# Who got in on Bitcoin early?



## emperor

Wonder who here had the foresight to see how successful bitcoin was going to be. I think it was around 10 dollars last year now its at 90.

I've wanted to buy some but it's to confusing for me to figure out. I've read tutorials but still don't get it.


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## cdnceo

As a Canadian, https://cavirtex.com is probably the easiest exchange to use.


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## marina628

cdnceo said:


> As a Canadian, https://cavirtex.com is probably the easiest exchange to use.


I got some from 2011 ,traded them from a guy who needed poker stars money.We had a discussion about them on a poker forum when i think they were $3.50 and there was some talk a big poker room was going to start using them.I know quite a few poker players who loaded up on them thinking we could use them to play and for most part we all though they were going to be useless lol.


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## sags

I don't see them as having any future value.


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## lonewolf

Robert Precther told his clients of them before they came to market & recomended them to his clients.( he also recomended taking profits @ the top of a parabolic arc awhile back) This was before I knew anything about computers so it was to complicated for me to buy them. He does not know if they will survive the goverments do not like them but thinks some form of digital currency could be the currency of the future. Bitcoin is a high risk but it could be the currency that takes hold.


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## cdnceo

Wouldn't be surprised if governments coordinate a shutdown of the bigger exchanges at some point.

My guess is the recent price explosion is the result of some massive money laundering scheme.. cartel drug money or something. Way too late and risky to buy in now imo.


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## sags

I think it probable the "miners" who manage to buck the odds and get some bitcoins..........buy and sell among themselves artificially driving up the "price" in the hopes of drawing in some "real" money.

A proposed digital currency to replace paper currency...........that requires paper currency to buy and sell the digital currency, doesn't make a whole lot of sense.

Sounds like a bad idea or just a plain old scam to me.


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## fatcat

FinCen (the money laundering arm of the us government) has just issued guidelines on how bitcoin should be handled
essentially, "users" are exempt from reporting requirements but exchanges (those who buy and sell bitcoins) are not and must report their transactions

so, the way to get them is to receive them via some kind of sale of goods and you are in the system anonymously and can buy and sell goods freely using bitcoin

i think this will be a target of governments worldwide for a long time

and if it ever gets really big and threatens paypal and mastercard in the payments game, we will see their lobbyists go to town and bitcoin doesn't have anything like the lobbying capacity

it will be fascinating to see how well and how long it maintains "outlaw status"

i remember them at $6.00 so i can't bring myself to acquire at $90 but maybe they'll go to $500


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## kcowan

Isn't this just a big barter scheme? They always get shut down when they get too successful.


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## RBull

I saw the young guy who started it on BNN a few days ago. Looks like the real deal although as kcowan says I think there will be a strong drive to stifle this kind of business.


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## cdnceo

kcowan said:


> Isn't this just a big barter scheme? They always get shut down when they get too successful.


Bitcoin itself can't be shut down by design. But if enough exchanges are raided they can drive the BTC price down near 0.


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## sags

The Canadian dollar is backed by the assets, resources, and ability to collect tax revenues of the Canadian government.

The bitcoin has no underlying assets.

It's worth is supposedly determined by perceived "rarity".

Lots of things are rare........but that alone doesn't make them valuable.

Since the rarity is derived from only "mining" 21 million of them...........the general population of 6 Billion people.............350 million in the US alone.........will never participate, therefore extremely limiting interest by the public.

It sounds vaguely like a city minting coins that can be redeemed for merchandise by the businesses in the city.

That has been done in the past and the coins had no lasting value.


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## fatcat

sags said:


> The Canadian dollar is backed by the assets, resources, and ability to collect tax revenues of the Canadian government.
> 
> The bitcoin has no underlying assets.
> 
> It's worth is supposedly determined by perceived "rarity".
> 
> Lots of things are rare........but that alone doesn't make them valuable.
> 
> Since the rarity is derived from only "mining" 21 million of them...........the general population of 6 Billion people.............350 million in the US alone.........will never participate, therefore extremely limiting interest by the public.
> 
> It sounds vaguely like a city minting coins that can be redeemed for merchandise by the businesses in the city.
> 
> That has been done in the past and the coins had no lasting value.


say what ? ... there are roughly 5,481,600,000 ounces of gold in the world (all the gold ever mined) which is less than 1 ounce per person on the planet and we see no loss of interest in owning gold ... rarity usually makes a thing more valuable 

bitcoin represents the possibility of an "almost" completely occult and liquid world currency which is something that many people and business urgently desire

it's easy to forget how vast portions of the world are completely unable to participate in the economy by virtue of no access to mediums of exchange ... we see this on this forum all the time by people who ask "how can i buy stock in company aaa on some foreign exchange ?" ... the answer is that "you can't"

the problem bitcoin has at present is not that nobody wants it, it's that nobody understands it well enough to trust it

if that trust starts to build i can see it being rapidly adopted ... that's when the governments are going to go ape####

this is classic science-fiction "crytpo-currency" which will exist on digital cards and devices .. it's a world currency equivalent of buying a prepaid debit card at walmart, except there's no way to track it (mostly, anyways)

there is a rapidly growing movement worldwide to track all financial resources and all transactions and assets in order to raise tax revenue 

the ongoing wet dream of every government in the world is the compete and total elimination of cash as a medium of exchange and the plan to do this is right on schedule

and i think there wil be an answering movement towards secrecy and freedom of exchange ... bitcoin (or something like it) is the perfect answer


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## jcgd

Bitcoin seems sketch. I just read the Wiki page on it and that was enough to make me shut the door.


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## Rusty O'Toole

Since the system is open source with a million geeks and hackers working on it all the time I don't think Bitcoin is going away any time soon no matter what any government wants.

From a pure profit standpoint those who got in early are making out like bandits and the rise is not over yet. Gold is $1600 an ounce and that has not killed its popularity. I can see future trading in fractions of a bitcoin.

The only thing that keeps me out is that I don't understand it and I don't invest in things I don't understand.


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## jcgd

Rusty O'Toole said:


> The only thing that keeps me out is that I don't understand it and I don't invest in things I don't understand.


+1


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## marina628

As I said i got my 58 coins from the online poker community , never thought of them as investment as I figured i would use them to fund a poker account online .I know plenty of people who have them and don't think a single person planned to make any money with them just use them for online transactions .


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## jcgd

Where do the coins come from? How are they mined? Who gets the new ones first?


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## andrewf

Bitcoins are created by solving mathematical problems with computers, so they are effectively distilled electricity and computer cycles. The cost of creating new bitcoins is maintained by the input cost of electricity and computer processing time, and the amount needed is increased periodically to ensure their value doesn't fall to zero (since computers are becoming exponentially more powerful).

My two cents... I don't think bitcoin will be taking a significant role in transactions any time soon. I would not be surprised to see an ETF wrapper for bitcoins to enable speculation more easily.


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## andrewf

I do kind of question it as a use of resources. It is turning useful resources--electricity, computing resources, etc--into an artificially scarce virtual resource.


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## lonewolf

sags said:


> The Canadian dollar is backed by the assets, resources, and ability to collect tax revenues of the Canadian government.
> 
> The Canadian dollar is also destroyed by the lack of disapline by the Canadian goverment. The lack of disapline in goverments is nothing new.
> 
> The private sector might do a better job with developing a more solid currency then the goverment sector.


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## sags

You put more faith in the private sector than I would.

Without the government being involved with regulations, it would be a dream come true for fraudsters and scammers.


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## fatcat

andrewf said:


> I do kind of question it as a use of resources. It is turning useful resources--electricity, computing resources, etc--into an artificially scarce virtual resource.


i would venture that the printing, storing moving, distributing and guarding of canadian currency uses more energy



> Without the government being involved with regulations, it would be a dream come true for fraudsters and scammers.


every heard of counterfeit 100 dollar bills ? and debit card fraud and bank phishing .... :biggrin:

the bitcoin community has thousands of people who essentially watch each other and every development in the currency, it has worked very well to root out the various problems that have cropped up ... 

should we have a new government ministry and a whole new raft of forms to fill out and id to show if we buy bitcoins ? ... should we be required to give a thumbrint or retinal scan ... would this make you happy ? ... you want more government regulation in your life ? ... maybe you should stick with GIC's


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## fatcat

Causalien said:


> you can buy minted physical coins from Causascius. His name is his web site.


freaking brilliant ... using a trusted currency as a platform to build trust in a new currency ... i would prefer to see some kind of one-for-one relationship where 1-bitcoin was equal to 1-ounce of silver and gold equaled like 50-bitcoins to the ounce ... you then would have a currency that had value on two mediums

though, i suspect that if bitcoin crosses the threshold of trust, the precious metals version would be seen as redundant and only a risk and oddity


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## andrewf

fatcat said:


> i would venture that the printing, storing moving, distributing and guarding of canadian currency uses more energy


It's not quite the same thing. To create a trillion dollars worth of bitcoins would require expending resources approaching a trillion dollars (electricity, computing, labour). To create a trillion dollars worth of $100 bills costs a few million, perhaps? The surplus is known as seigniorage. It would be an enormous industrial activity to create sufficient bitcoins to satisfy the demand for money, requiring a large % of GDP to be dedicated to the effort. Same problem as with gold, really, although gold at least has alternate uses.


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## andrewf

fatcat said:


> freaking brilliant ... using a trusted currency as a platform to build trust in a new currency ... i would prefer to see some kind of one-for-one relationship where 1-bitcoin was equal to 1-ounce of silver and gold equaled like 50-bitcoins to the ounce ... you then would have a currency that had value on two mediums
> 
> though, i suspect that if bitcoin crosses the threshold of trust, the precious metals version would be seen as redundant and only a risk and oddity


How would you propose to link the price of bitcoins to the price of gold? To physically back bitcoins with metal stored in vaults?


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## sags

Are bitcoin profits "capital gains", required to be reported to the CRA........or IRS.........or anyone?


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## My Own Advisor

I was wondering the same thing sags, how are profits treated? Just like a legit security?


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## fatcat

andrew, the analogy to gold is a perfect one ... it's true that gold has some small industrial uses but the value of gold is primarily related to the difficulty of extracting it from the ground as anyone who invests in junior gold miners will tell you

it is true for most precious and rare metals, they are labor and capital intensive to extract and thus perceived as more valuable

bitcoins are exactly the same, they are hard to create, think of endless computer cycles as the equivalent to pouring buckets of earth into strainers and crushers

the value of bitcoin is entirely invested into it buy the owners, buyers and sellers exactly like most forms of money

as far as linking bitcoins to precious metals, what casascius has done is to embed the private key (the ownership of the coins) in an actual piece of precious metals (1-ounce of silver)

i was merely playing around with the notion that gold is usually priced at 50-1 silver so a silver coin could have 1-bitcoin and a gold 50-bitcoins

that would make the silver worth 30+ dollars as silver and $90+ dollars as bitcoin ... both values would fluctuate

but i do think the notion of embedding bitcoin in precious metals is a gimmick in the end, a fun and interesting way to talk about value but it defeats the occult and transportable aspect of bitcoins which can be "taken" spent and used anywhere in the world in complete freedom and anonymity

the jews escaping germany in the 30's would have been buying a lot of bitcoin had it existed, gold sewn into the lining of a coat was a risky proposition

people in cyprus are becoming fans of the currency


> They won't make a sound no matter how many of them you try to toss in a bucket, and you can't pitch them in a fountain and wish for good luck. But make no mistake, bitcoins are getting big.
> 
> The online alternative currency, previously little more than a curiosity in financial markets since its 2009 inception, has zoomed in trading value since the Cyprus banking crisis erupted two weeks ago.
> 
> With fears spreading that even insured deposits might not be safe in similar nations hit by banking crises, those looking for a haven to store their wealth have fled to the complicated world of digital cash.
> 
> *"Incremental demand for bitcoin is coming from the geographic areas most affected by the Cypriot financial crisis—individuals in countries like Greece or Spain, worried that they will be next to feel the threat of deposit taxes,"* Nicholas Colas, chief market strategist at ConvergEx, said in a report on the startling trend.


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## dsaljurator

andrewf said:


> It's not quite the same thing. To create a trillion dollars worth of bitcoins would require expending resources approaching a trillion dollars (electricity, computing, labour). To create a trillion dollars worth of $100 bills costs a few million, perhaps? The surplus is known as seigniorage. It would be an enormous industrial activity to create sufficient bitcoins to satisfy the demand for money, requiring a large % of GDP to be dedicated to the effort. Same problem as with gold, really, although gold at least has alternate uses.


There will only ever be a finite number of bitcoins. 21 million. They haven't all been mined yet. The only way there will ever be a trillion dollars worth of bitcoins is if 1BTC = 1,000,000 dollars. Even that is a bit too far for my friends who are incredibly bullish on bitcoin, even at the current price levels (it broke 100USD today)


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## lonewolf

If my memory is correct according to David Knox Baker who has done a lot of research on cycles. The bottom of the K wave or near the bottom is when a new currency can take over the old currency. I dont think K wave winter ended in 2009.


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## Eder

Well if you like to buy porn bitcoins fit the bill. I prefer tulip bulbs myself, but I may be dating myself.


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## none

Eder said:


> Well if you like to buy porn bitcoins fit the bill. I prefer tulip bulbs myself, but I may be dating myself.


Gross - what on earth are you doing to those poor tulip bulbs????:stupid:


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## andrewf

I was not aware of the (small) finite number of bit coins. That would also seem to relegate bitcoins to permanent novelty status. I would consider using it as a medium of exchange, but not a medium of account or store of wealth. The risk is too high, IMO.


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## andrewf

What happens when all the bitcoins are created? Deflation? Deflation+debt is a toxic mix, so no rational borrower would enter into a borrowing arrangement in terms of bitcoins.

Bitcoins are innovative as a means of transacting anonymously (medium of exchange), but that is only one of the uses of money. The others are unit of account, and store of value. If the 'real' value of bitcoins is not stable, its utility for the latter two functions is limited, and thus cannot fulfill the role of 'money'.

There is a reason that gold was abandoned as currency. Its supply is too inflexible, leading to inflation and deflation by turns as the demand for money rises and falls. How soon we forget.


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## fatcat

andrew, i am not sure what you mean by "unit of account" ... but in general i would say that bitcoins are subject to the same problems as fiat currency, theft, counterfeiting, rise and fall in value and so 

it's not clear to me why you give fiat/central bank money a pass and take bitcoins to task ? (though i do agree, bitcoins are a new currency and thus subject to growing pains, i suspect the vast majority of users are holding fairly small amounts and not life savings though there are well known exceptions)

bitcoins will rise and fall with deflation and as causalien says there are ways to split coins into smaller units

bitcoin also has a huge value in that it is decentralized, no one man can just release more into circulation and stoke inflation, bitcoins can't manipulated by politicans (at least not yet, am i certain they will try at some point)

the real reason gold is no longer used has more to do with the fact that it can't be moved across long distances .. it is infinitely malleable and we could easily create an entire currency by amalgams of gold silver and copper ...we could create all kinds of units of currency ... but they can't be easily exchanged in a global world ... they end up being represented by paper which defeats the purpose of metals as currency

bitcoins solve the exchange problem and the central control problem easily (and provides anonymity)


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## andrewf

'Unit of account'

"A unit of account is a standard monetary unit of measurement of value/cost of goods, services, or assets. It is one of three well-known functions of money.[1] It lends meaning to profits, losses, liability, or assets.

The accounting monetary unit of account suffers from the pitfall of not being a stable unit of account over time. Inflation destroys the assumption that money is stable which is the basis of classic accountancy. In such circumstances, historical values registered in accountancy books become heterogeneous amounts measured in different units. The use of such data under traditional accounting methods without previous correction often leads to invalid results.[2]"

While fiat currency is subject to changes in real value, the volatility in real value of bitcoins would greatly exacerbate this problem.

Bitcoins are not really better than paper in that respect. They only have value to the extent that they are accepted in exchange for goods. Just like paper.

Gold was used to back currency for hundreds of years before the abandonment of the gold standard--the problem wasn't that it can't be transported, it's that its supply is static, as with bitcoins (at least eventually).

I'm not really dismissing concerns about fiat currency. They are real and legitimate. This thread is about bitcoins, though. I'm skeptical because this seems like gold redux. And there are good reasons we abandoned the gold standard.


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## CanadianCapitalist

fatcat said:


> bitcoin also has a huge value in that it is decentralized, no one man can just release more into circulation and stoke inflation, bitcoins can't manipulated by politicans (at least not yet, am i certain they will try at some point)


I don't know much about Bitcoins but how sure can you be that it can't be manipulated? I've read that the number of Bitcoins is finite but again how sure can you be? Also, how sure can you be that there won't be some other competing currency built along the same lines as Bitcoin? It seems to me that you have to accept a lot of things about Bitcoins on faith... just like with "paper" money.


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## fatcat

right, unit of account = marker of value

yes, i understand, the gold standard was abandoned to expand the money supply and there are a lot of economists who have much to say about the mischief this has caused

the supply of money seems a manageable problem with a metals backed currency since there all kinds of ways to use metals both as actual currency and to back ordinary currency, though i do take your point that it does create a bottleneck

i find just as much problem with central bank control of an expanding shrinking money supply since a small unelected group of people can create havoc with people's entire livelihoods with no accountability

my point is that all currency is based on trust (metals can be seen as an exception since they have an inherent value to human beings both from the standpoint of utility and/or beauty, they just aren't convenient in a global world)

bitcoins are in the trust-building phase and should over time achieve a smoother and more predictable value curve ... though i agree that technological advances do represent a threat in terms of mining but even this is built into the system since advances in technology are met with resistance in the creation process

primarily to me bitcoins are a marker of personal liberty, freedom from control by the state (or any one man or group) and that is worth a lot


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## fatcat

CanadianCapitalist said:


> I don't know much about Bitcoins but how sure can you be that it can't be manipulated? I've read that the number of Bitcoins is finite but again how sure can you be? Also, how sure can you be that there won't be some other competing currency built along the same lines as Bitcoin? It seems to me that you have to accept a lot of things about Bitcoins on faith... just like with "paper" money.


i completely agree ... faith is required .... as far as bitcoins being manipulated, i won't pretend to understand the underlying math in bitcoins, let me be clear .... but i do know that there are many others who do and they watch each other carefully ... bitcoins is an open system that can be scrutinized and it is well watched by all kinds of people who have competing interests ... exactly like the market

don't forget cc, our entire lives are now built on a technology that most of don't understand ... when we invest in something as complex as the new york stock exchange, we do so with the understanding that people who understand it are watching each other to make sure that it works effectively and honestly

to your first question, there is a public record of all created coins, not the ownership but the creation of the coins is available for examination, there is a running tally of coins ... as of a minute ago it is: 10,983,600

http://blockchain.info/

http://blockchain.info/charts


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## dsaljurator

fatcat said:


> subject to the same problems as fiat currency, theft, counterfeiting, rise and fall in value


In theory they aren't subject to counterfeiting. They are absolutely subject to the other issues you describe though.


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## dsaljurator

CanadianCapitalist said:


> I don't know much about Bitcoins but how sure can you be that it can't be manipulated? I've read that the number of Bitcoins is finite but again how sure can you be? Also, how sure can you be that there won't be some other competing currency built along the same lines as Bitcoin? It seems to me that you have to accept a lot of things about Bitcoins on faith... just like with "paper" money.


The number of coins is finite, and you can be sure that it is finite, because the math and cryptography that runs the underlying system is open and available for you to confirm it. It is absolutely possible that another competing currency could be built along the same lines. Also the value of the currency can absolutely be manipulated, just like stocks or other currencies for that matter. It's no different in that regard.

The main difference between bitcoin and gold is that bitcoins are infinitely divisible. Currently, they support division to 8 decimal places. and should it be required to allow subdivision further than that in the future, adding support for it is trivial. Gold however, can only be divided to atoms. Once you start having to split atoms of gold you run into some issues.


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## cdnceo

Causalien said:


> Not sure if I interpreted your skepticism correctly. Here is what I think you want to know:
> Bitcoin is infinitely divisible.


Nope. Bitcoins are divisible to 0.00000001


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## andrewf

Gold isn't divisible? In ~200 g of gold there are 6.02 x 10^23 atoms. Seems divisible enough to me.

Bitcoin is a means of exchange, but it doesn't seem able to function as money. It's a good discussion, because it serves to temper the enthusiasm of some boosters.


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## nathan79

I didn't get in as early as I would have liked.


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## dogcom

Is currency not backed by law and the ability to pay debts and taxes. Gold and silver have always been there so they stay there and then the currency of choice pays the bills. 

I have never heard of Bitcoin so until governments embrace it to pay taxes and debts then it will go down in flames.


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## sags

The use of bitcoins for criminal activity.....will be the reason the government uses to shut down the exchanges.


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## fatcat

sags said:


> The use of bitcoins for criminal activity.....will be the reason the government uses to shut down the exchanges.


this will be very interesting to watch ... they can go after the exchanges but can they shut down bitcoin itself ? ... you can obtain bitcoins without using an exchange ... though i believe it is possible to track and trace bitcoin owners ... i don't know enough about how easy it is to hide your tracks



> *Bitcoin plummets amid slowdowns and hacking of service sites*
> April 3, 2013, 6:11 PM
> Instawallet, a site that offered a service to allow people to store bitcoins, said Wednesday its site had been hacked. Instawallet said it will suspend its service until it can “develop an alternative architecture.”
> 
> The company plans to open a claim process for Instawallet balance holders to claim funds “in the next few days.”
> 
> Problems with the site were disclosed last week in an open letter to Instawallet that appeared on the Adaptive Glass blog. The letter described a security flaw on the site that affected 3,000 people. The problems affected accounts with fractional amounts of bitcoins up to about 100 bitcoins in them. The security flaw also affected Paymimum, Paytunia, Instawire, and Bitcoin Central, according to the post.
> 
> Subsequently, Instawallet posted a notice on its site on April 1, saying it was down for maintenance, prompting Adaptive Glass to ask in a headline: Did Instawallet just have $4.3 million dollar bank heist?
> 
> Bitcoin prices spiked to $147 Wednesday, before falling back sharply to around $125.
> 
> Mt. Gox, an online exchange that handles much of the traffic in bitcoins, experienced slowdowns on Wednesday, as well.
> 
> The digital currency has been gaining attention and adherents in part due to the crisis in Cyprus, analysts say, though the whole concept of a digital currency with no central authority or backer remains highly controversial. See earlier post Bitcoins: bubble or breakthrough.
> 
> – Tom Bemis


 what's interesting here is that coins are stolen exactly like money being emailed from a bank account to someone in kenya or some such place but the coins themselves are still intact ...


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## sags

Not exactly a "safe" currency when it gyrates around like that............

A vendor who accepted bitcoins at the 147 value...........and had them drop to 117 during the day and then return to 125 by the end of the day................wouldn't know if he made a profit or lost money on the transaction.

I can see bitcoins being used for products or services that don't involve goods...........but are "time or space that was empty anyways" types of transactions. Things like yoga classes or gym memberships come to mind. A "discount" in those areas of business don't mean a loss for the business.

Some are calling it a modern day "tulip bubble".............time will tell.


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## sags

If people lost millions of dollars...........do these exchanges have the resources to make them whole.........and will they?

They have been hacked before........and they will get hacked again.

As the top internet security experts have said...........there is no guaranteed protection on the internet. 

The hackers can get into anything they want.

***Note.............

After surfing on some Bitcoin discussion forums.........someone posted they had about 100 bitcoins taken from their accounts without their knowledge. They contacted the Mt.Gox exchange and received a form letter back advising them to contact the police with the information and report the theft. The exchange said they would assist the police in an investigation, but would be unable to replace the bitcoins or money value. So it looks like.......tough luck.

I also noticed that on forums full of bitcoin enthusiasts........there are a lot more questions than answers.

Someone posted a question on how to "redeem" the bitcoins for cash........and they were advised of a complicated procedure that takes 45 days and a third party willing to exchange cash for bitcoins.

This would be a major problem trying to exchange 1 Million dollars worth of bitcoins for 1 Million in US/CAD currency, if they have to find someone willing to do it.

It appears third party websites are springing up to exchange bitcoins for gift cards to enable online shopping at retailers who don't accept bitcoins. As an example one website will accept bitcoins for Amazon Gift Cards..........but for a fee and there would be a time delay.

There have also been some problems with websites making claims and then absconding with the bitcoins.

Most of the conversations on those forums is about the prospect of getting rich quick and easy, while people who post legitimate questions are ignored or fluffed off. It is almost at the level of hysteria on some of the discussions.

I also looked at a couple of the bitcoin trading "blocks" and there are people trading 20,000 or more of these bitcoins. If bitcoins are ever to be considered some kind of alternative currency.........how does that work with individuals trading 20,000 or more of them each?

My conclusion is that after reading the discussions.............it is the wild west out there in Bitcoin land.

It was noted on one business website that bitcoin prices fluctuate wildly because there are a very limited number of people actually trading in them. One question on the discussion board asked if the price could be manipulated by someone buying all the bitcoins. A rather expensive and proposterous idea........but what about the reverse? Since bitcoin prices are reflected by continual trading........what is to stop someone from acquiring bitcoins and selling the same coins over and over to themselves in another account.......for lower and lower prices? Drive the price down to near 0 and then scoop them all up scenario.

It isn't for me to give advice on the wisom of buying bitcoins.......but the whole thing does appear to be very complicated in a world where a lot of people have no financial instincts and no desire to have any.


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## Lephturn

More on Bitcoin - the weak point is not the currency itself but the exchanges:

http://www.bbc.co.uk/news/technology-22026961


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## fatcat

sags, i follow bitcoin with real interest but don't own any coins nor do i plan to buy any at present

nobody should get into bitcoin without full awareness that this is going to experience all the birth trauma of any new currency or medium of exchange

people on the forum tend to be rather harsh i think
it's a brand new (2009) currency

also, to hold hacking and theft against bitcoin is to be caught wearing blinders and sunglasses

theft and hacking is rampant and ongoing in the "traditional currency" world
how can you hold this against bitcoin ?

as far as the questions go, yes, this is the weakness of the currency, it's so complex that few really truly understand the underlying math and thus are nervous

this can all change in time as it matures


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## andrewf

fatcat: I think the skepticism is justified. I'm not calling for Bitcoin to be banned or anything, I'm just injecting a note of caution into the discussion.


