As I said, the currency conversion could work either way. It'd be easiest doing it the way you describe, however a big part of BitInstant's other business doing fiat-Bitcoin conversions is that they have good mechanisms to complete the conversions as fast as possible with accurate pricing. This may enable them to do the conversion fast enough that they'd somehow load the dollar balance on the card as you attempt to spend it. Effectively they'd intercept that "over-spent" notification somehow in the computer system, and instantly transfer over dollars as required. They then take the risk that they can't buy the dollars back at a profitable exchange rate.
Re: risk, any balance actually on the cards would be the responsibility of the bank actually issuing the cards. This isn't any different from any other pre-loadable card. BitInstant itself is a registered company in New York, NY with a physical office. The identities of the people running it are well known. On IRC they hinted that they're looking into allowing you to hold the private key associated with the Bitcoin balance on your card, so if BitInstant failed you could recover the Bitcoin balance yourself. (the BTC funds wouldn't be pooled in that case) The issue there is the person holding the card spending the coins before BitInstant can take them to sell on the market. However, the card isn't anonymous, so they know who you are if you try to pull that scam and will just ask you to give them Bitcoins to replace the ones you took. Also in practice even a transaction that's been on the Bitcoin network for only a few seconds is difficult to reverse.
Currencies aren't really backed by anything these days, other than the fact people in certain economic regions generally use a given currency.
All this stuff about governments backing currencies by accepting them as taxes ignores one critical thing: How does the government decide how much to take? Suppose you were in Canada, running a business happened to accept US dollars exclusively from your customers, and at the same time happened to have all your expenses in US dollars. (quite easy to do with an cloud-using internet startup actually) The Canadian government will of course demand you pay your taxes in Canadian dollars, but as for how many Canadian dollars you owe they'll use the exchange rate between CAD and USD.... which is in turn determined by the currency markets, which figure out the price by, guess what, how much people want Canadian dollars vs US dollars.
Now imagine for some reason that every company in Canada becomes such an internet startup overnight. Even though the Canadian government demands that you pay taxes in Canadian dollars, they're going to have to ask how many based on the exchange rate at commercial exchanges. Chances are the value of 1 CAD compared to 1 USD will plummet as soon the only reason you'd want to have Canadian currency is to pay your taxes. Eventually some weird equilibrium will happen where the value is totally determined by how fast the government sells of their Canadian dollars to buy things that the government wants, which means the government might as well just peg the value of the Canadian dollar to the US dollar at some arbitrary multiple.
Of course, this doesn't happen because Canadian companies often want to be paid in Canadian dollars so they can pay their employees and other Canadian expenses. Said Canadian companies often export things to other countries, hence the exchange rate being determined by the supply and demand between Canadian stuff being exported and non-Canadian stuff being imported.
Bitcoin, modulo people holding it due to speculation, acts quite like this sort of thing, except that you can picture Bitcoin as the intermediary between two different currencies. Therefor the exchange rate of Bitcoin is determined by how long it takes to convert from a currency to Bitcoin and back again, times how many people are doing these types of transactions, divided by the total amount of Bitcoin on the market.
Really the value of Bitcoin is based on the velocity of money, and speculation. The latter is just a matter of supply and demand, it's the former that's more interesting. Suppose Alice, in the USA, wants to transfer value to Bob, who lives in Germany, using Bitcoins. The actual exchange of value is going to look like this:
Alice gives Charlie, who runs an exchange, some US dollars. Charlie gives Alice some Bitcoins.
Alice sends her Bitcoins to Bob.
Bob gives Dan, who also runs an exchange, his new Bitcoins, and Dan gives Bob Euros.
Now if this goes on over and over again, Charlie is going to be short of Bitcoins, and Dan short of Euros. So on Charlie's exchange the price of Bitcoin relative to the US dollar will rise, and on Dan's exchange, it'll fall. Enter Anna, are arbitrage trader:
Anna sells US dollars on the Forex market, buying Euros.
Now Anna wires those Euros to Dan's bank account in Germany, and Dan gives Anna Bitcoins
Anna then gives Charlie Bitcoins, getting US dollars back.
Why didn't Alice just wire Euro's? Well, bank wires have high fixed fees, so Anna can amortize the fees over one huge wire transfer in a way that Alice can't. Also, Anna doesn't care if either side know who she is, but Alice might.
The key thing is that all these steps take time, which means Bitcoins are tied up in the system, reducing the supply. So by basic supply and demand, the price goes up, based on how useful it is to use Bitcoins to transfer value between people, and how fast the whole process can happen. Some people find them very useful to do this, especially pseudo-anonymously, notably the drug trading site Silkroad. Note how curiously a more efficient Bitcoin market, in terms of fiat conversion, will lead to a lower Bitcoin price.
The key thing is that Alice and Bob don't actually care that much what the price of Bitcoin relative to other currencies is. They just care that the price doesn't change fast enough that one side or the other gets ripped off during the time it takes to complete transaction. The faster those transactions happen, the less of an issue this is. If either side can quickly buy and sell their coins, something made easier by things like BitInstant's new paycard, they don't have to worry about exchange rate volatility as much. And speaking of, while people in the US don't have this problem, ask someone in, say, Iceland, with its tiny economy and its own currency, how stable the value of the Krona is relative to other currencies...
