Need Bitcoins? This ATM takes dollars and funds your account
news.cnet.com
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I don't see any thought put into physical security, yet, which is arguably one of the most important things when putting a box full of money anywhere.
Then, you have to factor in the cost of the box. Assuming they can actually design an ATM quality/secure machine, who pays for it? Assuming the retailer pays for it, what sort of return could a retailer expect for having the device? TCO - How long will it take to pay off the investment.
Then on top of that you need to offer a service whereby people are emptying the machines regularly. And since the people emptying these machines would be putting their lives in danger handling money all of the time out in public, you'd need to hire a professional firm like Brinks, or absorb the large costs of trying to do this yourself.
Then assuming these guys want to get paid themselves, there will be administrative costs as well.
How much does a bitcoin end up costing with all of the extra fees at the end of the day? Is it worth it? Does a system where you have to walk/drive to a location with cash in hand to purchase bitcoins, and pay a significantly larger amount of money for them offer value?
I can see this idea appealing to the anonymous aspect of the currency, but since any location these are placed in would have to be under constant video surveillance, that makes it a little more tricky.
In the end, since there already exists the ability to get bitcoins with cash at WalMart and CVS via bitinstant, I don't think this idea will go much farther than the hobbyboards and display they've tucked into a box and connected to the internet.
Of course, if everyone does this, the currency will collapse, but that is just the beginning of Bitcoin's problems.
Collapse will come when no one is willing to buy (e.g. crypto is broken or there is no way to spend/use it). As people anticipate this coming, they'll start selling to anybody who is still willing to buy. The price will drop until no one is willing to buy, at which point the value of commodity will become zero.
On the other hand, if many people are willing to buy (in expectation of future increased usefulness), then the price will go up until no one is willing to sell. At which point every holder anticipates some future benefit, cannot buy more from anybody, but has plenty of people willing to buy from him for some price. This situation will stay like that until anyone decides to "use" money by selling it (e.g. to buy a dinner because people need to eat sometimes). No collapse here.
The problem with your argument is that it ignores the utility of the currency. A currency that nobody is willing to trade is not useful, which is harms the demand for that currency. Bitcoin's only utility is as a currency, and so without people willing to trade BTC for something else, Bitcoin is useless, which makes it worthless. Another way to put it is this: your argument only accounts for speculation, which is not the whole story.
Can you give some examples, please?
Your problem is with definition of "trade" and "hoarding". If you rephrase your statements using words "buying" and "selling", then it'll be clear why you create a paradox.
When people "trade" they are doing an exchange: one buys coins for a product, another one buys product for coins. If the demand for coins grows, buyers of coins will compete between each other to offer more of their products for coins. Hence the growth of the coin price in terms of other products.
But the trade (or "hoarding") can only happen if someone is willing to sell, right? So the actual exchange (at any price) will happen only where people are selling coins.
The trade does not happen continually, it is discrete. In the night people sleep and do not trade. And when trade occurs, it is instantaneous. 100% of time money and products simply stay on someone's account.
If at some point everyone expects price to rise and nobody sells, no trade occurs. But still everybody is willing to buy at the last known price. What can we say about price without recent trade? Nothing - we only know last price from yesterday (or last week). Do coins suddenly lose all their value since nobody is trading? No, because people are still willing to buy.
When a single seller expects that the price will not grow further, but there are real products to buy for coins (since everyone is still willing to buy), he will sell his coins and establish a new price. Maybe the same as yesterday, or lower. And the market will find another price. Maybe lower, maybe higher.
Please point out logical problems in my statement before repeating that "no trade means no utility and total collapse".
It is not that the price necessary drops to zero; it is that the commodity stops being used as currency. That is precisely what happened to gold and other precious metals -- people do not use gold coins to conduct their business anymore, not because nobody wants gold, but because there are no gold coins in circulation. Gold is not currency outside of a few niches because people just hoard it. Gold was replaced by other currencies as soon as people discovered reliable ways to prevent counterfeiting.
"If you rephrase your statements using words "buying" and "selling","
...then you wind up with the same problem. Here is a simple example for you: suppose an enormously wealthy person decided to buy all the gold in the world, and keep it locked in his cellar. What would gold be worth once everyone realized that there was none left to buy? People would eventually forget that they ever wanted gold once there was none left to buy.