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## fatcat

andrewf said:


> fatcat: I think the skepticism is justified. I'm not calling for Bitcoin to be banned or anything, I'm just injecting a note of caution into the discussion.


well, on that we agree, if you are not cautious about bitcoin, you aren't paying attention  

the guy selling the house for bitcoin got a lot of publicity out of it and hopefully a good cash offer but to accept bitcoin for your largest asset would be nuts 

i would say that at this point bitcoin should only be used a medium of exchange and nothing more ... it can and is competing with paypal who i don't like much so i'm rooting for bitcoin

i sell stuff on ebay from time to time and i would happily take bitcoin if i could

but to "invest" in bitcoin is nuts, you might as well go the to the dog track where at least you'll get fresh air as you get cleaned out

nevertheless, the potential exists for bitcoin to mature into a viable system


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## sags

I'm not sure bitcoin will survive long, given the severity of the breaches to several of the exchanges and the ongoing attacks on Mt.Gox.

These things should have been anticipated in advance. Fixing problems as they are discovered will cost people a lot of money in the meantime and destroy the necessary trust for bitcoins to gain traction in the general population.

Instawallet has gone offline indefinately, and are now saying they will refund up to 50 bitcoins lost. Above that will be considered on a case by case basis. Other websites and exchanges are also affected by the hacking. 

That brings up the question if the exchanges have the financial resources to pay for the replacement bitcoins or are creating them out of thin air, which questions the finite number of bitcoin production.

Even Google has been brought into the discussion, as some claim the Google robots provide search results of all the accounts.

This "solution" has unanswered questions of it's own. The hackers have all the information needed to make "claims" on the refunds, and can take the bitcoins again after they are replenished. Anonymity means nobody knows who rightfully owns the bitcoins.........so as long as a person possesses the right information, they are good to go. The legitimate owner and the hackers may both be submitting claims.

This is a bit like putting tons of gold in a warehouse with 20 doors and hiring security guards to only watch 2 of them.

Instawallet says they have contacted the police and a full investigation is underway. This brings up a point as to how much taxpayer money should be spent chasing down fraud and theft...........for an organization set up for transactions that hinder criminal investigations by the same authorities.

I would imagine calling up the police and saying......."somebody stole my bitcoins".........would require some explaining.

"Yes, you see officer.........they really don't exist, except in digital form. They are held in servers somewhere, by a company that has a website on the internet............and now they are gone. Can you get them back?"


----------



## andrewf

Yeah, saying "report it to the police" is code for "get stuffed".

The police will do just about nothing beyond filing a report.

Regarding bitcoin as a medium of exchange: that's as may be, but then it's more like a prepaid debit card than 'money'. People get confused and think bitcoin is money, or a currency, and it's not. It's just a purely electronic prepaid debit card.


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## lonewolf

High confidence in Goverment & its currency will result in low confidence in bitcoin.
Low confidence in goverment & its currency it controls will result in more confidence in bitcoin.

The goverments will use the excuse that bitcoins main purpose is for illegal activity such as drug trafficking to destroy the bitcoin.

It would not surprise me if in the future some form of digital money will be the official currency of a country controled by the goverment.

I also think there is a place for a currency that is controled by the private sector. If it is not designed properly it will fail. b The creative private sector has a good track record of getting a job that there is a demand for, a lot better then the goverment sector.

Perhaps in the future x amount of community service will have to be done by individuals that would take the place of paying taxes.


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## fatcat

andrewf said:


> People get confused and think bitcoin is money, or a currency, and it's not. It's just a purely electronic prepaid debit card.





> A currency (from Middle English curraunt, meaning in circulation) in the most specific use of the word refers to money in any form when in actual use or circulation, as a medium of exchange, especially circulating paper money. This use is synonymous with banknotes, or (sometimes) with banknotes plus coins, meaning the physical tokens used for money by a government.[1][2]
> A much more general use of the word currency is anything that is used in any circumstances, as a medium of exchange. In this use, "currency" is a synonym for the concept of money.[3]


certainly bitcoin is a currency based on this wikipedia entry ...

i have no argument with the idea that bitcoin should be approached cautiously, i do have a problem with the notion that it is somehow more risky or dangerous as a system than basic bank hacking

what is happening is that people are breaking into exchanges ("banks") and stealing coins

what they are *not doing*, is creating coins out of thin air or breaking the underlying structure of bitcoin

all kinds of companies from apple to major banks to pick-a-company are being hacked every day, online theft is rampant at all kinds of "secure" repositories of information



> from *bloomberg*:
> In increments of a few thousand dollars to a few million per theft, cybercrooks are stealing as much as $1 billion a year from small and mid-sized bank accounts in the U.S. and Europe like Experi-Metal, according to Don Jackson, a security expert at Dell SecureWorks. And account holders are the big losers.


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## andrewf

The purchasing power of legal tender is stable, while that of bitcoins is not. That makes the former a better store of value than the latter.

The last time my bank account was 'hacked' (someone spoofed my debit card), the bank made me whole. It looks like you have no reasonable expectation of the same with bitcoin. Maybe that will change.


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## sags

I'm not sure that the creation of bitcoins through "mining" gives them much credence.

A better option may be to create a currency based on gold that is stored in a secure vault, that is audited frequently by several auditors. The "coins" would be backed by the physical gold, and would rise in value as a portion of the fees are used to purchase additional gold..............thereby increasing the value of a finite number of gold coins.

Oh wait.............we used to have a similar system..........

Counting the cost of computers and energy as "assets" behind the issuance of bitcoins..........is also a bit of a stretch for me though.

People sit around playing video games all day and night, and we don't consider them as doing anything particularly useful.


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## andrewf

More importantly, that electricity and clock cycles have been irrevocably consumed, unlike gold where it can be released to be put into other things people value (like jewelry).


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## fatcat

andrewf said:


> The purchasing power of legal tender is stable, while that of bitcoins is not. That makes the former a better store of value than the latter.


andrew, this is not a fair comparison, bitcoin is an international currency (i.e. it crosses all borders) and yes it fluctuates wildly but so does fiat currency on a global basis .. the loonie has moved through like 40 cents in the last 5 years against the american dollar, in a global market, the purchasing power of the loonie fluctuates considerably


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## andrewf

It's fair enough; most people spend a huge % of their consumption in local currency.

More importantly, it is impossible for prices in bitcoins to be stable, by design. There is a limited quantity of bitcoins, and demand for money fluctuates. Because the supply is inelastic, the real purchasing power of bitcoins has to vary.


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## fatcat

andrewf said:


> It's fair enough; most people spend a huge % of their consumption in local currency.
> 
> More importantly, it is impossible for prices in bitcoins to be stable, by design. There is a limited quantity of bitcoins, and demand for money fluctuates. Because the supply is inelastic, the real purchasing power of bitcoins has to vary.


we will disagree on whether the comparison is fair, i say it isn't but this can't be settled because there is no way to "localize" bitcoin, by definition it is a world currency

i do agree that the value of bitcoin has fluctuated wildly and this is a major barrier to entry (including me)

however, as bitcoin matures and becomes more secure and more widely understood and IF trust in the currency starts to really build and become stable i suspect we will start to see value extremes smooth out and it should settle at a number that will largely move up and down with perceived inflation / deflation (as opposed to speculation)


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## sags

Here is a link to an interesting indepth appraisal of bitcoins.........and some inherent problems.

It was written by Karl Denninger who understands the money supply pretty well. There are also some replies to his article that are interesting.

http://market-ticker.org/akcs-www?post=219284


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## sags

The very premise that the cost and effort of producing bitcoins makes them valuable is flawed.

They may be of value to the person who invested the time and money..............but that doesn't make them of any value to me.

During the sports card frenzy.......people spend time and money chasing down so called "rare" cards.........that were issued in small numbers by card companies. The "value" of these unique cards was seen as in the rarity and the cost of finding one in hundreds of thousands of cases of sports cards.

It lasted for awhile.......and then abruptly stopped. There was no mass market for these cards and the value dropped to zero.

People realized that they were after all.............just cardboard.

The cost of bitcoins is as irrelevant to their value.........as the input costs of a farmer are to the price of wheat. The marketplace for wheat is created by supply and demand.........not the input costs. Today, many farmers would say the price of land alone makes it impossible for them to make a profit, and farming is becoming corporate operations from the necessity to spread the costs of machinery and land over more acreage.

There are many other issues with bitcoin.............from a macro view alone..........without even getting into the minute details of problems with exchanges etc.

The biggest problem perhaps is that in eschewing regulation and government oversight...........there is no authority that speaks on behalf of bitcoin, while there is at the same time a dependence on fiat money systems to buy and sell, and a dependence on government regulators to investigate illegal activities.

One foot in...........one foot out.

I wouldn't make the leap in judgement that people who question bitcoin are simply uninformed.

They may in fact be fully informed........which leads them to questions for which there seems to be no answers.


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## fatcat

causalien, i have not yet used bitcoin and would not purchase one for $150 based on the wildly erratic price charts but i am always buying and selling stuff (electronics, stamps, coins) and i would definitely consider bitcoin in exchange for goods ... i still need to understand it more before i do that ... 

we need to remember that all mediums of exchange including gold are based on trust and the perception that if one accepst it in trade for goods or services it can be spent at some point in the future to purchase goods and services

a key part of that perception as andrew points out is predictability of value and bitcoin, at the moment anyway, fails that test imo


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## MrRed

I started "mining" in 2011 and haven't looked back. So far the business has generated several tens of thousand dollars at today's price. We're looking to expand our operations and continue to provide security to the blockchain - the p2p ledger that Bitcoin is based on. We like to think of Bitcoin as cash for the Internet.



fatcat said:


> causalien, i have not yet used bitcoin and would not purchase one for $150 based on the wildly erratic price charts but i am always buying and selling stuff (electronics, stamps, coins) and i would definitely consider bitcoin in exchange for goods ... i still need to understand it more before i do that ...
> 
> we need to remember that all mediums of exchange including gold are based on trust and the perception that if one accepst it in trade for goods or services it can be spent at some point in the future to purchase goods and services
> 
> a key part of that perception as andrew points out is predictability of value and bitcoin, at the moment anyway, fails that test imo


You don't have to have predictability in Bitcoin value to start using it as a very cheap way to accept payments for your goods in an online store. These guys [bitpay.com] and others will let you accept Bitcoins and get real cash into your bank account for *way* less (0.99%) than the credit card companies or PayPal charge (typically 2-5%). As an online merchant, Bitcoin makes a lot of sense, even if all you do is convert immediately at the point of sale to your local currency.

As time goes on, some of the merchant's input costs may be negotiable in Bitcoin, saving even more money, as raw Bitcoin transactions are incredibly cheap, currently around 0.0005 Bitcoins, or less than 10 cents in dollar terms at today's price. The transaction fees are paid to the miners (like me ).


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## MrRed

sags said:


> Are bitcoin profits "capital gains", required to be reported to the CRA........or IRS.........or anyone?


My understanding of CRA's point of view, is that it depends on where the gain came from originally. If you earned your Bitcoins from business operations, like I do, then the gain is treated as normal business income. If you had a gain from an investment (you bought some and later sold for gain), then it would be treated as capital gain.

Please don't take my word for it, do your own research, blah blah.


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## MrRed

Causalien said:


> Currently the consensus is to create a bitcent called satoshi. Each satoshi = 0.01 bitcoin and the trading of whole bitcoins will probably cease to happen if 1 bitcoin reach 10000usd


Actually, one satoshi (named after the mysterious Bitcoin creator Satoshi Nakamoto) is defined as 0.00000001 Bitcoins (8 decimal places). This is currently the smallest unit that can be represented in the Bitcoin system, but this can be changed in future versions of the Bitcoin software to allow for further subdivision if needed.


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## fatcat

thanks for that reference to bitpay red
looks very interesting and i would love to see it put downward pressure on paypal and visa and the rest of that emerging online pay group
if bitpay using bitcoin can bring the costs down to 1% and make money that would be great
i pay 2-3% now


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## sags

I think before bitcoins are considered a serious online method of payment, there are security issues that would have to addressed.

Right now, bitcoins fall under the heading of "caveat emptor" and that will have to change to gain wide acceptance.

But how does anything change........with no central authority to institute the changes?


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## MrRed

sags said:


> I think before bitcoins are considered a serious online method of payment, there are security issues that would have to addressed.
> 
> Right now, bitcoins fall under the heading of "caveat emptor" and that will have to change to gain wide acceptance.


I think you're right, especially if you're considering Bitcoins as an investment vehicle. No one should be buying Bitcoins right now thinking they're going to get rich - this means you! Never put in more than you can afford have go to zero! The worst problems are at the edges of the Bitcoin network where you have to change from Bitcoins to another currency, though there's never actually been a hack of the Bitcoin system itself.

However, there's lots of Bitcoin price volatility and valid security concerns with some of the businesses serving the Bitcoin ecosystem. If Bitcoin is to succeed as cash for the Internet, the businesses with poor security will need to be weeded out and the best ones will have to step up. I would suggest that any Bitcoin-based business getting hacked right now probably isn't the best choice of service provider. Lots of others in the Bitcoin universe with much better security to choose from. Do your research if you are considering getting in, there are some good choices and lots of bad ones!

Back in the 90s there were a bunch of crappy Internet startups...anyone remember pets.com or boo? These guys were "selling at a loss but making it up on volume." LOL. Of course there was also amazon.com that everyone thought was going to be a flop. Only time will tell who the winners will be.

See you in the future...


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## fatcat

sags, red makes a great point
anyone who used ebay 10 years or paypal 10 years knows that it was like the wild west
all of these systems had (and do have) vulnerabilities 

the real issue is the integrity of the currency itself
and that has not been broken at all
it is decentralized and the people at the margins who move in and out of the system are the ones that need to do the security and build the trust

when they get a really strong encrypted system and enough capital to guarantee deposits of coins, there will be some stability and acceptance
those of us who use the payment systems on the selling end (i am just a hobbyist so it's not too big a deal but business owners are super-sensitive to this stuff) it will be great to see real competition

i would use it now on ebay if i could but fat chance of that

i am really going to enjoy watching ebay/paypal be taken on by bitpay and hope that they gather some real momentum


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## sags

Good points.......but who represents the bitcoin universe and who will develop and implement the changes needed?

Whoever it ends up to be............will have a fight on their hands from those involved in illegal activities, and from those who are attracted to bitcoins due to their personal opposition to any rules or regulations from any authority.

Freedom from authority is a core bitcoin issue.


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## sags

Interesting the topic with the most replies on a bitcoin forum tonight is about creating a bitcoin note.

Another topic is creating a paper wallet.........which people print themselves and carry around with them.

It starts to look like they are going full circle right back to the system we already have.......paper money.


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## Rusty O'Toole

Something very strange is happening with Bitcoins. In the wake of the Cyprus bank crash Bitcoins doubled in value and doubled again. Experts say this represents a flight to safety of savers exchanging their money from one currency, or one country to another with Bitcoins as a medium of exchange, or simply putting their savings into Bitcoins.

At the same time silver and gold the traditional haven in such times, have hardly moved. This suggests to me, that silver and gold are being artificially suppressed as some have been saying for years.


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## fatcat

Rusty O'Toole said:


> Something very strange is happening with Bitcoins. In the wake of the Cyprus bank crash Bitcoins doubled in value and doubled again. Experts say this represents a flight to safety of savers exchanging their money from one currency, or one country to another with Bitcoins as a medium of exchange, or simply putting their savings into Bitcoins.
> 
> At the same time silver and gold the traditional haven in such times, have hardly moved. This suggests to me, that silver and gold are being artificially suppressed as some have been saying for years.


i disagree, silver and gold have been available to buy since the beginning of this crisis ... i think bitcoin is perceived as both quick and easy as well as hidden .... both aspects of which appeal to people in cyprus who are in panic mode ... i think they will soon be regretting it


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## andrewf

More likely there is irrational exuberance and bubble activity in the tiny bitcoin market. Occam's razor; it doesn't require a massive international conspiracy.


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## Rusty O'Toole

So the boom in Bitcoin on the heels of the Cyprus crisis is a pure coincidence of no significance? And it follows, if there is no flight to safety, then the massive spike in COMEX silver shorts from 6000 contracts to 30000 is a coincidence of no significance either?


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## fatcat

Rusty O'Toole said:


> So the boom in Bitcoin on the heels of the Cyprus crisis is a pure coincidence of no significance? And it follows, if there is no flight to safety, then the massive spike in COMEX silver shorts from 6000 contracts to 30000 is a coincidence of no significance either?


yes ...to the silver shorts no, to the cyprus issue, i would guess that bitcoins rise and cyprus are connected but wouldn't go near the silver shorts with a ten foot pole ... there is always and forever a current theory as to how and why silver and gold are being manipulated ... as usual i am stunned at the blindness that bugs have to this issue, though they no doubt think i am blind for not seeing it .... rusty, silver and gold don't amount to diddly as a portion of the worlds wealth, and are inadequate as stores of wealth in any great quantity, why would anyone bother to manipulate them ?, it's not worth the time or trouble ... the markets work very well in silver and gold 

cyprus is another matter, there is i am sure a lot of rampant paranoia going on over there and bitcoin is seen as a way to safely move money out of the country in the presence of capital controls


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## andrewf

No coincidence: bitcoin coverage has spiked since Cyprus announced the deposit seizure. It's a small, illiquid market, so a small inflow can move the price substantially.


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## fatcat

andrewf said:


> No coincidence: bitcoin coverage has spiked since Cyprus announced the deposit seizure. It's a small, illiquid market, so a small inflow can move the price substantially.


yes, spot on and this as well:


> A FINANCE ministry decree, the third since controls were first introduced, yesterday raised the ceiling on transactions which do not require Central Bank approval to €25,000 from €5,000.
> It also permits the use of cheques worth up to €9,000 per month.
> Other restrictions introduced last week, including a €300 per day cash withdrawal limit and a €1,000 euro limit on the amount travellers can take overseas, remain in place.


bitcoin looks very nice as a way to move cash


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## Rusty O'Toole

Precious metals are manipulated same as the American dollar, Japanese yen, oil, and practically everything else. You don't have to be a conspiracy theorist, you just have to read the news. The latest development is Japan is deliberately trying to cause inflation and depreciate the value of the yen because they think it will help their exports and get their economy moving. This is hardly a secret, there have been hundreds of news stories on it and official statements by the Japanese prime minister and minister of finance. 

Bernanke in the US, in charge of the Federal Reserve Bank has stated more than once, that it is his design to flood the market with US dollars, buy US bonds and do everything in his power to keep interest rates at 0 for the forseeable future. This is not a secret either

Their EU counterparts also have their plans to manipulate the world's currency markets for their own advantage. Everybody does it. It is in the financial news every day.

Gold and silver are part of the world's financial system and are also artificially manipulated although the media does not cover it as much. Like you , they don't think it is important. But if you dig a little you can find it out.


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## andrewf

By what mechanism are gold or silver prices being manipulated? They're physical commodities, and unlike fiat currencies, there are no central banks to set interest rates on gold/silver or produce it from thin air.


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## sags

One way gold prices are manipulated.........

Is to create ETF that don't actually hold any physical gold. Demand is sidetracked from raising the price of gold directly. People who wish to pay for gold are buying paper promises of gold on demand. 

Therefore, the "supply" of gold is not reduced by these purchases and the price of gold is unaffected.

If everyone invested in gold ETFs decided to purchase physical gold instead, there wouldn't be enough supply to meet the demand, and the price would skyrocket.


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## Rusty O'Toole

Sags is right. There are other paper markets that drain off demand from physical metals and permit finageling the pieces of paper. Futures markets for instance. The COMEX admits they can't possibly settle all contracts in metal. They couldn't even settle 1/10th of them. Fortunately almost everyone settles in cash.

This means gold and silver can be driven up and down by buying and selling futures contracts.

By the way every once in a while a rich man, a syndicate of rich men, or a big institution makes a killing by creating a short squeeze in silver and demanding physical delivery. As they can't make physical delivery of silver that does not exist the exchange is forced to pay whatever price they demand.

Warren Buffet did this in 1997. He cornered the silver market, buying up 1/4 of the world's supply and demanding delivery. The COMEX could not make delivery and it cost them millions to buy him off. Buffet's buying drove silver from $4 and change to over $7 but it cost them a lot more than that to settle. At the time Buffet said he was stockpiling silver because he believed with the use of silver batteries in electric cars, in future years silver would go up. Pure bullshit. It was a classic short squeeze. He was out of his position with a big profit in a few months.

The precious metals markets are manipulated every day by exchanges, governments, and big traders.


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## andrewf

It's totally transparent. The people buying those funds do so knowing that they are backed by futures. Besides--how large is this as a % of the gold supply? All the big gold ETFs are physically backed--GLD, IAU, etc. 

And if the price of gold is being artificially depressed, why are those who are on the short side of futures contracts doing so? Are they stupid?


----------



## fatcat

Rusty O'Toole said:


> Sags is right. There are other paper markets that drain off demand from physical metals and permit finageling the pieces of paper. Futures markets for instance. The COMEX admits they can't possibly settle all contracts in metal. They couldn't even settle 1/10th of them. Fortunately almost everyone settles in cash.
> 
> This means gold and silver can be driven up and down by buying and selling futures contracts.
> 
> By the way every once in a while a rich man, a syndicate of rich men, or a big institution makes a killing by creating a short squeeze in silver and demanding physical delivery. As they can't make physical delivery of silver that does not exist the exchange is forced to pay whatever price they demand.
> 
> Warren Buffet did this in 1997. He cornered the silver market, buying up 1/4 of the world's supply and demanding delivery. The COMEX could not make delivery and it cost them millions to buy him off. Buffet's buying drove silver from $4 and change to over $7 but it cost them a lot more than that to settle. At the time Buffet said he was stockpiling silver because he believed with the use of silver batteries in electric cars, in future years silver would go up. Pure bullshit. It was a classic short squeeze. He was out of his position with a big profit in a few months.
> 
> The precious metals markets are manipulated every day by exchanges, governments, and big traders.


even if what you are saying is true (and i have no way of proving it is or isn't, i am aware of the hunt brothers and buffet) it can only artificially move the price for a short time ... 

sooner or later contracts must be settled and the market will move again ... over a long enough period of time gold and silver respond to market forces ... 

the bugs keep telling us that there is a consistent, ongoing cabal of occult groups that are manipulating the price of precious metals ... the truth is simpler, these metals are extremely hard to value and very volatile ... 

more important the value of these metals is simply too small to worth the trouble to manipulate other than in short term ways that don't even touch the levels of global assets


----------



## Rusty O'Toole

fatcat said:


> even if what you are saying is true (and i have no way of proving it is or isn't, i am aware of the hunt brothers and buffet) it can only artificially move the price for a short time ...
> 
> sooner or later contracts must be settled and the market will move again ... over a long enough period of time gold and silver respond to market forces ...
> 
> the bugs keep telling us that there is a consistent, ongoing cabal of occult groups that are manipulating the price of precious metals ... the truth is simpler, these metals are extremely hard to value and very volatile ...
> 
> more important the value of these metals is simply too small to worth the trouble to manipulate other than in short term ways that don't even touch the levels of global assets


They aren't that volatile. Since mid 2011 the price of gold has swung from 1550 to 1800 and back again 3 times.


----------



## Cal

The thread should be more like who got out of bitcoin early.


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## marina628

Cal said:


> The thread should be more like who got out of bitcoin early.


LOL I had no idea this stuff was worth so much until you guys started chatting so about a week ago I decided to sell some of mine .But my total cost on this was like $400 and honestly I have money in practically ever ewallet online or have used everyone for funding my poker accounts so I had actually forgotten all about this  Got rid of 14 coins still have 44.


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## sags

Bitcoin trading crashed the Mt.Gox exchange yesterday, when the price fell from 266 to 105...before closing at 145.

Today, they closed the exchange until 10 p.m. EST tonight. The slide continued downward.

Different exchanges have different prices...........some as low as 45.

Many exchanges and related businesses have been closed.

It looks like a big crash............when or IF the exchanges open again.........the sell orders are piling up against 5 dollar bids.

It is terrible to read some stories on the bitcoin forums..........people borrowed student loans or against their homes to buy bitcoins and they will be wiped out.

Some will make out like bandits though............perhaps that is what they always were?


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## OptsyEagle

But as long as someone comes along and pays a higher price then everything should be fine. lol.


----------



## andrewf

Yeah, I was pretty sure this was a hype-driven bubble in a small, illiquid market.


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## dsaljurator

It couldn't really be anything but that, right now. Some people made a lot of money on it, some people lost a lot of money on it, and some people just watched.


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## nathan79

The market is going through growing pains right now. It will rebound, but in the meantime I view this dip as a positive because it gives more people the opportunity to get into the market.

The last big crash in 2011 dropped from $35 to $2. I don't think it will go that low this time though.


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## dogcom

Except the bigger fool theory how can anyone even consider this stuff.


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## fatcat

as we all know it happened with tulip bulbs in 1637 and it will happen again ... and again
http://en.wikipedia.org/wiki/Tulip_mania

this was entirely predictable and even bitcoin boosters and backers would admit that this was going to happen

what has NOT happened is any corruption of the coins _themselves_

the exchanges and the capacity to process orders and safeguard data, yes, but this has happened all over the internet for years so bitcoin is no different in that regard

the integrity of the coins themselves is still intact


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## andrewf

For whatever (little) that is worth.


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## sags

Anything gained was taken from those who lost............net sum game.

Redistribution of wealth is all.....................

Early adopters got fabulously rich........everyone else contributed to their wealth.


