Some combination of hoarding and spending I'd say. There is plenty of both buying and selling going on in the speculative markets, enough to make it fairly liquid. I certainly have no trouble selling a BTC on the exchange.
Bitpay offers a gateway option for merchants that they can integrate into POS transactions. It can optionally instantly convert to fiat, has total fees never exceeding 1% regardless of volume or individual transaction size and no charge backs. So merchants don't have to worry about the speculative price and have a payment option that blows about credit/debit from a business perspective. They are signing thousands of new accounts a month. There are no monthly fees. So you can sign up, eat a small cost to integrate it, and there is really no overhead to keep the payment option even if the volume is low.
I for one would love to get a Bitcoin gas pump set up. You prepay, like you'd do at the counter with cash except right at the pump with your sell phone and a QR code on the screen. If you don't use it all, it just pays the difference back. You didn't quite get enough on there to fill your tank, np just pay in more. No more dollar holds that bloom into $75 charges at some random later point and no having to deal with an attendant either. And no more concern that there aren't enough funds in the account to cover the subsequent charge for the gas station. That's a win all around.
What is missing is a ready source of fiat to BTC. Right now people are afraid of turning reversible credit/debit transactions into non-reversible BTC payouts. But cash is non-reversible as well. It seems like mitigating the risk with lots of transactions/people for low amounts seems doable.
Exactly. You think this Bitcoin thing might have something to it. You buy in and then it grows some and you start to wonder if it could really have THAT much to it. So you cash out. Maybe it goes down and maybe up. Then you see yet higher and your like. Well now this has to be a peak. Each time you see a drop of $10-$20 you think this is the crash, then it makes up that ground and then some.
Each step of the way, more and more of us are doubting our doubts. Until eventually, there is going to be a huge base of us that have unshakable confidence in the stuff. To put it another way, if it crashed down to $5 would you buy in? I sure as hell would. The price could go up or down, it could be a bubble, there could be a crash. But I don't see Bitcoin going away any time soon.
He hasn't raised any technical issues. He just made an unsupported assertion that Bitcoin was broken.
The logical design and theory is well documented and completely open. Likewise the implementation of that logic is completely open. Bitcoin has been around for 4 years and has been a high priority topic of interest for security researchers and cryptographers from the beginning.
4 years, a completely open specification, and a billion dollar bounty for successfully finding and exploiting a weakness and nobody has managed to find anything that doesn't require gaining control of > 51% of the total global mining power.
If Concern actually knew of any technical flaws in Bitcoin he would have exploited them and become a billionaire.
More likely he is talking about the economic hypothesis that you need inflation an economy to work. Inflationary currency is a relatively new thing that came about a few decades ago but the entire fiat currency system of the world works on it. Prior to that the entire world was filled with deflationary economies, some booming, some weak. So while the inflationary requirement is taught as economics 101 it is relatively untested while deflation has several thousand years of working just fine backing it up. There are talking points for both sides of that debate.
Both sides will disparage people with the opposing opinion on inflation vs deflation. But no matter what you think is the cause, it is the pro-inflation crowd who now has to defend their views in light of the reality that Bitcoin and it's deflationary system have grown from nothing to a billion dollar economy exceeding those of 20 nations in just four years.
The IRS considers Bitcoin an good not a currency. It isn't income until/unless you sell it and realize a profit. A good portion of the wealthiest people in the nation dodge almost all the taxes on their vast wealth by shifting it from investment to investment. The poor can't do this because the majority of their wealth is needed to provide their lifestyle. For the super wealthy even their extravagant lifestyles represent statistical noise relative to their balance sheets.
That's why the wealthy want the "fair tax" because then they don't have to play those games. Their balance sheets grow by leaps and bounds relative to the insignificant amounts they actually spend. So they could dodge even more tax than they do now.
The smartest people were the ones who understood the potential of Bitcoin early and mined when your desktop cpu could unlock multiple blocks of 50 coins a day. Most of them have probably either lost the coins or cashed out long before now but they were the smartest.
A lot of this does seem like it could be a bubble but it also seems likely Bitcoin will crack $100 and that is a nice place to establish a new market bottom with the Bit cent then becoming equiv to a dollar. Bitcoin's appropriate value certainly isn't nothing. It was quite stable in the $8-12 range before the reward for mining halved. At the same time the difficulty (and therefore cost) of mining has skyrocketed as ASIC miners have come online. So we are looking at a price point between $30-40 dollars as a bottom just on the merits of supply reduction vs demand that existed before this climb.
The good thing for Bitcoin itself is that Bitpay is offering merchants who take Bitcoin a much much less expensive payment option 0.99% with no other fees, credit requirements, or charge backs and they can have payments instantly convert to fiat to work like a credit card or can keep it in Bitcoin. They are signing thousands of merchants a month. So even if this is a speculation bubble, it is stimulating actual growth in the Bitcoin economy and therefore increased demand.
The increased demand combined with decreased supply would mean that the price should be somewhere beyond that $30-40 and the longer this run goes the higher that number is. Plus, this isn't a pure buying run. Every few days there is a dip of $10-20 dollars that indicates small market corrections throughout the rise.
Exactly like Wall Street. It's a speculative market and at the end of the day all speculative markets are just high stakes casinos.
Still, it will help Bitcoin itself. The currently booming Bitcoin world combined with Bitpay offering merchants a payment option with only 0.99% interest, no other fees, no credit or volume requirements, and no charge backs probably means a lot more merchants jumping to accept it.
This is just the dirty act of government of the week. Dare to suggest our wonderful benign government illegally intercepting cell communications is doing any of the other things they do for a corrupt or improper reason and you are instantly branded a crackpot conspiracy theorist.
