I don't understand the singling out of the ponzi scheme assertion though. There are a number of assertions about the economic failures of bitcoin. There aren't any peer reviewed economics papers on bitcoin being a ponzi scheme for that matter. I'd like to see a credible paper on _any_ aspect of bitcoin.
"So far as I can tell it's a combination of the worst of all of the above."
Yes perhaps this is true, if these are features you don't like about those things. Some people don't like these features, some people do. I guess we'll find out who's in the majority.
"On my "factual errors", you might be better received if you stopped passing off your opinions as facts."
Factual errors are factual errors it is immaterial how they are received. I have being trying to give people facts, not opinions. If I've made a mistake I'd like to know where.
"So far as I can tell it's a combination of the worst of all of the above." Is an opinion.
"You can send them in any amount to anyone on the internet, and with almost no fees." Is a fact.
Odd, I don't see that a single one of my posts have been even remotely successfully rebutted. Your national currency allows charge backs? Really? That's cool, where do you live I what to come there and see how they do that with cash. Your version of the perfect digital currency is that it must allow automatic chargebacks? Odd, but ok, wait until that shows up and use it.
I have at no time advocated that anyone go out and speculate on bitcoin, quite the opposite. So even if I where speculating, which I'm not, I'm not giving the right advice for building the value of bitcoin.
To be crystal, I do not recommend that anyone speculate on Bitcoin. It is very unstable and may lose massive value at any time. Full Stop.
However as a tool for transmitting value across the internet it is very useful. Think software; email, web browser. It's a tool not a political party. This is something that bitcoin can be used for, is designed for, and can happen regardless if the value of bitcoin is $0.00001, or $1,0000.0. Not for you, no problem, that's easy DON'T USE IT. Even if you do decide to use it, buy which I primarily mean allowing people to pay you small low risk amounts with it, I say change them out to your currency immediately. Don't hold them. Don't speculate on the future value of bitcoin. You can easily test it out without risking more then a few pennies. Why all the anger? Just learn about it.
What is frustrating are the people going around talking about how evil it is and they 'know' it's a Ponzi scheme. When in fact they haven't even cracked the FAQ, and have no understanding of how it actually works. People are spreading FUD, instead of facts. You got good facts to argue against it? Great! Lets hear them.
Learn about it, if for no other reason then to have competent arguments against it. Hell, as I've said elsewhere, I want to find out what's wrong with it. Save us all a lot of bickering.
"See.. it may be a feature of the "currency" of bitcoin that anyone in the world can pick up the client and accept/send bitcoin to anyone else in the world (with the client, anyway).. But that is a USELESS FEATURE if it is not also a feature of bitcoin that everyone in the world already HAS THE CLIENT."
That is a bold assertion that I don't agree with (opinion). My position is that if the client is free, and can be downloaded in moments. The the distance between "I can't accept bitcoins" to "I can accept bitcoins" is trivial to the point of being a non issue. Where as "I can't accept credit cards" to "I can accept credit cards" is ridiculously non-trivial.
"If I am in, say, the middle of Brazil, I can still GIVE USD to anybody standing around. It just does me zero fucking good. Kinda like bitcoin, except that bitcoin makes practically everywhere is like being in the middle of Brazil without any real."
Hum no, that is in fact one of the values of bitcoin. You can at this moment exchange bitcoin to currencies all over the world. You may still have to use a local currency at any given shop, but that is not the same thing as saying the currency you are holding is not "valuable".
"(although how chargebacks don't lead to legal action when legal action is called for, you haven't explained...)"
They may do. However finding a business that just sold you a defective TV, is somewhat easier then finding the customer that just walked out with a TV and charged it back.
" but the legal system is of no value for people who cross borders and expect to have their money. Way to stay internally consistent."
Two un-related features. Although I do business over seas, I wonder if they will honor our contract...
"You mean I can travel across borders without having all my cash money on me,"
No I'm saying you can travel across borders and have ALL of your cash money on you. In fact you can have your total net worth on you.
"If I have access to the internet, I have access to my actual currencies."
Really? I'm guessing you're not from an oppressive government.
"I have zero access to bitcoin, despite having my encrypted wallet on me. If I am imprisoned, rightly or wrongly, I have zero access to both."
And yet when you come out your bitcoins will still be there, your credit cards will not.
"Not being one, I don't give a shit."
Which takes you out of that argument. Let's see if someone who is, does.
"If a merchant accepts bitcoin and wants to be paid in bitcoin because it pays no fees, it has to induce customers to use bitcoin."
No it doesn't. It can continue to conduct business with credit cards and cash like any business. But when a customer who would like to use bitcoin comes in it's just one more way to get paid. Just like Meze Grill does right now in New York. (http://tech.fortune.cnn.com/2011/06/17/the-clock-is-ticking-on-bitcoin/)
"Credit and debit systems offer protection to the consumer (and can offer other benefits to the consumer). If a merchant wants me to discard those protections and benefits for an exchange system that really only benefits the merchant, he is going to have to offer me an incentive."
And maybe he would, or maybe he'd give you a choice, that they currently do with cash vs. CC.
"accepting bitcoin is adding overhead"
No it isn't. Unless you just mean cognitively.
"For the tl;dr people.. The fact that you advocate cashing out bitcoins to currency basically immediately upon receipt is really all I need to know about the system. Bitcoin is Western Union, but cheaper and less handy."
Yes like wester union, but cheeper, more handy, and more widely available.
Well unforttunalty it seems you've devolved into a nearly indecipherable bundle of factual errors and opinion. You can certainly hold your opinion, and I wouldn't argue that. You think chargebacks are a essential feature of a monitory system, fair enough. I don't. Unsurprisingly neither do any governments I'm aware of as no national currency supports that feature. Nevertheless to each his own.
On the issue of factual errors, read up. You will be happier if you can argue your position with greater command of the facts. Learn bitcoin if only to provide intelligent and witty pronouncements of it's imminent demise.
I agree that some of the proponents of bitcoin are complete loons, but so too with apple stock. It has nothing to do with the validity of the underlying technology.
"The original players are able to mine coins quite easily while people coming on later will be hard pressed to mine coins, and eventually newcomers won't be able to."
This is not accurate. The difficulty is the same for everyone, it is hard now for everyone, it was easier before for everyone. There are more ways to make bitcoin then mining it. New miners are not "punished" any more then no buyers of a popular stock.
"Money for nothing for the early adopters, while the newcomers coming to BitCoin having to exchange real goods for the currency. Sounds great for currency speculation, and I'm sure that once the currency gets enough suckers^Wpeople coming in, the early adopters can just dump their holdings and cash out."
This is true of any stock. Early adopters may "cash out", though early adopters are people who are the most passionate about it and firmly believe it will become much more valuable. Nevertheless, so what? Who cares if they cash out? Who cares if Steve Jobs sells all his apple stock? Will it reduce the value of the market, a little sure. Will it make using bitcoins less easy in transactions on the internet? No. The system has value independent of the exchange rate.
Don't speculate on the future value of bitcoin. Use it for what it's useful for.
It's not a Ponzi scheme, you really need to do better research.
"Sorry, I find those arguments highly uncompelling."
Ok, many people find these features to be compelling, you certainly don't have to. I personally don't find Rubles compelling, never had even one, no idea what I'd spend it on if I did.