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## fatcat

andrewf said:


> For whatever (little) that is worth.


it's actually worth quite a bit andrew ... it's the difference between the growing pains of a new product (a new currency) being sold in a completely new way (entirely decentralized on the internet) and a currency which has been hacked ... 

there is no central authority and thus it is going to get chaotic at times ... this is all part of the process of building any new enterprise ... 

the underlying algorithms are still intact which means the coins can go up and down in value (spectacularly as we are now seeing) but the number of coins is working just like gold, they are slowly coming into existence and the integrity of the coins are solid

ever use paypal ? paypal is bitcoin (i.e. it is a virtual currency based on trust) operated by a central authority and it has had numerous and ongoing problems for the last 10 years

how long have you been on the net, i am now 20 years in and i have seen countless, numerous, un-countable hacks and online stupidity by companies large and small ... why do we expect bitcoin to be any different ?

again, the integrity of the coins is still intact

it may well be the case that bitcoin doesn't succeed but i promise you, something similar and better will replace it, this is a product that people want



> Early adopters got fabulously rich........everyone else contributed to their wealth.


 actually a lot early adopters got creamed, a lot of late adopters have made out very well depending on when they got in and out ... the winklevoss twins of facebook infamy own a large pile of bitcoins


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## andrewf

Bitcoins may be secure, but they have zero intrinsic value. They are like fiat currencies, that also rely on the Tinkerbell effect to have value. The integrity is worth very little if tomorrow everyone disbelieves in the value of bitcoins.

PayPal uses fiat currency deposits with stable purchasing power. It piggybacks on the very strong belief in the value of fiat currency. Bitcoin is totally divorced from any real value. Should the be worth $2 or $200 or $200,000? Who knowns? Tune in tomorrow to find out which one it will be.


----------



## fatcat

andrewf said:


> Bitcoins may be secure, but they have zero intrinsic value. They are like fiat currencies, that also rely on the Tinkerbell effect to have value. The integrity is worth very little if tomorrow everyone disbelieves in the value of bitcoins.
> 
> PayPal uses fiat currency deposits with stable purchasing power. It piggybacks on the very strong belief in the value of fiat currency. Bitcoin is totally divorced from any real value. Should the be worth $2 or $200 or $200,000? Who knowns? Tune in tomorrow to find out which one it will be.


"_strong belief in the value of fiat currency_" ???? ... you obviously haven't been reading the dog's posts :biggrin:

ALL currencies have _zero_ intrinsic value ... ALL currencies are based on trust ... no trust = no currency ... not a penny of the money i have in paypal is guaranteed, they could close tomorrow and i would be left holding my d***, i leave my money with them because i trust they will be around when i want to withdraw it, nobody guarantees that money and even if they did, i would be trusting the guarantor

the only exception to the trust rule is gold and silver (and other PM's) since they appear to hold intrinsic value for human beings and don't require trust to have value, though that value can change considerably

i agree with you completely that they could disappear tomorrow if people lost faith in them ... but so could the us dollar or the canadian dollar, it is less likely in both cases since they have a long track record of trust

remember, bitcoin is only 4 years old ... there is a demand for this kind of worldwide, lightening fast, mostly private currency, what we are seeing is both speculation and a vote against the very fiat currency that you say holds so much trust


----------



## andrewf

PayPal has a brand that they're trying to protect. They have real assets that they are willing to use to protect that brand.

Fiat currencies have governments with guns, tanks, police, prisons, etc.

Who does bitcoin have?


----------



## fatcat

andrewf said:


> PayPal has a brand that they're trying to protect. They have real assets that they are willing to use to protect that brand.
> 
> Fiat currencies have governments with guns, tanks, police, prisons, etc.
> 
> Who does bitcoin have?


hope ?


----------



## dogcom

Fatcat I have trouble with the way the central banks are playing with currencies and markets but they are still backed by law and tanks as andrewf said. At least we can argue about gold, silver and paper money backed by tax payers. Bitcoin however is nothing and will always be nothing except to those few who enjoy this fantasy. PayPal even though I despise it after being a customer at one time, deals in official currency.


----------



## sags

From what I have read, there have already been instances where the money vanished...........and there doesn't seem to be anyone with the legal jurisdiction to investigate and prosecute.

It seems much too wide open to unscrupulous people, located behind a website and server anywhere in the world, for me to invest in it.

Some have called it the perfect criminal enterprise. No rules, no authorities, no repercussions.

There are a couple of people who posted they lost a lot of money when a website simply disappeared and now the same website is starting up again.

I believe Instawallet is still shut down, after their clients were "hacked" for their money. They have promised some refunds, but who knows if they even have any money.

Unfortunately, the peer to peer warning system only works after the fact, and nobody is tracking the movements of the offenders.

It is basically handing people your money on a strictly trust system.


----------



## sags

There have been alternative currencies in the past, some people are promoting some now, and there will be more in the future.

If another attractive platform, absent the problems that plague Bitcoins, should come along..........what would happen to the value of Bitcoins?

I guess for me, I wouldn't invest until all the problems are sorted out........and by then I probably couldn't afford them.

Catch 22.........so as the Dragons say...........I'm out.


----------



## fatcat

one more from me and then i'll let you guys have the last word

dog, paypal can deal in _official currency_ all it wants but if it goes under you are left holding zilch except a claim on assets, i have 1K in paypal and i trust them for that much and no more ... i leave my money with them on faith and believe that since ebay/paypal are solvent, i will get my money back but if they go under, just like bitcoin, i am hosed

paypal spent 10 years building trust and they had all kinds of hacks, thefts, phishing and the like along the way, bitcoin is no different, it's a startup currency that is totally decentralized and yet is still chugging along

100 years ago banks printed their own currency and if you held it and they went under you got zilch, bitcoin is exactly the same, it's highly risky to buy it for speculation but once it smooths out it should work well as a medium of exchange, nothing more

sag, paypal is not an investment vehicle, it shouldn't be viewed as an investment, not now or ever, it is a _medium of exchange_ ... anyone who "invests" in bitcoin at this point is taking a huge risk, but people do ... remember there are a lot of people out there who bought apple at 700, gold at 1900 and silver at 50 ...

bitcoin is a new product with all the growing pains of a new product, my interest in it is based on the fact that people want this product, there is a demand, a strong demand ... maybe bitcoin will fail, but something very similar will replace it


----------



## sags

Bitcoiners seem to be divided into different camps.

Some consider bitcoins an alternative currency, some an investment, and some as an online payment method.

Any of the above has inherent problems.

An alternative currency would eliminate a country's ability to increase or decrease the money flow. A common currency has it's own problems when used by strong and weak nations.........as witnessed by the Euro.

As an investment, bitcoins appear to be purely speculative, depending mainly on finding someone willing to pay rising prices. It isn't difficult to imagine that as prices rise, the pool of interested buyers drops off.

As an online payment tool, I am not sure it is the best method. Creating debit/credit card transactions automatically and anonymously online would be a better solution. Something like the person goes online and pays for something from a vendor with their bank debit card and is immediately directed to their own bank for approval of the transaction and having it made into an anonymous transaction from the bank........rather than from the customer. This would alleviate concerns of sending personal banking information online.

Where there are problems..........there will be solutions.

I am not sure Bitcoin is the best...........or even a good solution.


----------



## fatcat

interesting article about local bitcoin trading
leaves no trail and as anonymous as cash
http://www.wired.com/wiredenterprise/2013/07/buttonwood?mbid=nl_wired_20130723


----------



## sags

Yea but........at some point they will want to trade the bitcoins for cash..............and that is when it will be reported to the government for tax purposes.

Also, any vendors who accept bitcoins for services or products, must declare the transaction for tax purposes.


----------



## sags

When the "value" of something goes up and down 50% in 15 minutes, it is all driven by speculation.

Business needs a stable currency environment.

Consumers need protection against fraud (chargebacks to vendors).

Bitcoins offer neither.


----------



## MrMatt

sags said:


> From what I have read, there have already been instances where the money vanished...........and there doesn't seem to be anyone with the legal jurisdiction to investigate and prosecute.
> ...
> There are a couple of people who posted they lost a lot of money when a website simply disappeared and now the same website is starting up again.


Sure there is, breach of contract, fraud, unauthorized access etc.

The problem is the designed semi-anonymous nature makes tracking them down difficult.


----------



## sags

Bitcoins look an awful lot like the sports card bubble, when limited production of cardboard was perceived to have value.

It lasted for a couple of years and then collapsed.


----------



## underemployedactor

Not that I want to reveal too much of my church lady sensibilities, but it has always seemed to me that the biggest beneficiaries of an anonymous currency like bitcoin would be those involved in criminal enterprises.


----------



## nathan79

sags said:


> Bitcoins look an awful lot like the sports card bubble, when limited production of cardboard was perceived to have value.
> 
> It lasted for a couple of years and then collapsed.


Except they're not alike at all.

Sports cards don't have an easily known value - you need to get them appraised or be an expert to know what they're worth. With Bitcoins, the price is posted online so everyone knows the value.

Unlike Bitcoins, you could never send sports cards instantaneously to anyone on the planet who has an internet connection.

Sports cards cannot be divided to 8 decimal places. You can't buy 0.0005 of a sports card, but you can buy as little or as much Bitcoin as you want.

Sports cards were simply never useful as a currency, whereas Bitcoins are.


----------



## marina628

Causalien said:


> You guys let this thread die? Bitcoin now at $347. China just got on board.


Last time I looked they were $115 guess I need to look into getting rid of mine.I do know many online gaming companies were starting to get serious about using them.In one of the forums I visit a guy has made a business out of it ,he takes the bitcoins and buys and sells takes 10% off top and sends paypal or wire for rest.


----------



## sags

marina628 said:


> Last time I looked they were $115 guess I need to look into getting rid of mine.I do know many online gaming companies were starting to get serious about using them.In one of the forums I visit a guy has made a business out of it ,he takes the bitcoins and buys and sells takes 10% off top and sends paypal or wire for rest.


There are a few companies that have been started for exchanging bitcoins.

What they discovered was the government considers them "money exchangers" and they are subject to the same regulations and licensing as other money exchanges. The expense of compliance in every jurisdiction, was more than these small businesses could handle and they disappeared.

Unfortunately, customer bitcoins disappeared along with them.


----------



## sags

nathan79 said:


> Except they're not alike at all.
> 
> Sports cards don't have an easily known value - you need to get them appraised or be an expert to know what they're worth. With Bitcoins, the price is posted online so everyone knows the value.
> 
> Unlike Bitcoins, you could never send sports cards instantaneously to anyone on the planet who has an internet connection.
> 
> Sports cards cannot be divided to 8 decimal places. You can't buy 0.0005 of a sports card, but you can buy as little or as much Bitcoin as you want.
> 
> Sports cards were simply never useful as a currency, whereas Bitcoins are.


Sports cards could never be a currency, because of extremely unstable valuations. That is the same problem bitcoins have.

You can send bitcoins anywhere in the world from an internet connection, but they still have to be transferred into the local currency somewhere.

As far as I can see, it is an undesired additional step in sending money, and doesn't solve any problem. 

Sending cash for cash already exists as money wire transfers and email transfers.

Anonymity isn't as secure as people have proclaimed. Silk Road website buyers/sellers had their bitcoins and money seized by the US Government.

Nobody, including the government cares about bitcoins flying around the world. If people want to trade bitcoins........what does it matter?

They care when the bitcoins are converted to fiat money. That is the weak point of bitcoins and where the government lies in wait for illegal activity and tax avoidance.


----------



## fatcat

sags, there are rabid pro and anti bitcoin people, you appear to be in the latter camp
i do think some of your assumptions about bitcoin are wrong

first, bitcoin is not an investment it's a currency ... do people invest in currencies ? ... yes ... are currencies volatile and risky investments ? ... absolutely ... do currencies swing wildly up and down ?, they sure do

bitcoin is a young currency, it is in the trust building stage and if it succeeds it will begin to become more stable and we will see less fluctuations in value i think ... like all currencies it is based on trust, as people trust it more, it will be more stable

but bitcoins primary purpose is as a mostly (but not entirely) occult digital currency that can be moved with lightning speed anywhere in the world ... and it operates free of the interference or machinations of any government (it is *extremely important to realize that bitcoin cannot be inflated or deflated like fiat money*, in that sense it is exactly like gold and like gold it is also "mined")

it's true that if you use an exchange, the government is regulating the movement in and out but there are many ways to get bitcoin anonymously and to spend it mostly but not completely anonymously

this is especially true if you move money in to bitcoin privately and then move it out fairly quickly, determining identity is possible in bitcoin but it is very difficult and arduous to do so

more and more businesses are accepting bitcoin every day which mean that there may well be enough goods and services to allow people to spend bitcoins without taking them out and converting

as transactions grow in volume it will be very, very difficult for governments to keep track of where this money is moving

if you buy coins privately and purchase using bitcoins you will be anonymous (unless you are selling mass quantities of drugs and the feds spends millions on a task force to hunt you down) but as far as i know the fbi still has not gained access to the silk road founders coins because only he has the keys (ownership) of the coins

see FBI proves seizing bitcoins _isn’t the same as owning them_

http://www.coindesk.com/fbi-proves-seizing-bitcoins-isnt-owning/


----------



## Eder

I send CAN$ into the USA & Mexico for free, so bitcoin doesn't solely own that spot.

I am old and don't really understand bitcoin...as I see it all bitcoins were created by computer farms but at the beginning a bunch were created quickly on some peoples pc to get the ball rolling (I think they cashed in huge and have run for the hills). Seems alot like online gaming gold sales...ie Ultima Online or Warcraft gold sales...real value occurs only if another perceives value as well.

What is to stop a rival bitcoin start up? Not much...no moat that I can see....at least the USD has a country backing it that will throw you in jail if you create more USD with a computer or video card.

What if the Netflix of bitcoin- like money starts up to replace the Blockbuster bitcoin algorithms...if a computer program convinces some people that a bitcoin is worth anything then I'm sure that younger nerds are already working on a bigger and better version. 

I think I'll sit this one out.


----------



## fatcat

let me also re-emphasize what i said earlier, bitcoin is a kind of holy grail currency (or store of value for causalien)

aside from speed and privacy and extraordinary "transportability" (for lack of a better term)

it is controlled by no government and like gold, _it cannot be inflated or deflated_, to many people, this alone is huge

it has many of the advantages of gold but does not share gold's major disadvantages, namely transportation and security

i think it is the first of what will be many digital currencies


----------



## donald

I'd sit this one out also.if bit coins are some good why aren't hedge funds into it or Goldman ect?
my guess it turns out like the tulip-worthless and a footnote in history.Anybody playing around with this stuff is a nut bag IMO.(asking to get hurt)


----------



## fatcat

Eder said:


> I send CAN$ into the USA & Mexico for free, so bitcoin doesn't solely own that spot.
> 
> I am old and don't really understand bitcoin...as I see it all bitcoins were created by computer farms but at the beginning a bunch were created quickly on some peoples pc to get the ball rolling (I think they cashed in huge and have run for the hills). Seems alot like online gaming gold sales...ie Ultima Online or Warcraft gold sales...real value occurs only if another perceives value as well.
> 
> What is to stop a rival bitcoin start up? Not much...no moat that I can see....at least the USD has a country backing it that will throw you in jail if you create more USD with a computer or video card.
> 
> What if the Netflix of bitcoin- like money starts up to replace the Blockbuster bitcoin algorithms...if a computer program convinces some people that a bitcoin is worth anything then I'm sure that younger nerds are already working on a bigger and better version.
> 
> I think I'll sit this one out.


so, your argument against bitcoin is that there will be better bitcoins coming along (even though you don't _understand_ bitcoin itself)

when the car came out you would have said "i'm not buying a car because someone will surely invent something better than a car" .. is that right ?

your logic impeccable (even if i take larger issue with your conclusions), someone probably _will_ invent something to rival bitcoin, but that says nothing about the here-and-now of bitcoin

at the moment, bitcoin IS the netflix of bitcoin, it may be upended but it is alone in doing what it does

oth, it clearly is not for _you_ and that's ok


----------



## fatcat

donald said:


> I'd sit this one out also.if bit coins are some good why aren't hedge funds into it or Goldman ect?
> my guess it turns out like the tulip-worthless and a footnote in history.Anybody playing around with this stuff is a nut bag IMO.(asking to get hurt)


good point, well said ... i hate a lot of that _newfangled_ crap too


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## donald

Fatcat,when the pizza delivery man starts excepting bit coins than maybe I'll think about it.


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## Greyhound86

It will be interesting to see what the US Government will do with the bitcoins they seized from Silk Road and if the Silk Road bitcoins they were not able to get access to (they dont have the key yet) just sit there or will someone eventually get access to them. If the US Govt decides to sell them, the huge numbers involved might cause a bit of havoc on the exchanges. 

Another interesting thing that I found in the links provided in this thread is that in recent months over 30% of bitcoin trades are taking place in China. Are those Chinese trying to get money out of the country through Bitcoin?


----------



## humble_pie

world's first bitcoin ATM - in vancouver - takes in $100,000 in cash in just its first week of operation, says the vancouver Sun.

http://www.vancouversun.com/100K+traded+through+Vancouver+Bitcoin+week+with+video/9145774/story.html


----------



## donald

What is your take humble pie?
You buying?


----------



## donald

Caus,I work to hard to mess with bit coins....until the companies on the big board accept it I'm out-kudos to the sole propiertier that sold that pizza,to my knowledge dominos pizza isn't accepting don't think Boston pizza does either,next time I'm ordering a pie I'm going to ask how many bit coins it is,Ill report back to you.
I have to respectfully disagree with you.


----------



## Causalien

Just wondering what you mean by big box.
Would paypal's adoption of bitcoin sway your position? Or does it have to be a retail store type like Walmart?


----------



## donald

Big board-stock market.


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## nathan79

I think it's only a matter of time until a large company like Amazon begins accepting Bitcoins.


----------



## fatcat

donald said:


> Fatcat,when the pizza delivery man starts excepting bit coins than maybe I'll think about it.


here you go donald ... http://pizzaforcoins.com/

though, why anyone would want to do this when plain old money or plastic is more efficient, i don't know ... 

so _now_, you can start thinking about it donald ...


----------



## donald

Cat don't think your following me big guy!what is this pizza companies stock symbol?
anywho I ain't touching bit coins,nothing personal.
I wish you long term luck investing in it.


----------



## fatcat

donald said:


> Cat don't think your following me big guy!what is this pizza companies stock symbol?
> anywho I ain't touching bit coins,nothing personal.
> I wish you long term luck investing in it.


never bought a bitcoin in my life and have no intention of doing so at the moment ... 

much too risky and volatile as an investment for my risk tolerance and level of knowledge (as are most currencies)

i only buy currencies when i need to spend them and so far i have no need or use for bitcoin in any transaction ... that may change at some point

in the meantime i see the usefulness and power that digital currency represents ...

and good luck to you too donald thank you


----------



## donald

Wait,were on the same side of the field!lol.....I thought you had some skin in the game,that was a useless debate.


----------



## james4beach

fatcat said:


> it is extremely important to realize that bitcoin cannot be inflated or deflated like fiat money


Until a mathematician discovers how to break the crypto algorithm

Bigger threat though, I think, is money being pulled out of the bitcoin market. Right now it's like a midcap stock that's enjoying a huge price rise as money floods in (limited supply of shares, high demand). That same dynamic sometimes makes penny stocks shoot sky high, but it doesn't mean they're fundamentally a good investment

I can imagine various things that could suddenly make that money leave bitcoins: the need for the cash back (e.g. economic downturn); new government regulation of the exchanges that are now growing huge; an exposed weakness in the crypto algorithm; etc


----------



## braintootired

I'm going to get a bit geeky here, but breaking BitCoin reduces to breaking SHA-256, which was designed by the NSA.

Recently another NSA-designed algorithm, a pseudorandom bit generator called Dual_EC_DRBG, has been suspected of having a _backdoor_ which is known to the NSA thanks to Snowden's leaks.

I'm surprised that the crypto geeks out there like BitCoin, given the strong ties to the NSA. If a future Snowden-like leak even hints that the NSA has installed a backdoor on SHA-256, BitCoins will instantly be worth nothing.


----------



## fatcat

Donald, I have never said that bitcoin wasn't, at the present, a risky investment ... Its new, unfamiliar, hard to understand and prone to speculation ... It is not the kind of thing I would ever own as an investment. What I have said is that I can see the tremendous value it represents. This is something people really want. It is conceptually very well made. The underlying structure is sound. As it matures and gains trust it may well become a trusted and well used way to do business and move money around.

James, take a deep breath, read the article I linked a few posts back. Bitcoin is based on the RSA algorithim and a so far wide and dedicated group that scrutinizes Bitcoin carefully. It is being watched by many, many pairs of eyeballs and so far has proven to be solid. 

I don't understand the math but I get the concept and it is so far, solid.

I amazed that so many people knowing so little about it have such strong convictions about its imminent failure.

You guys need to actually read something about Bitcoin before you start dissing it.

Have an open mind to new ideas. Do the research.


----------



## donald

bottom line-any investment where math quants can't hack or destroy is a good enough reason for me to pass!you just know there are thousands of geeks across America right now spending 24/7 trying to hack bit coins(I don't understand anything tech I'm not foolish/naive enough not to believe that can't happen)
I dont understand briantootireds post but that is exactly why this stuff is so dangerous!
Fatcat seems to know a lot about it and even he won't touch it.
Tulips/Bennie baby's/bit coins it's all the same IMO.


----------



## james4beach

Cryptographic systems are notoriously difficult to implement. Even if it relies on well established algorithms, there's still a whole separate issue of implementation and sometimes it takes very subtle problems in implementation to render a crypto system useless. Saying "it's based on RSA and RSA is solid" is very naive. There's a lot more to crypto systems than that and there are a ton of crypto systems that have vulnerabilities discovered, even though they rely on an algorithm that is as of yet unbreakable.

I'll give you one example. No matter how solid the bitcoin crypto is (leaving aside the important fact as I mentioned that it's all about subtle implementation details) it ultimately depends on the quality of the operating system's random number generator. The Windows RNG is highly suspect, so anyone generating bitcoins on Windows may be generating worthless coins, or coins of severely diminished worth. Linux kernels of certain versions also have broken RNG implementations, again rendering very weak keys.

It's fine to speculate on bitcoins, but I caution against putting too much faith in it. Crypto systems are very complex and very difficult to get right even if the basic algorithm is sound. Small implementation details can render crypto ineffective, and can take years to come to light. Further the quality of the operating system's random number generator is a key factor in making a strong key, and therefore, a strong bitcoin. Experts have suggested that the NSA may have backdoors in OS random number generators. Windows is directly suspect. Linux is also suspect as a random number weakness was found in a previous kernel version.

I didn't say there's an imminent failure in bitcoin, I'm just warning of risks


----------



## james4beach

By the way, a vulnerability in the Android random number generator was already found (for bitcoin generation)
http://www.digitaltrends.com/mobile/how-to-fix-bitcoin-android-bug/
http://arstechnica.com/security/201...droid-crypto-flaw-used-in-5700-bitcoin-heist/

As I mentioned, past random number generation problems were found in Linux, and Windows has always been highly suspect too.

This article I linked is a great illustration of what I'm talking about. It's not just about the "algorithm", it's all about the *implementation* and the whole crypto system. This also includes the quality of random number generation. There's a lot of moving parts in this, and it's very complicated... know what you're getting into.


----------



## james4beach

Causalien said:


> A backdoor would mean that there is an input sequence that will collide with every other input sequence. a.k.a The master key.


That's not entirely true. A backdoor can also mean something more subtle, that somebody knows a way to reduce the computational complexity of searching for a key collision. Currently it's believed that a person has to try a huge number of possibilities, 2^256 before finding the match (considered impossible). But knowledge of a weakness in the algorithm can reduce that complexity, say someone reduces to a small enough number that it becomes feasible to search & break. *That* is a backdoor too ... a reduction in the difficulty of searching.

SHA-2 algorithm, which includes SHA-256, was designed by the NSA. I will repeat, *it was created by the NSA's mathematicians*. The NSA also recommends that you use it.

Bitcoin relies on an algorithm created by the NSA.

So I find it kind of silly that this Bitcoin thing is supposed to be the new currency to use if you don't trust government. By using it, you're trusting government.


----------



## fatcat

james4beach said:


> I didn't say there's an imminent failure in bitcoin, I'm just warning of risks


and that warning might actually have some traction if it weren't for your rampant, shifting, mutating paranoia regarding almost every financial instrument and corporate entity on the planet ... 

you really aren't an investor james, you are a _saver_, let's be frank here, nothing wrong with that, savers are good people who work hard and want to see every penny of their money returned 

investors take risk and you are about as risk-averse a person as exists on this forum which is also fine .. i think i am pretty risk averse myself

since i don't have the skills, i will pass on the underlying technical discussion of bitcoins innards ... when the internet kicks the rsa system to the curb, then i'll know bitcoin has problems 

bitcoin has gone through crisis after crisis and weathered them all ... it still stands ... it is open sourced and monitored by thousands of smart people on a minute by minute basis ... 

the best way to guard a meaty bone is to surround it with 10 hungry people

and i _never suggested nor do i now_ that anyone should put a large amount of money in bitcoin, i am interested in it's political implications as much as anything which i believe can turn out to be significant

an occult, lightning fast, borderless, stateless currency that can't be inflated or deflated and is controlled by no government entity ?

this will be something to watch


----------



## andrewf

^ Had bitcoin been more prominent a few years ago, maybe governments would have found it harder to shut down Wikileaks's source of funding. 

bitcoin is interesting as a means of exchange. It is not a reliable store of value, so it cannot replace currency. And as a medium of exchange, you don't need a large float of bitcoin.


----------



## braintootired

james4beach said:


> That's not entirely true. A backdoor can also mean something more subtle


Exactly. Look at the history of DES and the NSA's involvement to make it resistant to differential cryptanalysis.


----------



## andrewf

Those are your definitions. Here's wikipedia's:



> Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country.[1][2][3] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value;



And on Currency:



> A currency (from Middle English curraunt, meaning in circulation) in the most specific use of the word refers to money in any form when in actual use or circulation, as a medium of exchange, especially circulating paper money.


Money is currency but not all currency is money.

