, Paypal will be "the best thing ever to happen to Bitcoin." Paypal-owned Braintree not only brings 150 million active users in close contact with Bitcoin, it signals "mainstreaming" similar to cell phone app banking, perceived as experimental just a few years ago.
...and people were afraid MtGox was going to steal your money. Well, at least there is no doubt with PayPal.
I'm not exactly a guru of bitcoin, but I'll summarize as somebody who's tried it recently out of curiosity.
Getting into it is surprisingly difficult. Purchasing bitcoins right now (or before paypal maybe) is pretty hard. Near impossible to find a site that will let you buy with a credit card, because sellers get screwed over with chargebacks.
Mining bitcoin at this point isn't worth it. At all. A high end GPU working 24/7 would get you $10 per month while costing more in power. At this point mining is only profitable to people willing spend a lot of money on very specialized hardware.
Once you have some, it's easy enough to use. But it's an unregulated system, so there is some danger and no safety net. If you're ever going to put serious money into it, be very, very careful. Danger comes both from things like getting hacked, and from that the value fluctuates without any central control.
Tax-wise it seems tricky. It seems (you're nuts if you take advice from a random stranger on this) that it's considered an asset, and if bitcoin gains in value you have to pay tax on that. Up to you to figure out how to keep track of it and do it properly.
As far as working, it does. You can buy stuff with it fine, and the USD/BTC exchange rate is stable enough. If you have cash to spare it might be worth to get some, just in case it increases a lot in value (I doubt paypal would get into it without consulting a bunch of lawyers), but you'd be nuts to put your life savings into it.
Awesome! All the user friendliness of bitcoin combined with the great customer support of Paypal.
The entire security scheme of bitcoin is actually based on the exact opposite:
Not only is it not anonymous, it's public knowledge *BY DESIGN*.
Every single bitcoin transaction (or any other alt-coin for that matter) is publicly broadcast on the network.
Every single full node on the network is always aware of the transaction.
The point is that, thanks to this broadcast, every single bitcoin user can independently verify the transactions and (based on these checks) together all the node can agree who has how many coins left.
Unlike traditional banking (or a web payment like paypal, for exemple), there is no central authority that is the official referrer about account balances (with banks: the bank is the official authority about the content of its users' acounts. With webpayment: paypal is the official authority about the content of paypal accounts, etc. BUT with bitcoin, everyone can control the history of transactions by looking up the blockchain, there is no official central "Bitcoin, inc." that is in charge).
Due to this design (security by public broadcast) that means that no transaction is secret.
At best, it could be called "pseudonymous": the transaction are hidden behind public key hashes. (the civil/legal identity of parties of a transaction aren't directly written into the block chain. Instead the public key hashes are written).
so there's a low risk that an identity is immediately leaked, just by casual look of the blockchain.
It at least takes a conscious effort to track public keys accros the blockchain and follow the money train until an actual identity can be matched.
But that's completely possible and well within the capabilities of governments.
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