I Bought a Bitcoin | Hacker News Reader

I Bought a Bitcoin

nymag.com

110 pointsbenwoody111 comments

It's fun how hard it is for a layperson to buy a Bitcoin in USA. CCs do not work, you need bank transfer, your funds can be frozen, you have to wait in line, etc, etc.

I live in Russia and it's amazingly easy. First, everyone here owns a virtual money account. It works like this: you put some money into it and then you can pay your bills (especially internet and mobile phone), small purchases over internet and you can donate it to other users of the system. It is denominated in fiat money and that's what you put in. On every corner there is a device with touchscreen that accepts cash.

And that's where it ends: you can buy bitcoins with virtual money at metabank.ru. It probably talks to mtgox, buys some bitcoin there for you and transfers is. There is no trading involved, you buy for whatever the price is. You can actually buy BTC with CC attached to virtual money account, exactly like PayPal works. The catch is 6% fee.

If you want to trade, you go to btc-e. It supports a plenty of ways to move money into and out of the system. Fees are like 2%.

>It's fun how hard it is for a layperson to buy a Bitcoin in USA. CCs do not work

Because it's too easy to claim fraud and have your CC provider initialise a charge-back.

I don't know why you can't go to an ATM or a 7-Eleven and use your CC with your PIN to make a purchase. The CC company will know it's probably you because you entered your PIN and the merchant doesn't risk a charge-back.

In the UK this is called Chip and PIN.

https://en.wikipedia.org/wiki/Chip_and_PIN

Guess what? It's broken as hell ;)

http://www.cl.cam.ac.uk/~sjm217/papers/oakland10chipbroken.p...

Is it really more broken than just having to sign?

Fair point, "as hell" was unwarranted. I mainly just wanted to post that PDF tbh.

It's not that broken. It's still not trivial to clone them like swipe cards.

The thrust of that paper is that using special equipment it's possible to use a genuine stolen card to do a non-PIN transaction, and that banks will often claim that PIN was used in a card-present transaction in order to avoid refunding money.

In the UK at least, and with a credit card, the bank is legally bound to return the money pending investigation, regardless of the circumstance.

(I agree this doesn't help with the BTC situation because chargeback is still a possibility)

And I'm amazed that this hasn't caught on in the US yet. Last time I vistited, I was horrified when they swiped the magnetic strip and asked me to sign for it - felt like I'd jumped back in time.

By 2014-2015 all of the cards should be Chip & Pin in USA.

After I got back from my last visit to the states I kept handing my card to the staff when I was paying. They usually looked funny at me and put it in the machine rather awkwardly.

>Because it's too easy to claim fraud and have your CC provider initialise a charge-back.

First, you can do this with any CC purchase, and I don't see why bitcoin merchants need any special protection against it. Why would a bitcoin merchant be more likely to get a chargeback than any other merchant? Second, this would definitely be credit card fraud, and easily detectable fraud at that; it's highly likely that anyone who attempted this would wind up in jail.

In Europe it's not that much simplier.

What I like is localbitcoins.com (disclaimer: I have ads for selling and buying on there). It's simple, you actually meet some people interested in bitcoins, it's pretty safe (because of the escrow) and a little more decentralized than mtgox/btc-e.

I say "a little", because the escrow is centralized anyway.

I'm surprised that no one has mentioned the issues that the author had with Bitinstant. The API error indicated that the service - allegedly one of the largest and most reputable Bitcoin sellers in the US - had a total of $16.48 in its possession at the time and could not deliver his order. His experience is not unique - https://bitcointalk.org/index.php?topic=128314.2660

My guess is that the next big Bitcoin implosion story will be about Bitinstant. Something is rotten over there.

Is there any evidence of nation states or three letter agencies dipping their toes into Bitcoin? Its seems like a perfect solution for the CIA when they need to move money quickly and discretely to 'difficult' regions or individuals.

I know that Gavin Andresen (unofficial leader of Bitcoin movement) did a talk for the CIA in 2011. But I dont know if their interest was about catching bad guys, using it for themselves or seeking to control/manipulate bitcoin: http://www.bitcointrading.com/pdf/GavinAndresenCIATalk.pdf

So I think an interesting question is whether these same agencies are generating bitcoins or attempting to manipulate the market. The big news recently for Bitcoin is the introduction of ASIC hardware dedicated to mining. An ASIC miner the size of a PC can generate bitcoin hashes 100x faster than a GPU at approximately the same power usage.