Bitcoin is a currency. Gold is not money, because it may be used as a store or value or even in some limited areas as a medium of exchange, it is not used as a unit of account. USD are money, as it fills all three roles. Yes, it declines in value over time, but it has a predictable value in real terms, whereas gold does not.


----------



## andrewf

From wikipedia:



> A unit of account is a standard monetary unit of measurement of value/cost of goods, services, or assets. It is one of three well-known functions of money.[1] It lends meaning to profits, losses, liability, or assets.


Gold is not currently a unit of account. It could be, but it isn't currently. Gold was once money, but isn't any longer.

Gold as a store of value is somewhat questionable. It has, for instance, lost ~20% of its value in the past two years. Over the long term it retains value as a real asset, but it's not a good way of storing purchasing power today for use in six months, with any predictability. Having a stable value in the short run is much more useful than a stable value in the long run at the cost of short term variability.


----------



## andrewf

I don't think gold would have all that much value in the event of nuclear war. But why worry about that? In the event of nuclear war, you're dead or dying.


Real assets are the only long term store of value, but they are not good as a short term store of value, due to bubbles. With asteroid and ocean mining, it's possible that the world stock of gold could rise dramatically, destroying the value of the metal. Gold's value relies on the confidence fairly just about as much as dollar bills do. Gold's practical use would justify a value orders of magnitude below what it trades at.


----------



## sags

Yet another security breach and a loss of 1 Million dollars.

So, the owner of the website claims the site was hacked and lost the bitcoins, but he isn't going to report it to the police.

How do his customers know if he was hacked.........or just decided to take off with their coins?

It probably wouldn't do much good to go to the police anyways. They don't have the resources to track around the world to find out who the hackers are.

Bitcoins have become a great opportunity for thieves, fraudsters and hackers to apply their skills, and not have to worry about law enforcement coming after them.

http://www.theguardian.com/technology/2013/nov/08/hackers-steal-1m-from-bitcoin-tradefortress-site

On the discussion of instant electronic bitcoin transactions, it now takes a minimum of 4-8 weeks to get cash for your bitcoins from Mt. Gox, the world's largest bitcoin exchange. People can still send them money to buy bitcoins though.

How can you take bitcoins seriously.......??


----------



## james4beach

Yeah if someone is so concerned about fiat currency I think they should buy physical gold. Not only is the price relatively low now (as opposed to Bitcoins at new all time highs) but you don't have worries about algorithmic integrity, and gold is easily traded instantly for cash. It's also been around longer than 2 years


----------



## favelle75

I have never invested directly into Bitcoin per se, but I have been mining it for almost a year now. Started when it was around $40/BTC so this current run up has been nice. And I do play the market with my coins, selling at the current high of about $360 a few days ago and then buying back in at $299 during the mini-correction. Nice tidy profit for doing nothing.


----------



## marina628

I got rid of mine yesterday ,wont be getting back in as I said I got a few with idea to use them to fund a poker room. I do know many of the gaming companies and players alike like ewallets and bitcoin serves this space well. Go to any gaming forum and people are always doing money swaps taking money from one poker room account trade with a friend who will fund another for them. USA probably will go after this like it did the banks when they tried unsuccessfully to stop Americans from gambling online. So many companies have popped up in this space to process gambling payments for housewives and billionaires alike who are not wanting to break the law but love to gamble.


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## andrewf

Is it still cost effective to mine? There is specialized hardware now that can outperform generic CPU/GPU.


----------



## fatcat

sags said:


> Yet another security breach and a loss of 1 Million dollars.
> 
> So, the owner of the website claims the site was hacked and lost the bitcoins, but he isn't going to report it to the police.
> 
> How do his customers know if he was hacked.........or just decided to take off with their coins?
> 
> It probably wouldn't do much good to go to the police anyways. They don't have the resources to track around the world to find out who the hackers are.
> 
> Bitcoins have become a great opportunity for thieves, fraudsters and hackers to apply their skills, and not have to worry about law enforcement coming after them.
> 
> http://www.theguardian.com/technology/2013/nov/08/hackers-steal-1m-from-bitcoin-tradefortress-site
> 
> On the discussion of instant electronic bitcoin transactions, it now takes a minimum of 4-8 weeks to get cash for your bitcoins from Mt. Gox, the world's largest bitcoin exchange. People can still send them money to buy bitcoins though.
> 
> How can you take bitcoins seriously.......??


i wonder how to take you seriously ?

do have any idea how many gold and silver coins are faked, counterfeited and stolen every year ?
how many coin dealers and even individuals are robbed ?
how many "gold" bars sitting in vaults are filled with tungsten ?
the fraud and theft associated with precious metals is rampant, rampant

and you want to compare this to bitcoin ?
seriously ?

how about phishing, trojans and all manner of thefts with small business and personal bank accounts every year ?
atm skimmers ?
counterfeit bills ?
i could go on

all money has theft and graft and corruption, why would bitcoin be any different ?

the guy who got busted for silk road has not given over his private keys and that 92-million of bitcoin is untouchable and unusable except by him
in fact he can probably still spend it in prison by simply handing over the keys to whoever he wants for products on the outside


----------



## fatcat

james4beach said:


> Yeah if someone is so concerned about fiat currency I think they should buy physical gold. Not only is the price relatively low now (as opposed to Bitcoins at new all time highs) but you don't have worries about algorithmic integrity, and gold is easily traded instantly for cash. It's also been around longer than 2 years


yeah, but as i just said ... there are huge problems storing and securing gold

you can put it in the ground but you risk metal detectors
you can put it in your home safe but you risk robbery
you put it in a safe deposit box and the government can with the stroke of a pen bar access to every safe deposit box in the country pending audit if they so chose?

gold presents huge problems for storage transport and security and even spending especially if an ounce goes to 5000 ... your gonna down to the swap meet when times are tough carrying around your ounce of gold and yell hey who wants to buy an ounce of pure gold ?

i'd rather have a usb stick with encrypted bitcoins and thus unusable until i handed over the private keys

all money presents problems including bitcoin but lets not conveniently overlook all the problems associated with gold and fiat money


----------



## nathan79

andrewf said:


> Is it still cost effective to mine? There is specialized hardware now that can outperform generic CPU/GPU.


It's hardly worth mining now, IMO. I gave up mining a year ago when difficulty began to skyrocket, and my GPU would be pretty much worthless for mining today. Serious miners have moved to ASICs. At the rate difficulty is rising, most ASICs sold today will be obsolete by next year.


----------



## sags

If your bank account gets hacked, the bank will replace the funds.

If your credit card gets stolen and used, the bank will replace the funds.

Most people buy gold and silver coins from reputable dealers, who know the difference between real and counterfeit coins.

Gold bullion can be purchased at the Royal Canadian Mint and it is stored there. 

Bitcoin exchanges get hacked...........and nobody replaces customer money.

Nobody has yet addressed the conundrum for bitcoins.

As they are now at record high prices...........everyone who used bitcoins in the past to purchase things, comes out the loser.

The guy who paid $25 worth of bitcoins for the pizza.............was an extreme example, but it is true for all purchases.

When a "currency" or "store of value" continues to rise in price, people stop spending them and hoard them anticipating higher prices in the future.

Unless bitcoins are being spent in business commerce, prompting retailers to accommodate the demand, what is the value of them?

Currently, people are acquiring bitcoins buying and selling to each other.

Some people have invested a lot of money into bitcoins............and they made public announcements about their purchases. They won't be making any public announcements when they decide to cash out and take their free money.

In my opinion, bitcoins are nothing more than a technically gussied up ponzie scheme. 

Those who got in first (inventor, early adopters) will make a pile of free money from those who bought later.

It could be the greatest ponzie scheme of all time.

Maybe that is why Satoshi wanted to remain anonymous.


----------



## Eder

For those who missed easy money when Bitcoin started there's Litecoin...already increased in value 4x as fast as Bitcoin.

http://www.wired.com/wiredenterprise/2013/08/litecoin/

And then there's Friecoin, The Lebowski, PPCoin, Primecoin, Ven...the parade of virtual money is getting crowded. I'll stick to USD, CAN & Pesos.


----------



## sags

Peter Schiff called bitcoins Tulipmania 2.0 today on CNBC.

http://www.cnbc.com/id/101192216

I heard many of the same kinds of arguments regarding "tax reduction schemes", when they were all the rage a couple of years ago.

People said taxation was unfair and it was their patriotic duty to avoid paying them. They said "this" wasn't proven or "that" wasn't proven.

People convinced themselves the schemes were legal and believed all the "we have a legal team standing by" malarkey coming from the originators of the schemes.

Well..........the people got their tax refunds.........intially...........and then the CRA re-assessed their taxes and demanded the money, with interest and penalties. The schemes violated many regulatory rules and the promoters were convicted and fined the maximum amounts.

But, the investors lost all their money. They recovered nothing.

As Peter Schiff says..........people are buying bitcoins because they think they will be worth more some day.......and maybe they will for awhile. But someday the bubble will implode on itself.............the promoters and early adopters will pocket their money and move on to something else.........and the majority of people will lose everything they invested.

That is what always happens to pyramid and ponzie schemes.


----------



## sags

Another day........another bitcoin exchange disappears with everybody's money.

This one in China.........where bitcoin promoters have pointed to much "success" in spreading the word.

http://www.theregister.co.uk/2013/11/12/bitcoin_gbl_hong_kong_collapse/


----------



## HaroldCrump

The biggest pump for Bitcoins these days on the entire Internet is Max Keiser.
He calls himself a "Bitcoin Vigilante"
You should hear him bellow, and spew vitriol against the fiat currencies, and even against precious metals (gold, silver).

From what I recall, he has ridden the Bitcoin train since $10 or somewhere in that range.


----------



## james4beach

Zerohedge is also pumping bitcoins, which I find really silly... these are people who say they don't trust the government, yet apparently they trust an electronic scheme based on government technology (SHA-2)

For the record: if someone wants an electronic investment and insists on buying now, I think *ZCN, CEF.A, or MNT* are safer than bitcoin and have better long term prospects. I'm talking not just about the share price but the reliability and integrity of the trading system. That's for all you guys saying that I'm negative on everything... don't say I never have anything positive to say about stocks (ZCN)


----------



## james4beach

sags said:


> Another day........another bitcoin exchange disappears with everybody's money.


A big Australian bitcoin bank also recently disappeared and client money evaporated. From this article,

Business Insider noted just a few days ago that an Australian Bitcoin bank, "Tradefortress," closed with $1 million in Bitcoin funds missing. The bank turned out to be operated by an 18-year-old boy who lived in a block of apartments in Hornsby, a suburb of Sydney.


----------



## HaroldCrump

james4beach said:


> For the record: if someone wants an electronic investment and insists on buying now, I think *ZCN, CEF.A, or MNT* are safer than bitcoin


You are missing the point about Bitcoins then.
The whole point is to invest in something that cannot be manipulated by governments and central banks.
The Bitcoin vigilantes claim that PMs are being majorly manipulated, esp. gold and silver.

MNT is a govt. owned crown corp. That is clearly a non starter investment for someone that believes in the fundamental premise of Bitcoin.
Holdings like CEF.A and CGL are supposed to be backed by physical holdings in a vault.

Yet, we have seen criminal charges against institutions (such as JPM) that claimed their private PM funds were backed by physical metals in a vault, but those claims were found to be fraudulent.
They were even charging their customers storage and handling fees for stuff that didn't even exist.

I don't see CEF, MNT etc. as alternatives to Bitcoins.
CEF and MNT are basically pure bullish bets on gold.


----------



## nathan79

Jeez, enough with the anti-Bitcoin trolling in this thread. sags, whatever your agenda is might want to relax a little... you obviously don't know much about how Bitcoin works. Go outside and get some fresh air instead of spending all day trolling the web for anti-Bitcoin articles.


----------



## HaroldCrump

I don't think sags is fear mongering about Bitcoins without cause.
He is pointing out that right now the Internet is rife with Bitcoin fraud.

None of the banks (at least in Canada) are dealing in Bitcoins yet.
You can't use it as a currency right now.

All you can do is trade it with other speculators.

Like the early days of any new asset class or industry, it is rife with fraud.


----------



## fatcat

sags said:


> Peter Schiff called bitcoins Tulipmania 2.0 today on CNBC.
> 
> http://www.cnbc.com/id/101192216
> 
> I heard many of the same kinds of arguments regarding "tax reduction schemes", when they were all the rage a couple of years ago.
> 
> People said taxation was unfair and it was their patriotic duty to avoid paying them. They said "this" wasn't proven or "that" wasn't proven.
> 
> People convinced themselves the schemes were legal and believed all the "we have a legal team standing by" malarkey coming from the originators of the schemes.
> 
> Well..........the people got their tax refunds.........intially...........and then the CRA re-assessed their taxes and demanded the money, with interest and penalties. The schemes violated many regulatory rules and the promoters were convicted and fined the maximum amounts.
> 
> But, the investors lost all their money. They recovered nothing.
> 
> As Peter Schiff says..........people are buying bitcoins because they think they will be worth more some day.......and maybe they will for awhile. But someday the bubble will implode on itself.............the promoters and early adopters will pocket their money and move on to something else.........and the majority of people will lose everything they invested.
> 
> That is what always happens to pyramid and ponzie schemes.


lets see if have this right ? ... the guy selling gold and silver and other precious metals doesn't like his competitions product ... how shocking


----------



## fatcat

HaroldCrump said:


> I don't think sags is fear mongering about Bitcoins without cause.
> He is pointing out that right now the Internet is rife with Bitcoin fraud.
> 
> None of the banks (at least in Canada) are dealing in Bitcoins yet.
> You can't use it as a currency right now.
> 
> All you can do is trade it with other speculators.
> 
> Like the early days of any new asset class or industry, it is rife with fraud.


+1 from me ... for gods sake people take a deep breath here ...

bitcoin wasn't designed for speculation, at this stage it is expensive (though i think it may one day look cheap), hard to use and understand and thus ripe for fraud and all manor of shenanigans 

get the freaking bubblemania / ponzi scheme crap out of your heads and look at the technology and the political implications of the technology

look at its potential for disruption and change ... which is *massive*

forget the idea of buying at 300 and watching it go to a 1000

look at what else you can buy as a result of the _disruption_

don't buy any .. just look at what it has the potential to do 

for the love of god will you people calm the **** down and stop spouting such uninformed nonsense


----------



## fatcat

james4beach said:


> A big Australian bitcoin bank also recently disappeared and client money evaporated. From this article,
> 
> Business Insider noted just a few days ago that an Australian Bitcoin bank, "Tradefortress," closed with $1 million in Bitcoin funds missing. The bank turned out to be operated by an 18-year-old boy who lived in a block of apartments in Hornsby, a suburb of Sydney.


small businesses across the united states are _everyday_ losing hundreds of thousands of dollars to gangs that successfully place trojans on the company it systems (often because small business don't have the tech to do good security) ... 

banks don't make it up, it isn't guaranteed by anyone ... this money is gone, the business is out the money and it ain't never coming back 

yet somehow you expect me to buy the idea that bitcoin is more risky for account fraud ?

money is stolen by technological malfeasance every second of every day worldwide but somehow bitcoin money is unique in "evaporating" .. 

bitcoin is uniquely vulnerable ? 

this is a crock james, pure horse####


----------



## james4beach

fatcat I don't see the relevance of small businesses that lose money to fraud.

From an investor perspective, I think we're talking about places where you keep 'money' or 'resources'. Examples are bank accounts, brokerage accounts, safe deposit boxes, or Bitcoin banks.

You put money in a Canadian bank account, and the money doesn't disappear.
You put money in a Canadian brokerage, and the money doesn't disappear.
You put gold in a safe deposit box, and the gold doesn't disappear.
But you put money in a Bitcoin bank, and the whole bank can disappear overnight

What am I missing here?


----------



## andrewf

I think people are desperately hoping that bitcoin can be anything other than a medium of exchange. It never can be. It is totally unreliable a store of value. Fiat currencies have governments backing them. PMs have intrinsic value. Bitcoins are entirely abstract, intrinsically worthless entities not backed by any government. It relies totally on the greater fool, artificial scarcity, and the confidence fairy. The only legit use for bitcoins I can imagine is buy bitcoin, and immediately exchange bitcoin for goods or services. Perhaps as a way of reducing the friction of international transactions.


----------



## favelle75

andrewf said:


> I think people are desperately hoping that bitcoin can be anything other than a medium of exchange. It never can be. It is totally unreliable a store of value. Fiat currencies have governments backing them. PMs have intrinsic value. Bitcoins are entirely abstract, intrinsically worthless entities not backed by any government. It relies totally on the greater fool, artificial scarcity, and the confidence fairy. The only legit use for bitcoins I can imagine is buy bitcoin, and immediately exchange bitcoin for goods or services. Perhaps as a way of reducing the friction of international transactions.


Wonder how the Greek people felt when their "government-backed" money was hijacked from their savings accounts?


----------



## favelle75

andrewf said:


> Is it still cost effective to mine? There is specialized hardware now that can outperform generic CPU/GPU.


I just mine litecoins and convert them to BTC. Litecoin mining is still dominated by GPU's and I'm clearing about 15 LTC/day (@ $4/each).


----------



## andrewf

I would hold bonds, savings accounts, etc. denominated in dollars. I would not hold them denominated in bitcoins. The predictability of price (real terms ie, purchasing power) is more important than the purchasing power tending to rise over time. Why? Because predictability is important to setting real interest rates. Debts denominated in currency with highly variable purchasing power is very risky for both the borrower and the lender.


----------



## fatcat

andrew, no one is suggesting that you are anyone hold the bulk of your liquid assets in bitcoin ... you would be a fool to do so

more than anything for your cash portion, you want to be sure it is _returned_ ... you want to make sure you will get it back, and you don't want it to fluctuate unpredictably so you go with proven time honored assets

bitcoin at present isn't that place to be ... in 20 years that might be a different story

james, i don't disagree that the places you outlined are safer to hold assets than bitcoin but my point is that all assets are vulnerable and though bitcoin has had trouble with exchanges and wallets that have been hacked, the fault lies with the poor security of the exchanges not with the integrity of the coins themselves ... there is a huge difference ... you and others keep using wallet and exchange break-ins as an _indictment of the coins themselves_ and this _false_

people break into bank accounts and steal money all the time but the underlying money remains solid

if you have a large amount of bitcoins you can store them offline and completely unconnected to the internet which eliminates any possibility of theft, exactly the same as you would go with a stash of gold coins

the coins are vulnerable to theft and the bitcoins are vulnerable to technological failure if you don't back them up or lose the keys

it's worth remembering that the fbi, as far as know, still haven't recovered the 92 million worth of coins from the silk road guy ... only he controls them (though control is probably the wrong word if he is being watched 24/7 probably and i am sure is unable to speak privately with anyone)


----------



## james4beach

fatcat said:


> my point is that all assets are vulnerable and though bitcoin has had trouble with exchanges and wallets that have been hacked, the fault lies with the poor security of the exchanges not with the integrity of the coins themselves ... there is a huge difference ... you and others keep using wallet and exchange break-ins as an indictment of the coins themselves and this false


You've got a point there. Yes so far, the problems all lie with exchanges, bitcoin banks and platform troubles such as that Android security vulnerability.

I agree that so far, there has been no demonstrated problem with the integrity of the bitcoin itself (that is -- the math looks solid, currently). This is good, and it could have a future.

Mind you, I'm quite certain that with millions$ of client funds disappearing here and there, eventually the government is going to make the point that they need to regulate this to protect people. It's coming.


----------



## andrewf

CAD has been highly predictable in real terms. I challenge you to find anything else that has had as predictable a real value, perhaps leaving aside other fiat currencies.

Debt is an essential part of the modern economy. The alternative to debt is feudalism.


----------



## fatcat

james4beach said:


> You've got a point there. Yes so far, the problems all lie with exchanges, bitcoin banks and platform troubles such as that Android security vulnerability.
> 
> I agree that so far, there has been no demonstrated problem with the integrity of the bitcoin itself (that is -- the math looks solid, currently). This is good, and it could have a future.
> 
> Mind you, I'm quite certain that with millions$ of client funds disappearing here and there, eventually the government is going to make the point that they need to regulate this to protect people. It's coming.


let me for once, try to be brief ... 

i think that the reason bitcoin (or another similar "virtual currency") will eventually suceed ... people _want_ this currency ... 

the us and canadian dollar, gold, silver diamonds, whatever, all have huge problems associated with them ... inflation/deflation, security, lack of speed, lack of privacy ... 

bitcoin solves many of these problems .. 

i have no doubt that there will arise a worldwide virtual currency which will be widely used and supported ... 

i think governments and even gold miners are plenty well aware of the disruptive potential of bitcoin ... they sure should be


----------



## fatcat

bitcoin at 500
china is going mad for bitcoin
i smell a correction
great article and attached pdf on zerohedge.com 
http://www.zerohedge.com/news/2013-11-17/bitcoin-rises-over-500


----------



## braintootired

How trustworthy are the bitcoin exchanges?


----------



## fatcat

Causalien said:


> This is just the beginning. What's coming next, is whether or not US will regulate its bitcoin economy to death in america and get left in the dust in terms of technology and adaptation. Right now, it doesn't seem like the rest of the world cares about what usa think as the volume in US based exchange (only 1) dies down to an insignificant value and barely survives. Or will greed take over because the politicians will see that they are missing out on a huge tax revenue because the transactions are happening in other countries and hence un-taxable.
> 
> A 1% small hedge fund allocation should bring the coins to $1300, the Winklevoss ETF establishment will open it up to the general market, which has an unknown impact that wasn't discussed. The Chinese involvement wasn't predicted. So, the current rise in price has nothing to do with the USA.
> 
> In either way, bitcoin is still in the same position as before. It will either go to $0 USD per coin, or it will become the next world reserve currency. The closer the price gets to $10,000, the firmer the world reserve currency reality is.


agree completely ... it will either explode spectacularly (and immediately be replaced by a similar and hopefully better product) or 500 is going to look cheap 

on the other hand it might correct spectacularly, demonstrate robustness by remaining intact and rebuild again and not need to be replaced by a new product

as soon as someone finds a secure way to easily do reliable peer to peer (either in person or on-line) transfers this thing will gallop away from everyone ... the anonymity of money with the ability to move it anywhere in the world in a blink ... wow the authorities are going to go apesh#t and scream for regulation

but they really can't regulate it if good peer to peer transfers can be conducted

i would start to looking out for instances of massive dos attacks that actually emanate from various government bodies if bitcoin really continues to prove robust


----------



## braintootired

Causalien said:


> Depends. Which one are you inquiring about?


I don't know anything about them, so let's say the top Google hits, MtGox and CaVirtex?

Wow it's at 575 USD now.


----------



## MoreMiles

At one time, tulip bulbs could be sold for more values than houses.

What is bitcoin? Some thing created out of thin air, backed by a hope that some other people will pay more than you. Don't you wish you are the creator for that thin air? It's like a cult, if you are the early adopter, then you get all these other followers to drink koolaids for you.


----------



## sags

I doubt you can open a bank account without producing a SSN identification. Banks have to report transactions to the government, and aren't in the practice of aiding people who feel the need for an "anonymous" bank account, for a good reason.

If the customer with the "anonymous" bank account is involved in illegal activities..........the bank would be held culpable.

Here is an article from Forbes magazine regarding bitcoins and bank accounts.

As one bitcoin business owner said........the bank shuts you down AND blacklists your SSN.......so you can't even open a personal account.

Swim carefully in these shark infested waters.............

http://www.forbes.com/sites/kashmir...ies-and-entrepreneurs-cant-get-bank-accounts/


----------



## sags

Bitcoins are rising in value every day, it seems.

On the surface that would appear a good thing.........for those who bought them cheaper.........some people for as little as 10 cents each.

But as an alternate currency.........it raises a lot of questions.

Why would anyone spend bitcoins..........when they are going up in value every day?

How does bitcoin expansion into main stream business get accomplished........if everyone is hoarding their bitcoins and there is no demand side for the business?

A conundrum.............


----------



## MrMatt

Causalien said:


> I agree. But I also have the same realization about stocks. Replace the word bitcoin with the word stock and you get the basic premises of of our capitalist system.


But a stock isn't something created out of thin ari, backed by a hope some other people will pay more than you.

A stock is a small fraction of a company. Generally purchased because of the belief that the companies increase in value will be returned to you in some way.
I don't see how a bitcoin is in any way the same as a few shares of stock that actually pay me money every few months.


----------



## nathan79

sags said:


> Why would anyone spend bitcoins..........when they are going up in value every day?


Because they want to, or more likely need to. Most people are in debt. If they realize they could pay off their credit cards or buy a new car with their Bitcoins, don't you think they would?

Not many people have the discipline or luxury not to spend them.


----------



## fatcat

sags said:


> I doubt you can open a bank account without producing a SSN identification. Banks have to report transactions to the government, and aren't in the practice of aiding people who feel the need for an "anonymous" bank account, for a good reason.
> 
> If the customer with the "anonymous" bank account is involved in illegal activities..........the bank would be held culpable.
> 
> Here is an article from Forbes magazine regarding bitcoins and bank accounts.
> 
> As one bitcoin business owner said........the bank shuts you down AND blacklists your SSN.......so you can't even open a personal account.
> 
> Swim carefully in these shark infested waters.............
> 
> http://www.forbes.com/sites/kashmir...ies-and-entrepreneurs-cant-get-bank-accounts/


you say "be careful about dealing with banks" .... really ... seriously ? .... is that because bitcoin is a direct threat to their business model ? ... of course they are going to be difficult, they are helping you no longer need their product so yeah they are going to be difficult ... this is not news 

and they are unlikely to be able to legally shut down your personal account (business maybe) but i doubt the law will allow someone to be permanently "de-banked" because they bought or sold bitcoins

there are all kinds of ways to buy bitcoins many of them directly

i.e. two individuals can meet and buy/sell bitcoins privately

as to the issue of selling or not, the idea is to buy an amount of bitcoins that will be useful to you for goods and services ... it is exactly like the many of us who hold us dollars in an account for investing but also for vacations and purchasing goods and services 

bitcoin should be thought of a another currency account that gives more flexibility for buying and selling

anything beyond that is pure speculation and you can expect to maybe get rich or lose your shirt

if you buy bitcoins privately and store your keys offline your bitcoin account is completely safe and completely private


----------



## andrewf

Causalien said:


> I agree. But I also have the same realization about stocks. Replace the word bitcoin with the word stock and you get the basic premises of of our capitalist system.