"I can PAY them to almost no one. Money is only money if you can spend it, and nobody I wish to spend money with accepts bitcoins."
I'm sorry but that's just not true. There is a difference between markets that use a currency and a feature of a currency. There are few markets that use bitcoin currency, but it _is_ a feature of bitcoins that you can pay them to anyone anywhere in the world who has a computer and in internet connection. Tell them to download the bitcoin client, have them give you their address, send them bitcoins - DONE. It's easier then e.mail. It can't even remotely be compared to the difficulty of accepting credit cards for any given person in the world.
"The no chargeback/third party is a disadvantage, not an advantage. I have no one to help protect me and my money."
You have a legal system instead of the help desk of Visa. It took me a bit to be convinced about the charge back issue too, but now I realize that it is better not to have a mechanism in which someone can take back money you think you have, even if it is in blatant violation of a contractual agreement, without any legal system intervention.
You do have to protect your bitcoins form illegal activity, I don't disagree, but that is possible to do, and similar to what you have to do with money kept elsewhere.
"Credit card transactions happen in seconds these days."
Not really. It seems that way to consumers, but it isn't that way to sellers. Plus there are significant fees. However, the advent of bitcoin does not mean that credit cards are suddenly going away, and bitcoin does not need them too to be successful.
"Your portability argument is extremely silly."
It's not an argument it's a feature. Perhaps not a feature for you, but nevertheless a feature. Just because you have a encrypted wallet file on a SD card doesn't mean that you don't have another copy any number of other places. Some people in some countries are not as confident as you that their money will remain available when they cross the border.
"As for the disadvantages, I've seen no response. Where is the cryptographic analysis? Let's see some analysis from people like Schneier and Rijmen. Let's see the reports from institutions like the NSA and IBM? Crypto takes a long time and a lot of analysis to prove. AES went through 5 years of evaluation by the top minds before becoming a standard."
I don't know what you're talking about. Cryptio is _never_ proven it is defeated. How soon that defeat is published is how long that crypto has useful life. Bitcoin does not introduce ANY new crypto. It's a protocol. It uses SHA256 and standard public key cryptography. There is a massive amount of literature on those subjects. Nevertheless a protocol can use secure crypto in insecure ways, but so far not one person has found one. All an expert can say is they either did or didn't find an flaw, they can't prove that it's flawless.
I would like to hear some more analyses too, but so far not one flow has been found.
"Also, please tell me how it at all prevents a multiple-spending attack: Someone sends bitcions to multiple different entities, in rapid succession. How do you verify this doesn't happen? I understand that yes, eventually this can be traced, I mean as the person accepting them, how do you make sure this didn't happen and you aren't stuck holding the bag?"
Okay this is a good question, here's how it works. Everyone in the bitcoin network (clients, and minors) has a copy of the complete general ledger. This tracks the movement of every bitcoin from inception to the account that currently holds it. I can pay you a bitcoin, but if I try to pay that bitcoin again (by restoring a backup of my wallet file say) everyone on the network will disagree wi
First of all every block equals 50 bitcoins. It's called bitcoin "mining", but what it really is is a "proof or work" that contains all of the transactions for the last 10 minutes or so. At this point it is VERY hard to do this proof of work even for only 1 block.
"I can just go to a website and say "Give me [exchange rate] for X coins" and it becomes actual folding dollars?" - Yes. And very quickly too. In fact because of the nature of bitcoins it is _much_ easier to move bitcoins to a currency exchange and transfer to dollars then it is to do the opposite. Within 30 minutes to an hour you can set up an account at any of the currency exchanges send your bitcoins in, sell them on the market, and transfer the cash out to a service that can do direct deposits to your checking account.
"Who decides what it is worth?" Just like any stock, commodity or currency exchange thousands of traders trade tens of thousands to hundreds of thousands of bitcoin per day. The buyers and sellers in these markets define the 'value'.
"What happens when it becomes so difficult to make a bitcoin that it just can't be done anymore (say NASA put some supercomputers on coin mining duty) and everyone who doesn't have a supercomputer can't make them anymore?"
This is not quite how bitcoins mining works. The system auto load balances. It ALWAYS takes about 10 minutes system wide/world wide to generate a block. If it becomes harder to find a block then 10 minutes, then the system makes the "proof-of-work" easier, and vice versa. Also it is unlikely that even NASA has the computing power to make a significant impact to the difficulty level of bitcoin mining. The current bitcoin network processing speed is 145898 TeraFLOP/s. This is an unbelievable number to put it in perspective the top 100 super computers in the world right now combined do 51184 TeraFLOP/s that's only 35% the computing power of the bitcoin network. Nevertheless, to answer your question if your participation in the network is so small that you can hardly make any bitcoins, there are still ~7,200 bitcoins being introduced every day because the difficulty is balanced to the system performs such that 1 block is solved every 10 minutes or so and each block is worth 50 bitcoins to the computer that solved it. It's like a lottery that happens every 10 minutes how many tickets you have is based on how much of the total computing power of the network you contribute.
The amount of bitcoins being produced will be reduced at a schedule proscribed by the protocol until in the end there will only EVER be 21 million bitcoins. When this happens, nothing happens. People will be trading with the bitcoins that already exist. Bitcoins can be divided to 8 decimal places so the fact that there are only 21 million could mean there are 21 dollars worth of bitcoins or 1,000,000,000,000,000 dollars worth of bitcoins, it only depends on the market for bitcoins. It will still be easy to do transactions with bitcoins at whatever unit is convenient, say 0.0001 bitcoins is worth about a dollar, no problem the system can work that way.
I think it's probably not worth mining bitcoins now unless you have access to more the a few graphics cards. A better way to make bitcoins is just download the client and accept them for what ever you want, services used stuff, whatever. I do not recommend that you speculate on bitcoins. Trade them immediately for your currency and transfer that to your bank. It's just another way for you to accept payment, and easier then credit card.
"when there are 21 million coins and production stops completely?" Yes, miners (who are the security back bone of the system) will be rewarded by transaction fees instead.
"I'm not trying to challenge the validity of bitcoins, I'm just genuinely uninformed slash curious."
Please do challenge the validity of bitcoins. It is an interesting idea, if it works it will be because smart people have done everything they can to defeat it and failed, if they find a flaw then they will save everyone after them from loosing on a broken system, and my highlight the one thing that if fixed could make it work for version 2.
True, but it should be pointed out that ""shuffling" into new addresses" is indistinguishable form "spending."
I agree, people have it wrong if they think that bitcoin is a good way to do illegal things. With appropriate resources a state agent can "follow the money."
"If you are a seller, you're a merchant. That's generally why people give you money."
You're kidding. Really? That's your argument. Wow, I got the money I have in the bank by being a merchant, who knew. Thank god people are protected from my evil merchant ways buy being able to charge back on me... Oh wait no they can't I don't take credit cards.
"Plus accepting credit cards through paypal is easy..." Yeah that's why everyone takes credit cards.
"Card payments are processed immediately, so you know the money exists."
I'm sorry, but no they don't. That's just a flat out factual error. You do not ever with any credit card provider receive cash deposits into your corporate account "immediately".
"You don't even know this with bitcoin." Yes you do. Look it up. Since we're down to "yes it does"/"no it doesn't" now clearly you simply don't believe me, that's an easy thing to address. Try it. Read the available literature. I'm not the only person who understands how it works.