ASIC miners have taken a while to hit the market because making an ASIC is hard and expensive for a small company. You can bet they didnt get funding from a brick and mortar bank. There are only a couple of companies with a shippable product.

But surely making this same hardware is a relatively trivial exercise for a nation state, particularly the NSA who run their own fab and would be experts at making silicon tuned for crypto algorithms.

Thoughts?

NSA use FPGAs. Even they can't afford ASICs unless its a supercomputer CPU I.e IBM power and they aren't all that quick compared to an FPGA.

Are you sure about that? There have definitely been times in the past when the NSA rented fab capacity from Intel.

Up to 2008, 100% sure. AFAIK, they were doing primarily mixed mode analogue as this stuff is harder to do inside an FPGA. I worked for one of their nefarious suppliers for a bit.

Wikipedia says they have their own fab at Ft Meade. Or is this just a super secure division of an Intel fab?

Intel run it. AFAIK it was used to produce rad hardened and analogue stuff only. Nothing fancy.

If Motorola and Cisco and other big tech firms have no trouble producing ASICs, why would the NSA? You don't need to fab them yourself, you just need designers and a fab partner.

If you've ever worked in the defence industry, you will find out that you can't just ship designs to be fabbed. They are strictly information controlled and classified. That favours FPGAs as the process is externalised and the design is secure. ASICs cost at least a few million to get off the ground and you're not guaranteed your design will yield on the first run. Bringing the process in house only makes sense for very specialist hardware (think mixed mode and rad hardened) as these can't be got off the shelf.

When I worked for one of these orgs, we had a PowerPC rad hardened device which was based on a 603 and that was nearly $100k a unit in quantities of 50 and that was an off the shelf design. The one ASIC we had which was mixed mode (analogue front end and digital back end) was $25k a pop in quantities of 1000 on top of tooling and design costs of $7m.

Just doesn't add up. If its on the ground or can be bought in milspec form, it'll get used. Altera/Xilinx do this for a reasonable spend. Expect to be killed by an FPGA I programmed one day :(

Bitcoin is a pyramid scheme in that everyone is counting on someone else to want them.

However this is no different from any currency or monetary commodity with no use value. With bitcoin, the "bag holders" at the end of the scheme have something for their trouble: a global, secure, low fee transaction settlement system. Given that such a network would be quite valuable, there's no reason for it to crash to 0, barring threats of violence. Perhaps speculation value will come out over time, but this is fine.

[bitcoin] is no different from any currency or monetary commodity with no use value

No, bitcoin is different insofar as there is no powerful entity that taxes people and requires payment in bitcoin. This makes it even less valuable than currencies that DO have that feature.

That's hilarious, do you even realise what you're saying? You consider it a feature of a currency that there is a violent extortionate power engaged in parasitism of the monetary base.

That's not what he said. Also, you seem to think that monetary bases are something that exist independently of government.

Yes it is;

There is no powerful entity (violent extortionate power) that taxes people (engaged in parasitism) and requires payment in bitcoin. (the monetary base in question)

It's just in statist apologist clothing. Monetary bases exist on any money, whether that is government issued or otherwise, to insinuate otherwise is to imply that there is no money outside that issued by the state, and that has never been and is not the case.

I don't expect you to agree, whenever I have noticed any comment from you it has without exception been in strident and shrill defense of the state, but just stating you think differently and using this as evidence for calling your opinion as fact proves precisely nothing.

You have misunderstood the grandparent post. His point was that since states exist as a matter of fact and want to have their taxes paid, Bitcoin is less useful than currencies which are acceptable legal tender for that purpose. For one thing, you'll have to pay a small conversion premium on top of the debt you're servicing.

You're calling me strident and shrill, when you're characterizing all government as violent and extortionate? OK, if it makes you feel better.

Monetary bases that are not government created are essentially worth only their commodity value, because they lack any reliable institutional backing. In practice, this typically makes them rather inconvenient: http://thedailywtf.com/Articles/Special-Delivery.aspx

> You have misunderstood the grandparent post. His point was that since states exist as a matter of fact and want to have their taxes paid, Bitcoin is less useful than currencies which are acceptable legal tender for that purpose. For one thing, you'll have to pay a small conversion premium on top of the debt you're servicing.