No, these are not the same. Bitcoins are not productive assets and yield 0. Stocks are claims on real assets and have earnings yield. Bitcoins are more like gold. Making money on bitcoin relies on a greater fool buying them from you for more than what you paid. If you're not trying to make money on bitcoin, you should buy just enough for what you need and trade for goods/services with as short a delay as possible.


----------



## fatcat

andrewf said:


> No, these are not the same. Bitcoins are not productive assets and yield 0. Stocks are claims on real assets and have earnings yield. Bitcoins are more like gold. Making money on bitcoin relies on a greater fool buying them from you for more than what you paid. If you're not trying to make money on bitcoin, you should buy just enough for what you need and trade for goods/services with as short a delay as possible.


bitcoin is an immature currency and susceptible to wide variations in value ... IF it gains more trust, the price swings will lessen and it will settle down and then you will be able to hold for longer terms as a reserve

much of whether or not it settles down and price swings lessen will have to do with how successful authorities are in "regulating" it ...

but of course bitcoin is designed in such a way that it can't be totally regulated

perhaps it will end up like the hawala system where trusted people will move the money around outside the established system


----------



## andrewf

Caus, a stock is still a claim on a real asset that produces income. Whether stocks are perfectly safe or not is immaterial. Bitcoins do not produce income and are not a claim on real assets. If you bought all the shares in a company, you would own all the residual value of the company less its liabilities. If you bought all the bitcoins, all you would have is some data. Shares and bitcoins are not the same thing. At least gold is shiny and good for conspicuous displays of wealth.

Bitcoins are not productive assets. They are perhaps useful tools. But holding a bitcoin will not net you additional bitcoins. It's like gold in that it has zero yield--the only way to make a return is to sell them for more than you paid for them.


----------



## andrewf

When SHTF, what makes you think bitcoins would have any value? You can't heat a home with bitcoins or feed your family. They'd be as worthless as paper money.


----------



## andrewf

Also, you seem to be getting confused by the fact that bitcoins are mined. The productive asset in this case being computers. They are producing useful work, not the bitcoins themselves. It's like confusing gold being a productive asset because mining trucks, excavators and diesel are used (and get paid) to produce it.


----------



## sags

Bitcoin prices touched $788 today.......so they went up $400 in a few days.

It has the signs of a classic "pump and dump" scenario.


----------



## nathan79

sags said:


> Bitcoin prices touched $788 today.......so they went up $400 in a few days.
> 
> It has the signs of a classic "pump and dump" scenario.


Same thing people said when it hit $35... then $300. It corrected and came back stronger each time.

It will correct again eventually and stabilize, but there may be several more run-ups and subsequent corrections. No way to know.


----------



## sags

First question should be.......why is a decentralized currency testifying before a US Senate hearing?

This is some of what was said...........

The general counsel for the Bitcoin Foundation called it "highly risky", "speculative" and the following quote:

_At the same time, however, "virtual currencies can be an effective tool for those looking to launder money, traffic illegal drugs and even further the exploitation of children around the world," Carper said._

The Treasury Department said this quote:

_For virtual currencies to operate within the U.S. financial system and retain their legitimacy, they must abide by the same regulations as other financial institutions, including anti-money-laundering protections such as reporting suspicious transactions and maintaining records, said Jennifer Shasky Calvery, director of the Treasury Department's Financial Crimes Enforcement Network.

"While innovation is a wonderful thing, it does come with obligations," Shasky said. "We believe (regulation) is reasonable given that we have seen that virtual currency has been exploited by criminal actors."
_

I would hardly call those quotes either an endorsement for bitcoins, or supporting the notion that bitcoins will remain anonymous or escape regulation or taxation, which are three of the biggest reasons people promote bitcoins.

I don't know if it is a deliberate scam........or something else, but there are lots of unanswered questions about it.

How do you know, for instance..........that bitcoins were created by some unknown math genius named Satoshi Nakamoto........and not some brilliant hackers working for the US government to entice the largest illegal criminal organizations to adopt bitcoins.........simply so the government can track their use and when the time is appropriate, make the arrests and confiscate all their money?

Wouldn't that be a hoot......invent a currency perfect for criminals to use.........monitor their use..........and then arrest them.


----------



## sags

Right now........with the price jumping as it has........it could easily be attributable to a few owners of many bitcoins manipulating the price.

Are bitcoins doubling in value in days..........simply because of US hearings into them?

Somehow, I doubt it.

Oh wait.........$840 dollars now...........in a matter of minutes.


----------



## sags

nathan79 said:


> Same thing people said when it hit $35... then $300. It corrected and came back stronger each time.
> 
> It will correct again eventually and stabilize, but there may be several more run-ups and subsequent corrections. No way to know.


If Bitcoins drop from $840 to anywhere near $200..........there will be panic in the streets of Bitcoinville.


----------



## andrewf

Volatility is really really bad when it comes to currency. Why not buy a lottery ticket and call it currency.


----------



## sags

Yup.........if you bought a pizza with bitcoins at lunch........you paid $50 for a $25 dollar pizza.

It wouldn't take too long to go broke doing that.


----------



## fatcat

it just hit 900 and then dropped 100 in four minutes ... growing pains


----------



## fatcat

all the us government can do is regulate the exchanges (or in the extreme make ownership of bitcoins illegal)
but they really have no way to actually enforce real regulation


----------



## fatcat

now dropped to 700 ...


----------



## HaroldCrump

fatcat said:


> now dropped to 700 ...


Is it now at $530 on Mt.Gox?
Am I looking at the right thing?

FWIW, I don't think this can be a global, international trade settlement currency yet...it is surely a long way away from that.
You can't draw up contracts, settle trades, etc. based on something this volatile.

The technology behind it is cool and all, and the idea is quaint, but geez.
Maybe in a few years, it can be (assuming the US$ dissolves itself).


----------



## HaroldCrump

Causalien, is there any serious money to be made in minting the bit coins?
I have a couple of Windows XP computers humming along in my house, unused.
I can probably spin up a couple of VMs, boost them by throwing some cheap RAM into the VM host, and leave them running.

Is that how it works?

Is there any profit to be made, after accounting for the electricity consumption?


----------



## fatcat

HaroldCrump said:


> Causalien, is there any serious money to be made in minting the bit coins?
> I have a couple of Windows XP computers humming along in my house, unused.
> I can probably spin up a couple of VMs, boost them by throwing some cheap RAM into the VM host, and leave them running.
> 
> Is that how it works?
> 
> Is there any profit to be made, after accounting for the electricity consumption?


harold, you want to google "mining litecoin" ... litecoins can be converted to bitcoin ... i looked but it requires a lot of computer power ... you do it with gpu's ... people talk about rigs that are inside refrigerators running 6 graphics cards on one cpu ... you need to be technically adept ... i have assembled a couple of simple pc's but have no interest in water cooled giant rigs to mine coins

i think you can make pennies a day using a fairly simple home setup though

caus, i don't see bitcoin becoming a reserve currency for a long, long time ... 100 billion market cap isn't even close to handling the daily needs of worldwide commerce

of course, million dollar coins and then fractional coins might be another matter

rich people will brag about being worth "14 coins" or some such thing


----------



## MoreMiles

I don't get it. On one hand, we are advocating on saving energy and keeping our planet green. On the other hand, people are wasting electricity on useless calculation to create some "coin". Unless that money is free like dirty money, I find it hard to believe anyone would convert their salary into some computer strings. Would you work for one month and get some computer strings that drop 50% (ie, $900 to $500) in less than 24 hours? You must be out of your mind or don't have any family / children to feed if you do.


----------



## andrewf

With bitcoins, you might be able to recoup your electricity costs. Maybe. Trust me, your home computer is totally outclassed by purpose built computers (ASICs). It can be different for some of the other cryptocurrencies. 

Why a bitcoin should ever be worth $10k is beyond me. Why not just set up a competing virtual currency (as some already have)? Bitcoins are not special or unique, and they are artificially scarce. At least gold is shiny and you can make it into jewelry.


----------



## favelle75

andrewf said:


> With bitcoins, you might be able to recoup your electricity costs. Maybe. Trust me, your home computer is totally outclassed by purpose built computers (ASICs). It can be different for some of the other cryptocurrencies.
> 
> Why a bitcoin should ever be worth $10k is beyond me. Why not just set up a competing virtual currency (as some already have)? Bitcoins are not special or unique, and they are artificially scarce. At least gold is shiny and you can make it into jewelry.


And that is why we mine Litecoins. At a current value of $8 each, I mine about 22-24 per day. I convert half to Bitcoin (BTC) and keep the rest as Litecoin (LTC).


----------



## fatcat

favelle75 said:


> And that is why we mine Litecoins. At a current value of $8 each, I mine about 22-24 per day. I convert half to Bitcoin (BTC) and keep the rest as Litecoin (LTC).


can you describe what kind of computing power you are using ? ... i.e. what is your hardware setup ?


----------



## PatInTheHat

Not that I plan to purchase at current levels but I am interested what is the safest/quickest/most reliable way for canadians to purchase coins?


----------



## sags

Price volatility causes regulatory and legal problems for some of the bitcoin companies, as they are not licensed or approved as money exchangers It raises legal questions for them...........when they are depositing large sums of money into a bank.

The bank is required to report the transaction, and the money exchanger is required to store the identification information for the IRA and other regulators.

It seems to be a disputed area among bitcoiners, how they pay their taxes on the profit from their bitcoins.

If someone purchase a bitcoin for $10 and sold it for $900........how do they report the profit?

Is it a capital gain, personal income..............?? Do you have to claim the profits in the year they were earned.....etc.etc.

Does the money exchanger issue the required income tax reports to the government...........or do the banks........or who?


----------



## sags

Taxation is going to be a big issue for bitcoin owners.

If someone buys bitcoins for $300 and they end the year with a value of $1000.........do they remit the taxes on the profit for that year?

What happens if they remit the taxes on the $1000 bitcoins...........and the price drops to $300 the next year? Can they report the losses?

With a highly volatile bitcoin...........someone could get caught paying a pile of tax on something that ended up worth a lot less later.

The only reason the Senate and other legislators are interested in bitcoins now........is the sudden rise in value.

We aren't talking about a 3 cent bitcoin hobby anymore.

There is lots of money on the table for tax collectors..........and they want their slice.

This is how the CRA is handling bitcoins..........note that all transactions are taxable, and capital gains or income is due on profits.

Why don't banks want to deal with bitcoin owners..........because it is a paperwork nightmare for them.

http://www.cbc.ca/news/business/revenue-canada-says-bitcoins-aren-t-tax-exempt-1.1395075


----------



## fatcat

sags said:


> Taxation is going to be a big issue for bitcoin owners.
> 
> If someone buys bitcoins for $300 and they end the year with a value of $1000.........do they remit the taxes on the profit for that year?
> 
> What happens if they remit the taxes on the $1000 bitcoins...........and the price drops to $300 the next year? Can they report the losses?
> 
> With a highly volatile bitcoin...........someone could get caught paying a pile of tax on something that ended up worth a lot less later.
> 
> The only reason the Senate and other legislators are interested in bitcoins now........is the sudden rise in value.
> 
> We aren't talking about a 3 cent bitcoin hobby anymore.
> 
> There is lots of money on the table for tax collectors..........and they want their slice.
> 
> This is how the CRA is handling bitcoins..........note that all transactions are taxable, and capital gains or income is due on profits.
> 
> Why don't banks want to deal with bitcoin owners..........because it is a paperwork nightmare for them.
> 
> http://www.cbc.ca/news/business/revenue-canada-says-bitcoins-aren-t-tax-exempt-1.1395075


no different at all from buying and selling gold or silver coins or stamps ... if you have a capital gain you report it

if you are trading in bitcoin as an investment, you should be able to convert to canadian dollars and report gains and losses as you would with any currency ... why would bitcoin be different ?

as the article correctly reports, if you have a sudden cash infusion of 50K and you get audited, cra will ask where it came from ?


----------



## andrewf

favelle75 said:


> And that is why we mine Litecoins. At a current value of $8 each, I mine about 22-24 per day. I convert half to Bitcoin (BTC) and keep the rest as Litecoin (LTC).


So you're running at 30,000-32,000 kH/s? That is a pretty serious amount of hardware. Something like 50 x $300 GPUs in 10-20 motherboards, sucking up about 10 kW of power... ?

I'd be curious to hear more. I don't know anyone who is mining on such a big scale.


----------



## fatcat

andrewf said:


> So you're running at 30,000-32,000 kH/s? That is a pretty serious amount of hardware. Something like 50 x $300 GPUs in 10-20 motherboards, sucking up about 10 kW of power... ?
> 
> I'd be curious to hear more. I don't know anyone who is mining on such a big scale.


me too ... no big deal, right ? ... just mining $200 a day in litecoins in your spare time ?


----------



## sags

Another day...........another bitcoin company gets hacked..........or did they?

http://www.coindesk.com/bitcoin-payment-processor-bips-attacked-1m-stolen/

This time is a little different. It is a bitcoin processor for merchants who accept bitcoins as payment. 

The company claims they were "hacked" and everything was wiped out. It doesn't sound like anyone will be getting any money back.

Some have investigated further............and believe it is a scam and the "hack" was outright theft.

https://bitcointalk.org/index.php?topic=252308.100

One merchant lost 90 bitcoins...........the equivalent of $65,000.

The response from the company has been sketchy or non-existent.

These are the kinds of events that will keep bitcoins from gaining any acceptance by business.


----------



## fatcat

sags said:


> Another day...........another bitcoin company gets hacked..........or did they?
> 
> http://www.coindesk.com/bitcoin-payment-processor-bips-attacked-1m-stolen/
> 
> This time is a little different. It is a bitcoin processor for merchants who accept bitcoins as payment.
> 
> The company claims they were "hacked" and everything was wiped out. It doesn't sound like anyone will be getting any money back.
> 
> Some have investigated further............and believe it is a scam and the "hack" was outright theft.
> 
> https://bitcointalk.org/index.php?topic=252308.100
> 
> One merchant lost 90 bitcoins...........the equivalent of $65,000.
> 
> The response from the company has been sketchy or non-existent.
> 
> These are the kinds of events that will keep bitcoins from gaining any acceptance by business.


yawn ... growing pains



> *In increments of a few thousand dollars to a few million per theft, cybercrooks are stealing as much as $1 billion a year from small and mid-sized bank accounts in the U.S. and Europe like Experi-Metal, according to Don Jackson, a security expert at Dell SecureWorks. And account holders are the big losers*


http://www.bloomberg.com/news/2011-...m-company-accounts-banks-won-t-indemnify.html


----------



## andrewf

My bank has made me whole for any fraudulent transactions on my accounts. You can explicitly not expect such service with bitcoin. Absent any evidence, it sure seems that the level of theft and fraud with bitcoin is orders of magnitude greater than with bank deposits.


----------



## fatcat

andrewf said:


> My bank has made me whole for any fraudulent transactions on my accounts. You can explicitly not expect such service with bitcoin. Absent any evidence, it sure seems that the level of theft and fraud with bitcoin is orders of magnitude greater than with bank deposits.


can we all agree on something ? ... bitcoin is risky ... OK ...it isn't even close to the easy and secure process of just putting money in the bank, 

if you want to own bitcoin, you better do your homework and move your money/coins wisely ...

why does everyone expect this to be like depositing your paycheck at td bank ? ... it isn't and never pretended to be


----------



## HaroldCrump

Causalien said:


> I am trying to get my money out from USA. lo and behold I can't. The first batch of $9000 will only get here by January 15th and that is a cashier's check.
> I have yet to figure out how to get the rest out. This archaic system needs change.


You are doing it wrong.
A wire transfer is faster than that, although there are fees involved.
The lowest cost way is to deposit a personal cheque drawn on your US bank in your name into a USD account in Canada.
Within 5 days, the cash will be here.

If the amounts involved are large, you can negotiate with your Canadian bank not to put a hold on USD cheques and make the amount available instantly.

I was able to bring USD$ into Canada in this manner well over 10 years ago, all legally and above-board.

Don't need no Bitcoins for this


----------



## andrewf

^ This. People make transferring cash complicated. It's really not, unless the government has capital controls (see China).


----------



## andrewf

So corps can't transfer money back and forth?


----------



## sags

It's pretty clear why the regulations are there.........terrorism and drug trafficking.

The bank wants to protect itself. Bitcoins aren't going to change any of that, so banks don't want to take on the added risk.

One of the many problems with the concept of an anonymous digital currency............is that it can't be anonymous and meet regulations at the same time.


----------



## andrewf

Fair enough. For the record, I think transferring money between jurisdictions with capital controls is the single best use for crypto-currencies. I expect it to be at best a legal grey area, though, given you're using it expressly to circumvent the laws of the land.


----------



## sags

For those who believe the developer of bitcoin introduced a brilliant system, that can't be hacked.........I would point to this article to read.

It is about a mysterious series of intricate puzzles, that people around the world have been trying to solve.

I see the brilliance of those trying to solve the puzzles..........and then I think of those who actually devised them.......and how gifted they must be.

The article also sheds some light on the capabilities and tools that secretive organizations........such as the NSA and CIA have at their disposal.

http://news.nationalpost.com/2013/1...onal+Post+-+Top+Stories)&utm_content=My+Yahoo

I don't think it would be that difficult for someone to render useless the blockchain that bitcoin depends on.


----------



## coptzr

sags said:


> http://news.nationalpost.com/2013/1...onal+Post+-+Top+Stories)&utm_content=My+Yahoo


Good read, thanks for the link...


----------



## coptzr

sags said:


> http://news.nationalpost.com/2013/1...onal+Post+-+Top+Stories)&utm_content=My+Yahoo


Good read, thanks for the link...


----------



## coptzr

sags said:


> http://news.nationalpost.com/2013/1...onal+Post+-+Top+Stories)&utm_content=My+Yahoo


Good read, thanks for the link.


----------



## fatcat

my personal mission in life is to feed sags rampant mutating paranoia about bitcoins
so, in service of that all-consuming passion this story must be offered



> *IT worker throws out hard drive, loses $7.5 million Bitcoin fortune*
> By Alexander Smith, NBC News contributor
> LONDON -- An IT worker threw out a computer hard drive without realizing it contained $7.5 million worth of the digital currency Bitcoin.
> The device is now buried somewhere in a vast landfill site near the home of owner James Howells -- who only realized his mistake when it was too late.
> "It is soul destroying to be honest,” Howells told NBC News on Thursday. "I haven’t had much sleep over the past few days. Every second of the day I am thinking about what could have been."
> Howells, whose ordeal was first reported by the Guardian, worked out the hard drive would have been taken to a local landfill site and visited the dump to speak to the manager.
> But the hopelessness of his task became clear when he was was told that finding he disk would take weeks even with a team of a dozen people and backhoes.
> "I had originally thought about raising money to hunt for the drive, but it was more an off-the-cuff idea. I know it’s gone," he said.
> Howells posted an image of the landfill site on Twitter


----------



## fatcat

test


----------



## dogcom

I found this interesting debate on Bitcoin between Peter Schiff and Stephen Molyneux.

http://www.silverdoctors.com/bitcoi...f-money-peter-schiff-debates-stefan-molyneux/


----------



## dogcom

I think I might want to go with silver coins other then Bitcoin because I can get them for less then $25 an ounce and silver has good industrial uses. Gold to me at over 50 to 1 to silver doesn't make as much sense.


----------



## HaroldCrump

Here is another dumb question for the Bitcoin enthusiasts here - if one were to "invest" in Bitcoins (using Mt. Gox or one of the other exchanges), how does one get the money out?
CRA has stated that Bitcoins (and other digital currencies) are taxable as capital gains.

I assume one would play Bitcoins as follows:
- Register for an account on Mt. Gox.
- Make a deposit into Mt. Gox from your Canadian bank account (or credit card)
- Buy/sell bitcoins just like regular stocks or currencies
- To remit the money back, do a transfer from Mt. Gox back into your Canadian bank account.

Both the in/out transactions from the Canadian bank account are within the jurisdiction of the CRA and the gains are taxable as regular capital gains.

Even if you don't get the money out, as soon as you sell a bitcoin and realize the capital gain, it becomes taxable.

Is this correct, or am I missing something?


----------



## Butters

Has it really jumped 460% in the last month?


----------



## underemployedactor

At a point this am, gold and Bitcoin were the same price. Strange days indeed.


----------



## fatcat

HaroldCrump said:


> Here is another dumb question for the Bitcoin enthusiasts here - if one were to "invest" in Bitcoins (using Mt. Gox or one of the other exchanges), how does one get the money out?
> CRA has stated that Bitcoins (and other digital currencies) are taxable as capital gains.
> 
> I assume one would play Bitcoins as follows:
> - Register for an account on Mt. Gox.
> - Make a deposit into Mt. Gox from your Canadian bank account (or credit card)
> - Buy/sell bitcoins just like regular stocks or currencies
> - To remit the money back, do a transfer from Mt. Gox back into your Canadian bank account.
> 
> Both the in/out transactions from the Canadian bank account are within the jurisdiction of the CRA and the gains are taxable as regular capital gains.
> 
> Even if you don't get the money out, as soon as you sell a bitcoin and realize the capital gain, it becomes taxable.
> 
> Is this correct, or am I missing something?


harold the number of businesses that take bitcoin is increasing at a rapid pace ... soon there will be bitcoin equivalent of paypal where you will be able to buy goods and services ... the idea is to use bitcoin in situations where you want/need to use digital money thats all

you would keep an account just like you probably do in american dollars

if you need to take them out you can use an exchange or you can sell them directly to someone privately, you simply meet do a deal hand over the keys and walk away

you can pay your plumber and house reno guy in bitcoins if you like

there are people all over the world that meet in small groups and buy and sell bitcoin privately

ps. if you buy 100 coins at 500 and they go to a 1000 and have a gross taxable gain of 50K you are liable to report that to the cra exactly the same as if you buy 100 ounces of gold at 1000 and sell at 2000 .... much to the cra's displeasure i'm sure, people buy and sell gold privately all the time


----------



## dogcom

As in the debate link I posted, Peter Schiff mentions that the extreme volatility is a real problem for serious Bitcoin usage. The other problem mentioned was the natural pyramid scheme it seems to be heading in. Also it is backed by nothing, so again the price can go just about anywhere.

Another point mentioned with Bitcoin being so high, is what is to stop another much cheaper start up digital currency for people to go to. An example used was look at what happened to MySpace when Facebook came in or all the search engines that Google replaced and so on.


----------



## marina628

I got my bitcoin long time ago and for cheap to play poker.I know personally probably 30-40 people who all got it for same reason .I realize this is a small pool of people considering the global market for bitcoin but the online gambling sector are sucking these things up and the reason for it is because many Americans want to gamble online and not pay their taxes.Bitcoin is even doing guest spots on some of the big gaming conferences all over the globe and 'underground' the American players are seeing it as a way to side step the laws and find a way to deposit.For this reason I dumped all of mine and even paid the middle guy 15% to get rid of them for me in the $300 range.Definitely not investment and I am a serious gambler.


----------



## fatcat

dogcom said:


> As in the debate link I posted, Peter Schiff mentions that the extreme volatility is a real problem for serious Bitcoin usage. The other problem mentioned was the natural pyramid scheme it seems to be heading in. Also it is backed by nothing, so again the price can go just about anywhere.
> 
> *Another point mentioned with Bitcoin being so high, is what is to stop another much cheaper start up digital currency for people to go to.* An example used was look at what happened to MySpace when Facebook came in or all the search engines that Google replaced and so on.


dog, what do you mean by "cheaper" ? ... people are able to buy, spend and sell partial bitcoins, so if bitcoin is 500 and you want to buy a 100 hat, you can spend 1/5 of a bitcoin 

the real problem with any startup is the same problem that bitcoin is now wrestling with ... building trust
digital currency will not be a case where startups can underprice because it isn't price that backs the currency it's trust

trust is all important 

if the math holds up and people begin the understand and trust the system and we see no hacks of the coins themselves (as distinct form the exchanges) then bitcoin will be in a very strong position


----------



## sags

Lots of interesting things going on with bitcoins.

In one sense, they allow the perfect crime for the criminal scammer thief.

Here is a deep web drug selling site...........that has scammed 40 million dollars from would be drug buyers.

What are they going to do..........run to the police and complain they were buying drugs online and got ripped off............LOL.

Businesses involving anonymity and Czech mobsters.............what could go wrong ?

http://www.reddit.com/r/Bitcoin/comments/1rq4r7/possible_40m_scam_going_down_right_now_on_deepweb/


----------



## dogcom

Trust that is a big problem with Bitcoin backed by nothing Fatcat. Also the powers that be must have a plan for this and are just collecting data for all sorts of purposes before flushing it down the toilet, if it doesn't flush itself first.


----------



## sags

If bitcoin was established and run by all honest people......it may provide a solution for you Causalien, but do you really want to send your bitcoins to some website exchange or bitcoin business......and have them put on their website........Sorry, we have been hacked and all your money is gone.......have a nice day"?

It is the wild west in Bitcoin land these days. Rampant fraud, shady characters, wild speculation, ........and no regulation or law enforcement to deal with any of it.

First establish the regulations, the rules, and the penalties for breaking the rules. 

Then develop a digital currency that fits within the perimeters set.

Don't develop a currency based on anonymity and no rules or regulations.

Money is too important to people.........to accept the hope that it will all work out in the end.