As for what happens if cash systems collapse... frankly if that's true, chances are something is seriously wrong with society. If the internet is still functioning Bitcoin might still be working well enough as a technological project that your coins are going to be worth something. If the internet isn't work, well, you're coins are going to be worthless because people can't transfer them. Of course, if you're in such bad straits that what you really want is goats and chickens, you might also quickly find out that you can't eat gold...
Like any other tradeable thing: on an exchange. If you don't think the exchange rate BitInstant gave you is fair, it's easy to go to a site like BitcoinCharts and look at the spot prices at the time on any of the exchanges in existence for the currency you were converting too. After all, the back-end of BitInstant is just a computer program that automatically submits sell orders as required to meet their float requirements. Buyers then buy the Bitcoins, giving BitInstant fiat currency in return, which they then send to the bank handling the debit card backend via wire transfer.
The key thing from BitInstant's point of view is to have solid reliable backend software that submits orders fast enough, and statistically understands the volatility well enough, to figure out what instantaneous exchange rate they can make a profit on while still giving a good enough rate that their users don't feel ripped off. This is easy if the price of Bitcoins is rising, but if it's dropping they could easily be in a situation where they give you too much fiat currency for too little Bitcoins. Part of the issue too is that spreads between buy's and asks on Bitcoin exchanges tend to be much larger than you'd find in government-issues currency exchanges, simply because the market is smaller. They're looking at spreads in the region of one percent, rather than hundredths of a percent.
Ultimately though the process is no different from what your bank does if you use a USD denominated debit card in Europe.
From what BitInstance has said it either works by simply converting your BTC into USD or some other currency when you deposit the BTC to the address on the card, or they've done some clever thing where they convert the appropriate amoun of the BTC balance associated with the card it as you make a transaction. (depositing the currency to the actual account associated with the card just in time for the payment to go through) Credit is never offered.
Of course, this is why they don't really need much help from Mastercard: the technology powering the card is already common for branded payment cards like those ones you can get to give as gifts, just without the crazy fees and with a much more reasonable %1 currency conversion fee and the flat $10 or so fee to buy the card. That conversion fee being pretty similar to what you'd pay at a regular bitcoin exchange anyway.
Ultimately this is like Paypal's debit card: just an easy way to spend your Bitcoin balance. If you happen to have a lot of coins for whatever reason, be it you run a business, mine, or invest in them, this card might be for you. Otherwise don't complain that a niche product doesn't make sense for you.
From a security point of view it's a very easy product to offer. When Bitcoins are sent you can almost guarantee the transaction has gone through, no charge-backs, after one confirmation, or an average of 10 minutes. That rises to essentially guaranteed after six confirmations. (I'm pretty sure no-one has ever managed an actual double-spend with even one confirmation) The rest of the process is subject to the exact same risks as any other pre-paid debit card, hence the transaction limits they've said they'll apply of something like $1000 a day. Basically they just want to limit losses if someone steals/clones your card, or they screw up somewhere.
You don't have to 3d print a barrel if instead you 3d print a machine to make a barrel. I do know one of the first (the first?) machine tools ever designed were for making gun barrels. I'm sure building that machine would be a lot easier if you can 3d print all, or almost all, the parts for it. The parts of that machine that need to be accurate can then use off the shelf mechanical parts like precision guide rails are readily available and standardized, with the 3d printer providing the "stuff" required to put everything in the right places.
You ever heard of the Gingery Series? It's essentially a how-to manual on bootstrapping your own machine shop from scratch; at the end of the process you'll have an accurate metal cutting lathe and mill. It's quite reliant on time-consuming metal casting, as well as precision scraping to get the accuracy needed in a machine tool. With 3d printing you can replace the metal casting with printed parts, and the scraping can be replaced with pre-made linear rails and ballscrew assemblies. A 3d printing bootstrapped gun barrel making machine would essentially be a purpose-built version of this concept.
Keep in mind that in some cases you can use the 3d printer to make the tools needed to make the parts, rather than directly making the parts themselves. For instance barrels need to be made out of metal, yet a 3d printer could still make a jig, essentially a purpose built machining tool, that would give you the ability to make the barrel without purchasing a lot of expensive equipment. Even simple stuff like cutting templates can be a huge time-saver compared to machining parts manually.
> As for the new operation, I have a hard time taking seriously a financial institution that announces its products on IRC.
Bitinstant is well known in the community, as are the actual people behind it. What's wrong with Charlie Shrem, who frequents IRC, letting it be known that his company will be releasing a new product soon? This isn't after all their official "we have actually released this" announcement. Rather it's just a way to let people know and find some people who are willing to sign up for the first batch of 1,000 cards made.
I happen to think that kind of openness is a good thing myself.
This service is for those companies who may not be big enough to afford to go tape storage (big investment), but may only have a few TB they store on backup hard drives and such. Rather than having to arrange for offsite storage, they can use Amazon to do it cheaply and effectively. I also see it as a play for Amazon as a virtual business - Amazon handling all your IT and server needs between EC2/S3/etc so a business doesn't actually have exist anywhere - employees work from home, a token post office box is the street address, etc.