No, I follow perfectly well, the mugger demands his due in a specific form of paper, therefore that specific form of paper is more valuable than one in which similar predation does not take place, that's precisely why I disagree that it's actually feature.

> You're calling me strident and shrill, when you're characterizing all government as violent and extortionate? OK, if it makes you feel better.

That's not a characterisation, it's a simple fact. Government is a monopoly of force, there are no governments in existence who do not use that monopoly of force for extortion.

> Monetary bases that are not government created are essentially worth only their commodity value

As opposed to absolutely nothing in the event of the failure of the backing state.

To be fair, it is a historically significant motivator in the adoption of new centralized currencies.

On the balance, however, we are shifting away from that with globalization and the ridiculous logistical requirements of such an approach (eg. every new US president doesn't de-circulate, debase and re-issue USD.)

These days, as long as you have liquidity that allows money to viably function as one or more of a medium of exchange ("settlement system"); a unit of account ("accountable asset"); and a store of value ("somewhere to stash accrued value"), then you're doing OK. Bitcoin has the former two properties and seems to be doing OK in the latter category despite volatility, despite relatively narrow acceptance.

Digital currencies and settlement systems as a whole will undoubtedly continue the trend that Bitcoin has started; the genie is so far out of the bottle at this point it's almost entering the third-stage of truth: self-evidence.

> To be fair, it is a historically significant motivator in the adoption of new centralized currencies.

Historically, a new monetary base needed significant printing infrastructure, law enforcement to prevent its counterfeiting (if it is a paper and coin currency, which is effectively every currency ever) and you needed to artificially control its reproduction. That requires a government. That usually is associated with taxation.

I think you are looking at the causal relationship in the wrong way. Old paper money required artificial limiters to prevent anyone from printing it and using it. With bitcoin, the trust system of the block chain means to "counterfeit" bitcoins you need as much computational power as a majority of the swarm.

> to "counterfeit" bitcoins you need as much computational power as a majority of the swarm.

Actually, to the same effect you could use a bug in bitcoind, control of the view-of-the-swarm (network access) by the processing merchant, an implementation issue, or a careful double spend. Bitcoin is exceptionally hard to implement well for merchants, particularly those with near real-time requirements, and it's not getting any easier.

"You consider it a feature of a currency that there is a violent extortionate power engaged in parasitism of the monetary base."

If by that you mean a democratic government empowered to stabilise the currency via a variety of means, including supply inflation...

Hell yes that's a feature.

> If by that you mean a democratic government (violent extortionate power) empowered to stabilise the currency via a variety of means, including supply inflation (engaged in parasitism of the monetary base)...

It's funny how many different ways there are to paint over the underlying unpleasant reality of the situation with pretty words designed to lend a veneer of legitimacy to the enterprise. It's almost like there's an uncomfortable underlying truth that many people would prefer you would not state in such a blunt fashion.

No, what's funny is how differently people see the world.

You see a violent extortionate power, I see a cooperative, democratic government. You see parasitism of the monetary base, I see an important stabilising role in the common currency that keeps the economy ticking.

These are not words I use to gloss over "the underlying unpleasant reality", there is no "uncomfortable underlying truth that many people would prefer you would not state in such a blunt fashion". We genuinely have different views on these things.

This is one of the things I find so fascinating (and childish) about internet libertarians and objectivists - they assume that everyone that doesn't agree with them is either actively evil, totally deluded, or just hasn't been exposed to their self-evidently correct way of thinking yet.

I bet it never occurs to you that other people think about the very same things you do but can come to completely different conclusions?

No, as a matter of fact it simply never occurred to me that you might simply disagree thereby changing the underlying nature of reality in so doing.

But I suppose I am not one for the acceptance that things are only what we label them with. If no differences can be iterated between one thing with a pretty label, say a democratic government for argument's sake, and another thing with an ugly label, say an organised crime ring with a byzantine structure designed to convey the perception of community support but which retains the core underlying features of being impossible not to participate in under threat of violence, parasitic and corrupt even by it's own rules; it just never occurred to me someone might truly be naive enough to honestly accept that the labels alone change the nature of the underlying labelled things.

It's a fine trick if you can find enough suckers to pull it off I suppose.

Of course, because only your views represent the "underlying nature of reality", and anyone with a more positive view of collective government is necessarily blinded by labels. And it's so obvious that when it comes to human affairs, particularly those of a social/governmental nature, that there is one single empirical truth. Of course! How could I be so stupid?