Dare to suggest we can't trust these guys to overreach in financial regulation or that they can't be trusted if we disarm the population or not to infringe on free speech if anonymity isn't preserved, or with latest constitution shredding government empowering anti"terror" rag and you are a nutter and conspiracy theorist.
After all so many people can't keep a secret! Even though most of it is no secret and requires only a few people knowing anything and the rest doing their part in ignorance or acting in self interest.
How many married people would favor dissolving state recognition of marriage across the board and treating them no differently than an unmarried couple living together? For the left it ends unequal state treatment of gay couples, for the right it settles that issue without infringing on their sacred view of marriage. Yet the answer is very very few would support it. Why? Married couples wouldn't want to lose their tax breaks and spouses wouldn't want to give up their "security" in the form of a stranglehold over the property of their partner and the potential alimony.
You can expect the same percentage of self interest based action out of government agents and representatives. Most are corrupt, greedy, and self interested because most people are.
I'm afraid I have to disagree. First modern economic theory has existed for a very short time and there have been wealthier peoples in the past who did not subscribe to it. It is also highly suspect how much of an impact modern economic theory has had compared to the advance of technology and science. You might have a case of soda in the fridge where you would have had a six pack before. But the total amount of resources, in terms of materials and labor, that you can buy is actually far far less. It isn't economic progress to own two cars that represent a 10% the amount of raw resources where you used to own one that represented 10 times the value... it is technological progress. A very solid argument that modern economic theory has only managed to stumble along because of the extreme strides in technology that have coincidentally progressed in parallel could be made.
Let's not forget this is hardly the first depression/recession in the short window of time that modern economic theory has been at play. Personally, I blame speculation more than inflationary currency. Large scale speculative markets are what brought us the great depression. As for what countries will survive the GFC, lets wait and see if and when it passes.
Bitcoin doesn't prevent all regulation it simply prevents regulation by the majority in a place where the interests of the group conflict with the interests of every individual who makes up that group. If someone somehow steals your Bitcoin you can still call the police. If someone fails to pay a contract you can still file a civil suit and a judge can order a payment, even in BTC, the same way it could order the return of any property. Government can still regulate the production of goods and apply controls on them.
The mass adoption of Bitcoin won't suddenly unravel law and order in the world. It doesn't prevent you from facing the consequences of breaking the law. It just restores personal privacy, thwarts the unlawful search of your financial actions without warrant, and restores to the right to decide if you'd rather face those consequences of law than give up your property. At least to the extent you manage to protect that property.
Taxation is another issue. Bitcoin doesn't have much chance of helping you avoid taxes locally. But the US oversteps it's right and taxes money it's citizens makes abroad even though they must pay the local taxes. Now the US can do this because ultimately might makes right. But using a system like Bitcoin empowers those citizens with the might needed to make a ridiculous and abusive policy like this unenforceable.
Finding ET isn't even something meaningful if we succeed. It isn't as if we are searching for any reason beyond curiosity. Bitcoin = Financial freedom from the tyranny of banks and governments. A level playing field for global trade and a potential global currency with all the benefits that provides and none of the drawbacks of a government controlled global currency.
Sure some of the miners might just be in for the greed and the speculators certainly are but that doesn't mean it's all Bitcoin is about.
"All it would take is a stroke of a pen to wipe out bitcoin entirely."
I'd love to see that pen. Outlawing it wouldn't work. As long as anyone, anywhere, runs a client and mines Bitcoin is still around.
"All that computation going to waste for LITERALLY NOTHING but a number."
That is what comes from reading news article to find out about a topic. Miners are processing transactions which is a fairly essential function and not wasteful at all.
"Creating artificial scarcity by wasting energy and processor cycles"
The scarcity is a numerical property. It isn't artificial, you can't get less artificial than a mathematical certainty. Someone could find some new cache of gold, or mine it from space junk, etc. Nobody can ever find unexpected Bitcoin. Also the processor cycles are being used to process transactions and to assure counterfeiting is impossible. That isn't a waste, it is an essential economic function for the currency.
Food and water yes. Bitpay is adding about 1000 merchants a month and climbing rapidly. Most of them are probably using the option to convert directly to fiat at the time of transaction but it hardly matters to the guy looking to spend Bitcoin or who is considering whether or not he can spend it if someone offers it. They just dropped their fee to 0.99% of the transaction with no other fees of any kind. Even the straight percentage is less than you will get with any credit card merchant account and there are no charge backs.
"Not really sure how that's going to work with the inherent instability of Bitcoin."
I don't see there as being any inherent instability in Bitcoin. Unless you consider the instability that comes from low volume as inherent instability. A stock with Bitcoins volume and media appeal has price instability as well. But we can agree to disagree here.
But I'll tell you a story. There is an entity billing one of my credit cards monthly for $20. They refuse to stop. I can dispute the charges but only back 90 days. I did this once and had a new card with a new number issued. I just discovered that the charges are still being applied. According to my bank because it is recurring billing it doesn't matter how many times I dispute or change the card number they will continue to pay it. My only remaining option is to put a total block on my account with them, pay off any remaining balance, and then close the account.
As it happens I never entered an agreement. But whether or not I did so doesn't matter. At least, it is none of my banks business. Their primary reason for existence is to make sure NOBODY gets a single penny of my balance without my explicit authorization. If there was an agreement the company in question would be free to try to establish that in a civil suit. So why does my bank refuse to stop giving away my money? They have a backend deal with the merchants and are deliberately breaking faith to maintain their interests over those of account holders (it is a secured card, I don't use unsecured credit so I am borrowing my own money not theirs).
Bitcoin prevents this scenario from even being possible. It is left to me to authorized every pay out. Nobody can pull funds, I have to push them. At the end of the day, my right to decide a vendor doesn't deserve my money is left to my discretion not the banks. If I want to rob peter to pay Paul, this is my choice.