----------



## fatcat

dogcom said:


> Trust that is a big problem with Bitcoin backed by nothing Fatcat. Also the powers that be must have a plan for this and are just collecting data for all sorts of purposes before flushing it down the toilet, if it doesn't flush itself first.


sheesh dog, have you done any research into bitcoin at all ? 

what they heck do you mean by "the powers that be" ?

bitcoin is controlled by no one person or organization, bitcoin is crowd sourced, it runs on the trust and faith or a very large user/investor community who watch very carefully everything that happens ... this precisely its strength dog

unless a government essentially passes a law that makes it illegal to own bitcoin, there is little that they can do ... do you understand this ? ... it functions outside the control of any governmental authority 

and even if they were to pass such a law, it would be very difficult to enforce, bitcoin can be exchanged person-to-person completely anonymously just like cash


----------



## sags

The government doesn't have to make it illegal to own bitcoins.

They can.........and will..........tax bitcoin transactions.

They can........and will..........seize property and cash at the exchange or business level.

They can........and will..........let bitcoin pave the way for their own digital currency, which would be immediately accepted by the mainstream retailers.

Bitcoin was a first start, and that is why Bernanke and others said a couple of things.

The technology is interesting.........but in it's present form it is used by criminals.

Put the two statements together..........and you can figure out where they are going with this.


----------



## sags

fatcat said:


> bitcoin is controlled by no one person or organization, bitcoin is crowd sourced, *it runs on the trust and faith* or a very large user/investor community who watch very carefully everything that happens ... this precisely its strength dog


And yet, this is what Satoshi Nakamoto said was the reason he created bitcoin.........

“*The root problem with conventional currency is all the trust that’s required to make it work*. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with hardly a fraction in reserve.”

-Satoshi Nakamoto

It seems to me he wants to replace one trust dependent currency with another one more even more reliant on trust.


----------



## andrewf

As far as we know, there is no satoshi nakamoto. It's a pseudonym for an individual or group of individuals.

There's no problem using as a medium of exchange. As a store of value or basis of financial contacts it leaves a lot to be desired.


----------



## sags

Some are thinking Satoshi Nakamoto is a combination of some of the names listed on the bottom of this NSA report from 1996,

If true.......bitcoins could have been produced by the NSA.

Perhaps created to entice and snare terrorist organizations and drug traffickers?

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm


----------



## andrewf

Anyone notice that GPUs have been cleaned out of north american retailers in the last day or so? I suspect it has something to do with the spike in litecoin.

I'm not seeing the purpose of granting huge rents to the people who hold bitcoins by bidding their value up another 100x. The artificial scarcity of bitcoins along with the huge waste of resources involved in producing them are problems for me.


----------



## sags

This is what bitcoin mining looks like these days........LOL.

http://kotaku.com/bitcoin-mining-is-getting-out-of-control-1471769898

People mining all the different "alt coins" are wasting their time and money, in my opinion.

If there is a genuine need for a digital currency, much beyond the current debit cards, credit cards, online banking, email transfers, automatic deposits and withdrawals..........it will probably be solved by a government backed project............such as Mint Chip. (created by the Royal Canadian Mint and backed by the AAA rated Canadian government). 

It is currently being tested........something the alt coins fail to do, and when Mint Chip is perfected and released, all the media hype will focus on it. The others will fade away into the dust bin of history, when they are ignored by the media.

Why the government interest in digital coins ? I suspect taxation, fees, control and employment.

All good things from the perspective of governments and politicians.


----------



## andrewf

I don't agree that mint chip will mean the end of cryptocurrency. It is still too useful for criminal enterprise and tax avoidance.


----------



## OnlyMyOpinion

Re: This is what bitcoin mining looks like these days........LOL.

Similar story here regarding Bitpay's $1 million dollar order from Butterflylabs for more mining hardware:
http://codinginmysleep.com/million-dollar-purchase/
For $5,000 it looks like we could order our own mining card, and we see claims that you can still make a decent roi, but frankly we only invest in things our simple minds can grasp and this is too far outside of our comfort zone.

We will be following the evolution of digital currency with interest however. It seems to have the potential to shake up global commerce and the way things have been done in the past. A bit like the way social media have changed the way protests occur and elections take place (and not necessarily to the better). 
Also suspect there will be new (largely tech) companies created to meet spinoff demands if this grows. Like twitter and facebook, we'll probably sit those out as well - without regret.


----------



## fatcat

sags said:


> The government doesn't have to make it illegal to own bitcoins.
> 
> They can.........and will..........tax bitcoin transactions.
> 
> They can........and will..........seize property and cash at the exchange or business level.
> 
> They can........and will..........let bitcoin pave the way for their own digital currency, which would be immediately accepted by the mainstream retailers.
> 
> Bitcoin was a first start, and that is why Bernanke and others said a couple of things.
> 
> The technology is interesting.........but in it's present form it is used by criminals.
> 
> Put the two statements together..........and you can figure out where they are going with this.





> They can.........and will..........tax bitcoin transactions.


 where do you get this stuff sags ? ... first, how can they tax bitcoin transactions other than by the normal process whereby merchants charge tax, they cannot single out bitcoin and even if they could they don't know _who_ is making the transactions ... any merchant in canada that accepts bitcoin for a transaction will charge the required tax as he would on any purchase using whatever means of payment



> They can........and will..........seize property and cash at the exchange or business level.


 what the hell does that even _mean_ ? ... it makes zero sense, cra seizes property for unpaid taxes all the time, the government has all kinds of powers that it can exercise but are you saying that they will specifically go after bitcoin, they can't single out a specific currency, it would be illegal



> They can........and will..........let bitcoin pave the way for their own digital currency, which would be immediately accepted by the mainstream retailers.


do you even understand what bitcoin is ? ... it's a decentralized, crowd sourced, stateless currency ... this gives it unique advantages that no digital currency created by any government can match


----------



## fatcat

regarding mining of bitcoins there are all kinds of excellent analogies to the mining of gold ...

as i have posted earlier, the coins become more difficult to mine as more computing power is thrown at them, you can have a city blocks worth of computing power and if there are other rigs that are just as powerful it will require more computations to produce coins so the productions of coins is designed to stay constant with the last coin mined around 2140 ... gold is becoming progressively harder and harder to mine and more expensive since miners now must go deeper and work at higher altitudes



> The cost to mine bitcoins is based on how much they are worth. *If bitcoins go up in value, more people will mine (because mining is profitable), thus difficulty will go up, thus the cost of mining will go up.* The inverse happens if bitcoins go down in value. These effects balance out to cause mining to always cost an amount proportional to the value of bitcoins it produces.


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

second, just exactly like gold, mining is only _one way_ to make money from gold, more money is made _after_ gold comes out of the ground by making coins, jewelry, creating etfs, coins stores, websites, etc etc ... the majority of money made on precious metals is made _after_ they come out of the ground ... bitcoin will create many opportunities for exchanges and payment processing and software for wallets, websites and so on ... mining is only one way to make money from bitcoin


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## sags

Rarity and difficult or costly to mine/create..........has nothing to do with the price of goods, including gold.

On rarity.......I can paint a picture.......one of a kind. It would be rare but hold no value. Lots of rare things have no value.

Gold, oil, wheat........are all commodities that have "input" costs, but the price fluctuates regardless of those costs to the miner, oil driller, or farmer.

Supply and demand.......is what dictates the price of those commodities.

Last year the US suffered drought conditions and affected the wheat harvest. The price of wheat skyrocketed upwards. This year there is no drought, a bountiful crop and the price dropped.

Oil prices move on supply and demand.

Gold is more complicated, given it's centuries of history as something humans have put value on, but supply and demand still affects it's price. It is still widely coveted for it's beauty. Ancient Egyptian tombs are adorned with gold. Gold has chemical properties that make it ideal for some manufacturing purposes, such as electronics. Humans have a fascination for gold......that bitcoin will never replace.

Bitcoins, are created out of thin air.........by people using their computers. Other people use their computers to play games.

If one person uses their computer to "mine" bitcoins and the other uses their computer for an identical period of time playing games.......why would the bitcoin player's time on the computer be more valuable? 

The Bitcoin theory is laden with systemic problems, merchant acceptance problems, regulatory problems, and public image problems.

All of the problems are addressed by bitcoin enthusiasts by saying..........we will fix it later.

The smooth flow of currency around the world.......can't endure those problems until "later".

Example of real time systemic dilemna.......

When the last of the 21 million bitcoins are mined (actually long before then as the profit for mining drops), and the miners disengage and go on to something else.......who will validate the transactions on the blockchain?

Some discussion is now underway among bitcoiners.........but there is no consensus among them.

It is suggested that "fees" be implemented to "pay" the miners to continue to validate blockchain transactions. (aren't fees something bitcoins is supposed to eliminate). Some want a "flat fee".......but that would be too onerous for small micro-transactions of partial bitcoins that have been envisioned. Others want everyone to set their own fee, but miners would handpick the highest fees to earn the most money.........leaving the others to languish waiting for hours to be confirmed.

But the core problem is there is no central authority to decide what to do. Decentralization is at the heart of bitcoin theory, and is both a blessing and a curse.

So, the miners disagree among themselves. There is no decision.........and everyone says..........we will solve it later.

We know from the example of the US Congress, that when a group of people are making decisions, their own personal interests and biases, make it almost impossible to reach a consensus. 

Why would we expect a group of distant and varied "miners" to have a different outcome?

Another example is the length of the blockchain itself. Many of the "transactions' recorded are micro transactions and are both lengthening the blockchain at hyberbolic speed and causing delays in confirmation. Gambling at Satoshi Dice and other gambling sites, and illegal drug trading sites, such as the recently shut down "Silk Road" and the recently "absconded with all the money" aptly named "Sheep Market" dark net websites, were responsible for most of the "purchases" using bitcoins and were clogging up the arteries of the blockchain.

What happens when the envisioned millions of coffee shops around the world start transacting in bitcoins and sending millions of micro transactions for a dollar or two to the blockchain for comfirmation? What miners will want to waste their precious time and computing power to validate endless 2 dollar transactions, while losing money to do so?

Again, to that question there is no consensus. There is no central authority to make a decision, and a decision won't be made. 

You mention the year 2140 as the final date for bitcoin mining. That has changed.

Due to the increased presence of high powered, dedicated bitcoin mining equipment........experts knock about 15 years off that date already.

An easy way to understand it is to say.......bitcoin mining is ahead of schedule.

And that........once again........means more problems for bitcoin theorists.

Most of the bitcoins mined............will belong to two very small groups of people.

1) Satoshi Nakamoto and his collaborators and early adopters.......who own millions of bitcoins.

2) Powerful miners who mine the vast majority of the remaining 10 million bitcoins.

Instead of creating a currency that is centralized within financial institutions, bitcoins will be a currency that is centralized within a few people.

That kind of centralization and control creates more problems than it solves.

The other problems such as merchant acceptance (due to wildly fluctuating prices, and technology understanding required), consumer acceptance (with no ability to charge back to vendors for products not delivered and the technology understanding required), government regulation and taxation.........including capital gains treatment, would take many pages to discuss.

When a "currency" needs such technical explanation.........to millions of people who can't figure out how to budget their personal finances..........it is already way past any optimistic chance of success.


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## sags

andrewf said:


> I don't agree that mint chip will mean the end of cryptocurrency. It is still too useful for criminal enterprise and tax avoidance.


I believe the primary goal of the Mint Chip is to create a "cashless" society, which would save governments billions of dollars printing, handling, replacing and circulating money. ATM machines would no longer need to be filled with cash on a regular basis by a third party, such as Brinks Security........as one small example of the enormous savings potential of switching to electronic cash. The ATM will simply be "updated" by the provider with bits and bytes, or would be programmed to never run out of digital "money"....a convenience for the consumer.

All finances would be on one card, similar to a debit card......but with better security technology. 

Envision a card that had 3 credit cards, savings accounts, investments,.....everything on it. ATM machines could deliver any information at any time, including internal transfers, payments, withdrawals, deposits. Money could be sent anywhere in the world automatically changed to the local currency.

With a limited goal (not trying to change the world).....top level security and an ease of use.....I think Mint Chip could be a winner. 

A cashless society........no more nickles, dimes, quarters, paper bills.........that is where the world is heading.

The Mint Chip will simply piggy back on the current financial system, and will provide law enforcement and regulators will a clear transaction record that can't be avoided.

If cash doesn't exist....and transactions have to move through the Mint Chip.....or something similar......it will create a record.

When it is presented to the general population.........that only drug dealers, terrorists, and wealthy tax avoiders have to worry about "secret" or anonymous transactions anyways, the general public won't care about a record of their transactions. Most people would simply say......I have nothing to hide and accept the change as something that makes their life easier.

A successful, all Canadian designed Mint Chip......accepted as a legitimate digital currency globally, would be a big feather in Canada's hat.........and could provide many jobs in the technology industry surrounding it.

Imagine billions of Mint Chip holders and users around the world........tens of thousands of banks issuing their own Mint Chip cards.

It could be big.......really, really.........big news for Canada.


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## andrewf

I think physical currency will take longer to die than many people expect. I expect it to be around for a while yet.


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## sags

It will be at least until the older generation is gone. The banks still struggle getting older people to have automatic deposits for their government cheques, and they are still lined up at the teller window clutching a raft of paper utility bills they have to pay individually.

But, that is the end goal.........sometime into the future.

General public acceptance...........is I agree,.........the major obstacle to success.


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## braintootired

BTC dropped 20% since China said it forbids the banks from transacting with it. Do you see this as manipulation by China, so they can buy the dip?


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## andrewf

Bitcoin is inconsequential in relation to the size of the Chinese gov't.

Meanwhile, the price of Litecoin has caused a run on mid- to high-end AMD graphics cards. Most retailers are completely cleaned out.


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## Not Working

andrewf said:


> Bitcoin is inconsequential in relation to the size of the Chinese gov't.
> 
> Meanwhile, the price of Litecoin has caused a run on mid- to high-end AMD graphics cards. Most retailers are completely cleaned out.


having bought 24 x 7950 in april i can say that each time the bitcoins goes in the new AMD is making money. can't believe why they don't take advantage of this trend to get back in business (stop losing money)


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## fatcat

litecoin is attracting everyone who feels they missed the boat on bitcoin

i think this will only add to the problems virtual currency is facing

what is needed is a single currency to gain stability and trust

then we can see some competitors

but the _idea_ (of a virtual currency) needs to be ratified first


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## andrewf

People will vote with their wallets. I can't see virtual currencies replacing all methods of payment (like credit card), but I can imagine it playing a role. For the very reason that the supply of new coins is constrained, new currencies are almost inevitably going to pop up.


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## fatcat

andrewf said:


> For the very reason that the supply of new coins is constrained, new currencies are almost inevitably going to pop up.


what do you mean by supply is constrained ? ... there is no shortage of bitcoins ...

i think people are into litecoin and others simply because they feel they missed the boat on bitcoin (and mining at the moment is doable on a small scale)

i think its a big mistake because the winning "coin" will be the most stable and easiest to work with ... bitcoin fails on both fronts at the moment but it has a huge lead in terms of brand


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## HaroldCrump

braintootired said:


> BTC dropped 20% since China said it forbids the banks from transacting with it. Do you see this as manipulation by China, so they can buy the dip?


China is in a tricky situation with Bitcoin, esp. from the sovereign perspective.

On the one hand, they want to hold Bitcoin to diversify away from their holdings of fiat currencies (primarily the USD).
On the other hand, they do not want too much capital flow away from gold into Bitcoin.

China and Russia are now the top two holders of sovereign gold, respectively - not including all the personal, individual gold holdings by their citizens.
China is hedging its USD exposure like crazy, and Bitcoin is probably yet another hedge in that portfolio.

While China and Russia have been enjoying this sell off in gold by buying like crazy, at some point, they will stop buying.
Once they feel they have adequately hedged their USD positions, they will stop.
At that time, they would not like to see the value of gold plunging 30% every year, the way it has been since summer of 2011.

Therefore, while they do want to hold a digital currency not controlled by a central bank, they do not want Bitcoin to become a substitute for gold.
Lately, there has been a lot of talk that Bitcoin may usurp gold's traditional role as a non fiat hedge, ever since both Bitcoin and gold reached the value of approx. $1,200 USD each.

China will not like to see gold drop another 30% at the expense of Bitcoin.


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## andrewf

The supply is constrained because new coins are created at a more or less fixed rate. As time goes on, the % increase in the supply of coins becomes lower and lower. Thus, if demand to hold coins grows faster than the rate of growth in the coin supply, the price of coins increases/they become more valuable. This gives people incentive to substitute to other coins. If the price of bitcoins rises continuously, Gresham's law will begin to hold and it will be impossible to transact in bitcoins because people would rather hold on to them than spend them. This is all basic monetary theory.


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## fatcat

andrewf said:


> The supply is constrained because new coins are created at a more or less fixed rate. As time goes on, the % increase in the supply of coins becomes lower and lower. Thus, if demand to hold coins grows faster than the rate of growth in the coin supply, the price of coins increases/they become more valuable. This gives people incentive to substitute to other coins. If the price of bitcoins rises continuously, Gresham's law will begin to hold and it will be impossible to transact in bitcoins because people would rather hold on to them than spend them. This is all basic monetary theory.


but you can transfer and spend and accumulate in partial bitcoins ... 1 BTC = 100,000,000 satoshis 

i have a cold, perhaps i am missing your point andrew

these guys are accumulation bitcoins in small fractions by watching videos: http://www.wired.com/wiredenterprise/2013/09/bitcoin-homeless/

harold, the bitcoin / gold relationship (or non-relationship) is fascinating


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## andrewf

If your bitcoins will rise in value by 10% a year, will you ever spend them? Gresham's law says no. This is why deflation is a Bad Thing. The economy grinds to a halt because everyone wants to hold cash for as long as possible rather than spend it now. It doesn't matter whether that cash is bitcoins or USDs or gold.

Partial coins are irrelevant.


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## sags

Bitcoins are an interesting phenomena to watch.

Billionaires, multi-millionaires........created virtually overnight by owning bitcoins.

There was the Silk Road take down by the FBI (who knew there was a "dark net" and people bought and sold illegal drugs and guns like it was Ebay) 

And then the 100 million dollar ripoff Sheep Market (Silk Road replacement) ........where the guy apparently stole 93,000 bitcoins (worth 93 million dollars), and is in real danger since the people he ripped off are drug traffickers who want their money back.

Governments and financial institutions wrestling with bitcoins.........

Who would have thought a concept written on a white paper, by an anonymous source........would cause such a commotion?


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## fatcat

looks like the lamborghini dealer in newport beach just sold a tesla and accepted bitcoin as payment ....



> Lamborghini Newport Beach in California is proud to announce that we are fully capable of accepting Bitcoin as payment for vehicles. We are excited to be opening the door to this new currency.
> 
> Bitcoin, a fully encrypted and fully digital currency, has been used by a recent client of ours to pay for a Tesla Model S Performance we had in our inventory. That's right, an electronic currency was used to purchased a fully electric vehicle


http://lamborghininewportbeach.blogspot.ca/


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## dogcom

Looks like Alan Greenspan thinks Bitcoin is just a huge bubble and doesn't think it has any value.

http://www.independent.co.uk/news/b...oves-to-ban-the-virtual-currency-8984738.html


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## none

^ and as someone who created on of the biggest financial bubbles in history he would know one when he sees it.


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## sags

none said:


> ^ and as someone who created on of the biggest financial bubbles in history he would know one when he sees it.


Maybe that is why he had that smirk on his face..........


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## sags

I guess it supports the price of Bitcoins...........if nobody can cash out a large amount all at once.


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## dogcom

Your right none and he also was famous for his irrational exuberance speech in the 90's before the stock market really exploded to the upside. So this could be the point where bitcoin really explodes in price. Still however I do agree with him on this one.


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## fatcat

right, a central banker doesn't like bitcoin ... how shocking ... what a revelation


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## dogcom

Fatcat I have heard the CIA has been involved with the bitcoin so who knows maybe central bankers are playing with it.


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## fatcat

dogcom said:


> Fatcat I have heard the CIA has been involved with the bitcoin so who knows maybe central bankers are playing with it.


dog, your paranoia is showing ... how could the cia "be involved" ... just exactly what would the cia be doing with bitcoin ?

you realize that the power of bitcoin is that its all publicly available .. you can see the transactions ... bitcoin is complicated but it isn't hidden

so how would the cia be messing with bitcoin ? ... how would the central bankers be "playing with it" ?


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## andrewf

No comment on the problem of currencies experiencing strong deflation not being suitable as a medium of exchange? This is a big flashing red light for cryptocurrencies.


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## fatcat

andrewf said:


> No comment on the problem of currencies experiencing strong deflation not being suitable as a medium of exchange? This is a big flashing red light for cryptocurrencies.


why so more than any other currency ?


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## andrewf

Other currencies aren't expected to experience deflation because they have a flexible supply. The supply of bitcoins is totally inflexible. They will increase in supply at a fixed, unchanging rate.

This is EXACTLY the reason the gold standard was abandoned.


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## fatcat

andrewf said:


> Other currencies aren't expected to experience deflation because they have a flexible supply. The supply of bitcoins is totally inflexible. They will increase in supply at a fixed, unchanging rate.
> 
> This is EXACTLY the reason the gold standard was abandoned.


yes right, you can't print more gold ... but it seems to me that the coins will still respond to supply and demand, they will respond to market forces, the price will correct and stabilize at some point

but yes, deflation is a risk ... but only one among many with bitcoin i think ... it is absolutely an experiment


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## andrewf

Coins can't alter supply to respond to demand.

Currently, there are about 3600 bitcoins created per day. That number will be halved periodically (every four years) as more bitcoins are produced (ie, 3600/day, 1800/day, 900 per day and so on). Thus the percentage growth in the bitcoin supply rapidly approaches zero. Coins are created at this rate regardless of demand for money. The model is explicitly deflationary. And because it is a deflationary model, coins will rise in real (inflation/deflation adjusted) value, generating a real return just for holding on to them. If that real return is high enough, people will have little incentive to sell (spend) their coins for goods. In other words, it will be impossible to transact in bitcoins. Thus, people turn to other cryptocurrencies. It's inevitable that bitcoin will not be the only cryptocurrency. Either cryptocurrencies will fail, or there will be lots of them.


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## dogcom

Fatcat the CIA are involved in many things so why not bit coins. However it matters not because these things will be worth next to zero at some point.


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## sags

China made it illegal for banks or merchants to handle bitcoins. 

Baidu and China Telecom both dropped bitcoin transaction acceptance.

As bitcoins plummeted today, Mt. Gox experienced the same "computer glitch", they have in past selloffs.

There is some suspicion they are trying to manipulate the price to keep it from falling.

Similar I suppose to a fund refusing redemptions, which is never a good sign for the fund.


----------



## fatcat

andrewf said:


> Coins can't alter supply to respond to demand.
> 
> Currently, there are about 3600 bitcoins created per day. That number will be halved periodically (every four years) as more bitcoins are produced (ie, 3600/day, 1800/day, 900 per day and so on). Thus the percentage growth in the bitcoin supply rapidly approaches zero. Coins are created at this rate regardless of demand for money. The model is explicitly deflationary. And because it is a deflationary model, coins will rise in real (inflation/deflation adjusted) value, generating a real return just for holding on to them. If that real return is high enough, people will have little incentive to sell (spend) their coins for goods. In other words, it will be impossible to transact in bitcoins. Thus, people turn to other cryptocurrencies. It's inevitable that bitcoin will not be the only cryptocurrency. Either cryptocurrencies will fail, or there will be lots of them.


first, you may be right, i have no idea what will happen to the coins 

second, what you are describing is exactly analogous to gold, gold is getting harder and harder to mine and it's harder to find veins with high quality gold and miners are going to higher altitudes .... so, one would think that the exact same thing would happen to gold and yet gold continues to decline and we see selloffs

finally i would disagree about the idea of lots of cryptocurrencies, not that we won't see them, we are already seeing many, many alternatives, but rather that we need to see a standout in the field, we need to see a coin that is stable and reasonably predictable, whoever gets that will attract the biggest money ... though i agree we will see lots of competitors

its also possible that the market may stabilize and the users might build inflation into the price/value of the coins by settling on a rate of inflation for the coins that becomes accepted

my interest in the coins is that i think the world wants a world currency that moves fast and cheap and so far only bitcoin fits the bill, add stability and you are off

dog, you are my favorite goldbug but you are a little nuts in this one ... the cia is probably keeping an eye on bitcoin because of money movements but they can't sabotage bitcoin


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## andrewf

If gold doesn't have a stable value, why would any cryptocurrency?

You can't just set a rate of inflation for coins. They'll be worth what people are willing to pay for them, and that is determined by demand (and inflexible supply). It's not too much of a problem yet for bitcoin, as the supply is still growing by about 10% a year. When it falls below the rate of GDP growth (in the next few years) it will be interesting to see whether bitcoin experiences continuous deflation, with virtually all coins being hoarded. Slight variations in expectations for future demand for coins is what is driving the wild volatility.


----------



## dogcom

Fatcat we still live in the physical world and if the CIA or the central banks want to flex their muscle they could easily destroy bitcoin if that was their wish. Look at how hard they, maybe not the CIA, have hit real items like gold and silver despite enormous physical demand. If at some point synthetic beings take over then maybe everything will change but for now they are not in charge.


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## sags

From reading different forums, it seems like bitcoins have created a lot of "what might have been" stories.

Lost bitcoins on corrupted hard drives, people mining for free and selling them for pennies. Frauds, ripoffs, thefts, government seizures......it runs the gamut.

Really though, how many people who obtained a large quantity of bitcoins.........say 100,000.........wouldn't have sold them for $10 or $20 each along the way.

I think very few held on to the $1200 price.

And even then..........exchanging a large quantity is just about impossible, as the exchanges have very limited cash reserves in place.

It is fascinating to watch though.........and is hanging in longer than I would have thought.


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## Cal

The question for bitcoins may be better positioned to ask who got out of bitcoins early...