I don't think that most western nations do have a government that could be described as an organised crime ring. I don't think you can cite this as an empirical fact. In fact I think that all of the words you used there are overly-emotional negative labels you use to reinforce your own belief that democratic government is necessarily evil, a view I don't subscribe to.

You completely missed the point of what I said.

The labels you or I use to describe the institution in question are entirely irrelevant, it is the characteristics which those institutions have which dictate their actual material nature. Responding to my iteration of the characteristics that a government shares with an organised crime syndicate with "I don't think so" is exactly as effective as trying to tell me a marsupial is not a mammal despite its characteristics because you don't think so.

If you hope to convince me that the state is not an intrinsically violent and extortionate body you would do far better pointing to examples of how one might choose not to participate in the structure of the state without being subject to it's violent sanction. That you can't do this is precisely why the pretty labels you plaster it with are utterly unconvincing to anyone unswayed by simplistic feelgood propaganda.

"Responding to my iteration of the characteristics that a government shares with an organised crime syndicate with "I don't think so" is exactly as effective as trying to tell me a marsupial is not a mammal despite its characteristics because you don't think so."

No, because we can point at a marsupial and agree on the characteristics. You and I do not agree on the characteristics of government or currency. --edit-- In fact many of the 'characteristics' you list are emotional labels as far as I can see. Yet you continue to insist that they are part of an 'underlying reality'. I disagree.

"If you hope to convince me that the state is not an intrinsically violent and extortionate body"

I don't hope to convince you of that, it's clearly central to your outlook on life. I only hope to convince you that not everyone sees it that way, and that not everyone that doesn't see it that way thinks the way they do because of ignorance.

They are not emotional labels, they are simply facts.

Government is by definition;

Violent; the state claims a monopoly on violence and employs the use of violence when forcing compliance with its edicts.

Parasitic; the state functions by siphoning productivity from a captive populace and channelling it into the activities of the state such as bureaucracy, war and the continued maintenance and expansion of the state and its power. In the absence of a productive body there can be no state as there is nothing for the state to parasite from.

Extortionate; the state obtains money, property, or services from a person, entity, or institution, through coercion.

Now you can deny these all you like, but the simple fact remains that all states share the above characteristics. It's not a matter of opinion or viewpoint, those are simple facts. Disagreeing with them does in fact make you ignorant to the reality of the situation as it stands regardless of how uncomfortable that might make you feel.

If you consider government to be formed of the people, rather than an external entity, then your view of these things changes.

We, the people, reserve the use of violence to those we collectively appoint to help run our society. This is necessary in order to protect the rights we grant ourselves. How would you propose to protect what you see as your property rights without violence? Oh that's right, it's only violence when other people do it, not when you do it.

We, the people, impose taxes (extortion! LOL) in order to provide collective services we all rely on.

And I disagree both that democratic government is parasitic or that expansion of the state and state power are necessarily the aims of all democratic governments.

So I absolutely can and do disagree that all states have those characteristics, that your ideal stateless existence is free of them or that all of these things are necessarily negative. Sorry. It really is a matter of opinion and viewpoint.

"Sure he's a tyrant, but he's our tyrant"

This is exactly why I look forward to the rise of cryptocurrencies; protection from people like you.

democracy != tyranny in my book.

Sorry. It's far from perfect, but it's better than any other system I can think of and it's sure as hell better than a libertarian free-for-all which (IMHO) would devolve into feudalism and indentured servitude in no time.

Difference of opinion again you see.

--edit-- and I hope you enjoy your crypto-currencies. I also like them, I love crypto and am often amazed at what can be done with it. I just don't think that some of the features of BTC (particularly the fixed supply) are as awesome as some others seem to, nor do I find it important for currency to be free of central control, because I consider it a social utility rather than an absolute possession.

Tyranny vs democracy wasn't my point, my point was that instead of accepting the negatives in the system, you rationalise them away by saying it's okay when it's your team behaving this way. History has a way of making this habit look foolish in the long run.

If crypto currencies prevail, we will see if your fears or my hopes end up justified. I am just happy it's finally possible.

Again, I don't think these characteristics you list are unquestionably present or that they are unquestionably absolute negatives. From my perspective you use emotionally loaded language to try and paint a picture that fits in with your worldview.

It's not 'my team vs your team'. It's that I genuinely don't see cooperative government or managed currencies as evil (quite the opposite), and you do.