You can buy goods and services with Bitcoin. It IS real money. Since it is built on more sound principles than fiat some of us take it in preference to fiat. The only thing hindering Bitcoin now is critical mass and adoption is growing.
It is no different than the open source vs commercial or firefox vs IE issue. Being an entrenched monopoly makes overtaking you a slower process but it doesn't make you invincible vs a superior solution in the end.
"No they are not. A winning lottery ticket is worth more than the cost of the ticket, but you have to win. The benefits of Bitcoin mining accrue only to the first person to compute the hash. Everyone else uses electricity, and gets nothing back. You have to take into account competition for mining to calculate the cost. Nobody does this, so it looks like a no-brainer, but once you find you're competing against ASICs you're screwed even if you have an ASIC too."
I'm sorry but it seems like you almost but don't quite understand the way the system works. The system adjusts for additional competition by adjusting the difficulty factor. This gives you an easily calculated and predictable probability of "winning" that absolutely does account for the "competition." If there is a 1 in 10 chance of winning, over the course of time you will win roughly 10% of the time. You can plug a given mining rate into a mining calculator and it will tell you often you'll "win" and it will be right. Of course you can also just join a mining pool and instead of winning every 30 days (which might mean 1 every 30 or 3 in the third month, etc) you'll get a constant trickle of coin that adds up to a full block after 30 days.
I think a lot of people misunderstand the nature of the competition. There is a competition in the sense that there is only so much coin to be had but miners are all running on private tracks, not running on the same track with bigger miners being faster.
As for ASICS, they are cheaper and use less power. They'll cause a short disruption but everything will stabilize again. Ultimately everyone will have them. All they will do is is change the difficulty factor. In the end they are a great thing. Miners aren't just doing random crap, they are processing transactions for the network and securing it. The faster the rate the better.
Bitcoins are definitely worth a LOT more than the electricity needed to make them. At least with GPU/FPGA/ASIC mining. I don't know if it is true of CPU's anymore.
There aren't more big players in the game because the Bitcoin economy was too small to worth bothering with for a big player. Now it is starting to get there. Plus, there is a severe shortage of the hardware needed to mine. Large companies can't just generate it out of air, if there are no ASICs or suitable GPU's to be had there are none to be had.
I wouldn't speculate on Bitcoin... or anything else for that matter. Speculation is gambling and 80% of speculators lose money while only 20% win. The problems you are talking about with bubbles and suckers apply to the stock market just as well as Bitcoin speculation. Which isn't to say that the current price is (entirely) a bubble. There have been a lot of recent developments in the bitcoin world to stoke the flames that indicate solid changes in supply and demand that explain a huge upward movement. Bitcoin is very young, companies the size of the Bitcoin economy often grow 400%-1000% year on year for awhile. At some point they mature and it simply isn't possible to maintain that growth but that doesn't mean they suddenly shrink.
None of that means Bitcoin as a currency is a bad idea though. And short of something terrible happening like a system wrecking hack Bitcoin will continue to appreciate over time... that is a mathematical certainty.
All that said. My guess was that we'd see something more like $30-35 with the mining reward halving. Now it looks like we are probably going to hit $100. That would be nice because we could essentially use bitcents (0.01 BTC) as dollars.
That is the same thing as inflation. With the gold standard there is no value in the dollar only in the gold. You don't increase the value of the gold that way, you only decrease the amount of gold backing each dollar and thereby increase the number you need to buy a candybar. It also isn't the way the gold standard was implemented. I was really referring to using gold directly for currency. It deflates but eventually the piece of gold that buys a candy bar is too small.
In any case, not having enough of the stuff was the primary excuse given for moving to the inflating fiat. It is only later that people began to buy the idea that somehow nobody would need to trade if deflation occurred. Which is ridiculous. You still want goods and services no matter what you do. The demand doesn't drop, if someone stops supplying because they don't make more than the deflation rate spending supply drops, the reward for performing that task then goes up beyond the deflation rate. Inflation/deflation don't drive trade, trade drives inflation/deflation.
This seems to be your incorrect assumption. I don't care if you take me seriously. You are just a slash troll.
For anyone else unfortunate enough to have fallen down this thread. I doubt anyone actually has their head buried deep enough in the sand that they are unaware of government tracking of finances. The fincern ruling itself is a government declaration that they require financial institutions to gather this data for them. The DEA can raid you if you have purchased x number of common household and hardware chemicals/cleaners within a short span of time where those items can potentially be used to manufacture methamphetamine. There was a semi-popular tv show that covered the DEA raiding these "bad guys" left and right. How exactly is it that the DEA is supposed to use your acetone purchase to find your evil meth lab if they aren't reviewing your purchases?
I don't have an investment in Bitcoin. Personally I think currency speculation and speculation in general is just a form of high stakes gambling. I believe the Bitcoin system itself is numerically sound and also that the cryptographers who designed it had a far better understanding of mathematics and mathematical models than economists whose mathematical expertise does not extend further than the general math and basic algebra required in their field. Any information I've presented about Bitcoin is verifiable independently. Everything about Bitcoin is verifiable independently. It is a completely open design both in terms of theory and implementation.
"After you have proven both these two things, you then need to realize this is a policing problem not a currency problem. "
Aside from demanding I support claims I never made like the 100% anonymity of Bitcoin (which you cleverly supported with my example of the lack of 100% anonymity of Bitcoin), your odd insistence that my references to how irreversable Bitcoin transactions somehow requires me to prove that all transactions of any kind are not reversible, and your winning point about how my suggestion that escrow works out better than reversible transactions somehow requires that I prove Bitcoin is the first and only place escrow became available.... everything you said can be reasonably summed with the above.