" Conflating out and out fraud (possible with bitcoins in a payment scenario in which instant payment is needed) with the chargeback policy is duplicitous nonsense." -
"Ah, the libertarian answer to everything! I don't need no government involvement..." Quite the opposite, I specifically pointed out that I want the government involved. If I have a problem with a transaction I want the legal system involved, no the customer services department of Visa.
"And immediately the success of likes of ebay become impossible." Perhaps you're right I can't comment I don't use ebay because of excessive fraud.
"As a society we have taken steps to ensure that buyers do not need to do this because history shows us that it can and will be abused." I'm not sure who's point your arguing here, sounds like mine.
"here's a list:" I thought the premise here was that you where going to provide good arguments here?
"Instability for multiple reasons" - Instability of the value of bitcoin does not mean that bitcoin as a system has no value, it's value is unstable. At this point in time you should not speculate in the future value of bitcoin. Some people do, I do not recommend it, it is very high risk. However using bitcoin as a way to transmit value is very useful and you can avoid the risk of speculation by immediately transferring any bitcoins you receive to cash which is easy to do.
"No real economy, just speculation" - The economy is growing, several online stores have opened, and the number of businesses and individuals accepting bitcoin has increased moth over month no indications that will slow.
"No security, your wallet gets compromised you're screwed" - This is absolutely true, and a big issue (wow, this is like 1 to what 20?, but hey at least you don't leave the field with 0). No built in security, you are responsible for your own security at the moment. Worse, you don't necessarily know you've been compromised, years down the road someone who has a copy of your wallet file could spend your money. This is supposedly being addressed in the next release of the client. Meanwhile you should encrypt your wallet, you can receive bitcoins to it at any time, but you only need it decrypted to spend money. Many people are creating offline "savings" wallets for added security.
"Massive deflation punishing new entrants." - Factual error, currently the bitcoin money supply is inflationary to the tune of ~7,200 bitcoins a day.
"I think deflation steals from the productive economy." - As I've pointed out using facts, what you 'think' is not a compelling argument.
"Less features than current solutions" - Factual error here is an incomplete list of features that my be interesting t
Here are some of the features of bitcoin and reasons why you, or a merchant might find bitcoins interesting.
You can send them in any amount to anyone on the internet, and with almost no fees. Your customer base is therefore the entire world not just people with your "coin of the realm" If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back. No third parties are involved, there is no one else to trust or pay fees too. You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments. Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards. It is as easy to accept bitcoins as it is to spend them, unlike credit cards. They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.
There are disadvantages too, and you should make yourself aware of them, however these do not include a weakens in the protocol or being a system designed to defraud you as some argue.
You should probably not speculate on the future value of bitcoins. If you accept them do so at the current exchange rate, and then immediately cash them out for your currency of choice. In that way it's just another tool to get paid.
I am not a true believer, I am a sceptic. I come across as a true believer because I have done a lot of research on bitcoin, and I now believe I understand how it works. I have not found a flaw. More importantly I can't find anyone who has. Not one person. I am however, still skeptical and would love for someone to step forward with an actual real world flaw. I continue to investigate and will report back if I find anything.
Meanwhile, you are absolutely right that bitcoins are accepted by few places, but what is interesting is that they are accepted by more people, and merchants this month then they where last month. And this has been consistent month over month. Which implies that this will continue to grow. There have already been cragslist listing for apartments that can be rented for bitcoin.
Here are some of the features of bitcoin and reasons why you, or a merchant might find bitcoins interesting.
You can send them in any amount to anyone on the internet, and with almost no fees. Your customer base is therefore the entire world not just people with your "coin of the realm" If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back. No third parties are involved, there is no one else to trust or pay fees too. You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments. Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards. It is as easy to accept bitcoins as it is to spend them, unlike credit cards. They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.
There are disadvantages too, and you should make yourself aware of them, however these do not include a weakens in the protocol or being a system designed to defraud you as some argue.
You should probably not speculate on the future value of bitcoins. If you accept them do so at the current exchange rate, and then immediately cash them out for your currency of choice. In that way it's just another tool to get paid.
Bitcoin is not a scam. Have you reviewed the while paper, or the source code? I have. I cannot find a flaw not that I'm anyone important. More importantly I can't find anyone else who can find one either. Not one person mind you. Much less an intention to defraud people.
Oh sure I can find people who haven't even read the FAQ spout volumes about what's wrong with it. But I can't find a single knowledgeable person who can find a single real world flaw.
So now, would you now kindly explain what emperor's wardrobe you are referring too with regard to bitcoin. I actually want to know what's wrong with it. I've been working on that problem for a while.
I take it your concept of success is not very incremental. An all or nothing kind of thing. I on the other hand see a technology that has only moved forward in terms of its uptake and usability, the exchange rate is immaterial to that although it as also moved up.
I agree I would love to hear Bruce Schneier give it a bit of a public go over, but it is open source and anyone can review the code and the white paper. Many people have so far and no one has published a flaw. You can't double spend, don't know where you're getting that from. That's a core design element. Explain where you think there is a flaw and I can try to clarify.
I'm not as quick as you to say that a few tens of thousands of computer geeks and a number of core developers are completely technically incompetent.
Flooz failed because it was backed by a company when the company failed the currency had no infrastructure to function within. Other virtual currencies have also failed, because of single points of failure. Addressing these issues is part of Bitcoin's design. Bitcoin is not a company, it would be easer to shutdown torrent at this point, and we've seen how easy that is.
It might be better to think of it as software that helps you move money across the internet. If you are suspicious about it's future, don't hold it, but as a tool it's very useful. As I've said elsewhere the value of bitcoins is not a theory, predictions of it's failure are what is theoretical.
"Merchants." I am not a merchant, I do not want people to be able to pull back money they have given me. And interestingly enough it's hard for me to accept credit cards too.
"Yes, an hour in which you're not sure if you've been defrauded.... not sure how rewording helps here"
Agreed, an hour vs. six months, the rewording is not helping you.
"Demanding a refund forces the vendor to be involved." - Exactly so.
"Fake goods, or goods not delivered, and a vendor that disappears into the ether, these are real phenomena." - indeed don't do business with shady people. And know who you're doing business with so that you can involve the law if you need to.
In a transaction between two people that goes bad it is not objectively known who the defrauder is. They will both blame the other. Facts must be properly investigated. This is what the legal system is for. Chargebacks avoid the legal system.
"I can make much better arguments against bitcoin then[sic] this too," Then by all means please do. I truly want to see some good arguments against it. However, so far you appear to be poorly qualified. Let me guess, you're not really left handed.
Yeah, well, that's just like, your opinion, man. Got any facts to go with that?
"Then read harder! There are lots of compelling arguments about this out there, the fact you ignore them is up to you."
As far as I can tell I'm the one who's been doing the reading. Tell you what, why don't we return to this topic when deflationary stalling actually starts having an effect on Bitcoin. Then at least more then one of us will be using facts.
In fact there is very little in the way of compelling arguments with respect to deflation of bitcoin. It was designed to work as a "scarce commodity," much like gold, and gold is still a medium of exchange the world over, while it continues to gain in value as it always has. There are very few real world examples of catastrophic deflation. In every example I'm aware of there was no real alternative to trade in a fixed geographic area so with no alternative way then the deflationary currency to transmit value the economy stalled. Also a primary factor was the indivisibility of the currency. These are not the case with bitcoin, it is divisible, and it is not the only medium of exchange in any geographic area, so someone needs to argue a different mechanism by which bitcoin's become useless (i.e. no value) by becoming increasingly highly valued. No one has done so. The fact you find those arguments compelling points to your lack of understanding of bitcoin.