Let's put it this way: Livermorium is one of the rarest materials in the universe. How much would you be willing to trade for a gram of it?
Now, with Bitcoin, things actually become simpler. Gold has industrial uses, and Lv might also. Bitcoin has no use at all, except as currency. Repeat the thought experiment: if one person bought all the BTC in the world and refused to sell any of it, what would Bitcoin be useful for? What if 100 people bought it all and refused to sell it?
"If at some point everyone expects price to rise and nobody sells, no trade occurs"
...and if a currency that is not traded has no utility. Eventually people catch on to the lack of utility. The next time you go to a gas station or vending machine, see if you can find a way to spend a gold coin.
"Do coins suddenly lose all their value since nobody is trading? No, because people are still willing to buy."
People are only willing to buy currency if the currency has utility. Nobody buys gold as currency anymore because it is not currency (again, try to use it at a vending machine; for that matter, try to find a merchant who even has a scale available to weigh gold), they buy it as an investment, and only when they have a supply of some other currency available to them.
"Please point out logical problems in my statement"
Right here:
"When a single seller expects that the price will not grow further"
1. That means the seller is not hoarding.
2. The seller has to be able to find people who have not given up on using the currency. If the volume of trade falls low enough, that will become difficult; people would have switched to a currency that is easier to trade.
Also, gold is expensive to transport and store, so paper receipts were used instead. But those were warehousing receipts (until the banks started issuing fake receipts), equivalent to gold. So you can't say that the gold lying in a vault does not have value: it has value because of its readiness to be taken out at any moment for a receipt.
2. You think of economic actors as static role players. They are not. When someone starts buying up gold, the price will go up because he would have to overbid everyone else who wants to buy it too. And the more gold you want to buy, the more expensive it will be until something else that you give up will become more precious for you than gold.
3. I'm not interested in Livermorium. If someone is, it's their choice. I'm also not interested much in gold at current prices and risks of storage and transportation. Some other people are. Also, some people are not interested in using Bitcoin while its market is limited and client app sucks. But I'm okay with both.
4. Bitcoin is more useful than just a currency: http://blog.oleganza.com/post/42262765318/direct-use-value-o...
5. Define utility. When people keep bitcoin/gold/usd/eur balance, it has utility for them (otherwise they would sell). The utility is in expectation that you can sell it later, when you know better what you want to buy. There is always uncertainty in the world and people keep some cash to be able to spend it when they know how.
6. The fact that "hoarder" sells his coins is not a logical fallacy. The logical fallacy is a notion of a "hoarder" as a special category. He is just a buyer. He bought some time ago, then circumstances did change and he is willing to sell. Maybe he's selling because he needs to eat. Or travel. Or he expects the price drop. Or whatever. People change their minds and adapt.
7. You suggest that the trade "stops" when people hoard all coins and cannot buy more, right? Then, obviously they are willing to buy more, they just waiting for someone to sell. So when someone for some reason decides to sell, he will find the buyers immediately.
8. "Trade" does not exist as a fluid continuum. It is just a collection of instant exchanges in time. Trade never "stops" or "freezes". The money does not "circulate", it is always-always located on someone's balance. It never "moves". Even if a truck with gold physically "moves", the money already belongs to someone, so it does not matter where exactly the truck is. Therefore, any theory derived from existence of "circulating money" is false from the start.
Rothbard on circulation: http://blog.oleganza.com/post/43378777734/on-circulation-of-...
This increases the overall value of BTC because as more people who own BTC bought in at a higher price, it will be harder and harder for the price to crash down to levels lower than the average price of BTC purchased. (I argue this based on the psychology of buying BTC at a certain price)
Back when the large 2011 crash happened and even now to a slightly lesser degree the average BTC acquired/bought is still low, (i'd wager around $5 for the entire network of BTC still accessible, as a example)
As more earlies sell and purchase items, this average will increase, and as it does the possibility for BTC to fall below this average becomes harder and harder.
I'd much rather they start spending them within the BTC economy than cashing in for "real" currency instead. The biggest hurdle for BTC isn't even the hoarding, it's that they hoard just because it's still not seen as a real alternative by most folks so they're waiting for the "realization, spike" in prices (I don't think we're there yet).