I'm not going to provide you references for all the examples of currency tracking and government action. Most of these law enforcement techniques are secret. For the detection of metal strips in cash it requires no evidence. Any quantity of such metal strips is trivially detected with RF. Unlike the rest of the bill the strips will clearly show on scanners at the airport as well. Law enforcement, as a rule, does not tell everyone what techniques they use. But a particularly paranoid friend of mine who worked at a gas station collected the little strips and stuck them to a sheet of paper. After a year of collecting them from every 20 that passed through he put it to the test. He traveled with the strips in his trunk 3 days out of a 5 day work week and was pulled over on all three days. It could be resounding coincidence.
All that is beside the point. Government controlled currency is simply an extension of government. So long as you are using such a currency you are at the mercy of the will of government and the will of others. The right to property is one of the few rights you have even if there is no government and it should not be subject to the will of government or the tyranny of the majority.
"Which explains why osmium is more dense than lead?"
Lead is less dense than osmium because of the way their atoms exist in their crystal structures.
"As far as use as a construction and engineering material, the vast majority of the time people don't care how many atoms there are and instead care about something that comes back to the volume."
Not always so in say, chemical or nuclear engineering. But for larger scale applications that is fair enough and you did say the "vast majority." But nothing I said is related to what those people are interested in. I am calling them on saying something that is not accurate. They said the graphene aerogel is LIGHTER than hydrogen. Lighter is a comparison of weight. W = mg where m is mass and g is gravitational acceleration.
If we check wikipedia we find the following about gravitational acceleration, "Neglecting friction such as air resistance, all small bodies accelerate in a gravitational field at the same rate relative to the center of mass.[1] This equality is true regardless of the masses or compositions of the bodies." Since they didn't give any qualifiers we must assume that both materials are being compared under an equal gravitational field. We also find that we must compare them irrespective of air resistance and composition of bodies.
So we can consider g to be 1 which leaves us W = m1, or W = m. Once again, Wikipedia tells us that mass is the quantity of matter in an object.
Thus when you say something is "lighter" than the atom hydrogen you are saying that an equal quantity of matter units has less mass. Graphene is a molecule while hydrogen is an atom. So the comparison is one that only considers atomic mass. Osmium may be more dense than lead but lead is heavier than Osmium.
Now, if that isn't a useful or sensible comparison you shouldn't complain to me, you should complain to the ones who both made the comparison and gave the incorrect conclusion.
I think hydrogen wins regardless. Last I checked hydrogen is an element and it weighs the same amount regardless of it's state of matter. A 1 inch cube of hydrogen solid is just more hydrogen than a 1 inch cube of hydrogen gas.
Graphene is made of carbon. So in order for it to weigh less the total carbon atoms in it would need to weigh less than the same number of hydrogen atoms. They don't, so graphene loses. Making it into aerogel is just going to throw more atoms in into the mix and it would still lose.
"Yeah that's still deflationary. Deflationary is bad. It leads to economic stagnation"
That is the common myth. This view tends to propagated by the wealthy people who actually have more wealth than they need to spend. It is a backwards philosophy. The economy is not driven by inflation or deflation, deflation or inflation are driven by the economy. The economy moves because people have needs for goods and services and thus will spend money to get them and work to acquire money to get them. Currency is the tool to facilitate trade, trade predates currency and doesn't need currency to be either inflationary or deflationary to drive it.
It doesn't matter if the value of your money grows on paper if you never spend it. At least it doesn't matter if the currency is infinitely divisible because there is no reason to minimize deflation. For the tiny portion of the population that has excess wealth they can afford to just have sit around the rate of deflation becomes the minimum acceptable return on investment in the same way the rate of inflation does now. Neither inflation nor deflation are the driving motivator here, good old fashioned greed is.
"For you, the more economic activity others do, in BTC, the richer you become. Yet you still do nothing. In fact, provided BTC attracts a certain level of interest - i.e. that decimal keeps moving over at a certain rate - you're set for life. You can buy food and shelter in bitcoin for less then the increase in value of your initial bitcoin pile."
You are assuming a rather large rate of return. By definition this can never be the case long term. That might work in the beginning but it wouldn't work that way long term. People have to provide that food and shelter. In order for that to be worthwhile those people are going to be looking for a profit that exceeds the rate of deflation. The rate of deflation becomes a minimum economic pressure in the same manner that the rate of inflation does.
Ultimately it is impossible for the value of the currency to grow faster than the rate at which the actual available supply of goods and services grows. Both systems allow for the possibility to gain wealth without effort through private lending. The deflationary system makes it easier to get into a position to do this and thus diversifies access to credit. With the inflationary system a more or less unlimited stream of new currency is available to banks at a rate so cheap it is effectively free. The banks then lend and use diversification and screening to mitigate their risk to nothing while getting a greater return than the cost of the currency. With the deflationary system these banks and currency generation are eliminated. All the wealth that would go to them is instead directly distributed out into the hands of private individuals. Some of them will spend it away, others will save and invest, fewer will have enough to mitigate their risk to nothing and so they will lose money through that risk. Some of them will invest more wisely and will eventually be able to effectively mitigate most of their risk and thereby be able to assume even more risk via increased lending. In the end there is a free flow of credit either way but the deflationary method chooses the lenders through a heavily diversified free market where the fittest become the sources of credit where the inflationary system gives the power to a handful of state granted monopolies. At the top, the largest entities are in pretty much the same situation but the deflationary system makes it easier for people toward the bottom to get into a position where they can self finance or become investors.
Don't forget, pretty much the entire world ran on a deflationary system until a few decades ago and trade hummed along just fine. The only trouble we ran into was that we were using a limited resource with limited division and the overall economy grew to the point there wasn't enough of it. Logically, it is obvious this is a problem that would have never existed if deflation itself caused things to stagna
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Some combination of hoarding and spending I'd say. There is plenty of both buying and selling going on in the speculative markets, enough to make it fairly liquid. I certainly have no trouble selling a BTC on the exchange.