I don't this his language was emotional at all. I don't want my money to be spent in certain ways. I like voluntarism and of course I would try to improve the situation around my area instead of financing war, prisons and luxury for the corrupted.

Things are not going ok.

violent, parasitic, corrupt, extortionate, coercion, organised crime ring... these aren't emotionally loaded terms to you?

Again, different people have different attitudes. I'm not saying his (or your) view of the world is invalid. I'm saying that acting like it is the only possible rational or objective view on the world, and using heavily loaded words and a lot of absolute pronouncements, is a shortcoming I've seen in many internet libertarians.

--edit-- along with an assumption that anyone disagreeing with them just doesn't understand the arguments (I do), or is being wilfully ignorant (I'm not)

You keep pretending that those words don't actually apply, even though when I nailed you down on the definitions, you acknowledged it, you just said it was OK because the behaviour is acceptable when it's your team that's doing it.

If that excuse works for you, that's fine, but it doesn't negate the fact that the labels still accurately apply, you've just tried to justify them.

Oh for god's sake. No I didn't. Read the thread back. I do not agree that tax and extortion are equivalent, neither do I agree that government is by nature parasitic, nor that its aims are necessarily expansionist. These are emotionally coloured labels and presume that your worldview is absolutely correct.

I do agree (and said as much) that we delegate the use of violence to our representatives, but I'd quite like to know how libertarians would enforce property rights without violence, and why that's just AOK but not allowed for any other right we grant ourselves. This is where you're just as guilty of allowing 'your team' to get away with something.

--edit-- anyway, I'm done here, I'm pretty sure we've demonstrated that you're intolerant of other worldviews

Playing games with labels whilst refusing to accept the essential characteristics of the underlying subject doesn't make you correct.

It's not taxation, it's extortion.

It's not quantitative easing, it's debasement.

It's not enhanced interrogation, it's fucking torture.

It's not pre-emptive targeted killing, it's assassination.

It's not lobbying, it's bribery.

Putting your thugs in uniforms does not make them other than thugs. It doesn't matter which of these labels you accept, the description does not modify the reality. The map is not the territory.

I am sick to death of statist word game bullshit and yes, I will not silently take it while being told once again that war is peace, freedom is slavery and ignorance is strength.

Good day.

>democracy != tyranny

Depends on how popular your opinion is.

that creates a certain expectation that demand will remain strong sure, but it's still the same thing. People still do divest themselves of national currencies in real life. People trying to divest themselves of currencies they aren't supposed to is another use case of bitcoin.

This is actually untrue, bitcoin can be used as many things, and unless the price is zero for all eternity, which at this point appears to be extremely unlikely, it can be used at the very least as a wealth transfer medium. There is nothing in that particular use case that particularly benefits from a rising or falling or stable exchange rate, only a non zero one.

As a store of wealth, bitcoin is probably better off sitting at a single stable price rather than climbing exponentially as it has been, so even in that case it doesn't make sense to class it as a pyramid scheme.

Pretty much the only scenario where it makes sense to class it as a pyramid scheme is as a speculative investment. And frankly, if the most horrendous negative externality of bitcoin is that people are able to engage in speculation on distant value and are exposed to the risk and reward thereof, that really doesn't sound like a huge criticism to me.

"Bitcoin is a pyramid scheme in that everyone is counting on someone else to want them"

Exactly like gold. Yet you don't see people claiming gold is a "pyramid scheme", now do you?

Most of gold's value is dictated purely by speculation and jewelry use (people want it because it is... rare - there is no other underlying reason).

(People say that gold has value because it has industrial uses, but these uses only justify a small fraction of its price, which is in most parts a result of pure speculation and jewelry use).

I don't know, Gold has a well known historical value, but the recent spike in value caused be distaste of Dollars is very similar to what is happening the Bitcoins.

The problem with Bitcoins is that market has already proven it is capable of spiking to zero. Gold could drop, but it is very unlikely to drop too far below its historical levels (since there is demand for it by itself) in contrast, Bitcoins don't have any straight demand.

No, Bitcoin has never fallen to zero.

(If you have in mind the events of June 2011, it dropped to 0 because of bogus trades by the hacker; they were later reverted by MtGox).

there is demand, international ecommerce with anonyimity

I keep wondering whether I should be buying bitcoins now, but I have mixed feelings about it. I'm pretty sure its value will continue going up for a while, but I guess I'm still skeptical.

