Hacker News Reader

"Bitcoin is no longer considered a safe way to buy drugs."

This is not true. While it's not a good idea to waltz in naively and buy drugs without educating yourself, most people I know strongly prefer the dark markets to buying on the street.

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The big trend is that the hype has died and that people have largely stopped using Bitcoin for things that it is not really good at. Growth is up though. People use it for its strengths more, many more people have heard of it, and overall Bitcoin is seeing a lot of traction.

As Greece demonstrated, it's really nice to be in control of your money. At current volatility, Bitcoin is more of a contingency plan than a savings strategy , but its core strengths are just as relevant as ever.

2013: "Decentralized money is amazing- Let me build a business around it!"

2014: "Hmmm... I just built a centralized business around Bitcoin, so now my customers have the same counterparty risks as before... why was I excited about Bitcoin again?"

2015: ???

2016: Profit

(If someone figures out the entry for 2015, please let me know what it is...)

2016: Reward-Drop

Any decent Hayekian knows the mining reward drop in 2016 is already priced in to the current price :-)

This could be very sigificant. Down to 12.5 BTC per block. Fees are currently not close to making that up that split. It would be really interesting to see if some of the larger mining pools can sustain their current hash rate if the reward drops but the fees don't particularaly increase.

As long as there isn't sigificantly more transactions than are reasonable to be included in a block there simply won't be too much pressure on the senders side to increase the amount of fees paid.

Placeybordeaux, you should buy Bitcoin in large quantities in anticipation of this prediction, then panic sell it after the halving, like everyone else who's saying the same thing as you. That way my profit for shorting Bitcoin during the the 2016 halving window will be as large as possible.

Some people argue that the reduced creation of new coins will take pressure off the price which could lead to a rally. Then again, that would only be true if miners were actually selling off their newly created coins immediately instead of holding them while waiting for higher prices.

The other aspect is the miner's inevitable margin compression. From the numbers we have seen (e.g. KnC in 2014), it seems that these companies are already operating on razor thin margins. Whatever money they have made, they needed to re-invest into upgraded hardware in order to stay competitive. Unless there is a meaningful increase in price before the reward halving, a lot of miners will likely run into trouble.

My prediction:

The reward drop will instantly price out of the market a large proportion of the current hash rate.

This will make the next 2016 blocks take substantially longer to find than normal, which will result in a large drop in the difficulty. This, in turn, will price a large chunk of mining back in - enough to mean that the following 2016 blocks take substantially less time to find than normal.

So I think we'll see see-sawing difficulty in alternate 2016-block periods for a while, until a new equilibrium is reached (at a lower difficulty / lower network hash rate than before the reward drop).

I don't think there'll be a significant effect on either the bitcoin price. Transaction fees should rise a bit in the "high difficulty" periods, and drop in the "low difficulty" periods, but once equilibrium is reached they should be much the same as they were before the reward drop.

2015: Let's start discovering where the big disruption comes. Blockchain. Many companies like for example Stampery.co are using the technology behind bitcoin to change failed ways to do things, like certifying things.

Doesn't sound particularly revolutionary; more like a neat addition to the algorithmic toolkit.

Why not add a disclaimer: "I work for Stampery.co"

Bitcoin is no longer considered a safe way to buy drugs.

Is this really the consensus of the dark-net market denizens? Are they using another currency now?

> - Since the shutdown of Silk Road I and Silk Road II and the related arrests, Bitcoin is no longer considered a safe way to buy drugs. This doesn't seem to have affected the price much one way or the other.

You gotta be kidding me. Are you saying that it is safer to go to streets, than to order online?

> Are you saying that it is safer to go to streets, than to order online?

I fail to see how giving out your personal address to random strangers on the internet is somehow preferable to a face to face transaction that insulates the drug dealer from where you sleep and keep all your valuable possessions. I also reject the implication that one must necessarily turn to "the streets" to buy recreational drugs. Most habitual drug users have a relationship with their drug dealer(s) and don't troll "the streets", cash in hand, looking for someone to satiate their fix.

Dealers retire or move sometimes. Or you move. The darknet is far more convenient.

The darknet market failures have nothing to do with bitcoin. If anything, faith in TOR has been compromised, but it's still a very effective tool. DNMs are maturing and adapting, and still strong.

And they all still use bitcoin.

If anything, the DNMs use Bitcoin more in 2015 than in 2014 or 2013. In 2013-2014, there was a fair amount of interest in Litecoin, Dogecoin, and Darkcoin, with some markets using them exclusively. (Off the top of my head, Atlantis and Litebay for the former, and Doge Road for the middle.) Right now, every market I know of takes Bitcoin, with maybe a handful taking Litecoin/Feathercoin/Darkcoin on the side as a supported-but-hardly-used feature. I kept track of currency support in http://www.gwern.net/Black-market%20survival

> Bitcoin is no longer considered a safe way to buy drugs.

And who told you this?

> In the SF bay area, Hacker Dojo and Workshop Cafe got rid of theirs

Nit: as of a few days ago when I was there, the one at Hacker Dojo is still there.

I've seen it powered off, and then gone. Maybe it broke and went out for repair.

Originally, the Robocoin machines displayed their bid and ask prices on the attract screen. They stopped doing that; the size of the spread (about 15-20%) was embarrassing.

Didn't they ever figure out IN BLOODY CALIFORNIA that "robo" is Spanish for "theft" or "I steal"?

Normally I wouldn't notice this (for example that Nova legend about a car that doesn't go doesn't really sound at all plausible and doesn't really sound like "no go" to me) but with all of the connotations of theft that people have put around bitcoins, "Robocoin" sounds like a terrible name to my hispanophone ears.

And in english too, to rob = to steal.

Still the context is important. When talking about some machine, it's obvious that it's meant for robot, not to say it's going to rob you - even if it's what it actually does.

One of the nasdaq exchanges has a etf equivalent in Europe. Once we have options on those the market will be more mature.

I think countries giving up fiscal policy for the euro would make other countries consider bitcoin. Makes sense to have a tax regime based on immobile property taxes rather than resorting to inflation or foreign currencies. Since us and Europe already are pretty confident in their ability to collect taxes, they won't be too hostile to bitcoin.

May be stability is what Bitcoin need? Especially when many other currencies are jumping like a mad cows. Bitcoin attracts many people who don't really need or even understand bitcoin, they just want to play a casino game. They are not healthy for bitcoin.

Bitcoin doesn't really attract many people, there is just this handful or so million users. Bitcoin is still really far from anything that could be called mass adoption or even mainstream.

Bitcoin seems instable by design, the major flaw being an anticipation of increase in value due to "limited supply" which encourages people to speculate and horde rather than participate in real economic activity.

Last I checked CoinME had added several Bitcoin ATMs in Seattle.

http://www.coinmekiosk.com/

I think they're up to three now.

> That drove the $1000 Bitcoin bubble, and was shut down by the People's Bank of China last year, causing the Bitcoin crash.

I thought that was pretty much entirely Willybot, then other exchanges following Mt Gox's blatantly fraudulent prices about $100 lower.

I don't understand how they keep the price stable with waning interest. Is it mostly stakeholders trying to artificially keep it up? But presumably at least the miners need to sell occasionally to finance their operation?

> 2013: Wow!

> 2014: Aargh!

> 2015: Meh.

so, bitcoin got into productivity plateau?

The Bitcoin bubbles were driven by external use cases. The first runup was driven by Silk Road I, and the second by the use of Bitcoins to get around China's exchange controls. Bitcoin is now stuck waiting for a third killer use case.