Bitpay offers a gateway option for merchants that they can integrate into POS transactions. It can optionally instantly convert to fiat, has total fees never exceeding 1% regardless of volume or individual transaction size and no charge backs. So merchants don't have to worry about the speculative price and have a payment option that blows about credit/debit from a business perspective. They are signing thousands of new accounts a month. There are no monthly fees. So you can sign up, eat a small cost to integrate it, and there is really no overhead to keep the payment option even if the volume is low.
I for one would love to get a Bitcoin gas pump set up. You prepay, like you'd do at the counter with cash except right at the pump with your sell phone and a QR code on the screen. If you don't use it all, it just pays the difference back. You didn't quite get enough on there to fill your tank, np just pay in more. No more dollar holds that bloom into $75 charges at some random later point and no having to deal with an attendant either. And no more concern that there aren't enough funds in the account to cover the subsequent charge for the gas station. That's a win all around.
What is missing is a ready source of fiat to BTC. Right now people are afraid of turning reversible credit/debit transactions into non-reversible BTC payouts. But cash is non-reversible as well. It seems like mitigating the risk with lots of transactions/people for low amounts seems doable.
Exactly. You think this Bitcoin thing might have something to it. You buy in and then it grows some and you start to wonder if it could really have THAT much to it. So you cash out. Maybe it goes down and maybe up. Then you see yet higher and your like. Well now this has to be a peak. Each time you see a drop of $10-$20 you think this is the crash, then it makes up that ground and then some.
Each step of the way, more and more of us are doubting our doubts. Until eventually, there is going to be a huge base of us that have unshakable confidence in the stuff. To put it another way, if it crashed down to $5 would you buy in? I sure as hell would. The price could go up or down, it could be a bubble, there could be a crash. But I don't see Bitcoin going away any time soon.
He hasn't raised any technical issues. He just made an unsupported assertion that Bitcoin was broken.
The logical design and theory is well documented and completely open. Likewise the implementation of that logic is completely open. Bitcoin has been around for 4 years and has been a high priority topic of interest for security researchers and cryptographers from the beginning.
4 years, a completely open specification, and a billion dollar bounty for successfully finding and exploiting a weakness and nobody has managed to find anything that doesn't require gaining control of > 51% of the total global mining power.
If Concern actually knew of any technical flaws in Bitcoin he would have exploited them and become a billionaire.
More likely he is talking about the economic hypothesis that you need inflation an economy to work. Inflationary currency is a relatively new thing that came about a few decades ago but the entire fiat currency system of the world works on it. Prior to that the entire world was filled with deflationary economies, some booming, some weak. So while the inflationary requirement is taught as economics 101 it is relatively untested while deflation has several thousand years of working just fine backing it up. There are talking points for both sides of that debate.
Both sides will disparage people with the opposing opinion on inflation vs deflation. But no matter what you think is the cause, it is the pro-inflation crowd who now has to defend their views in light of the reality that Bitcoin and it's deflationary system have grown from nothing to a billion dollar economy exceeding those of 20 nations in just four years.
The IRS considers Bitcoin an good not a currency. It isn't income until/unless you sell it and realize a profit. A good portion of the wealthiest people in the nation dodge almost all the taxes on their vast wealth by shifting it from investment to investment. The poor can't do this because the majority of their wealth is needed to provide their lifestyle. For the super wealthy even their extravagant lifestyles represent statistical noise relative to their balance sheets.
That's why the wealthy want the "fair tax" because then they don't have to play those games. Their balance sheets grow by leaps and bounds relative to the insignificant amounts they actually spend. So they could dodge even more tax than they do now.
The smartest people were the ones who understood the potential of Bitcoin early and mined when your desktop cpu could unlock multiple blocks of 50 coins a day. Most of them have probably either lost the coins or cashed out long before now but they were the smartest.
A lot of this does seem like it could be a bubble but it also seems likely Bitcoin will crack $100 and that is a nice place to establish a new market bottom with the Bit cent then becoming equiv to a dollar. Bitcoin's appropriate value certainly isn't nothing. It was quite stable in the $8-12 range before the reward for mining halved. At the same time the difficulty (and therefore cost) of mining has skyrocketed as ASIC miners have come online. So we are looking at a price point between $30-40 dollars as a bottom just on the merits of supply reduction vs demand that existed before this climb.
:)
The good thing for Bitcoin itself is that Bitpay is offering merchants who take Bitcoin a much much less expensive payment option 0.99% with no other fees, credit requirements, or charge backs and they can have payments instantly convert to fiat to work like a credit card or can keep it in Bitcoin. They are signing thousands of merchants a month. So even if this is a speculation bubble, it is stimulating actual growth in the Bitcoin economy and therefore increased demand.
The increased demand combined with decreased supply would mean that the price should be somewhere beyond that $30-40 and the longer this run goes the higher that number is. Plus, this isn't a pure buying run. Every few days there is a dip of $10-20 dollars that indicates small market corrections throughout the rise.
Just my take on the whole thing. YMMV
Exactly like Wall Street. It's a speculative market and at the end of the day all speculative markets are just high stakes casinos.
Still, it will help Bitcoin itself. The currently booming Bitcoin world combined with Bitpay offering merchants a payment option with only 0.99% interest, no other fees, no credit or volume requirements, and no charge backs probably means a lot more merchants jumping to accept it.
This is just the dirty act of government of the week. Dare to suggest our wonderful benign government illegally intercepting cell communications is doing any of the other things they do for a corrupt or improper reason and you are instantly branded a crackpot conspiracy theorist.
Dare to suggest we can't trust these guys to overreach in financial regulation or that they can't be trusted if we disarm the population or not to infringe on free speech if anonymity isn't preserved, or with latest constitution shredding government empowering anti"terror" rag and you are a nutter and conspiracy theorist.