Chargebacks are not a different phenomenon, if a chargeback is applied to your transaction then it never happened, that's as directly related as I can imagine. You can't chargeback with cash and people rather appreciate that feature. Chargebacks are not a consumer benefit they are a way for fanatical institutions to avoid liability.
"You're talking about an hour in which you have no idea if you've just been defrauded." Not true we're talking about an hour in which you become increasingly sure that you have received money permanently. However this could be said of paypal or credit cards. You have no idea, some times for months, if you where defrauded.
"There's a reason that there are consumer protection laws on the books." And there is nothing about bitcoins that causes these laws not to apply. You can always demand a refund just like you can with cash, but you cannot force a chargeback.
(Notice how every argument you present has a compelling counter argument, does it not make you just a little suspicious that perhaps you could learn a little more about the subject? I can make much better arguments against bitcoin then this, but I have yet to find one that does not have a compelling counter.)
Distributing a large volume of bitcoins would crash the market, but it would not remove the value of bitcoins. In fact it would spread the currency to more participants who would be naturally motivated to see the value go back up. The top 100 largest bitcoin holders could make a big impact in the markets (below that it would not be much of an impact) but they can only sell out once, and once the currency is distributed it will become increasingly stable, as it will be very difficult to cause such a crash in value again. Saturating the order book is not the same thing as making an asset worth nothing.
There is a limited amount of gold, but no one has ever had a problem seen that as a currency. The argument that bitcoins are deflationary, which is by design, is a bad thing and will at some as yet unspecified date stall the economy has yet to be compelling.
"as little as an hour" in monitory transfer terms IS instantaneous. In case it wasn't completely clear the transfer is instantaneous, it takes as little as an hour to be 100% sure that it is completely irreversible.
Predictions of it's failure are not interesting, because they are not well argued due to lack of knowledge. I would truly like to find someone who does actually understand bitcoins make a well considered argument against them. I've been trying to do that myself. However, dissipate the number of arguments I have yet to see one that is. Not one. This is of course why bitcoins hold any exchange value at all there has yet to be a compelling argument of a flaw, as soon as there is no one would buy one.
It is a misconception that Bitcoins are good for are where ever intended to be used as micro-payments. As little as it is there are still fees involved, and although they are optional now it is a part of the design that all transactions will eventually required fees. The features of bitcoin lay elsewhere as I have discussed.
It is also a misconception that the only use of bitcoins now is as a commodity. That is increasingly less true, and soon will be the smaller part of the bitcoin economy, because of the value of using bitcoins to facilitate trade that persists regardless of the stock price.
It is true that there will be people who have interest in seeing the value of bitcoins go up. As is true of the motivations of anyone who holds stock in anything. But it is incorrect to assume that that is it's only value or that everyone who is interested in and talking about bitcoins are holding them for speculation as apposed to just using it as a tool. I use bitcoin as a tool, I don't particularly care what the exchange rate is. I exchange the appropriate amount to do what I need to do, and bitcoin makes what I need to do easier. I want more people to use bitcoin like I wan't more people to accept my debit card brand, it makes things easier for me, it does not necessarily make me any richer.
Approximately 7200 bitcoins are introduced to the supply every day, but this will slow and eventually stop, so in fact it will "turn out" quite the opposite of what you say and people will be less and less motivated to sell you bitcoins to raise the price of bitcoins, while more and more people will find the value of using them preferable to more expensive and more difficult means of online exchange.
The assertion that early adopters have an unfair amount of bitcoins is on the one hand completely irrelevant to the issues of usability, and on the other hand is completely typical of all inventions, commodities and the world in general.
This continued repetition of this idea stems from the misconception that Bitcoin is a Ponzi, pyramid or other type of scheme designed with the intent to defraud later adopters. That is not the design intent of bitcoin. It is an online medium of exchange that compensates people who improve it's security. The fact that people improved the security early on helps the security for everyone later. They got paid pennies at the time, and people who are helping now are getting paid pennies too. It has turned out that those pennies (if they kept them) have become valuable now. This is EXACTLY like being an early adopter of Apple stock, and could just as easily not have happened.
The reason bitcoin is being talked about so much is not because someone is trying to scam you and "cash out" their early adopter advantage. People are talking about it because regardless of the value of a bitcoin, it is a frictionless* way to exchange value over the internet. You needn't hold bitcoins to participate in bitcoins. You can change them to cash the second you receive them. Bitcoins are useable now. They are a currency now.
I would respectfully recommend that people who want to talk about what's wrong with bitcoin do their due diligence, before commenting on something that they clearly have little understanding of.
*frictionless means: 1) you can open a business and start excepting payments this very second anywhere in the world, with customers anywhere else in the world, (excepting money is no more difficult then paying money - try that with credit cards), 2) money you transfer to anyone in the world is instantaneous, in as little as an hour you can be 100% sure that you have received bitcoins that can never be taken away from you or reversed in any way. 3) It cost almost nothing to pay anyone any amount with bitcoins.
All of these elements provide value whither you call it currency, commodity or just software. I use it to do work, and I find that valuable to me right now. The value of bitcoins is not a theory, predictions of it's failure are what is theoretical.
That's a theory. I have a theory too. People who poo poo bitcoin despite it's obvious success, haven't actually done their due diligence on what it is and how it works.
Bitcoin works for me. I use it to get work done and buy things. I can do this now, I don't need you to be involved, and I don't need to "cash out."
Interestingly bitcoin is working despite all the arguments for or against it. The only valid question with regard to the viability of bitcoin as a currency today, is "Is it a currency today?" and the answer is without question YES.
Aside from the uses, for which there are now many (I have personally paid for survives, from freelancers around the world with bitcoin), approximately 7200 new bitcoins are introduced into the supply every day, and yet the value of the bitcoins has be rising over the past months. Even lately with the price off it's highs the constant influx of new bitcoins is not causing the bitcoin to lose significant value.
Fairness of early adopters doesn't enter into it. Early adopters helped to lay the foundation of the security which backs bitcoins, and were compensated for that service. You can participate and be compensated for that service too.
I would love to have been an Apple stock, gold or even U.S. dollar early adopter. But just because I wasn't doesn't me I should adopt now.
If you don't like the idea of it as a currency, or a commodity, then just think of it as a software tool that allows you to move money electronically without friction (unlike any other monetary device in the world), and therein you will find it's value.
This market place is already saturated with companies like box.net, dropbox, mozy, amazon s3, xdrive, pocketque and many others. What is interesting about GDrive, other then it'll search through my data to mine advertising opportunities?
Better be a massive amount of free online storage. What is the online storage to privacy exchange rate anyway?
Slashdot Mirror
Agreed. Very good.
I don't understand the singling out of the ponzi scheme assertion though. There are a number of assertions about the economic failures of bitcoin. There aren't any peer reviewed economics papers on bitcoin being a ponzi scheme for that matter. I'd like to see a credible paper on _any_ aspect of bitcoin.
"So far as I can tell it's a combination of the worst of all of the above."
Yes perhaps this is true, if these are features you don't like about those things. Some people don't like these features, some people do. I guess we'll find out who's in the majority.