I suspect the latter is going to be pretty common. If you're running something fully cloud hosted like imgur or reddit existing Amazon services were pretty expensive for your long-term backups; a lot of wasted money on retrieval speed that you didn't need. This finally gives the last piece of the storage puzzle: long-term cheap backups and archiving. Previously your best bet was to either download the data yourself, or use their physical drive service where you ship media to them and have them load up the data for you.
Honestly, at this point what service doesn't Amazon offer when it comes to your computing setup? (modulo the more general objections to cloud computing of course)
Myself I'll probably start using them for my home computer backups. 500GB * $0.01 is just $5 a month. I'm really looking forward to seeing rdiff-backup-like tools with proper delta support.
> Whenever I need to restore data from an archive backup, I need it RIGHT FUCKING NOW.
I don't. It'll be at least a few hours until FedEx arrives with the new server hardware in the best case, and a few weeks before we get a new building and our clothes stop smelling of smoke (and zombies) in the worst case.
Interesting question though: if I submit a retrieval job, how soon do I have to actually download the associated data? Can I wait a few hours or days?
A robotic tape system would generally give you your data back in a few minutes at most, but Amazon is saying you can expect multiple hours of waiting. I'm assuming this system is literally based on people moving around boxes of tapes and inserting them into tape readers; inconvenient but reassuring in its own way. Perhaps they've managed to automate things even further, say by setting up carts of hundreds of tapes carried around by a forklift that get plugged into the robotic tape loading system.
Also sound like an interesting operations challenge though in trying to co-ordinate all the read request jobs when your customers can store as little as 1 byte. You can see why they penalize any attempt to actually read your data, especially if you send in a read request job within a short time period of storing the data.
Anonymity ends when you interface with the real world... and actually what Zhou Tong was caught moving wasn't Bitcoin, but rather a different system of inter-exchange redemption coupons allowing people to directly move US dollars and other currencies that is anything but anonymous.
After all, don't forget that the major exchanges follow all the Anti-Money Laundering (AML) regulations that banks do. Good luck selling a bunch of BTC on MtGox without handing over your drivers license and/or passport.
You gotta distinguish Bitcoin as a system, and users of Bitcoin. As a technological system Bitcoin has done an exceptional job of fending off attacks; the only major threat was back in 2010 when someone found a integer overflow error in the transaction verification code that allowed anyone to make money out of thin air. The protocol was designed knowing that there probably would be mistakes like that, so the developers released a patched version of the software that everyone agreed to use and got everything sorted out within a few hours. Not a major problem, given Bitcoin was nearly worthless in 2010.
As for the scams surrounding Bitcoin... It's sufficiently anonymous and free from government control that people think they can get away with major scams, not to mention illegal activity like Silk Road. Some might call that a feature. Those are probably the same people that don't complain about how terrible tor is when hackers use it.
No, that Butterfly labs platform will currently mine about 0.37BTC/day, or 11.17BTC/month. Currently the exchange rate is $12/BTC, with fluctuations of about +-$1/BTC in the past few weeks. GPU's use up way more power, although they hardware cost is less. Either way, it's easy to turn a profit after power costs, albeit with the risk that your capital investment and coins generated will be useless if bitcoin busts. Obviously lots of miners immediately sell every coin they generate to recoup that capital investment.
It's irrelevant what Bitcoins are, only how scarce they are, what's the inflation rate, and what people are willing to pay for them. The latter driven because the scarcity and inflation rate is fixed, and you can transfer them from one person to the other easily.
They also are *not* a series of 1s or 0s in the correct pattern; you're confusing Bitcoins with hash cash. Rather it's an accounting system where the number of Bitcoins you have is based on a transaction trail back to the original creation of a Bitcoin. That creation happens out of thin air, but in a manner where the network only allows a (on average) fixed amount every 10minutes, automatically adjusted both to slowly decline that amount over time, and to ensure that as more people compete for that amount, it gets harder to get coins. All this stuff about "mining" is just proving how much computer power you control, so that the users of the system can vote on what is the authentic and true ordering of transactions. If the system didn't vote on transaction ordering, people could spend money twice, by signing statements to the affect of "I, Alice, transfer x coins to Bob" followed by "I, Alice, transfer x coins to Charlie".
It's just a form of fiat with a fixed, and declining, inflation rate that happens to be transferably digitally and can't be counterfeited, where all those properties are controlled by a distributed group of computers with many different owners. It's really not that complex or magical.
Modern banking is actually really similar, except that transactions guaranteed by accountants, and we say the government decides how many coins to create.
Go ahead and store your value in gold if you want. But there still is a need to transfer value digitally, and Bitcoin provides a way to do that without getting trusted third parties involved, and with having some hope of anonymity if you are careful. Yeah, you still have to put some trust in the person you just handed some dollars, or grams of gold too, in exchange for Bitcoins, but that person can be different on either end, and can be a different person each time.
Is Bitcoin a good way to *store* value for the long term? Probably not. But in some situations it has features, like irrevocability, pseudo-anonymity, and lack of dependence on government, that no other digital currency can currently provide.
Just don't hold more Bitcoins than you need in the immediate future and you can take advantage of it's features when you do need to transfer value digitally.