After all so many people can't keep a secret! Even though most of it is no secret and requires only a few people knowing anything and the rest doing their part in ignorance or acting in self interest.
How many married people would favor dissolving state recognition of marriage across the board and treating them no differently than an unmarried couple living together? For the left it ends unequal state treatment of gay couples, for the right it settles that issue without infringing on their sacred view of marriage. Yet the answer is very very few would support it. Why? Married couples wouldn't want to lose their tax breaks and spouses wouldn't want to give up their "security" in the form of a stranglehold over the property of their partner and the potential alimony.
You can expect the same percentage of self interest based action out of government agents and representatives. Most are corrupt, greedy, and self interested because most people are.
I'm afraid I have to disagree. First modern economic theory has existed for a very short time and there have been wealthier peoples in the past who did not subscribe to it. It is also highly suspect how much of an impact modern economic theory has had compared to the advance of technology and science. You might have a case of soda in the fridge where you would have had a six pack before. But the total amount of resources, in terms of materials and labor, that you can buy is actually far far less. It isn't economic progress to own two cars that represent a 10% the amount of raw resources where you used to own one that represented 10 times the value... it is technological progress. A very solid argument that modern economic theory has only managed to stumble along because of the extreme strides in technology that have coincidentally progressed in parallel could be made.
Let's not forget this is hardly the first depression/recession in the short window of time that modern economic theory has been at play. Personally, I blame speculation more than inflationary currency. Large scale speculative markets are what brought us the great depression. As for what countries will survive the GFC, lets wait and see if and when it passes.
Bitcoin doesn't prevent all regulation it simply prevents regulation by the majority in a place where the interests of the group conflict with the interests of every individual who makes up that group. If someone somehow steals your Bitcoin you can still call the police. If someone fails to pay a contract you can still file a civil suit and a judge can order a payment, even in BTC, the same way it could order the return of any property. Government can still regulate the production of goods and apply controls on them.
The mass adoption of Bitcoin won't suddenly unravel law and order in the world. It doesn't prevent you from facing the consequences of breaking the law. It just restores personal privacy, thwarts the unlawful search of your financial actions without warrant, and restores to the right to decide if you'd rather face those consequences of law than give up your property. At least to the extent you manage to protect that property.
Taxation is another issue. Bitcoin doesn't have much chance of helping you avoid taxes locally. But the US oversteps it's right and taxes money it's citizens makes abroad even though they must pay the local taxes. Now the US can do this because ultimately might makes right. But using a system like Bitcoin empowers those citizens with the might needed to make a ridiculous and abusive policy like this unenforceable.
Finding ET isn't even something meaningful if we succeed. It isn't as if we are searching for any reason beyond curiosity. Bitcoin = Financial freedom from the tyranny of banks and governments. A level playing field for global trade and a potential global currency with all the benefits that provides and none of the drawbacks of a government controlled global currency.
Sure some of the miners might just be in for the greed and the speculators certainly are but that doesn't mean it's all Bitcoin is about.
"All it would take is a stroke of a pen to wipe out bitcoin entirely."
I'd love to see that pen. Outlawing it wouldn't work. As long as anyone, anywhere, runs a client and mines Bitcoin is still around.
"All that computation going to waste for LITERALLY NOTHING but a number."
That is what comes from reading news article to find out about a topic. Miners are processing transactions which is a fairly essential function and not wasteful at all.
"Creating artificial scarcity by wasting energy and processor cycles"
The scarcity is a numerical property. It isn't artificial, you can't get less artificial than a mathematical certainty. Someone could find some new cache of gold, or mine it from space junk, etc. Nobody can ever find unexpected Bitcoin. Also the processor cycles are being used to process transactions and to assure counterfeiting is impossible. That isn't a waste, it is an essential economic function for the currency.
Food and water yes. Bitpay is adding about 1000 merchants a month and climbing rapidly. Most of them are probably using the option to convert directly to fiat at the time of transaction but it hardly matters to the guy looking to spend Bitcoin or who is considering whether or not he can spend it if someone offers it. They just dropped their fee to 0.99% of the transaction with no other fees of any kind. Even the straight percentage is less than you will get with any credit card merchant account and there are no charge backs.
"Not really sure how that's going to work with the inherent instability of Bitcoin."
I don't see there as being any inherent instability in Bitcoin. Unless you consider the instability that comes from low volume as inherent instability. A stock with Bitcoins volume and media appeal has price instability as well. But we can agree to disagree here.
But I'll tell you a story. There is an entity billing one of my credit cards monthly for $20. They refuse to stop. I can dispute the charges but only back 90 days. I did this once and had a new card with a new number issued. I just discovered that the charges are still being applied. According to my bank because it is recurring billing it doesn't matter how many times I dispute or change the card number they will continue to pay it. My only remaining option is to put a total block on my account with them, pay off any remaining balance, and then close the account.
As it happens I never entered an agreement. But whether or not I did so doesn't matter. At least, it is none of my banks business. Their primary reason for existence is to make sure NOBODY gets a single penny of my balance without my explicit authorization. If there was an agreement the company in question would be free to try to establish that in a civil suit. So why does my bank refuse to stop giving away my money? They have a backend deal with the merchants and are deliberately breaking faith to maintain their interests over those of account holders (it is a secured card, I don't use unsecured credit so I am borrowing my own money not theirs).
Bitcoin prevents this scenario from even being possible. It is left to me to authorized every pay out. Nobody can pull funds, I have to push them. At the end of the day, my right to decide a vendor doesn't deserve my money is left to my discretion not the banks. If I want to rob peter to pay Paul, this is my choice.
You can buy goods and services with Bitcoin. It IS real money. Since it is built on more sound principles than fiat some of us take it in preference to fiat. The only thing hindering Bitcoin now is critical mass and adoption is growing.