"On my "factual errors", you might be better received if you stopped passing off your opinions as facts."
Factual errors are factual errors it is immaterial how they are received. I have being trying to give people facts, not opinions. If I've made a mistake I'd like to know where.
"So far as I can tell it's a combination of the worst of all of the above."
Is an opinion.
"You can send them in any amount to anyone on the internet, and with almost no fees."
Is a fact.
Odd, I don't see that a single one of my posts have been even remotely successfully rebutted. Your national currency allows charge backs? Really? That's cool, where do you live I what to come there and see how they do that with cash. Your version of the perfect digital currency is that it must allow automatic chargebacks? Odd, but ok, wait until that shows up and use it.
I have at no time advocated that anyone go out and speculate on bitcoin, quite the opposite. So even if I where speculating, which I'm not, I'm not giving the right advice for building the value of bitcoin.
To be crystal, I do not recommend that anyone speculate on Bitcoin. It is very unstable and may lose massive value at any time. Full Stop.
However as a tool for transmitting value across the internet it is very useful. Think software; email, web browser. It's a tool not a political party. This is something that bitcoin can be used for, is designed for, and can happen regardless if the value of bitcoin is $0.00001, or $1,0000.0. Not for you, no problem, that's easy DON'T USE IT. Even if you do decide to use it, buy which I primarily mean allowing people to pay you small low risk amounts with it, I say change them out to your currency immediately. Don't hold them. Don't speculate on the future value of bitcoin. You can easily test it out without risking more then a few pennies. Why all the anger? Just learn about it.
What is frustrating are the people going around talking about how evil it is and they 'know' it's a Ponzi scheme. When in fact they haven't even cracked the FAQ, and have no understanding of how it actually works. People are spreading FUD, instead of facts. You got good facts to argue against it? Great! Lets hear them.
Learn about it, if for no other reason then to have competent arguments against it. Hell, as I've said elsewhere, I want to find out what's wrong with it. Save us all a lot of bickering.
"See.. it may be a feature of the "currency" of bitcoin that anyone in the world can pick up the client and accept/send bitcoin to anyone else in the world (with the client, anyway).. But that is a USELESS FEATURE if it is not also a feature of bitcoin that everyone in the world already HAS THE CLIENT."
That is a bold assertion that I don't agree with (opinion). My position is that if the client is free, and can be downloaded in moments. The the distance between "I can't accept bitcoins" to "I can accept bitcoins" is trivial to the point of being a non issue. Where as "I can't accept credit cards" to "I can accept credit cards" is ridiculously non-trivial.
"If I am in, say, the middle of Brazil, I can still GIVE USD to anybody standing around. It just does me zero fucking good. Kinda like bitcoin, except that bitcoin makes practically everywhere is like being in the middle of Brazil without any real."
Hum no, that is in fact one of the values of bitcoin. You can at this moment exchange bitcoin to currencies all over the world. You may still have to use a local currency at any given shop, but that is not the same thing as saying the currency you are holding is not "valuable".
"(although how chargebacks don't lead to legal action when legal action is called for, you haven't explained...)"
They may do. However finding a business that just sold you a defective TV, is somewhat easier then finding the customer that just walked out with a TV and charged it back.
" but the legal system is of no value for people who cross borders and expect to have their money. Way to stay internally consistent."
Two un-related features. Although I do business over seas, I wonder if they will honor our contract...
"You mean I can travel across borders without having all my cash money on me,"
No I'm saying you can travel across borders and have ALL of your cash money on you. In fact you can have your total net worth on you.
"If I have access to the internet, I have access to my actual currencies."
Really? I'm guessing you're not from an oppressive government.
"I have zero access to bitcoin, despite having my encrypted wallet on me. If I am imprisoned, rightly or wrongly, I have zero access to both."
And yet when you come out your bitcoins will still be there, your credit cards will not.
"Not being one, I don't give a shit."
Which takes you out of that argument. Let's see if someone who is, does.
"If a merchant accepts bitcoin and wants to be paid in bitcoin because it pays no fees, it has to induce customers to use bitcoin."
No it doesn't. It can continue to conduct business with credit cards and cash like any business. But when a customer who would like to use bitcoin comes in it's just one more way to get paid. Just like Meze Grill does right now in New York. (http://tech.fortune.cnn.com/2011/06/17/the-clock-is-ticking-on-bitcoin/)
"Credit and debit systems offer protection to the consumer (and can offer other benefits to the consumer). If a merchant wants me to discard those protections and benefits for an exchange system that really only benefits the merchant, he is going to have to offer me an incentive."
And maybe he would, or maybe he'd give you a choice, that they currently do with cash vs. CC.
"accepting bitcoin is adding overhead"
No it isn't. Unless you just mean cognitively.
"For the tl;dr people.. The fact that you advocate cashing out bitcoins to currency basically immediately upon receipt is really all I need to know about the system. Bitcoin is Western Union, but cheaper and less handy."
Yes like wester union, but cheeper, more handy, and more widely available.
Well unforttunalty it seems you've devolved into a nearly indecipherable bundle of factual errors and opinion. You can certainly hold your opinion, and I wouldn't argue that. You think chargebacks are a essential feature of a monitory system, fair enough. I don't. Unsurprisingly neither do any governments I'm aware of as no national currency supports that feature. Nevertheless to each his own.
On the issue of factual errors, read up. You will be happier if you can argue your position with greater command of the facts. Learn bitcoin if only to provide intelligent and witty pronouncements of it's imminent demise.
I agree that some of the proponents of bitcoin are complete loons, but so too with apple stock. It has nothing to do with the validity of the underlying technology.
"The original players are able to mine coins quite easily while people coming on later will be hard pressed to mine coins, and eventually newcomers won't be able to."
This is not accurate. The difficulty is the same for everyone, it is hard now for everyone, it was easier before for everyone. There are more ways to make bitcoin then mining it. New miners are not "punished" any more then no buyers of a popular stock.
"Money for nothing for the early adopters, while the newcomers coming to BitCoin having to exchange real goods for the currency. Sounds great for currency speculation, and I'm sure that once the currency gets enough suckers^Wpeople coming in, the early adopters can just dump their holdings and cash out."
This is true of any stock. Early adopters may "cash out", though early adopters are people who are the most passionate about it and firmly believe it will become much more valuable. Nevertheless, so what? Who cares if they cash out? Who cares if Steve Jobs sells all his apple stock? Will it reduce the value of the market, a little sure. Will it make using bitcoins less easy in transactions on the internet? No. The system has value independent of the exchange rate.
Don't speculate on the future value of bitcoin. Use it for what it's useful for.
It's not a Ponzi scheme, you really need to do better research.
Edit:
"All an expert can say is they either did or didn't find an flaw, they can't prove that it's flawless."
With the exception of a one time pad, or course.
"Sorry, I find those arguments highly uncompelling."
Ok, many people find these features to be compelling, you certainly don't have to. I personally don't find Rubles compelling, never had even one, no idea what I'd spend it on if I did.
"I can PAY them to almost no one. Money is only money if you can spend it, and nobody I wish to spend money with accepts bitcoins."
I'm sorry but that's just not true. There is a difference between markets that use a currency and a feature of a currency. There are few markets that use bitcoin currency, but it _is_ a feature of bitcoins that you can pay them to anyone anywhere in the world who has a computer and in internet connection. Tell them to download the bitcoin client, have them give you their address, send them bitcoins - DONE. It's easier then e.mail. It can't even remotely be compared to the difficulty of accepting credit cards for any given person in the world.