Like any investment it requires careful analysis, personally I prefer to pay attention only to the 200-day simple-moving average. Granted in the past 200 days it has changed a lot, however recent interest in it indicates that it may continue going up. Past performance isn't an indicator of future performance but it's a decent gauge of trends.

Most news articles call it speculative because the people using it can afford to lose the USD value of the coins and there simply isn't enough mass adoption behind it to maintain its value (which would be true), so trade cautiously and ignore news about it.

If you must then re-allocate your investment in or out on a monthly basis.

it's basically a bet,but you have more chance to win than in a casino, or at the lottery.

wow, seriously? Ignorance is strong in you.

If you just want to dip your toes in the water, you could always start mining. Doesn't take any initial investment or bank information or anything like that, just processing power.

Aren't the odds of making a single bitcoin as a lone miner, with an ordinary computer, over any sane period of time pretty microscopic at this point? To make any money that way, you'd need to join a mining pool, and at that point you're not really just dipping your toes in the water anymore.

First question, yes, I think you'd be talking about a timespan of months before seeing a reward as a lone miner.

Joining a pool is pretty painless though. You just create an account, and probably give them an email address, and then start running GUIMiner or something. You also give them a Bitcoin address to send the rewards. That's it, no other personal information needed.

How does that work? I guess the resulting bitcoins are divided between the people who participate in the pool of there's any success?

That's right. There are a variety of different schemes that have been devised by the pool operators to enact fair compensation for the pool workers. Most pools pay proportional to the amount of work that the worker accomplishes with a fee for the operator. But there are many of tweaks and variations, some of which are to deal with bad actors (pool skipping) or to allow for a steady pay out to the workers in the face of the unpredictable variability in time between coins that the pool successfully mines.

https://en.bitcoin.it/wiki/Comparison_of_mining_pools

I just read about that and joined one yesterday, though. I ran it for an hour or so and made a ten-thousandth of a bitcoin or so, at which point I calculated that it's probably not worth the electricity and shut it down.

฿0.10 is currently USD$13.47, that's almost double minimum-wage. I'm having a _really_ hard time believing your computer uses USD$13.47 of electricity an hour.

It doesn't, which is why I didn't claim it. I said 0.0001 BTC. Maybe it was 0.00001, though.

Actual math: 0.00000336030223163 BTC per share, I generated 21 shares, so my balance is 0.00007057 BTC. Roughly the amount I quoted, yeah.

Odd, I could have swore I read "a tenth" the first couple times I read it. Sorry for being nebby:-\

You are probably not an owner of a recent ATI video card, then. Or you joined a pool that showed you how to CPU mine, that's not the right way at all.

If you go with today's exchange rate, the Bitcoins I've collected mining since January are worth between 3 and 5 dollars (US) a day. I only recently shut down my BTC mining to try Litecoin, which is reported to be about 4x more profitable to mine.

http://dustcoin.com/

The profitability of mining has gone down sharply in this time, if you ignore the fact that the exchange rate over time has made up for this fact. The coins I mined in January were worth more because there were more of them (and I didn't cash them in.) Last clean 11 day sprint of mining before the LTC experiment resulted in 0.2652BTC, same as the 8 day sprints in January.

EDIT: I forgot to mention I have a video card that I bought from Best Buy about a year ago for $160. Not exactly top of the line.

Mining on your own is playing the lottery. You probably won't get anything but if you do strike it lucky you'll have $3000 worth of bitcoin.

How many do you get? Isn't it just one?

25 at the moment.

Alternatively you can start mining litecoin and exchange it at btc-e. Or join a pool in either btc or ltc mining.

If you want to buy because you think the value will go up for no other reason than that the value has been going up then you're just participating in a speculative bubble. You might as well be gambling.

If stock markets and currency markets have taught us everything, to some degree, human behavior is slightly less random than a shuffled deck or rolled set of dice.

Just a bit, though. Not much.

I was having the exact same thoughts when it was at 30$. I'm having a lot of regrets now.

Bitcoins are just a right to participate in a digital crypto economy. They don't have any value in themselves. Its like holding passes to a show in the big theater. If the show doesn't start you passes are worthless. If there is any meaningful possibility of a show in the theater, you might get lucky for holding those passes. The main problem is that people who will participate in the show also need to get the passes to actually act out the show but if everyone just keep holding their passes for no good reason, well then there may not be a show.