It is no different than the open source vs commercial or firefox vs IE issue. Being an entrenched monopoly makes overtaking you a slower process but it doesn't make you invincible vs a superior solution in the end.
"No they are not. A winning lottery ticket is worth more than the cost of the ticket, but you have to win. The benefits of Bitcoin mining accrue only to the first person to compute the hash. Everyone else uses electricity, and gets nothing back. You have to take into account competition for mining to calculate the cost. Nobody does this, so it looks like a no-brainer, but once you find you're competing against ASICs you're screwed even if you have an ASIC too."
I'm sorry but it seems like you almost but don't quite understand the way the system works. The system adjusts for additional competition by adjusting the difficulty factor. This gives you an easily calculated and predictable probability of "winning" that absolutely does account for the "competition." If there is a 1 in 10 chance of winning, over the course of time you will win roughly 10% of the time. You can plug a given mining rate into a mining calculator and it will tell you often you'll "win" and it will be right. Of course you can also just join a mining pool and instead of winning every 30 days (which might mean 1 every 30 or 3 in the third month, etc) you'll get a constant trickle of coin that adds up to a full block after 30 days.
I think a lot of people misunderstand the nature of the competition. There is a competition in the sense that there is only so much coin to be had but miners are all running on private tracks, not running on the same track with bigger miners being faster.
As for ASICS, they are cheaper and use less power. They'll cause a short disruption but everything will stabilize again. Ultimately everyone will have them. All they will do is is change the difficulty factor. In the end they are a great thing. Miners aren't just doing random crap, they are processing transactions for the network and securing it. The faster the rate the better.
Bitcoins are definitely worth a LOT more than the electricity needed to make them. At least with GPU/FPGA/ASIC mining. I don't know if it is true of CPU's anymore.
There aren't more big players in the game because the Bitcoin economy was too small to worth bothering with for a big player. Now it is starting to get there. Plus, there is a severe shortage of the hardware needed to mine. Large companies can't just generate it out of air, if there are no ASICs or suitable GPU's to be had there are none to be had.
I wouldn't speculate on Bitcoin... or anything else for that matter. Speculation is gambling and 80% of speculators lose money while only 20% win. The problems you are talking about with bubbles and suckers apply to the stock market just as well as Bitcoin speculation. Which isn't to say that the current price is (entirely) a bubble. There have been a lot of recent developments in the bitcoin world to stoke the flames that indicate solid changes in supply and demand that explain a huge upward movement. Bitcoin is very young, companies the size of the Bitcoin economy often grow 400%-1000% year on year for awhile. At some point they mature and it simply isn't possible to maintain that growth but that doesn't mean they suddenly shrink.
None of that means Bitcoin as a currency is a bad idea though. And short of something terrible happening like a system wrecking hack Bitcoin will continue to appreciate over time... that is a mathematical certainty.
All that said. My guess was that we'd see something more like $30-35 with the mining reward halving. Now it looks like we are probably going to hit $100. That would be nice because we could essentially use bitcents (0.01 BTC) as dollars.
I did say "gold standard" but I was thinking of gold (or any other item with recognized innate value and fixed supply) as currency.
"I'm not sure why you see this as a problem."
That is the same thing as inflation. With the gold standard there is no value in the dollar only in the gold. You don't increase the value of the gold that way, you only decrease the amount of gold backing each dollar and thereby increase the number you need to buy a candybar. It also isn't the way the gold standard was implemented. I was really referring to using gold directly for currency. It deflates but eventually the piece of gold that buys a candy bar is too small.
In any case, not having enough of the stuff was the primary excuse given for moving to the inflating fiat. It is only later that people began to buy the idea that somehow nobody would need to trade if deflation occurred. Which is ridiculous. You still want goods and services no matter what you do. The demand doesn't drop, if someone stops supplying because they don't make more than the deflation rate spending supply drops, the reward for performing that task then goes up beyond the deflation rate. Inflation/deflation don't drive trade, trade drives inflation/deflation.
"you will if you want me to take you seriously"
This seems to be your incorrect assumption. I don't care if you take me seriously. You are just a slash troll.
For anyone else unfortunate enough to have fallen down this thread. I doubt anyone actually has their head buried deep enough in the sand that they are unaware of government tracking of finances. The fincern ruling itself is a government declaration that they require financial institutions to gather this data for them. The DEA can raid you if you have purchased x number of common household and hardware chemicals/cleaners within a short span of time where those items can potentially be used to manufacture methamphetamine. There was a semi-popular tv show that covered the DEA raiding these "bad guys" left and right. How exactly is it that the DEA is supposed to use your acetone purchase to find your evil meth lab if they aren't reviewing your purchases?
I don't have an investment in Bitcoin. Personally I think currency speculation and speculation in general is just a form of high stakes gambling. I believe the Bitcoin system itself is numerically sound and also that the cryptographers who designed it had a far better understanding of mathematics and mathematical models than economists whose mathematical expertise does not extend further than the general math and basic algebra required in their field. Any information I've presented about Bitcoin is verifiable independently. Everything about Bitcoin is verifiable independently. It is a completely open design both in terms of theory and implementation.
"After you have proven both these two things, you then need to realize this is a policing problem not a currency problem. "
Aside from demanding I support claims I never made like the 100% anonymity of Bitcoin (which you cleverly supported with my example of the lack of 100% anonymity of Bitcoin), your odd insistence that my references to how irreversable Bitcoin transactions somehow requires me to prove that all transactions of any kind are not reversible, and your winning point about how my suggestion that escrow works out better than reversible transactions somehow requires that I prove Bitcoin is the first and only place escrow became available.... everything you said can be reasonably summed with the above.