"The no chargeback/third party is a disadvantage, not an advantage. I have no one to help protect me and my money."
You have a legal system instead of the help desk of Visa. It took me a bit to be convinced about the charge back issue too, but now I realize that it is better not to have a mechanism in which someone can take back money you think you have, even if it is in blatant violation of a contractual agreement, without any legal system intervention.
You do have to protect your bitcoins form illegal activity, I don't disagree, but that is possible to do, and similar to what you have to do with money kept elsewhere.
"Credit card transactions happen in seconds these days."
Not really. It seems that way to consumers, but it isn't that way to sellers. Plus there are significant fees. However, the advent of bitcoin does not mean that credit cards are suddenly going away, and bitcoin does not need them too to be successful.
"Your portability argument is extremely silly."
It's not an argument it's a feature. Perhaps not a feature for you, but nevertheless a feature. Just because you have a encrypted wallet file on a SD card doesn't mean that you don't have another copy any number of other places. Some people in some countries are not as confident as you that their money will remain available when they cross the border.
"As for the disadvantages, I've seen no response. Where is the cryptographic analysis? Let's see some analysis from people like Schneier and Rijmen. Let's see the reports from institutions like the NSA and IBM? Crypto takes a long time and a lot of analysis to prove. AES went through 5 years of evaluation by the top minds before becoming a standard."
I don't know what you're talking about. Cryptio is _never_ proven it is defeated. How soon that defeat is published is how long that crypto has useful life. Bitcoin does not introduce ANY new crypto. It's a protocol. It uses SHA256 and standard public key cryptography. There is a massive amount of literature on those subjects. Nevertheless a protocol can use secure crypto in insecure ways, but so far not one person has found one. All an expert can say is they either did or didn't find an flaw, they can't prove that it's flawless.
I would like to hear some more analyses too, but so far not one flow has been found.
"Also, please tell me how it at all prevents a multiple-spending attack: Someone sends bitcions to multiple different entities, in rapid succession. How do you verify this doesn't happen? I understand that yes, eventually this can be traced, I mean as the person accepting them, how do you make sure this didn't happen and you aren't stuck holding the bag?"
Okay this is a good question, here's how it works. Everyone in the bitcoin network (clients, and minors) has a copy of the complete general ledger. This tracks the movement of every bitcoin from inception to the account that currently holds it. I can pay you a bitcoin, but if I try to pay that bitcoin again (by restoring a backup of my wallet file say) everyone on the network will disagree wi
Ok, here's some clarification.
First of all every block equals 50 bitcoins. It's called bitcoin "mining", but what it really is is a "proof or work" that contains all of the transactions for the last 10 minutes or so. At this point it is VERY hard to do this proof of work even for only 1 block.
"I can just go to a website and say "Give me [exchange rate] for X coins" and it becomes actual folding dollars?" - Yes. And very quickly too. In fact because of the nature of bitcoins it is _much_ easier to move bitcoins to a currency exchange and transfer to dollars then it is to do the opposite. Within 30 minutes to an hour you can set up an account at any of the currency exchanges send your bitcoins in, sell them on the market, and transfer the cash out to a service that can do direct deposits to your checking account.
"Who decides what it is worth?" Just like any stock, commodity or currency exchange thousands of traders trade tens of thousands to hundreds of thousands of bitcoin per day. The buyers and sellers in these markets define the 'value'.
"What happens when it becomes so difficult to make a bitcoin that it just can't be done anymore (say NASA put some supercomputers on coin mining duty) and everyone who doesn't have a supercomputer can't make them anymore?"
This is not quite how bitcoins mining works. The system auto load balances. It ALWAYS takes about 10 minutes system wide/world wide to generate a block. If it becomes harder to find a block then 10 minutes, then the system makes the "proof-of-work" easier, and vice versa. Also it is unlikely that even NASA has the computing power to make a significant impact to the difficulty level of bitcoin mining. The current bitcoin network processing speed is 145898 TeraFLOP/s. This is an unbelievable number to put it in perspective the top 100 super computers in the world right now combined do 51184 TeraFLOP/s that's only 35% the computing power of the bitcoin network. Nevertheless, to answer your question if your participation in the network is so small that you can hardly make any bitcoins, there are still ~7,200 bitcoins being introduced every day because the difficulty is balanced to the system performs such that 1 block is solved every 10 minutes or so and each block is worth 50 bitcoins to the computer that solved it. It's like a lottery that happens every 10 minutes how many tickets you have is based on how much of the total computing power of the network you contribute.
The amount of bitcoins being produced will be reduced at a schedule proscribed by the protocol until in the end there will only EVER be 21 million bitcoins. When this happens, nothing happens. People will be trading with the bitcoins that already exist. Bitcoins can be divided to 8 decimal places so the fact that there are only 21 million could mean there are 21 dollars worth of bitcoins or 1,000,000,000,000,000 dollars worth of bitcoins, it only depends on the market for bitcoins. It will still be easy to do transactions with bitcoins at whatever unit is convenient, say 0.0001 bitcoins is worth about a dollar, no problem the system can work that way.
I think it's probably not worth mining bitcoins now unless you have access to more the a few graphics cards. A better way to make bitcoins is just download the client and accept them for what ever you want, services used stuff, whatever. I do not recommend that you speculate on bitcoins. Trade them immediately for your currency and transfer that to your bank. It's just another way for you to accept payment, and easier then credit card.
"when there are 21 million coins and production stops completely?" Yes, miners (who are the security back bone of the system) will be rewarded by transaction fees instead.
"I'm not trying to challenge the validity of bitcoins, I'm just genuinely uninformed slash curious."
Please do challenge the validity of bitcoins. It is an interesting idea, if it works it will be because smart people have done everything they can to defeat it and failed, if they find a flaw then they will save everyone after them from loosing on a broken system, and my highlight the one thing that if fixed could make it work for version 2.
True, but it should be pointed out that ""shuffling" into new addresses" is indistinguishable form "spending."
I agree, people have it wrong if they think that bitcoin is a good way to do illegal things. With appropriate resources a state agent can "follow the money."
This is a good thing. -- opinion
"If you are a seller, you're a merchant. That's generally why people give you money."
You're kidding. Really? That's your argument. Wow, I got the money I have in the bank by being a merchant, who knew. Thank god people are protected from my evil merchant ways buy being able to charge back on me... Oh wait no they can't I don't take credit cards.
"Plus accepting credit cards through paypal is easy..." Yeah that's why everyone takes credit cards.
"Card payments are processed immediately, so you know the money exists."
I'm sorry, but no they don't. That's just a flat out factual error. You do not ever with any credit card provider receive cash deposits into your corporate account "immediately".
"You don't even know this with bitcoin."
Yes you do. Look it up. Since we're down to "yes it does"/"no it doesn't" now clearly you simply don't believe me, that's an easy thing to address. Try it. Read the available literature. I'm not the only person who understands how it works.
" Conflating out and out fraud (possible with bitcoins in a payment scenario in which instant payment is needed) with the chargeback policy is duplicitous nonsense." -
I'm sorry I'm not sure now if we're on the same planet togeather. http://www.merchantcouncil.org/merchant-account/fraud-chargeback/chargeback-fraud-illegitimate.php
"Ah, the libertarian answer to everything! I don't need no government involvement..."