From many bitcoins forums, people are hoping that its USD rate climb to $1000 or even $1 million, which is pretty ridiculous. People who have thousands of bitcoins, can probably keep holding on to them after selling 50% of them. But people who gonna buy it for more than $100 , they gonna panic at a first sign of decline. I suspect its not that far off.

Isn't that the same as a dollar bill?

Yes, but dollar bill is running a successful show for the last 2 hundred years without any blackouts, while BitCoin need to START the show in the first place. It needs to sort of start a sustainable chain reaction. EDIT: But the bitcoin deflation has introduced so much resistance to this reaction. Each digital wallet is like an atom, there has to be some force to break the atom and keep the chain reaction going, but due to the deflation, each atom is requiring more and more energy to break (spend bitcoins).

>people are hoping that its USD rate climb to $1000 or even $1 million, which is pretty ridiculous.

Is it really? Not too long ago, a Bitcoin was worth about $.0007.

130/.0007 = 185714

It's only four more orders of magnitude to get to the $1M range.

I don't think it's going to happen, but it's not all that far-fetched.

Well right now the entire bitcoin economy is valued at $1.6B so if a bitcoin rises to $1M the bitcoin economy would reach $12.3T . I'm no economist but that seems like it might be an unrealistically huge percentage of the world economy. I really don't think there's enough investable money in the world to get there.

It's true, 12.3T represents a large portion of the world money supply. But not an insurmountably large portion.

Actually a bit more, since more coins will be mined until then.

There are about 11 million Bitcoins in existence now[1], so if they were worth one million dollars each, the Bitcoin economy would be worth 11 trillion dollars now. We're already halfway through mining all the Bitcoins that will ever be mined, so that doesn't affect the numbers massively (it'll be a 21 trillion dollar economy).

Apparently[2] there are about ten trillion US dollars in existence, and I'm not enough of a Bitcoin believer to expect the Bitcoin economy to approach that amount.

1. http://bitcoinwatch.com/

2. http://money.howstuffworks.com/how-much-money-is-in-the-worl...

I hadn't really considered the limits of bitcoin prices in this way, it's a great way to explain the "Why not?" about future price rises!

The price of a Bitcoin can rise regardless of investment in it. For example if the US pulled a Cyprus-like move, Bitcoin could triple instantly.

Serious question, why does the price of a single bitcoin matter when they're divisible to 8 decimal places? Beyond a psychological barrier people have thinking about the 1:100 thing, it's really irrelevant if your cup of coffee costs 10 bitcoins or 0.00001 bitcoins, especially if the calculation is made at the time of purchase relative to an underlying stable value like a basket of the largest fiat currencies in circulation or somesuch, or just the boring plain old USD.

1 BTC = 1000000 USD To put it in a less psychologically alarming way is exactly the same as saying 1 Satoshi = 0.01 USD.

People have been measuring the value of a BTC by its whole value until now because it was relative to fiat currencies in whole dollars that way.

If BTC was ever worth a million USD, they would probably be talking in Satoshis.

It isn't any more complicated than thinking of the difference between $1 and 0.01 cent.

It doesn't matter, mathematically. Psychologically, it absolutely does. Bitcoin running to $150 is way more splashy and headline-grabby than $15. And at Bitcoin's beginning, it looked more respectable in gaining followers when 1 BTC was somewhere near $1 than if it were $0.01 and looking like some penny-stock scam.

Same goes for stock prices. Apple and Google have let the shares run to $400 and $700 instead of splitting to a more industry-standard two-digit number. Of coures the per-share price is meaningless in itself, it'd be the same if ten times as many shares existed at one-tenth the price. But it's a lot easier to grab eyeballs with a stock shooting through $400, $500, $600 benchmarks than a pedestrian $50.

That is a really good point. Bitcoin "inflation" will stifle the Bitcoin economy. Because if you are holding Bc then prices on everything are dropping.

This effect of deflation is why Japanese economy is so broken. And why Governments and central banks will do almost anything to keep inflation going.

Tom Woods on sound money: https://www.youtube.com/watch?v=TnS2OtzSTq0&feature=yout...

Not sure if Bitcoins are a good investment. All it takes is a western country (say Switzerland) to create an online currency and Bitcoins will sink faster than a Carnival ship.

The Royal Canadian Mint developed MintChip[1] however there has been little interest.