I'm not going to provide you references for all the examples of currency tracking and government action. Most of these law enforcement techniques are secret. For the detection of metal strips in cash it requires no evidence. Any quantity of such metal strips is trivially detected with RF. Unlike the rest of the bill the strips will clearly show on scanners at the airport as well. Law enforcement, as a rule, does not tell everyone what techniques they use. But a particularly paranoid friend of mine who worked at a gas station collected the little strips and stuck them to a sheet of paper. After a year of collecting them from every 20 that passed through he put it to the test. He traveled with the strips in his trunk 3 days out of a 5 day work week and was pulled over on all three days. It could be resounding coincidence.
All that is beside the point. Government controlled currency is simply an extension of government. So long as you are using such a currency you are at the mercy of the will of government and the will of others. The right to property is one of the few rights you have even if there is no government and it should not be subject to the will of government or the tyranny of the majority.
"Which explains why osmium is more dense than lead?"
Lead is less dense than osmium because of the way their atoms exist in their crystal structures.
"As far as use as a construction and engineering material, the vast majority of the time people don't care how many atoms there are and instead care about something that comes back to the volume."
Not always so in say, chemical or nuclear engineering. But for larger scale applications that is fair enough and you did say the "vast majority." But nothing I said is related to what those people are interested in. I am calling them on saying something that is not accurate. They said the graphene aerogel is LIGHTER than hydrogen. Lighter is a comparison of weight. W = mg where m is mass and g is gravitational acceleration.
If we check wikipedia we find the following about gravitational acceleration, "Neglecting friction such as air resistance, all small bodies accelerate in a gravitational field at the same rate relative to the center of mass.[1] This equality is true regardless of the masses or compositions of the bodies." Since they didn't give any qualifiers we must assume that both materials are being compared under an equal gravitational field. We also find that we must compare them irrespective of air resistance and composition of bodies.
So we can consider g to be 1 which leaves us W = m1, or W = m. Once again, Wikipedia tells us that mass is the quantity of matter in an object.
Thus when you say something is "lighter" than the atom hydrogen you are saying that an equal quantity of matter units has less mass. Graphene is a molecule while hydrogen is an atom. So the comparison is one that only considers atomic mass. Osmium may be more dense than lead but lead is heavier than Osmium.
Now, if that isn't a useful or sensible comparison you shouldn't complain to me, you should complain to the ones who both made the comparison and gave the incorrect conclusion.
I think hydrogen wins regardless. Last I checked hydrogen is an element and it weighs the same amount regardless of it's state of matter. A 1 inch cube of hydrogen solid is just more hydrogen than a 1 inch cube of hydrogen gas.
Graphene is made of carbon. So in order for it to weigh less the total carbon atoms in it would need to weigh less than the same number of hydrogen atoms. They don't, so graphene loses. Making it into aerogel is just going to throw more atoms in into the mix and it would still lose.
Fail.
"Yeah that's still deflationary. Deflationary is bad. It leads to economic stagnation"
That is the common myth. This view tends to propagated by the wealthy people who actually have more wealth than they need to spend. It is a backwards philosophy. The economy is not driven by inflation or deflation, deflation or inflation are driven by the economy. The economy moves because people have needs for goods and services and thus will spend money to get them and work to acquire money to get them. Currency is the tool to facilitate trade, trade predates currency and doesn't need currency to be either inflationary or deflationary to drive it.
It doesn't matter if the value of your money grows on paper if you never spend it. At least it doesn't matter if the currency is infinitely divisible because there is no reason to minimize deflation. For the tiny portion of the population that has excess wealth they can afford to just have sit around the rate of deflation becomes the minimum acceptable return on investment in the same way the rate of inflation does now. Neither inflation nor deflation are the driving motivator here, good old fashioned greed is.
"For you, the more economic activity others do, in BTC, the richer you become. Yet you still do nothing. In fact, provided BTC attracts a certain level of interest - i.e. that decimal keeps moving over at a certain rate - you're set for life. You can buy food and shelter in bitcoin for less then the increase in value of your initial bitcoin pile."
You are assuming a rather large rate of return. By definition this can never be the case long term. That might work in the beginning but it wouldn't work that way long term. People have to provide that food and shelter. In order for that to be worthwhile those people are going to be looking for a profit that exceeds the rate of deflation. The rate of deflation becomes a minimum economic pressure in the same manner that the rate of inflation does.
Ultimately it is impossible for the value of the currency to grow faster than the rate at which the actual available supply of goods and services grows. Both systems allow for the possibility to gain wealth without effort through private lending. The deflationary system makes it easier to get into a position to do this and thus diversifies access to credit. With the inflationary system a more or less unlimited stream of new currency is available to banks at a rate so cheap it is effectively free. The banks then lend and use diversification and screening to mitigate their risk to nothing while getting a greater return than the cost of the currency. With the deflationary system these banks and currency generation are eliminated. All the wealth that would go to them is instead directly distributed out into the hands of private individuals. Some of them will spend it away, others will save and invest, fewer will have enough to mitigate their risk to nothing and so they will lose money through that risk. Some of them will invest more wisely and will eventually be able to effectively mitigate most of their risk and thereby be able to assume even more risk via increased lending. In the end there is a free flow of credit either way but the deflationary method chooses the lenders through a heavily diversified free market where the fittest become the sources of credit where the inflationary system gives the power to a handful of state granted monopolies. At the top, the largest entities are in pretty much the same situation but the deflationary system makes it easier for people toward the bottom to get into a position where they can self finance or become investors.
Don't forget, pretty much the entire world ran on a deflationary system until a few decades ago and trade hummed along just fine. The only trouble we ran into was that we were using a limited resource with limited division and the overall economy grew to the point there wasn't enough of it. Logically, it is obvious this is a problem that would have never existed if deflation itself caused things to stagna