Few people these days actually hoard cash; instead, they invest in commodities or companies. But these people are hoarding for the value of the currency itself. It's like gold all over again.
I must confess though, the first time I heard about BTC, I did take it for just a very elaborate ponzi scheme. The irony is that the hoarding may, if left unchecked, turn it into exactly that.
The thing is as of now people are still learning to accept it as a currency, once they do the market would be huge to trade/buy/sell things via BTC.
Therefore, "investors" build a market among themselves as a side effect of "hoarding". And since there will be non-zero amount of people willing to exchange directly rather than sell, the price will rise further, attracting even more people. And so on until everybody who needs BTC gets some. And then nobody would need fiat.
But now I want to invest, waiting for a dip so I could buy some BTCs. Also considering mining.
And now it looks profitable to mine and invest. Many say I'm too late to mine, many say its still not late.
1) If you want to mine as way obtaining bitcoins to hold then it's literally never too late. Bitcoin could crash or go to $1,000,000,000
2) If you wanted to mine them to sell for an immediate profit then it is simply too late.
It's a difficult one, as money laundering is one of the easiest justifications governments can use for shutting down such services (whether justified or not).
Considering the whole point of bitcoin is anonymity (or at least pseudo-anonymity), there's a great privacy benefit to having these at random locations, assuming the makers can clear some of the logistical challenges.
Does anyone with ill-gotten gains keep them in a bank account? So no.
</joke>
Are there well-funded lobbyists actively campaigning against money laundering regulations?
This is a ridiculous argument against an equally ridiculous comparison.
I was highlighting how ridiculous it is to conflate gun control with the topic at hand.
I agree with you: people do things, some of which are very, very simple to do. That doesn't affect anything from my initial point: money laundering is one of the easiest justifications governments can use for shutting down such services (whether justified or not).
Dirty cash -> bitcoin via these machines -> legitimate goods and services -> clean money.
"From anonymous donors via bitcoin ATMs" is not a plausible answer.
I very much agree with you - and that is not what I meant. It's worth remembering that money laundering is not cheap; getting 50% of the original amount in "clean" money would be an incredible deal. So the aim would be to make use of services that either convert bitcoin to ready goods, or better yet, run a service and create fake customers who pay via bitcoin.
It's the same principle as running a second-hand car showroom (although, in the UK at least, that is no longer a realistic option) or currency exchange (I believe this is more difficult, but is still an option in some countries). Both are cash-heavy businesses, making it very easy to mix in dirty cash with clean, and account appropriately. There's a reason why many years ago casinos appealed to mobsters.
Edit: Just seen that you're based in Warsaw as well - if you ever fancy meeting up, send me a mail! :)
Ok, my original thought was that cash is already anonymous, so the first step provides little value laundering-wise. But I see how Bitcoin removes the requirement to deal with cash (for the fake business) while still keeping the anonymity, which in turn makes the hypothetical business much more convenient.
Edit: mail sent :)
This is worrying because it means consumers have no protection.
One of the proposed benefits of bitcoin is that by protecting the merchant from buyer fraud, it could enable a global free market. In this case, buyer beware is the watchword, don't hand over large amounts to someone far away unless you trust them or they have very good reputation.
I think in most transactions the seller is well-known and has to worry about reputation effects, while the consumer may as well be anonymous. In which case consumer protection is not that important.
For cases where both parties are anonymous/untrustworthy, you can use a protection scheme like escrow.
That doesn't work when the payer can take his money back after the transaction, of course.
I don't find that scenario sensible at all. First buy $1000 machine, first customer comes in, buys bitcoins with $50, and notices that the machine does double spend. I believe he is not going to tell any of his friends...
This is why SatoshiDice processes immediately, except for bets over 2-5 BTC.
If part of the bet transaction is doublespent there's a good chance it won't make it into a block. If the bet transaction doesn't make it into a block, the response transaction won't either and is therefore worthless.
If you broadcast a transaction and SatoshiDICE responds with a YouLoseTx, and you have built a block containing a double-spending transaction, if you "lose" you can broadcast your conflicting block. You wouldn't need much hashpower to do this and still remain positive. It's called a Finney Attack. https://en.bitcoin.it/wiki/Double-spending#Finney_attack
This is why they only immediately respond to smaller bets.