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## fatcat

andrewf said:


> If gold doesn't have a stable value, why would any cryptocurrency?
> 
> You can't just set a rate of inflation for coins. They'll be worth what people are willing to pay for them, and that is determined by demand (and inflexible supply).


you can not set a rate of inflation but the coins are ultimately going to be valued at what effectively is an agreed upon price by the user community (though a bank of america analyst has set the value at $1300 http://www.forbes.com/sites/kashmir...-america-analysts-say-bitcoins-value-is-1300/) and the community of users may build some kind of inflation into the coins or they may be roughly pegged to another asset, i don't know .... we are in the shakedown cruise phase, who knows what will happen

if the coins gain wide acceptance and a rough formula is agreed upon or reached by trial and error (read repeated crashes and rises) then i think some kind of yardstick for value will emerge and it may have some kind of inflation function built in


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## marina628

I made $15000 on bitcoin and will let my accountant sort that out lol.But some guy bought a Tesla this week using bitcoin ,had i held mine I would have made $55000 but bird in bush blah blah blah.


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## andrewf

Bodkin has no mechanism to enable inflation or a flexible money supply. It is deflationary by design. The way to deal with this problem would be to adopt a cryptocurrency that does not have this problem.


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## sags

The CIA and NSA have been considering cryto-currencies for 20 years.

Here is a link to a 1996 white paper, that sounds eerily like bitcoins.

The source is a group at MIT, so I would presume the report is trustworthy.

http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm

Notice the names of a couple of authors of the report.

12. *Tatsuaki Okamoto *and *Kazuo Ohta,* Universal Electronic Cash, Advances in Cryptology - CRYPTO '91, Springer-Verlag, pp. 324-337. 

The creator of bitcoins...........the pseudo name..........Satoshi Nakamoto.

Hmmmm.


----------



## juniperpansy

andrewf said:


> it will be interesting to see whether bitcoin experiences continuous deflation, with virtually all coins being hoarded.


Pretty hard to hoard something when almost nowhere accepts them :biggrin:
Bitcoin needs to find a reasonable value for the market it supports before we can get a good measure of its true utility. 
Right now Bitcoin is an easy way to transfer money. Storage of value (not speculation) is not a reasonable expectation at this point


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## fatcat

sags said:


> The CIA and NSA have been considering cryto-currencies for 20 years.
> 
> Here is a link to a 1996 white paper, that sounds eerily like bitcoins.
> 
> The source is a group at MIT, so I would presume the report is trustworthy.
> 
> http://groups.csail.mit.edu/mac/classes/6.805/articles/money/nsamint/nsamint.htm
> 
> Notice the names of a couple of authors of the report.
> 
> 12. *Tatsuaki Okamoto *and *Kazuo Ohta,* Universal Electronic Cash, Advances in Cryptology - CRYPTO '91, Springer-Verlag, pp. 324-337.
> 
> The creator of bitcoins...........the pseudo name..........Satoshi Nakamoto.
> 
> Hmmmm.


one researcher has made a good case for virtual currency developer named nick szabo

http://techcrunch.com/2013/12/05/wh...oto-one-researcher-may-have-found-the-answer/

sags, your paranoia is showing .... all of the algorithms and math that underlies bitcoin is public and in fact it uses the same encryption that vast portions of the internet uses so if the cia and nsa have ginned this up we are all in a lot more trouble than we think

and yet plenty of people who do understand the math (i am not one of them) say that it is solid and it works 

so has the nsa and cia bought off all of these guys, is the conspiracy really this BIG ?


----------



## andrewf

I've studied encryption. Encryption is hard. You're sure that your encryption scheme is rock solid until it's demonstrated not to be.

NSA recommends people to use SHA-256. NSA wants to be able to break encryption, and has built backdoors into major software products. You should be wary about relying on SHA-256 not to have a weakness than can be exploited, even if that weakness is not widely known.


----------



## GoldStone

Charlie Munger at his pithy best:


----------



## sags

Maybe it is just me, but setting aside all the technical issues, the currency issues, taxation issues, and other complicated issues..........doesn't it strike people that the path to riches.......millions, tens of millions, hundreds of millions, and the Satoshi Billion.............for early adopters running their computer piling up almost free bitcoins.....doesn't quite add up to a realistic outcome?

The idea that you don't have to make anything that anyone needs, or provide a service that people want........but can simply let your computer make you rich,.............may be perfectly logical to some young people these days, but doesn't make any sense to me.

Maybe I suffer from "age gap".


----------



## underemployedactor

sags said:


> The idea that you don't have to make anything that anyone needs, or provide a service that people want........but can simply let your computer make you rich".


I think that would be Facebook....


----------



## sags

Someone just bought a Lamborghini with bitcoins........but these sales don't really prove anything, because the merchant doesn't keep the bitcoins as a store of value, or to pay their own employees, suppliers, or taxes due. The bitcoins are immediately turned into fiat money...........as soon as possible. That is what Virgin Airlines did with the 250,000 they were paid in bitcoins for the space flight.

It was revealed that another recent luxury auto purchase of bitcoins actually involved the bitcoin owner exchanging the bitcoins for cash and sending the cash.........not the bitcoins. The person did make the money with bitcoins........but the merchant didn't actually accept them.

Most merchants aren't going to spend the time and resources to immediately exchange small amounts of bitcoins.

Some observations.........

90% of bitcoin use is by males. Females are not adopting bitcoins........and that is a huge problem for bitcoin acceptance.

Most bitcoin transactions are "micro-transactions".

A few days ago, after the China government announcement, I logged onto to watch bitcoin prices, at exactly 9 p.m EST.

Bitcoin prices were over $800......when they suddenly began to drop. Large transactions of bitcoins were taking place.......as the price dropped, and dropped, and dropped before my eyes. Within a few minutes......bitcoins sat at $650. 

Then, just as suddenly bitcoins started running up again......up, up, up to more than $800 in a few minutes.

In the space of 30 minutes, bitcoins had moved down 25% and back up 25%.

The upward movement consisted of "micro transactions" mostly.

It appears that large exchanges of bitcoins drives the price downwards in a hurry, while it edges back up on micro transactions.

Is that a problem for bitcoin, that micro transactions are causing wild price fluctuations

I wonder what the price of Apple or Google might be, if people could buy 1/1000 of a stock.

No doubt the stock price would become extremely volatile..............and that would drive out long term investors.

Maybe I am wrong........because bitcoins continue to soar in price.

But there are many, many issues for it to overcome yet.


----------



## sags

As to buying bitcoins for exchange.......I may just buy 1.........just in case I am wrong and they go to 1 Million each.......lol.

I look at it like going to the casino.........might as well throw the money out the window of the car on the way by the front door.....but I still love to play the slots once in awhile, despite knowing how stupid it is.


----------



## sags

All good for him,.........but bitcoins didn't "create" the money.

It came from somebody else's pocket.

Instead of hundreds of people "wishing" they could buy a Lambo, they all contributed to him and he bought it.

Bitcoins aren't creating anything. Just transferring wealth from one pocket to another at this stage.

The money to buy the Lambo was always out there........just in many different pockets.

I think it still falls into the "greater fool" category.........but Goat is driving a Lambo.........and I'm not...........so there you go.


----------



## andrewf

I agree that bitcoin is a 'greater fool' speculative asset, like gold. Mining bitcoins and holding bitcoins are two separate endeavors. Mining may or may not be profitable, but it is highly risky and competitive. Holding bitcoins has had a great return so far, but this is ultimately a speculative bubble. Hold bitcoins are your own risk.


----------



## sags

I don't know of this Goat, but it sounds like he is fairly smart..........and is spending his bitcoin treasure to buy assets.

Has he made other significant purchases that are known of? Houses, estates, islands, yachts........

Many "early adopters" it appears are hanging on to their bitcoins. There are some pretty fat wallets out there.

Maybe some of those "bitcoin wealthy" would be wise to follow Goat's lead...........and start buying real assets with their new found wealth.

Just sayin...........


----------



## sags

Interesting that this thread started on March 29, 2013........and bitcoins were worth $90 dollars each.

Today, they are around $1,000 each.

Some people have done very well.......while we discussed this.


----------



## fatcat

you have to ask, just what exactly do people expect from a brand new concept in currency ?

not a new currency (though it is that) but a brand new concept, a new category ... do people think that it's going to just pop out of the ground and work like a charm ? nice and smooth with no growing pains or glitches ?

this is ridiculous, bitcoin is an experiment, a working hypothesis that actually involves real money

why would anyone expect it to be anything other than chaotic and volatile in the beginning ? ... it is crowd sourced and evolves based on the use and feedback of a large user community, it isn't a top down product launch with a coherent team in place, even launches that do have large backing often run into trouble

there is one thing that can be said of bitcoin, regardless of whether it succeeds or not: people _want_ this kind of product, there is a huge demand for a fast, low cost, mostly private way to move money and buy goods and services worldwide ... there is a demand for a currency that has the advantages of gold without the the drawbacks ... there is a demand for a currency that can't be manipulated behind closed doors by central bankers

there are kinds of reasons why a currency like this is desirable and bitcoin is right now attracting very big money, not so much in those buying the coins but in the ancillary businesses growing up around the coins, this is going to be big business

so, the idea that bitcoin isn't providing a useful and desirable service is patently false

charlie munger sounds exactly like what he is, an old man looking at a new-fangled do-hickey, which, since he has never seen one before, he can't understand and thus dismisses it without trying to understand, which is fine, i'm an old man and i do that to stuff all the time

but this or something like it will eventually be very big business


----------



## andrewf

The comment about being a good store of value carries the huge caveat of "for people trapped by incompetent kleptocratic regimes with capital controls". Sure, bitcoin may be a reasonable store of value when you have no alternative. 

PayPal poo-pooing it as a payment method is just talking their book. PayPal does add value over bitcoin in terms of brokering the transaction. Would people pay by bitcoin without some mediator guaranteeing that the deal takes place in good faith? For instance, buying goods on ebay using paypal vs on craigslist to be mailed to you once payment is received. Your recourse in the second situation is akin to meeting some guy on a street corner and paying in cash. Reputation systems can only take you so far.


----------



## sags

Causalien said:


> My response to that is, we are going to be transitioning to a virtual world. It'll suck in the mean time, but imagine, why go out when you can get the exact same simulation at home... like in the Matrix? We won't have to worry about it in our life, but I will probably see the beginning of it when I retire. If bitcoin survive till then, it will be the primary form of money.


The main problem with all concepts that presume to "transition" the current model of labor exchanged for money, is that they neglect the fact that human survival depends on at least "some" people working.

Why would farmers toil the fields.........if everyone else earns their living sitting at home?

Why would anyone work...........if they can join the ranks of others who are paid not to work?

I remember back in the early 1960s, when Popular Mechanics magazine and others, heralded a coming new age of shorter (than 40 hour) work weeks and extended leisure time. The question at the time was........what will we do with all that extra time?

A "virtual" new world for entertainment........no doubt, but people will always have to get their hands dirty........for us all to survive.


----------



## fatcat

in theory, and i believe soon in practice, you will be able to receive a bitcoin payment into an account and within 10 seconds convert the bitcoin into any number of fiat currency accounts, in other words your "value" risk will be limited to ten seconds (or less) of trading time, when that happens, bitcoin will be able to play at a much higher level

for people that want to stay hidden / anonymous it will be riskier but i am sure there will be options popping up everywhere


----------



## sags

I received an email transfer of money the other day.

What does bitcoin provide.........that can't be done by email transfers of cash?


----------



## fatcat

sags said:


> I received an email transfer of money the other day.
> 
> What does bitcoin provide.........that can't be done by email transfers of cash?


the ability to transact anywhere in the world for a very small fee


----------



## sags

Wouldn't bitcoin transactions transverse the world using the same technology as email transfers?

Regarding the fees.......how does anyone know they will be lower than current fees?

Who will regulate the "fees"?

Will miners have the option of choosing which transactions to approve........according to the highest fees offered?

Will there be a flat rate fee agreed upon..........thereby rendering "micro transactions" much more expensive than large transactions?

These are just some of the questions that have been left unanswered by the bitcoin community.

One would think that by now, after 5 years or so..........there would already be some answers.


----------



## sags

Causalien said:


> Fees, also try it with more than 10k. Your bank will flag you faster than you can click receive. BTW, try and receive just 3k from USA, your bank now flags them as well and you will have to go in and figure out why the transfer was stopped.


The banks flag the transactions, because that is a requirement of the law.

Governments aren't going to abandon legislation designed to track terrorism, illegal money laundering, and other illegal activities........simply because the transactions have a new name or process. Heavy government regulation will remain in place with bitcoins as well.

Announced today.......FINCEN has informed a maker of physical bitcoins (Casascius) that he needs to register the correct documentation and follow the regulations as a money transfer business.

http://www.wired.com/wiredenterprise/2013/12/casascius/

Fees...........can be either lowered (in the case of email or money transfers) or raised (bitcoin miners), without the approval of the customers.

If brick and mortar money transfer companies lower their fees to less than bitcoin fees.......is that the end of bitcoin's function?


----------



## fatcat

sags said:


> Wouldn't bitcoin transactions transverse the world using the same technology as email transfers?
> 
> Regarding the fees.......how does anyone know they will be lower than current fees?
> 
> Who will regulate the "fees"?
> 
> Will miners have the option of choosing which transactions to approve........according to the highest fees offered?
> 
> Will there be a flat rate fee agreed upon..........thereby rendering "micro transactions" much more expensive than large transactions?
> 
> These are just some of the questions that have been left unanswered by the bitcoin community.
> 
> One would think that by now, after 5 years or so..........there would already be some answers.


miners have nothing to do with approving fees, why would they ?

fees will be set by the businesses that act as brokers to receive and send payments, there will surely be several doing this and thus fees will be subject to the market

you can now send money in canada by several different methods (email transfer, visa transfer, paypal, western union, dwolla and more) and the fees are part of the process of choosing what you use ...bitcoin will operate in the same way

but all of these systems above have a a variety of restrictions on them in terms of where and how and what kinds of money you can send

bitcoin will have the advantage of being a worldwide system which should be able to operate with considerably less restrictions and at lower cost


----------



## sags

Miners verify the transactions on the blockchain are legitimate.

They will expect to be paid, and there will be a need for transaction approvals forever.......(long after bitcoin mining is completed) as the complete history of all transactions must be stored to prevent "double spending" of bitcoins. 

There is some discussion on "pruning" the blockchain, but as long as there is a minute speck of a bitcoin remaining in each transaction of the blockchain.......it cannot have it's history removed without stealing the owner's money. (not a very Libertarian thing to do).

On top of the "miner fee"..........businesses who manage transactions or act as escrow businesses........will also extract their own fee.

In addition, there may very well be government mandated fees.

It is apparent there will be multiple layers of "fees" applied to bitcoin transactions.

In aggregate, perhaps the bitcoin fees will be significantly less than current fees.

There would be nothing to stop current money transfer businesses from lowering their fees to compete with bitcoins.


----------



## sags

A couple of days ago, Fidelity sounded like they would accomodate bitcoin transactions.

One transaction was completed, and they had a sudden reverse in their position.

They issued a press release they will allow no involvement with bitcoins.

http://blogs.marketwatch.com/thetell/2013/12/12/fidelity-halts-bitcoin-investments-from-iras/

I suspect a government regulator made a phone call...........and Fidelity had a change of heart.


----------



## sags

Bitcoin prices seem to be "sticky" around 850-900 for couple of days.

I wonder if bitcoins stop rising for a few weeks, if some of the big whales won't start dumping into the bitcoin market.

Some real nice assets, a home on the beach, a couple of exotic cars, a yacht, a bank account full of USD, must look pretty attractive to someone holding 10,000 bitcoins or more.

Know when to hold em.........and when to fold em.........


----------



## fatcat

sags said:


> There would be nothing to stop current money transfer businesses from lowering their fees to compete with bitcoins.


of course, this alone would make bitcoin a success for users ... we need competition and options and lower costs not a system dominated by banks and paypal and visa

this is the power of bitcoin sags, it disrupts the current system which is good for users

which is why bankers and charlie munger and paypal and goldbugs all are slamming bitcoin, it threatens their hegemony


----------



## Longwinston

I would advise anyone "invested" in bit coins to get out. This is going to crash down, hard and fast.
Use your head and get out.


----------



## sags

Intelligent young people are the biggest bitcoin enthusiasts, and unfortunately I think their youth affords them to be less cynical than older people, although more than enough seniors manage to get themselves involved in some kind of fraud as well.

There are good people attracted to bitcoins.........the technical aspects and theories behind it.

But there also are bad people attracted anywhere there is money and unsuspecting victims.

Recent frauds.......perpetrated by bitcoin website and business owners, and there are quite a few of them to date.........are often reported as the theft of coins........and basically left at that.

What isn't discussed, and is perhaps far more valuable to the criminal..........is the amount of personal information the young people have willingly handed over to unknown people on the internet.

It is shocking how many people sent their bitcoins to a new online website/business........simply because someone on a bitcoin forum hyped up the business for awhile.

A poster known as Pirate40 comes immediately to mind.........among others.

This isn't the TDBank, Visa, or Walmart that they are dealing with online.

Many of the "sites" are located in foreign lands, with little regulation or enforcement. Some claim foreign residence offers them escape from the confines of stifling US government regulations........but it also makes for a very handy exit point to vanish from.

The biggest problem for some of these idealistic......but naive young people, is not the loss of some bitcoins........but the information they gave away with good intentions.

The loss of that information.........can come back to haunt them at the whim of the criminals who stole it.

Bitcoins are CAVEAT EMPTOR in capital letters.


----------



## andrewf

I know why that is. The price of gold has been tanking steadily, challenging their world view that governments are engineering a hyperinflation. Of course the government is also manipulating the price of gold. How long until we hear them complain about the government conspiracy to manipulate the price of bitcoins?


----------



## fatcat

Causalien said:


> That makes sense. I remember that their shot to fame was through the gold and silver bull case they made. Now theyneed a nw hero.
> 
> When I was in the US, I could really feel the deflation in prices. When i am back here in Canada, it seems like we are in full steam inflation mode. Everything is a lot more expensive compared to the last time i was here. Even gotthe price charting to prove it.


full steam ? ... housing isn't inflating, gas isn't inflating, food retailers are taking hits because the food retail world is very competitive ... i think your comparison is not accurate


----------



## sags

Watching the bitcoin ticker, there are mostly small "micro" transactions of fractions of bitcoins. They set the "price".

http://bitcointicker.co/

Given that bitcoins can be sold in small fractions, and it is impossible to sell a lot of bitcoins at once (say 1000 or more) without tanking the market, is the "price" of bitcoins accurate, or is it unknowingly manipulated due to the system?

I suppose a comparison could be to the stock market.

I would imagine if stocks could be bought in fractions.........the stock prices of expensive stocks may very well go up as a result, as small players in the markets flood in with fractional purchases. Small investors would buy bits and pieces of Google, Apple or Berkshire Hathaway stock.

What would be the price of bitcoins........if you had to buy or sell 100 each time?

I don't know. It is beyond my limited economic understanding, but I am thinking it highly unlikely there would be much of a market for $100,000 bitcoin purchase orders.


----------



## andrewf

Inflation is rate of change of prices, not differences in price level. Canada has had higher prices than the us for a long time.


----------



## sags

No government involvement..........save for collecting CPP.

I am interested in bitcoins, because it reminds of an old long, long, long, discussion and debate about a certain tax "alternative" scheme called Synergy, where the proponents claimed an individual could purchase shares in a business that exchanged funds for tax losses from businesses........and then transfer those losses to their individual tax returns.

It was the same kind of wishful thinking, and denial of facts that I see evident in some of the bitcoin mania.

"We are the wealthy elite"........"To the moon"........."how will you spend your bitcoin millions"......type of mania.

The end result was the scheme collapsed, the CRA demanded payment from all the "investors" and people were financially destroyed.

There are a lot of questions about bitcoins.........and the solution on the bitcoin forums is to downvote and berate anyone who raises them. Blind faith can be questionable judgement.

As Ronald Reagan is quoted as saying.......Trust but verify.

I am following along on the debates, to see what solutions the bitcoin "deciders" come up with........whomever they are.

It is an interesting phenomena and will certainly earn a place in the history books, alongside either tulip bulbs or the revolution of money.

One or the other.


----------



## fatcat

Causalien said:


> Just my impression based on crossing the borders several times. Since I don't need to spend on housing or gas, I see everything else. I am guessing that the rest of Canada is the same boat since housing price has gone up a lot and pricing most people out. That and the fact that only 30% of the people need houses and 20% of the population are teenagers... Anyway, housing represent very little of the inflation I am seeing... don't even get me started on gas. So much more expensive than USA and we make these things.
> 
> In the same line of thinking about food retailers. If they were allowed to fully inflate so they don't have to take hits, then we'd be seeing a higher price. Some control must be in place otherwise why would a business sell at a loss?
> 
> This whole, more expensive than USA thing bothers me. Most of our city are very close to the border, so the inflation is probably not the problem of a distribution network, rather political problem of crossing the border.


as andrew says, comparing prices on different sides of the border says nothing about inflation, only about different pricing schemes

governor poloz would not be making noises about deflation and we wouldn't be seeing story after story about rates being held low for the next 2 years if inflation were an issue, it just isn't which is why gold is poised on the edge of a cliff these days

the economy is sucking in all these extra dollars that are being printed and we aren't seeing any serious inflation


----------



## OnlyMyOpinion

*"in my mind, it is a clear inflation"*
Definitely cheaper in the US, and definitely swings up & down through the year, but the average price in both countries in the last 3yrs seems flat according to GasBuddy:
View attachment 356


----------



## HaroldCrump

BTC now down to $534, off over 50% since the Nov. high of $1,200.
Today's high was $748, before the taper announcement.


----------



## sags

Bitcoins..............Crassshhhh.

The price has dropped to $458 from the high of over $1200. About a 60% drop in value.

News from China spurred the sell off, as the Chinese are basically banning any financial institution, retailer or money exchanger from dealing with them. That would be a big hit to worldwide adoption.

It is amazing people are still buying them at $570 or so..........

I would have said it is because they are buying small insignificant amounts........and that is predominantly the case, but some large transactions have been taking place. I saw quite a few transactions of 40-50 bitcoins last night.

People are investing $30,000 in an unknown quantity?

They must have the **** of a brass monkey.


----------



## andrewf

I wonder why the market was freaking out about the taper. I guess it was worried about the taper being bigger than what was announced.

Personally, it seems to me that the market is irrationally fearful.


----------



## sags

Sorry to step on your post, Harold........great minds think alike............


----------



## HaroldCrump

andrewf said:


> I wonder why the market was freaking out about the taper. I guess it was worried about the taper being bigger than what was announced.


The "taper" is $10B a month - down to $75B from $85B.
For a balance sheet of > $4T now, that is barely a footnote.
No wonder the bond market hasn't moved (yet).


----------



## andrewf

I agree that slowing the growth of the fed balance sheet by $10 billion per month is insignificant. What I find interesting is that the market was so unnerved in advance of the announcement. A taper of ever $20 or $30 billion as some feared would also have been fairly insignificant. One thing seems fairly certain: rate will remain low in the US for a long time, as the fed stops growthing its balance sheet and eventually unwinds it.


----------



## sags

One bond analyst said the supply of mortgage bonds, of the kind the Fed is buying, has been shrinking.

The Fed was crowding out other investors..........so taking some bond buying off the table.........didn't affect the bond market much.

But US equities..............happy days are here again.


----------



## sags

Kind of a neat website showing the "flow" or bitcoins in real time.......location to and from, transaction size and price.

http://fiatleak.dyndns.org/


----------



## 6811

HaroldCrump said:


> BTC now down to $534, off over 50% since the Nov. high of $1,200.
> Today's high was $748, before the taper announcement.


Bitcoin party draws to a close:

http://www.theglobeandmail.com/repo...tcoin-party-draws-to-a-close/article16033007/


----------



## Hawkdog

not sure if this has been posted, but interesting
http://qz.com/158816/why-china-had-to-crack-down-on-bitcoin-and-will-eventually-regret-it/


----------



## fatcat

Hawkdog said:


> not sure if this has been posted, but interesting
> http://qz.com/158816/why-china-had-to-crack-down-on-bitcoin-and-will-eventually-regret-it/


good read ... from that article



> Bitcoin’s greatest promise is that it might one day become a frictionless and extremely cheap method for moving money around the world. Economies with access to such a technology would enjoy a competitive advantage against those with cumbersome payment mechanisms.


676.00 up 114 ... still standing



> http://www.theglobeandmail.com/repor...ticle16033007/


the guy is clueless


----------



## sags

From the article.....

_While bitcoin poses some theoretical challenges to Uncle Sam—funding terrorists, abetting drug dealers, enabling tax evasion—the US seems to be going out of its way to make encouraging noises about bitcoin’s potential. That’s because bitcoin’s negative disruptions are potentially outweighed by its benefits, in the minds of American policymakers and many others. _

This looks like an overly optimistic view of what has transpired in the US to date.

Governments know how to shut down bitcoins, without much effort on their part.

Simply close the points where bitcoins are exchanged for real money.

When that happens, nobody will care about bitcoins anymore.

While they wait, the gathering of information on who is sending money to where........is a gold mine for interested authorities.


----------



## fatcat

sags said:


> From the article.....
> 
> _While bitcoin poses some theoretical challenges to Uncle Sam—funding terrorists, abetting drug dealers, enabling tax evasion—the US seems to be going out of its way to make encouraging noises about bitcoin’s potential. That’s because bitcoin’s negative disruptions are potentially outweighed by its benefits, in the minds of American policymakers and many others. _
> 
> This looks like an overly optimistic view of what has transpired in the US to date.
> 
> Governments know how to shut down bitcoins, without much effort on their part.
> 
> Simply close the points where bitcoins are exchanged for real money.
> 
> When that happens, nobody will care about bitcoins anymore.
> 
> While they wait, the gathering of information on who is sending money to where........is a gold mine for interested authorities.


except bitcoin can be bought sold and exchanged without any need to use the exchanges ... it is a decentralized currency ... people can meet privately and exchange coins ... it can function exactly like hawala's ... the government _can't_ shut down bitcoin ... tracking who is sending to whom is very, very difficult if not impossible for people that move money in and out quickly


----------



## andrewf

Bitcoin is like gold, you can't stop people from trading it privately. Exchanges reduce transaction costs, but are not essential. Gold is also easier to confiscate than bitcoins.