I think you're really missing the point of Bitcoin mining. It's like gold mining, in an economy using Gold as a currency; you'd never expect the majority of economic effort being involved in digging the stuff out of the ground. Rather a small segment of society does that, and the rest of society does whatever they do in the economy, buying gold from other people as needed.
Bitcoin mining was *never* meant to be the way that the majority of people would get their Bitcoins. Rather it's a way of securing the network, namely in that Bitcoin essentially consists of an accounting system, where value is exchanged by writing public key crypto signed messages saying things like "Alice gives 10 bitcoins to Bob". Mining is required because there needs to be some canonical way of ordering those transactions in time. That's done by saying that whatever at least 51% of the computing power in the network thinks is true, is. So long as no one party ever controls that 51%, you can determine if coins have been spent to another party before you decide to accept them.
Look at the pool hashrate diagram. Each of those pie slices is a group of dozens to hundreds of users, each with at least a few hundred dollars worth of mining hardware, securing the network. Do I care if they are making more in Bitcoins than their rigs are costing them? Heck no. I just want a secure network so when I receive some Bitcoins I can know that they haven't been spent before. FPGAs and the upcoming ASICs are good for that, because they perform so much faster than off-the-shelf CPU's that any attacker would have a hard time getting enough computing power to attack the network.
Besides, if I did want to become a miner, all I'd have to do is spend about $600 on a Butterfly Labs fpga platform and I'd gradually have Bitcoins trickle in. But it's a lot faster to just buy them from someone else, just like it's a lot faster to buy gold from someone than mine it.
I highly recommend blockchain.info for your wallet. The encryption/decryption is handled locally by javascript to ensure that the server, at no point, has your private keys. If blockchain.info is hacked your coins are safe. I would create a wallet with a very secure passphrase and print a paper wallet backup.
Great advice. Also use the Google Authentication feature of blockchain.info, that way even if someone manages to steal the passphrase they still need to hack into your phone to get the Google Auth code. For that matter, use Google Authentication for everything... I do.
Regarding backups, if you did use a secure passphrase, you can also have blockchain.info automatically send copies of your encrypted wallet to an email address every time a new address, IE, a private key, is added to your wallet. If you ever need your coins back and blockchain.info is down you can get them directly out of that backup as long as you still know your passphrase.
Maybe Bitcoinica will offer a store credit good for their own non-transferable virtual currency?
Transferability is the very point of Bitcoin. Sure it'd be nice to have a stack of gold, but good luck sending that over the internet without involving any trusted third parties. Look what happened to e-Gold services, all shutdown by the Feds. Possibly the only alternative will be trusted devices such as the in-development MintChip, although the final version is likely to be restricted to very small amounts and not as anonymous as claimed.
Of course, hilariously on the MintChip Challenge website, the most commented upon idea for what you could do with MintChip is buy Bitcoins...
Does anyone really know if the site was actually hacked and the site owner did not just do a runner with the deposits held by Bitcoinica?
I posted this link elsewhere in the thread. Myself, I'm pretty convinced it was the guy who made the site. After all, it was a 17 year old immature kid.
Also, many in the community think that Zhou Tong, the buy behind the site, was the one who stole the money in the first place. For instance, after the initial hack and after Bitcoinica shut down, a bunch of money was stored with a legit exchange, Mt Gox. Well those funds got conveniently hacked, and another exchange noticed Zhou Tong trying to transfer the same amount of cash, as well as the fact that an email address associated with the hack was in control of Zhou Tong himself. Source
Ever heard of the term "bucket shop"? That's exactly how Bitconica functioned. Sure you could sell, or sell on margin, your Bitcoins for imaginary US dollars, but you couldn't never withdraw or deposit anything but Bitcoins. What went on was people would use the margin given to them by Bitconica to speculate on the price of Bitcoin, then they'd conveniently lose their whole positions whenever the market went against them, which is quite easy to do if you happen to have everyones Bitcoins to manipulate the market with. This happened so often that a new term was invented for it: zhou tonged, named in honor of the 17 year old kid running the site. (seriously, 17!) Hell, even in the Bitcoin community lots of people were calling them out on this right from the start, for instance here is a post by one of the main devs, obviously concerned about all the other scams that of course have cropped up using bitcoin. Speaking of, wait'll you see the press when the pyramid scheme known as "Bitcoin Savings and Trust" fails, as it of course will given it pays out %3400 a year.
Personally I'd suggest you use your Bitcoins for something reputable, like buying pot, getting cash out of Argentina or donating to wikileaks. All this investment non-sense, as opposed to just using the currency for moving value around digitally, is getting out of hand.
Doing out the math... CF lightbulbs have no more than 6mg of mercury per bulb. (voluntary industry standards, 5mg is typical) (wikipedia)
Most "low-mercury" fish has up to 0.1ppm of mercury, with canned tuna at the top. (http://www.obfocus.com/nutrition/Seafood.htm) So, 1kg of fish will contain, will have 0.1mg of mercury. As pointed out by other posters, the mercury in CF bulbs is metallic, and not particularly well absorbed by the body. In fish it's presumably organic mercury, and much more dangerous.