Quite the opposite, I specifically pointed out that I want the government involved. If I have a problem with a transaction I want the legal system involved, no the customer services department of Visa.
"And immediately the success of likes of ebay become impossible." Perhaps you're right I can't comment I don't use ebay because of excessive fraud.
"As a society we have taken steps to ensure that buyers do not need to do this because history shows us that it can and will be abused."
I'm not sure who's point your arguing here, sounds like mine.
"here's a list:"
I thought the premise here was that you where going to provide good arguments here?
"Instability for multiple reasons" - Instability of the value of bitcoin does not mean that bitcoin as a system has no value, it's value is unstable. At this point in time you should not speculate in the future value of bitcoin. Some people do, I do not recommend it, it is very high risk. However using bitcoin as a way to transmit value is very useful and you can avoid the risk of speculation by immediately transferring any bitcoins you receive to cash which is easy to do.
"No real economy, just speculation" - The economy is growing, several online stores have opened, and the number of businesses and individuals accepting bitcoin has increased moth over month no indications that will slow.
"No security, your wallet gets compromised you're screwed" - This is absolutely true, and a big issue (wow, this is like 1 to what 20?, but hey at least you don't leave the field with 0). No built in security, you are responsible for your own security at the moment. Worse, you don't necessarily know you've been compromised, years down the road someone who has a copy of your wallet file could spend your money. This is supposedly being addressed in the next release of the client. Meanwhile you should encrypt your wallet, you can receive bitcoins to it at any time, but you only need it decrypted to spend money. Many people are creating offline "savings" wallets for added security.
"Massive deflation punishing new entrants." - Factual error, currently the bitcoin money supply is inflationary to the tune of ~7,200 bitcoins a day.
"I think deflation steals from the productive economy." - As I've pointed out using facts, what you 'think' is not a compelling argument.
"Less features than current solutions" - Factual error here is an incomplete list of features that my be interesting t
Here are some of the features of bitcoin and reasons why you, or a merchant might find bitcoins interesting.
You can send them in any amount to anyone on the internet, and with almost no fees.
Your customer base is therefore the entire world not just people with your "coin of the realm"
If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back.
No third parties are involved, there is no one else to trust or pay fees too.
You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments.
Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards.
It is as easy to accept bitcoins as it is to spend them, unlike credit cards.
They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.
There are disadvantages too, and you should make yourself aware of them, however these do not include a weakens in the protocol or being a system designed to defraud you as some argue.
You should probably not speculate on the future value of bitcoins. If you accept them do so at the current exchange rate, and then immediately cash them out for your currency of choice. In that way it's just another tool to get paid.
I am not a true believer, I am a sceptic. I come across as a true believer because I have done a lot of research on bitcoin, and I now believe I understand how it works. I have not found a flaw. More importantly I can't find anyone who has. Not one person. I am however, still skeptical and would love for someone to step forward with an actual real world flaw. I continue to investigate and will report back if I find anything.
Meanwhile, you are absolutely right that bitcoins are accepted by few places, but what is interesting is that they are accepted by more people, and merchants this month then they where last month. And this has been consistent month over month. Which implies that this will continue to grow. There have already been cragslist listing for apartments that can be rented for bitcoin.
Here are some of the features of bitcoin and reasons why you, or a merchant might find bitcoins interesting.
You can send them in any amount to anyone on the internet, and with almost no fees.
Your customer base is therefore the entire world not just people with your "coin of the realm"
If a customer pays you the money it's yours they can petition or sue you for a refund, but they can not issue an automatic charge back.
No third parties are involved, there is no one else to trust or pay fees too.
You needn't hold bitcoins, there are a number of markets, as well as real world people who can change your bitcoins to cash in moments.
Transactions happen very quickly compared to wire transfers, checks, paypal and credit cards.
It is as easy to accept bitcoins as it is to spend them, unlike credit cards.
They are very portable. While it would be difficult to travel with more then 10 thousands dollars of anything, you could easily hold millions of dollars on a micro SD.
There are disadvantages too, and you should make yourself aware of them, however these do not include a weakens in the protocol or being a system designed to defraud you as some argue.
You should probably not speculate on the future value of bitcoins. If you accept them do so at the current exchange rate, and then immediately cash them out for your currency of choice. In that way it's just another tool to get paid.
Bitcoin is not a scam. Have you reviewed the while paper, or the source code? I have. I cannot find a flaw not that I'm anyone important. More importantly I can't find anyone else who can find one either. Not one person mind you. Much less an intention to defraud people.
Oh sure I can find people who haven't even read the FAQ spout volumes about what's wrong with it. But I can't find a single knowledgeable person who can find a single real world flaw.
So now, would you now kindly explain what emperor's wardrobe you are referring too with regard to bitcoin. I actually want to know what's wrong with it. I've been working on that problem for a while.
I take it your concept of success is not very incremental. An all or nothing kind of thing. I on the other hand see a technology that has only moved forward in terms of its uptake and usability, the exchange rate is immaterial to that although it as also moved up.
I agree I would love to hear Bruce Schneier give it a bit of a public go over, but it is open source and anyone can review the code and the white paper. Many people have so far and no one has published a flaw. You can't double spend, don't know where you're getting that from. That's a core design element. Explain where you think there is a flaw and I can try to clarify.
I'm not as quick as you to say that a few tens of thousands of computer geeks and a number of core developers are completely technically incompetent.
Flooz failed because it was backed by a company when the company failed the currency had no infrastructure to function within. Other virtual currencies have also failed, because of single points of failure. Addressing these issues is part of Bitcoin's design. Bitcoin is not a company, it would be easer to shutdown torrent at this point, and we've seen how easy that is.
It might be better to think of it as software that helps you move money across the internet. If you are suspicious about it's future, don't hold it, but as a tool it's very useful. As I've said elsewhere the value of bitcoins is not a theory, predictions of it's failure are what is theoretical.
j
Yep that was the argument. You win.
"Merchants."
I am not a merchant, I do not want people to be able to pull back money they have given me. And interestingly enough it's hard for me to accept credit cards too.
"Yes, an hour in which you're not sure if you've been defrauded.... not sure how rewording helps here"
Agreed, an hour vs. six months, the rewording is not helping you.
"Demanding a refund forces the vendor to be involved." - Exactly so.
"Fake goods, or goods not delivered, and a vendor that disappears into the ether, these are real phenomena." - indeed don't do business with shady people. And know who you're doing business with so that you can involve the law if you need to.
In a transaction between two people that goes bad it is not objectively known who the defrauder is. They will both blame the other. Facts must be properly investigated. This is what the legal system is for. Chargebacks avoid the legal system.
"I can make much better arguments against bitcoin then[sic] this too," Then by all means please do. I truly want to see some good arguments against it. However, so far you appear to be poorly qualified. Let me guess, you're not really left handed.
"Gold is a terrible currency!"
Yeah, well, that's just like, your opinion, man. Got any facts to go with that?
"Then read harder! There are lots of compelling arguments about this out there, the fact you ignore them is up to you."
As far as I can tell I'm the one who's been doing the reading. Tell you what, why don't we return to this topic when deflationary stalling actually starts having an effect on Bitcoin. Then at least more then one of us will be using facts.