There's a scathing Forbes blog post[2] too, if you're interested.

[1] http://en.wikipedia.org/wiki/MintChip

[2] http://www.forbes.com/sites/jonmatonis/2012/04/12/mintchip-m...

Note, however, that the "scathing Forbes blog post" was written by the Bitcoin Foundation's press secretary.

Do you even Bitcoin? One of the main features of Bitcoin is that it can't be manipulated by a central authority like a bank or government (ie: they can't steal from the people by printing money).

> Do you even Bitcoin?

No but I lift, .... mostly functions, sometimes they have multiple variables ;-)

> One of the main features of Bitcoin is that it can't be manipulated by a central authority

Q: What can a central authority with power to imprison and/or garnish your wage manipulate? A: anything it damn wants.

Yes the Fed Gov. can't print more bitcoin it sure can come after you with a rubber hose expecting to get some sales, or money exchange tax some rather-made-up-new-law-tax. A few high profile case about bitcoin used for terrorism, drug, illegal porn, money laundering and these new laws won't be hard to make.

By themselves, laws don't prevent actions (see copyright infringement), you need enforcement, and if a very large fraction of the population starts using Bitcoins, it can be very hard to stop, at least without taking some very drastic measures.

My guess is that the US government would just get enough computing power to control the network and prevent it from working well.

The latter seems very likely if btc every became really popular. It would probably send the United States into a radical depression and destroy its economy, but by then the ~500 Americans that own the world would have flown the coop anyway, and all that USD they had would still be worth something.

That's also the biggest drawback since there wouldn't be anyone watching over speculations.

That's no different to any other currency. Speculators have free range to do whatever they want on forex trading systems.

I've recently just sold all my BTC, whilst the hype is still there :) A few friends said I was mad and they would be keeping theirs, but frankly I don't have time to keep an eye on the market and wait for the true peak.

Which made me think of a problem; BTC's are really a speculative market at the moment, rather than a currency (i.e. most people are buying them to trade, not to purchase items). I feel like that defeats the object.

But, hey, it was a tidy profit.

I wonder if online gambling and gambling in games would be legal with bitcoins? Or less of a hurdle? This could be a huge boon for bitcoins if so to becoming the web currency/virtual wallet.

Legal is unclear but a lot easier for sure. Google SatoshiDice

These on-topic comments are all well and good, but what we really want to know is what Objectivists think of the government~

~or~ how to bring in new investors to your bubble.

The next crash is gonna be painful. My popcorn drawer is well stocked.

I bought BitCoin and I liked it Hope my wallet don't mind it... It felt so wrong, it felt so right, let's transact tonight

Hey, I know you hate Bitcoin and think it's a pyramid scheme and everything, but isn't it good for smart people, and wouldn't its success create fricture among the elites (like you are always advocating)?

It's a simplification to say that I hate it. The work is impressive. If there were a Bitcoin course on Coursera on how the thing works, I'd sign up and take it.

I don't like the forced deflation. Deflation encourages hoarding and protects elites.

With Magic: the Gathering (Mt. Gox has me connecting the two) the hoarding behavior is actually good because it keeps unbalanced cards out of play. With BitCoin, it's going to lock a lot of the stuff up with hoarders. That could destroy it, insofar as if no one's using it, the market becomes illiquid, compromising value and possibly causing panic sales. The thing certainly isn't ready for prime time as a currency.

Also, there's a pretty easy (and legal) way one could destroy BitCoin. Right now, there are no reserve requirements, because it's not a real currency. Start a bank. Make sure it's a limited liability corporation, because this is a bit risky (bank runs). Let people deposit BTC and then lend them out. Now you've put a money multiplier on BTC, and without the reserve requirement, that's unbounded. Goodbye, scarcity. Goodbye, $147 BTC.

At that point, it's unclear that BitCoin has any value, until regulations come in regarding reserve requirements.

A fractional-reserve BitBank will only be noticeably inflationary if it can take a substantial amount in deposits, then find some people to borrow them. Since most of the "convenience" arguments for keeping traditional currencies in a bank rather than under your mattress don't seem to apply here, the only reason anyone's going to make a deposit is if the interest on offer appears to justify the risk. Without the backing of a government deposit insurance scheme, I reckon that translates to both a high interest rate AND probably some degree of transparency to convince depositors it's not a complete scam.

Could be an interesting project, but hard to see it causing a major shift in BTC values.

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