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As I said, the currency conversion could work either way. It'd be easiest doing it the way you describe, however a big part of BitInstant's other business doing fiat-Bitcoin conversions is that they have good mechanisms to complete the conversions as fast as possible with accurate pricing. This may enable them to do the conversion fast enough that they'd somehow load the dollar balance on the card as you attempt to spend it. Effectively they'd intercept that "over-spent" notification somehow in the computer system, and instantly transfer over dollars as required. They then take the risk that they can't buy the dollars back at a profitable exchange rate.
Re: risk, any balance actually on the cards would be the responsibility of the bank actually issuing the cards. This isn't any different from any other pre-loadable card. BitInstant itself is a registered company in New York, NY with a physical office. The identities of the people running it are well known. On IRC they hinted that they're looking into allowing you to hold the private key associated with the Bitcoin balance on your card, so if BitInstant failed you could recover the Bitcoin balance yourself. (the BTC funds wouldn't be pooled in that case) The issue there is the person holding the card spending the coins before BitInstant can take them to sell on the market. However, the card isn't anonymous, so they know who you are if you try to pull that scam and will just ask you to give them Bitcoins to replace the ones you took. Also in practice even a transaction that's been on the Bitcoin network for only a few seconds is difficult to reverse.
Currencies aren't really backed by anything these days, other than the fact people in certain economic regions generally use a given currency.
All this stuff about governments backing currencies by accepting them as taxes ignores one critical thing: How does the government decide how much to take? Suppose you were in Canada, running a business happened to accept US dollars exclusively from your customers, and at the same time happened to have all your expenses in US dollars. (quite easy to do with an cloud-using internet startup actually) The Canadian government will of course demand you pay your taxes in Canadian dollars, but as for how many Canadian dollars you owe they'll use the exchange rate between CAD and USD.... which is in turn determined by the currency markets, which figure out the price by, guess what, how much people want Canadian dollars vs US dollars.
Now imagine for some reason that every company in Canada becomes such an internet startup overnight. Even though the Canadian government demands that you pay taxes in Canadian dollars, they're going to have to ask how many based on the exchange rate at commercial exchanges. Chances are the value of 1 CAD compared to 1 USD will plummet as soon the only reason you'd want to have Canadian currency is to pay your taxes. Eventually some weird equilibrium will happen where the value is totally determined by how fast the government sells of their Canadian dollars to buy things that the government wants, which means the government might as well just peg the value of the Canadian dollar to the US dollar at some arbitrary multiple.
Of course, this doesn't happen because Canadian companies often want to be paid in Canadian dollars so they can pay their employees and other Canadian expenses. Said Canadian companies often export things to other countries, hence the exchange rate being determined by the supply and demand between Canadian stuff being exported and non-Canadian stuff being imported.
Bitcoin, modulo people holding it due to speculation, acts quite like this sort of thing, except that you can picture Bitcoin as the intermediary between two different currencies. Therefor the exchange rate of Bitcoin is determined by how long it takes to convert from a currency to Bitcoin and back again, times how many people are doing these types of transactions, divided by the total amount of Bitcoin on the market.
Really the value of Bitcoin is based on the velocity of money, and speculation. The latter is just a matter of supply and demand, it's the former that's more interesting. Suppose Alice, in the USA, wants to transfer value to Bob, who lives in Germany, using Bitcoins. The actual exchange of value is going to look like this:
Now if this goes on over and over again, Charlie is going to be short of Bitcoins, and Dan short of Euros. So on Charlie's exchange the price of Bitcoin relative to the US dollar will rise, and on Dan's exchange, it'll fall. Enter Anna, are arbitrage trader:
Why didn't Alice just wire Euro's? Well, bank wires have high fixed fees, so Anna can amortize the fees over one huge wire transfer in a way that Alice can't. Also, Anna doesn't care if either side know who she is, but Alice might.
The key thing is that all these steps take time, which means Bitcoins are tied up in the system, reducing the supply. So by basic supply and demand, the price goes up, based on how useful it is to use Bitcoins to transfer value between people, and how fast the whole process can happen. Some people find them very useful to do this, especially pseudo-anonymously, notably the drug trading site Silkroad. Note how curiously a more efficient Bitcoin market, in terms of fiat conversion, will lead to a lower Bitcoin price.
The key thing is that Alice and Bob don't actually care that much what the price of Bitcoin relative to other currencies is. They just care that the price doesn't change fast enough that one side or the other gets ripped off during the time it takes to complete transaction. The faster those transactions happen, the less of an issue this is. If either side can quickly buy and sell their coins, something made easier by things like BitInstant's new paycard, they don't have to worry about exchange rate volatility as much. And speaking of, while people in the US don't have this problem, ask someone in, say, Iceland, with its tiny economy and its own currency, how stable the value of the Krona is relative to other currencies...
As for what happens if cash systems collapse... frankly if that's true, chances are something is seriously wrong with society. If the internet is still functioning Bitcoin might still be working well enough as a technological project that your coins are going to be worth something. If the internet isn't work, well, you're coins are going to be worthless because people can't transfer them. Of course, if you're in such bad straits that what you really want is goats and chickens, you might also quickly find out that you can't eat gold...