In fact there is very little in the way of compelling arguments with respect to deflation of bitcoin. It was designed to work as a "scarce commodity," much like gold, and gold is still a medium of exchange the world over, while it continues to gain in value as it always has. There are very few real world examples of catastrophic deflation. In every example I'm aware of there was no real alternative to trade in a fixed geographic area so with no alternative way then the deflationary currency to transmit value the economy stalled. Also a primary factor was the indivisibility of the currency. These are not the case with bitcoin, it is divisible, and it is not the only medium of exchange in any geographic area, so someone needs to argue a different mechanism by which bitcoin's become useless (i.e. no value) by becoming increasingly highly valued. No one has done so. The fact you find those arguments compelling points to your lack of understanding of bitcoin.
The misunderstanding of the facts continue.
Chargebacks are not a different phenomenon, if a chargeback is applied to your transaction then it never happened, that's as directly related as I can imagine. You can't chargeback with cash and people rather appreciate that feature. Chargebacks are not a consumer benefit they are a way for fanatical institutions to avoid liability.
"You're talking about an hour in which you have no idea if you've just been defrauded." Not true we're talking about an hour in which you become increasingly sure that you have received money permanently. However this could be said of paypal or credit cards. You have no idea, some times for months, if you where defrauded.
"There's a reason that there are consumer protection laws on the books."
And there is nothing about bitcoins that causes these laws not to apply. You can always demand a refund just like you can with cash, but you cannot force a chargeback.
(Notice how every argument you present has a compelling counter argument, does it not make you just a little suspicious that perhaps you could learn a little more about the subject? I can make much better arguments against bitcoin then this, but I have yet to find one that does not have a compelling counter.)
Distributing a large volume of bitcoins would crash the market, but it would not remove the value of bitcoins. In fact it would spread the currency to more participants who would be naturally motivated to see the value go back up. The top 100 largest bitcoin holders could make a big impact in the markets (below that it would not be much of an impact) but they can only sell out once, and once the currency is distributed it will become increasingly stable, as it will be very difficult to cause such a crash in value again. Saturating the order book is not the same thing as making an asset worth nothing.
There is a limited amount of gold, but no one has ever had a problem seen that as a currency. The argument that bitcoins are deflationary, which is by design, is a bad thing and will at some as yet unspecified date stall the economy has yet to be compelling.
"as little as an hour" in monitory transfer terms IS instantaneous. In case it wasn't completely clear the transfer is instantaneous, it takes as little as an hour to be 100% sure that it is completely irreversible.
Predictions of it's failure are not interesting, because they are not well argued due to lack of knowledge. I would truly like to find someone who does actually understand bitcoins make a well considered argument against them. I've been trying to do that myself. However, dissipate the number of arguments I have yet to see one that is. Not one. This is of course why bitcoins hold any exchange value at all there has yet to be a compelling argument of a flaw, as soon as there is no one would buy one.
It is a misconception that Bitcoins are good for are where ever intended to be used as micro-payments. As little as it is there are still fees involved, and although they are optional now it is a part of the design that all transactions will eventually required fees. The features of bitcoin lay elsewhere as I have discussed.
It is also a misconception that the only use of bitcoins now is as a commodity. That is increasingly less true, and soon will be the smaller part of the bitcoin economy, because of the value of using bitcoins to facilitate trade that persists regardless of the stock price.
It is true that there will be people who have interest in seeing the value of bitcoins go up. As is true of the motivations of anyone who holds stock in anything. But it is incorrect to assume that that is it's only value or that everyone who is interested in and talking about bitcoins are holding them for speculation as apposed to just using it as a tool. I use bitcoin as a tool, I don't particularly care what the exchange rate is. I exchange the appropriate amount to do what I need to do, and bitcoin makes what I need to do easier. I want more people to use bitcoin like I wan't more people to accept my debit card brand, it makes things easier for me, it does not necessarily make me any richer.
Approximately 7200 bitcoins are introduced to the supply every day, but this will slow and eventually stop, so in fact it will "turn out" quite the opposite of what you say and people will be less and less motivated to sell you bitcoins to raise the price of bitcoins, while more and more people will find the value of using them preferable to more expensive and more difficult means of online exchange.
The assertion that early adopters have an unfair amount of bitcoins is on the one hand completely irrelevant to the issues of usability, and on the other hand is completely typical of all inventions, commodities and the world in general.
This continued repetition of this idea stems from the misconception that Bitcoin is a Ponzi, pyramid or other type of scheme designed with the intent to defraud later adopters. That is not the design intent of bitcoin. It is an online medium of exchange that compensates people who improve it's security. The fact that people improved the security early on helps the security for everyone later. They got paid pennies at the time, and people who are helping now are getting paid pennies too. It has turned out that those pennies (if they kept them) have become valuable now. This is EXACTLY like being an early adopter of Apple stock, and could just as easily not have happened.
The reason bitcoin is being talked about so much is not because someone is trying to scam you and "cash out" their early adopter advantage. People are talking about it because regardless of the value of a bitcoin, it is a frictionless* way to exchange value over the internet. You needn't hold bitcoins to participate in bitcoins. You can change them to cash the second you receive them. Bitcoins are useable now. They are a currency now.
I would respectfully recommend that people who want to talk about what's wrong with bitcoin do their due diligence, before commenting on something that they clearly have little understanding of.
*frictionless means: 1) you can open a business and start excepting payments this very second anywhere in the world, with customers anywhere else in the world, (excepting money is no more difficult then paying money - try that with credit cards), 2) money you transfer to anyone in the world is instantaneous, in as little as an hour you can be 100% sure that you have received bitcoins that can never be taken away from you or reversed in any way. 3) It cost almost nothing to pay anyone any amount with bitcoins.
All of these elements provide value whither you call it currency, commodity or just software. I use it to do work, and I find that valuable to me right now. The value of bitcoins is not a theory, predictions of it's failure are what is theoretical.
That's a theory. I have a theory too. People who poo poo bitcoin despite it's obvious success, haven't actually done their due diligence on what it is and how it works.
Bitcoin works for me. I use it to get work done and buy things. I can do this now, I don't need you to be involved, and I don't need to "cash out."
Interestingly bitcoin is working despite all the arguments for or against it. The only valid question with regard to the viability of bitcoin as a currency today, is "Is it a currency today?" and the answer is without question YES.
Aside from the uses, for which there are now many (I have personally paid for survives, from freelancers around the world with bitcoin), approximately 7200 new bitcoins are introduced into the supply every day, and yet the value of the bitcoins has be rising over the past months. Even lately with the price off it's highs the constant influx of new bitcoins is not causing the bitcoin to lose significant value.
Fairness of early adopters doesn't enter into it. Early adopters helped to lay the foundation of the security which backs bitcoins, and were compensated for that service. You can participate and be compensated for that service too.
I would love to have been an Apple stock, gold or even U.S. dollar early adopter. But just because I wasn't doesn't me I should adopt now.
If you don't like the idea of it as a currency, or a commodity, then just think of it as a software tool that allows you to move money electronically without friction (unlike any other monetary device in the world), and therein you will find it's value.
This market place is already saturated with companies like box.net, dropbox, mozy, amazon s3, xdrive, pocketque and many others. What is interesting about GDrive, other then it'll search through my data to mine advertising opportunities?
Better be a massive amount of free online storage. What is the online storage to privacy exchange rate anyway?