Like any other tradeable thing: on an exchange. If you don't think the exchange rate BitInstant gave you is fair, it's easy to go to a site like BitcoinCharts and look at the spot prices at the time on any of the exchanges in existence for the currency you were converting too. After all, the back-end of BitInstant is just a computer program that automatically submits sell orders as required to meet their float requirements. Buyers then buy the Bitcoins, giving BitInstant fiat currency in return, which they then send to the bank handling the debit card backend via wire transfer.
The key thing from BitInstant's point of view is to have solid reliable backend software that submits orders fast enough, and statistically understands the volatility well enough, to figure out what instantaneous exchange rate they can make a profit on while still giving a good enough rate that their users don't feel ripped off. This is easy if the price of Bitcoins is rising, but if it's dropping they could easily be in a situation where they give you too much fiat currency for too little Bitcoins. Part of the issue too is that spreads between buy's and asks on Bitcoin exchanges tend to be much larger than you'd find in government-issues currency exchanges, simply because the market is smaller. They're looking at spreads in the region of one percent, rather than hundredths of a percent.
Ultimately though the process is no different from what your bank does if you use a USD denominated debit card in Europe.
Specifically one re-loadable with Bitcoins.
From what BitInstance has said it either works by simply converting your BTC into USD or some other currency when you deposit the BTC to the address on the card, or they've done some clever thing where they convert the appropriate amoun of the BTC balance associated with the card it as you make a transaction. (depositing the currency to the actual account associated with the card just in time for the payment to go through) Credit is never offered.
Of course, this is why they don't really need much help from Mastercard: the technology powering the card is already common for branded payment cards like those ones you can get to give as gifts, just without the crazy fees and with a much more reasonable %1 currency conversion fee and the flat $10 or so fee to buy the card. That conversion fee being pretty similar to what you'd pay at a regular bitcoin exchange anyway.
Ultimately this is like Paypal's debit card: just an easy way to spend your Bitcoin balance. If you happen to have a lot of coins for whatever reason, be it you run a business, mine, or invest in them, this card might be for you. Otherwise don't complain that a niche product doesn't make sense for you.
From a security point of view it's a very easy product to offer. When Bitcoins are sent you can almost guarantee the transaction has gone through, no charge-backs, after one confirmation, or an average of 10 minutes. That rises to essentially guaranteed after six confirmations. (I'm pretty sure no-one has ever managed an actual double-spend with even one confirmation) The rest of the process is subject to the exact same risks as any other pre-paid debit card, hence the transaction limits they've said they'll apply of something like $1000 a day. Basically they just want to limit losses if someone steals/clones your card, or they screw up somewhere.
You don't have to 3d print a barrel if instead you 3d print a machine to make a barrel. I do know one of the first (the first?) machine tools ever designed were for making gun barrels. I'm sure building that machine would be a lot easier if you can 3d print all, or almost all, the parts for it. The parts of that machine that need to be accurate can then use off the shelf mechanical parts like precision guide rails are readily available and standardized, with the 3d printer providing the "stuff" required to put everything in the right places.
You ever heard of the Gingery Series? It's essentially a how-to manual on bootstrapping your own machine shop from scratch; at the end of the process you'll have an accurate metal cutting lathe and mill. It's quite reliant on time-consuming metal casting, as well as precision scraping to get the accuracy needed in a machine tool. With 3d printing you can replace the metal casting with printed parts, and the scraping can be replaced with pre-made linear rails and ballscrew assemblies. A 3d printing bootstrapped gun barrel making machine would essentially be a purpose-built version of this concept.
Keep in mind that in some cases you can use the 3d printer to make the tools needed to make the parts, rather than directly making the parts themselves. For instance barrels need to be made out of metal, yet a 3d printer could still make a jig, essentially a purpose built machining tool, that would give you the ability to make the barrel without purchasing a lot of expensive equipment. Even simple stuff like cutting templates can be a huge time-saver compared to machining parts manually.
Deflation doesn't prevent Bitcoin being a viable currency, it just (theoretically) prevents a Bitcoin-based economy from functioning properly.
People are free to use as their currency whatever they feel like. The economic effects are secondary.
> As for the new operation, I have a hard time taking seriously a financial institution that announces its products on IRC.
Bitinstant is well known in the community, as are the actual people behind it. What's wrong with Charlie Shrem, who frequents IRC, letting it be known that his company will be releasing a new product soon? This isn't after all their official "we have actually released this" announcement. Rather it's just a way to let people know and find some people who are willing to sign up for the first batch of 1,000 cards made.
I happen to think that kind of openness is a good thing myself.
This service is for those companies who may not be big enough to afford to go tape storage (big investment), but may only have a few TB they store on backup hard drives and such. Rather than having to arrange for offsite storage, they can use Amazon to do it cheaply and effectively. I also see it as a play for Amazon as a virtual business - Amazon handling all your IT and server needs between EC2/S3/etc so a business doesn't actually have exist anywhere - employees work from home, a token post office box is the street address, etc.
I suspect the latter is going to be pretty common. If you're running something fully cloud hosted like imgur or reddit existing Amazon services were pretty expensive for your long-term backups; a lot of wasted money on retrieval speed that you didn't need. This finally gives the last piece of the storage puzzle: long-term cheap backups and archiving. Previously your best bet was to either download the data yourself, or use their physical drive service where you ship media to them and have them load up the data for you.
Honestly, at this point what service doesn't Amazon offer when it comes to your computing setup? (modulo the more general objections to cloud computing of course)
Myself I'll probably start using them for my home computer backups. 500GB * $0.01 is just $5 a month. I'm really looking forward to seeing rdiff-backup-like tools with proper delta support.
> Whenever I need to restore data from an archive backup, I need it RIGHT FUCKING NOW.
I don't. It'll be at least a few hours until FedEx arrives with the new server hardware in the best case, and a few weeks before we get a new building and our clothes stop smelling of smoke (and zombies) in the worst case.
Interesting question though: if I submit a retrieval job, how soon do I have to actually download the associated data? Can I wait a few hours or days?
A robotic tape system would generally give you your data back in a few minutes at most, but Amazon is saying you can expect multiple hours of waiting. I'm assuming this system is literally based on people moving around boxes of tapes and inserting them into tape readers; inconvenient but reassuring in its own way. Perhaps they've managed to automate things even further, say by setting up carts of hundreds of tapes carried around by a forklift that get plugged into the robotic tape loading system.
Also sound like an interesting operations challenge though in trying to co-ordinate all the read request jobs when your customers can store as little as 1 byte. You can see why they penalize any attempt to actually read your data, especially if you send in a read request job within a short time period of storing the data.
Anonymity ends when you interface with the real world... and actually what Zhou Tong was caught moving wasn't Bitcoin, but rather a different system of inter-exchange redemption coupons allowing people to directly move US dollars and other currencies that is anything but anonymous.
After all, don't forget that the major exchanges follow all the Anti-Money Laundering (AML) regulations that banks do. Good luck selling a bunch of BTC on MtGox without handing over your drivers license and/or passport.
You gotta distinguish Bitcoin as a system, and users of Bitcoin. As a technological system Bitcoin has done an exceptional job of fending off attacks; the only major threat was back in 2010 when someone found a integer overflow error in the transaction verification code that allowed anyone to make money out of thin air. The protocol was designed knowing that there probably would be mistakes like that, so the developers released a patched version of the software that everyone agreed to use and got everything sorted out within a few hours. Not a major problem, given Bitcoin was nearly worthless in 2010.
As for the scams surrounding Bitcoin... It's sufficiently anonymous and free from government control that people think they can get away with major scams, not to mention illegal activity like Silk Road. Some might call that a feature. Those are probably the same people that don't complain about how terrible tor is when hackers use it.
No, that Butterfly labs platform will currently mine about 0.37BTC/day, or 11.17BTC/month. Currently the exchange rate is $12/BTC, with fluctuations of about +-$1/BTC in the past few weeks. GPU's use up way more power, although they hardware cost is less. Either way, it's easy to turn a profit after power costs, albeit with the risk that your capital investment and coins generated will be useless if bitcoin busts. Obviously lots of miners immediately sell every coin they generate to recoup that capital investment.
It's irrelevant what Bitcoins are, only how scarce they are, what's the inflation rate, and what people are willing to pay for them. The latter driven because the scarcity and inflation rate is fixed, and you can transfer them from one person to the other easily.
They also are *not* a series of 1s or 0s in the correct pattern; you're confusing Bitcoins with hash cash. Rather it's an accounting system where the number of Bitcoins you have is based on a transaction trail back to the original creation of a Bitcoin. That creation happens out of thin air, but in a manner where the network only allows a (on average) fixed amount every 10minutes, automatically adjusted both to slowly decline that amount over time, and to ensure that as more people compete for that amount, it gets harder to get coins. All this stuff about "mining" is just proving how much computer power you control, so that the users of the system can vote on what is the authentic and true ordering of transactions. If the system didn't vote on transaction ordering, people could spend money twice, by signing statements to the affect of "I, Alice, transfer x coins to Bob" followed by "I, Alice, transfer x coins to Charlie".
It's just a form of fiat with a fixed, and declining, inflation rate that happens to be transferably digitally and can't be counterfeited, where all those properties are controlled by a distributed group of computers with many different owners. It's really not that complex or magical.
Modern banking is actually really similar, except that transactions guaranteed by accountants, and we say the government decides how many coins to create.
Go ahead and store your value in gold if you want. But there still is a need to transfer value digitally, and Bitcoin provides a way to do that without getting trusted third parties involved, and with having some hope of anonymity if you are careful. Yeah, you still have to put some trust in the person you just handed some dollars, or grams of gold too, in exchange for Bitcoins, but that person can be different on either end, and can be a different person each time.
Is Bitcoin a good way to *store* value for the long term? Probably not. But in some situations it has features, like irrevocability, pseudo-anonymity, and lack of dependence on government, that no other digital currency can currently provide.
Just don't hold more Bitcoins than you need in the immediate future and you can take advantage of it's features when you do need to transfer value digitally.
I think you're really missing the point of Bitcoin mining. It's like gold mining, in an economy using Gold as a currency; you'd never expect the majority of economic effort being involved in digging the stuff out of the ground. Rather a small segment of society does that, and the rest of society does whatever they do in the economy, buying gold from other people as needed.
Bitcoin mining was *never* meant to be the way that the majority of people would get their Bitcoins. Rather it's a way of securing the network, namely in that Bitcoin essentially consists of an accounting system, where value is exchanged by writing public key crypto signed messages saying things like "Alice gives 10 bitcoins to Bob". Mining is required because there needs to be some canonical way of ordering those transactions in time. That's done by saying that whatever at least 51% of the computing power in the network thinks is true, is. So long as no one party ever controls that 51%, you can determine if coins have been spent to another party before you decide to accept them.
Look at the pool hashrate diagram. Each of those pie slices is a group of dozens to hundreds of users, each with at least a few hundred dollars worth of mining hardware, securing the network. Do I care if they are making more in Bitcoins than their rigs are costing them? Heck no. I just want a secure network so when I receive some Bitcoins I can know that they haven't been spent before. FPGAs and the upcoming ASICs are good for that, because they perform so much faster than off-the-shelf CPU's that any attacker would have a hard time getting enough computing power to attack the network.
Besides, if I did want to become a miner, all I'd have to do is spend about $600 on a Butterfly Labs fpga platform and I'd gradually have Bitcoins trickle in. But it's a lot faster to just buy them from someone else, just like it's a lot faster to buy gold from someone than mine it.
I highly recommend blockchain.info for your wallet. The encryption/decryption is handled locally by javascript to ensure that the server, at no point, has your private keys. If blockchain.info is hacked your coins are safe. I would create a wallet with a very secure passphrase and print a paper wallet backup.
Great advice. Also use the Google Authentication feature of blockchain.info, that way even if someone manages to steal the passphrase they still need to hack into your phone to get the Google Auth code. For that matter, use Google Authentication for everything... I do.
Regarding backups, if you did use a secure passphrase, you can also have blockchain.info automatically send copies of your encrypted wallet to an email address every time a new address, IE, a private key, is added to your wallet. If you ever need your coins back and blockchain.info is down you can get them directly out of that backup as long as you still know your passphrase.
Maybe Bitcoinica will offer a store credit good for their own non-transferable virtual currency?
Transferability is the very point of Bitcoin. Sure it'd be nice to have a stack of gold, but good luck sending that over the internet without involving any trusted third parties. Look what happened to e-Gold services, all shutdown by the Feds. Possibly the only alternative will be trusted devices such as the in-development MintChip, although the final version is likely to be restricted to very small amounts and not as anonymous as claimed.
Of course, hilariously on the MintChip Challenge website, the most commented upon idea for what you could do with MintChip is buy Bitcoins...
Does anyone really know if the site was actually hacked and the site owner did not just do a runner with the deposits held by Bitcoinica?
I posted this link elsewhere in the thread. Myself, I'm pretty convinced it was the guy who made the site. After all, it was a 17 year old immature kid.
Also, many in the community think that Zhou Tong, the buy behind the site, was the one who stole the money in the first place. For instance, after the initial hack and after Bitcoinica shut down, a bunch of money was stored with a legit exchange, Mt Gox. Well those funds got conveniently hacked, and another exchange noticed Zhou Tong trying to transfer the same amount of cash, as well as the fact that an email address associated with the hack was in control of Zhou Tong himself. Source
Ever heard of the term "bucket shop"? That's exactly how Bitconica functioned. Sure you could sell, or sell on margin, your Bitcoins for imaginary US dollars, but you couldn't never withdraw or deposit anything but Bitcoins. What went on was people would use the margin given to them by Bitconica to speculate on the price of Bitcoin, then they'd conveniently lose their whole positions whenever the market went against them, which is quite easy to do if you happen to have everyones Bitcoins to manipulate the market with. This happened so often that a new term was invented for it: zhou tonged, named in honor of the 17 year old kid running the site. (seriously, 17!) Hell, even in the Bitcoin community lots of people were calling them out on this right from the start, for instance here is a post by one of the main devs, obviously concerned about all the other scams that of course have cropped up using bitcoin. Speaking of, wait'll you see the press when the pyramid scheme known as "Bitcoin Savings and Trust" fails, as it of course will given it pays out %3400 a year.
Personally I'd suggest you use your Bitcoins for something reputable, like buying pot, getting cash out of Argentina or donating to wikileaks. All this investment non-sense, as opposed to just using the currency for moving value around digitally, is getting out of hand.
Doing out the math... CF lightbulbs have no more than 6mg of mercury per bulb. (voluntary industry standards, 5mg is typical) (wikipedia)
Most "low-mercury" fish has up to 0.1ppm of mercury, with canned tuna at the top. (http://www.obfocus.com/nutrition/Seafood.htm) So, 1kg of fish will contain, will have 0.1mg of mercury. As pointed out by other posters, the mercury in CF bulbs is metallic, and not particularly well absorbed by the body. In fish it's presumably organic mercury, and much more dangerous.
Yup, they say it emits 600-800 lumens.
Given that LEDs emit about 100 lumens/watt, that's say, 6 watts, * 4 hours = 86,400 joules They claim it's about 2m high.
Plugging those two values into the gravitational potential energy calculator at http://hyperphysics.phy-astr.gsu.edu/Hbase/gpot.html gives a weight of about 5000kg, slightly above the claimed 22kg...
And aphex twin is known for doing the same sonogram trick.