People who think this most recent crash proves that bitcoins are a failure haven't been paying attention. It has had drawdowns of this magnitude and larger previously. It just means that bitcoin is a poor store of value for the foreseeable future, possibly forever. Your purchasing power may evaporate overnight.


----------



## HaroldCrump

IMHO, the USD strengthening over the next 2 - 3 years might render BTC redundant.
The whole premise of BTC is the concept of unlimited money printing by the US Fed...the so-called "QE-to-Infinity".
If the Fed is indeed successful in ramping down Q/E over the next 3 years, and the USD strengthens vis-à-vis all major currencies, the whole premise of BTC is destroyed.


----------



## andrewf

^ I think gold nuts will always think we're on the edge of hyperinflation, regardless of the facts--it's just confirmation bias. Not all BTC proponents are this kind of nut. A lot of them are tech-enthusiasts or anti-government types.


----------



## fatcat

harold, i think you are incorrect ... the premise has more to do with speed, cost and privacy (though trust and lack of central control do also factor in, bitcoin is crowd sourced and that has a lot of power, the users are in control) ... it would be essentially a global currency which would be immensely useful especially to those of us who deal in transactions around the world in different currencies ... it could save a lot of money in transaction fees especially ... though i am certain there are 50 reasons why people are interested in it



> ^ I think gold nuts will always think we're on the edge of hyperinflation, regardless of the facts--it's just confirmation bias. Not all BTC proponents are this kind of nut. A lot of them are tech-enthusiasts or anti-government types.


 right and i think a huge number of them are just plain old businessmen who see a real opportunity (not to participate in a ponzi scheme but to make money by providing products and services around a product people want)

what bitcoin needs is some kind of market agreement on a reasonably predictable price which might well end up pegged to another currency (indirectly and unofficially of course)


----------



## andrewf

I don't see how that's possible. Who would take that risk, and how much would they need to charge to take on that risk for consumers?


----------



## sags

Strange that given all the negative news, bitcoin prices remain in the $600 -$700 level.

I think the price is artificially supported by the small amounts of bitcoins that can be exchanged, rather than whole bitcoins.

As I said before........if Google stock was available as 1/100th of a one share.......I would expect the price to artificially rise as people bought 1/100th at a time.

If bitcoin trading was only done in a minimum of 1 full bitcoin.........the volume would dry up and the price would fall.

To me...........that is the problem with bitcoin........everything is artificial.

It is an interesting concept though........if it could be applied to the stock markets.

Example..........

A company buys 1000 shares of Google..........and then resells 1/100th share to it's investors for a small fee.

How many people would buy 1/100th share of Berkshire A shares?

The shares of course would never leave the holding company, and the investors would be partners.......but they could buy or sell their shares to "new" or other partners on an internal exchange if they wish.


----------



## fatcat

sags said:


> Strange that given all the negative news, bitcoin prices remain in the $600 -$700 level.


 funny, it's almost as though its a product thats proving to be really robust



> I think the price is artificially supported by the small amounts of bitcoins that can be exchanged, rather than whole bitcoins.


 also funny, maybe that buying and exchanging partial coins was part of the original plan to keep it robust ... just a thought 



> If bitcoin trading was only done in a minimum of 1 full bitcoin.........the volume would dry up and the price would fall.


 but it isn't trading in full bitcoins, it's trading in partial bitcoins or full bitcoins, that creates choice and makes the system more robust and likely to draw greater support



> To me...........that is the problem with bitcoin........everything is artificial.


i hear you, it's just a bunch of numbers, who can trust numbers ?



> It is an interesting concept though........if it could be applied to the stock markets.
> 
> Example..........
> 
> A company buys 1000 shares of Google..........and then resells 1/100th share to it's investors for a small fee.
> 
> How many people would buy 1/100th share of Berkshire A shares?
> 
> The shares of course would never leave the holding company, and the investors would be partners.......but they could buy or sell their shares to "new" or other partners on an internal exchange if they wish.


excellent points, really spot on ... if they were smart, berkshire would offer much less expensive shares than the A shares and those shares would probably skyrocket because they would be less expensive


----------



## sags

A bit of a stir on the bitcoin forums.

Somebody holding 400,000 bitcoins for years, has decided to move them somewhere. At today's prices that is about $250 million worth.

It is only speculation on what the movement means. New wallet......sold on private market......hiding money from the Feds.......Feds seizure......Satoshi's stash............??

Problem is............whoever owns them can't sell them in bulk........or they would crash the market.

Nice problem to have though..........

Sell 50.......get a cheque for $25,000.........sell 50........get a cheque for $25,000

I could do that all day and not get bored..........


----------



## james4beach

sags said:


> Sell 50.......get a cheque for $25,000.........sell 50........get a cheque for $25,000
> 
> I could do that all day and not get bored..........


And just what do you report to the government, then?

You've got to bring the money through the banking system at some point. Questions will be asked... get ready to answer them.


----------



## sags

As far as I know, Canada would require capital gains taxes on the difference between purchase and selling price.

I'm sure the CRA would be happy to accept the capital gains taxes........but wonder what would happen if there was a sudden collapse in price.

Would they allow losses?


----------



## andrewf

> As I said before........if Google stock was available as 1/100th of a one share.......I would expect the price to artificially rise as people bought 1/100th at a time.


Isn't that what we call a stock split? 

I honestly don't think it makes major difference to the price. If anything, it makes the market more liquid, which could reduce the liquidity premium required to hold it (thereby raising the price slightly). I don't think the effect would be large or persistent.


----------



## fatcat

andrewf said:


> I honestly don't think it makes major difference to the price. If anything, it makes the market more liquid, which could reduce the liquidity premium required to hold it (thereby raising the price slightly). I don't think the effect would be large or persistent.


there is no real difference as brk.a and brk.b demonstrate:

View attachment 365


----------



## sags

fatcat said:


> there is no real difference as brk.a and brk.b demonstrate:
> 
> View attachment 365


Thanks for the graph Fatcat. I didn't realize the B shares tracked the A shares so closely in returns.

It might be something I would be interested in buying and holding for my son.....30 years down the road, when he is ready to retire penniless.

I was considering laddered GICs....but the Berkshire Fund is diversified, holds solid companies and the returns have far exceeded the market index for decades.

Just buy a whack of shares and leave the driving to them........sounds like a good plan.

Now, if I can convince my wife to give up the GIC idea..........


----------



## fatcat

sags said:


> Thanks for the graph Fatcat. I didn't realize the B shares tracked the A shares so closely in returns.
> 
> It might be something I would be interested in buying and holding for my son.....30 years down the road, when he is ready to retire penniless.
> 
> I was considering laddered GICs....but the Berkshire Fund is diversified, holds solid companies and the returns have far exceeded the market index for decades.
> 
> Just buy a whack of shares and leave the driving to them........sounds like a good plan.
> 
> Now, if I can convince my wife to give up the GIC idea..........


berkshire b is on my watch list, it is so diversified as you say ... if i win the lottery i'll buy 1 share of the a perhaps


----------



## dsaljurator

sags said:


> As far as I know, Canada would require capital gains taxes on the difference between purchase and selling price.
> 
> I'm sure the CRA would be happy to accept the capital gains taxes........but wonder what would happen if there was a sudden collapse in price.
> 
> Would they allow losses?


I have a few friends that made money speculating on BTC last year, and they reported the capital gains. I have no idea if anyone has tried to report capital loses though. Maybe we'll find out this year.


----------



## juniperpansy

Bitcoin is just going through growing pains at the moment. 
In developed countries with stable currencies, crypto-currencies' advantages are somewhat limited 
Imagine though, living in a 3rd world country with %$#@ all for infrastructure and a government that will happily hyperinflate the local currency, crypto's advantages become quite big. My guess they will start to take firm hold in 3rd world nations first and then work their way up from there

Bitcoin is the frontrunner of crypto-currencies and I can see no reason for that to change


----------



## dogcom

What impact do you think the arrests will have on Bitcoin.

http://news.yahoo.com/two-bitcoin-e...ney-laundering-scheme-162424352--finance.html


----------



## fatcat

not much ... there will be a lot of this in the future
bitcoin attracts people who tend to be anti-establishment so this will no doubt be a regular occurrence with bitcoin


----------



## richard

A lot of people take that risk just to be able to watch TV shows - for something actually involving money I imagine there will always be a small group of people ready to go to great lengths and do whatever it takes to avoid being subject to governments.


----------



## sags

The price had a small drop......but bounced back.

Bitcoiners are a hardy bunch............that's for sure.

The guy arrested and charged..........is cooked. They only put a portion of what they know in an arrest warrant.......and they already know a lot. He is well known in bitcoin circles and is part of the Bitcoin Foundation.

It looks like the FBI has a lot more information than people thought, a greater degree of ability to track bitcoin transactions and emails than people thought, and are not done arresting people involved in the Silk Road investigation yet. 

Somebody........probably Ross Ullbright, the Silk Road website owner...........is feeding the authorities everything he knows.

That tends to happen when you are facing 30 years in prison, and the Feds decide where you will be spending it and for how long.

Not in the main stream news as much, was a major drug dealer on the Silk Road website was arrested last week or so.

Authorities around the world are picking them off............one at a time.

I would imagine there are some pretty nervous people right now. The FBI is looking for some who have fled.


----------



## sags

Big news............so I thought the thread should be revived, rather than post another one.

It appears that Mt.Gox the biggest bitcoin exchange has gone bankrupt. Their website is down and trading has been halted.

A statement from other bitcoin exchange owners, and members of the Bitcoin Foundation confirms the news.

There is also a released draft copy of the restructuring plans to rename the exchange GOX and start over. The domain name GOX.com was just sold to the owner of the now defunct Mt.Gox

According to the draft, *744,000 bitcoins are missing*. They have about 2000 only left on hand.

At a peak price of $1200 each...........I don't even want to do the math of what they were worth at one time last year.

The price of bitcoins has been falling as of late....to around $550 on exchanges that still work.........still a lot of cash is missing.

Many people lost a lot of money.

Interesting to me was that the other people high up in the bitcoin movement said nothing about the problems, but told people everything was okay. They were either too naive or too stupid to be running anything bigger than a lemonade stand.

To me.........bitcoins appear to have been one big fraudulent enterprise, run by criminals and aided by naive computer geeks.

Lots of discussion about the situation here.........

http://www.reddit.com/r/BitcoinMarkets


----------



## fatcat

sags said:


> Big news............so I thought the thread should be revived, rather than post another one.
> 
> It appears that Mt.Gox the biggest bitcoin exchange has gone bankrupt. Their website is down and trading has been halted.
> 
> A statement from other bitcoin exchange owners, and members of the Bitcoin Foundation confirms the news.
> 
> There is also a released draft copy of the restructuring plans to rename the exchange GOX and start over. The domain name GOX.com was just sold to the owner of the now defunct Mt.Gox
> 
> According to the draft, *744,000 bitcoins are missing*. They have about 2000 only left on hand.
> 
> At a peak price of $1200 each...........I don't even want to do the math of what they were worth at one time last year.
> 
> The price of bitcoins has been falling as of late....to around $550 on exchanges that still work.........still a lot of cash is missing.
> 
> Many people lost a lot of money.
> 
> Interesting to me was that the other people high up in the bitcoin movement said nothing about the problems, but told people everything was okay. They were either too naive or too stupid to be running anything bigger than a lemonade stand.
> 
> To me.........bitcoins appear to have been one big fraudulent enterprise, run by criminals and aided by naive computer geeks.
> 
> Lots of discussion about the situation here.........
> 
> http://www.reddit.com/r/BitcoinMarkets


the fat lady has not yet sung ... no one said this was going to be easy ... why do you keep expecting this to work like your local td bank sags ?

criminality, incompetence and confusion abound and yet BTC endures through it all so far ... and if it fails another will take its place until something finally stands

it's a new idea, a new concept that has the potential to disrupt the exchange of money, goods and services throughout the world

nobody is in charge here ... why would you even think it would be easy ?

one of the biggest, most sophisticated and most tightly controlled and locked down companies in the world (i refer to the one named after a fruit) has been knocked on its *** by a single line of computer code

why would you expect a leaderless chaos like bitcoin to just merrily go down the lane humming a happy tune ?

you strike me as incredibly naive about all this ... this is all going exactly according to plan


----------



## sags

The plan.........LOL.........

The price has dropped $150 since I posted. It is now hovering just over $400 and dropping.

Tomorrow morning every major news media will be covering the story and we will see what that does to the price.

One could look at it as a "buying" opportunity if they continue to drop, but the cost of mining new ones would become prohibitive.

As miners shut down their computers and move on to other ventures, that will be the ultimate end of bitcoins.


----------



## braintootired

Prices on other exchanges have gone back up to 500.


----------



## favelle75

And now the price is $520. Just like the stock market, the BTC market overreacts.

Funny that people point out the criminality and fraud surrounding Bitcoin, yet gloss over the fact that cold hard cash is just as bad. I guess you would want to ban dollah bills now? Because no where, ever has cash been laundered, counterfeited, or involved in ANY sort of criminal activity. Nope.



/sarcasm.


----------



## sags

Nobody is glossing over the fact that cash has risk as well.............but there are some huge differences between bitcoin and cash.

1) If the bank has my money stolen from their possession, they have to replace it or the government insurance will.

2) If someone hacks into the bank and steals the money, their location and identity is traceable and will be discovered.

3) The "theft" in this case was worth $350,000,000 dollars. With dollars that money will have to show up somewhere, either packed in bundles on skids, or as entries into a bank account. That many bitcoins could be stored on a memory stick to be accessed at will later. If the perpetrators spend it slowly over time, they may never be discovered.


----------



## andrewf

LOL. $350 million stolen and the boosters are saying "Move along. Nothing to see here."

This kind of reinforces my belief that bitcoin is a payment method, but not a good store a value. Highly volatile prices, highly susceptible to theft. On the payment method front, it's not clear to me that it's better than credit cards or other forms of electronic payment. The round trip cost of $$>BTC>$$ is a few % in spread, right, so what is the advantage over CC?


----------



## richard

Bitcoin isn't like cash in a bank, it's more like cash under a mattress (or cash that someone else is kindly keeping under their mattress for you). There is a sizable number of people around the world who really like that idea even though it has risks.

I don't think a price of $500 is "too low" given that there was a lot of interest when it was still under $10. My understanding is that the network adapts to the level of activity so if the number of people mining suddenly doubles it doesn't mean the value will go up and if it drops by half it doesn't mean the value will go down.

Bitcoin transactions are public too so if someone traces back the theft they could see if those are spent later (I don't know enough about the issue to guess at whether the theft can be identified in the transaction records). Only the people involved in those actual transactions would know who was spending it though.


----------



## fatcat

sags said:


> The plan.........LOL.........
> 
> The price has dropped $150 since I posted. It is now hovering just over $400 and dropping.
> 
> Tomorrow morning every major news media will be covering the story and we will see what that does to the price.
> 
> One could look at it as a "buying" opportunity if they continue to drop, but the cost of mining new ones would become prohibitive.
> 
> As miners shut down their computers and move on to other ventures, that will be the ultimate end of bitcoins.


sure, the plan *is* chaos ... it attracts gamblers and speculators and people looking for a big payoff and willing to risk their money 

these people abound and jump into penny stocks and play every possible game on the table

bitcoin at present is a gamble, a risk and anyone who thinks it is anything else isn't paying attention

you seem to have completely missed the meaning and power of bitcoin (regardless of whether it succeeds or fails) which is that it is the beginning of the devlopment of decentralized global stateless currency... this has tremendous disruptive power

what remains is to work through the chaos and develop a stable system (no small thing)

bitcoin is completely irrelevant to the category of electronic non-state based currency, it's the _category_ that matters

just let go of your obsession with bitcoin, leave it to the gamblers and keep an eye of what will come next in this space and how it will affect the movement of payments around the world


----------



## richard

And expect that weak players will get knocked out of the game sometimes. That's happening with Bitcoin like it happened to banks 100 years ago, technology companies 15 years ago, and airlines every single decade since they started operating.


----------



## CPA Candidate

Can anyone explain why another type of currency is needed for legitimate trading of goods and services?


----------



## sags

Without centralization and regulation...........there is counter party risk up the wazoo.


----------



## richard

CPA Candidate said:


> Can anyone explain why another type of currency is needed for legitimate trading of goods and services?


Have you ever tried to get 7 billion people to agree on something unanimously?


----------



## fatcat

CPA Candidate said:


> Can anyone explain why another type of currency is needed for legitimate trading of goods and services?


disruption ? ... innovation ? ... competition ? ... privacy ? convenience ? ... _lower online transaction costs_ ?



> sags
> Without centralization and regulation...........there is counter party risk up the wazoo.


 that can change as security improves and systems are implemented that allow you to carry and control your coins (https://bitcoin.org/en/choose-your-wallet) ... you realize that two people can simply transact business in complete privacy by exchanging bitcoins either in-person or online ? ... without any regulation or oversight

this is no different than two people who meet at the local swap meet and buy and sell stuff using cash 

is there risk, sure, there is always risk in any transaction involving cash (and many other kinds of transactions) 

but bitcoin has a huge advantage over cash which is its virtuality, its non-physicality ... 

sure it presents new risks but also new opportunities


----------



## andrewf

The price of bitcoin is determined by marginal buyers/sellers willingness to hold BTC over time. BTC has no inherent value and could just as easily be worth $5 or $50,000 as $500. 

The difficulty of mining bitcoins is determined by how much computational resources are pursuing the fixed number of new coins produced each day, which is strongly influenced by the price of those bitcoins. New resources will tend to be added as long as the marginal addition of computation as a % times the value (quantity * price) of BTC produced each day is greater than the cost of owning and operating those resources (including energy, cooling, and depreciation of hardware). More resources will be added until there is no profit for marginal producers. If the price falls, the computational resources added will tend to fall as well and difficulty will also fall.


----------



## Eclectic12

fatcat said:


> ... but bitcoin has a huge advantage over cash which is its virtuality, its non-physicality ...
> 
> sure it presents new risks but also new opportunities


I dunno ... this guy might disagree a bit.

http://news.cnet.com/8301-11386_3-57614038-76/uk-man-tries-to-retrieve-$7.5-million-in-bitcoins-from-dump/


Cheers


----------



## Eder

fatcat said:


> disruption ? ... innovation ? ... competition ? ... privacy ? convenience ? ... _lower online transaction costs_ ?


I see you left out security which was a very important attribute earlier with bitcoin, can't have it all I guess.


----------



## fatcat

Eclectic12 said:


> I dunno ... this guy might disagree a bit.
> 
> http://news.cnet.com/8301-11386_3-57614038-76/uk-man-tries-to-retrieve-$7.5-million-in-bitcoins-from-dump/
> 
> 
> Cheers


you want me to actually have to list all the cash, gold and silver buried, lost, stolen and just left in paper bags by mistake ? ... 

Las Vegas cabbie finds $300,000 in backseat, returns it to poker player
people do this all the time ...

nobody said bitcoin is without risks ... the guy was stupid and paid the price ... he should have backed up his keys to at least two different locations in digital and even paper form or microfiche or whatever, be creative ...yeah you don't want to lose your keys



> I see you left out security which was a very important attribute earlier with bitcoin, can't have it all I guess.


 depends on what you mean by security ? ... it's insecure at present because the value fluctuates wildly

keeping your keys secure presents exactly similar risks to cash, gold and silver ... no difference

except bitcoin is probably more secure assuming you are smart enough to follow the same rules that you follow now for your digital life right ? ... multiple backups in different locations 

that guy should have had a duped hard drive in safe deposit box and printed list of keys stashed somewhere safe

nobody is claiming that bitcoin is fairy dust, you gotta use your head, especially with 7.5M worth of BTC


----------



## sags

The problem is that at some point, bitcoins are meant to be spent.........not buried in the backyard for safekeeping.

That means you have to trust an "exchange" which is nothing more than a website, often of unknown origin and operated by unknown persons.

There have already been previous instances of these exchanges suddenly closing down and disappearing with all the bitcoins and cash.

How do you trust somebody you don't know?

How do you keep out the criminal element?

How do you do those things in a decentralized and unregulated environment, where nobody is in charge of anything?

Bitcoins are an open invitation to criminals to steal your coins...........without any legal repercussions.


----------



## fatcat

sags said:


> The problem is that at some point, bitcoins are meant to be spent.........not buried in the backyard for safekeeping.
> 
> That means you have to trust an "exchange" which is nothing more than a website, often of unknown origin and operated by unknown persons.
> 
> There have already been previous instances of these exchanges suddenly closing down and disappearing with all the bitcoins and cash.
> 
> How do you trust somebody you don't know?
> 
> How do you keep out the criminal element?
> 
> How do you do those things in a decentralized and unregulated environment, where nobody is in charge of anything?
> 
> Bitcoins are an open invitation to criminals to steal your coins...........without any legal repercussions.


do you even know how bitcoin works ? ... 

you don't even need to go near an exchange to acquire bitcoins ... 

you don't even need to use an exchange to spend bitcoins

you can buy bitcoins at a bitcoin machine and store them anyway you like, you can buy bitcoins in person from a stranger or a friend

you can keep your coins on a piece of paper in your pocket and spend them at a flea market by handing over the keys

you can buy something online directly by spending the coins from a wallet on your desktop

at least do some research sags ... you don't even understand how bitcoins work

you equate mt. gox's troubles with bitcoins and they are not the same thing

you don't really understand how bitcoins work ...


----------



## MoreMiles

fatcat said:


> do you even know how bitcoin works ? ...
> 
> you don't even need to go near an exchange to acquire bitcoins ...
> 
> you don't even need to use an exchange to spend bitcoins
> 
> you can buy bitcoins at a bitcoin machine and store them anyway you like, you can buy bitcoins in person from a stranger or a friend
> 
> you can keep your coins on a piece of paper in your pocket and spend them at a flea market by handing over the keys
> 
> you can buy something online directly by spending the coins from a wallet on your desktop
> 
> at least do some research sags ... you don't even understand how bitcoins work
> 
> you equate mt. gox's troubles with bitcoins and they are not the same thing
> 
> you don't really understand how bitcoins work ...


NO WE DON'T!

Why would some anonymous Joe Blow get to sell computer numbers for hundreds of millions or billions of dollars? You don't even know who created them and why should you pay him? For all we know, someone has all these planned out... laughing at you buying his "thin air"... It's so simple, you don't even need to "bag air" or "bottle water" to make money. You just have to create bunch of numbers and people will exchange their earned labour (ie, physical work time) for your thin air.

If you think you know Bitcoin so much... tell us who created it and where are all those numbers now? You can't right?


----------



## Eclectic12

fatcat said:


> you want me to actually have to list all the cash, gold and silver buried, lost, stolen and just left in paper bags by mistake ? ...


What for?

I'm not saying there isn't risk to other currencies just that lauded advantage of it's virtuality & non-physicality don't make it risk free either.


Cheers


----------



## jacofan

man, if bitcoins are that complicated to understand it sure sounds like to me that its easier to make it shady... I like the KISS approach. I'll watch it from the sidelines out of curiousity.. I read it was a Japanese guy that created Porkemon started it all.


----------



## cainvest

IMO, Bitcoin isn't a viable currency, the main reason being it's wild price fluctuations. Sure it was a great, but risky, investment gamble for those that got in at a low price but I just don't see the appeal for masses to use it.


----------



## kevinlk

fatcat said:


> do you even know how bitcoin works ? ...
> 
> you don't even need to go near an exchange to acquire bitcoins ...
> 
> you don't even need to use an exchange to spend bitcoins
> 
> you can buy bitcoins at a bitcoin machine and store them anyway you like, you can buy bitcoins in person from a stranger or a friend
> That bitcoin atm will require all your personal info, as well as biometrics. Knowing how many bitcoin startups were hacked, would you really trust them with your personal info and biometrics?
> 
> you can keep your coins on a piece of paper in your pocket and spend them at a flea market by handing over the keys
> You can't just hand over the keys to complete a transaction. To complete a transaction simply by handing over the keys, with the price wildly fluctuing, the keys you hold in your hand may end up having 20% more or less in value, so someone will get fleeced somewhere. Second of all, if you hand over the keys, the merchant will require you that you stay within the area for up to 60 minutes to ensure that he can transfer the bitcoins over to his own wallet, to ensure that you don't use a duplicate of the keys to send the coins elsewhere before the coins are confirmed to be in his possession by the network. I'm sure everyone will love waiting up to 60 minutes everytime they make a purchase. Also, handing over the keys mean that you know the cost of the transaction beforehand, as you need to calculate the transactions (and the fees) up to many decimals correctly. I don't know of anyone who goes to a store and knows to the cent how much it will cost him.
> 
> you can buy something online directly by spending the coins from a wallet on your desktop
> Wallets on a desktop are a big no-no as mentioned in the bitcoin community, as there are a very increasing amount of viruses that simply sweep the wallet and steal all the bitcoins. While computer security is a must no matter what currency one is using, if someone hacks into your bank account, the bank can at least do something. With bitcoins, once they're sent, they're gone. No recourse, nothing you can do. Antiviruses are great, but they don't protect against zero-day viruses.
> 
> at least do some research sags ... you don't even understand how bitcoins work
> 
> you equate mt. gox's troubles with bitcoins and they are not the same thing
> 
> you don't really understand how bitcoins work ...



Just to add... if MtGox indeed got 750k bitcoins stolen, then it is a major problem for bitcoin. The value of bitcoin is held mainly because the big holders of Bitcoin don't sell, but massively hold. 47 people hold 30% of the bitcoins, and 947 people hold 50% of them. Roughly 12 millions bitcoins have been mined, so they hold 6 millions bitcoins. At the time of the writing, on one exchange, the bitcoin price is at 564$. If someone were to dump 5000 coins (which is a small amount considering the 6 millions owned by a small group, as well as the 750k now in possession of the thief, the price would drop to 515$. A very small amount of people can greatly manipulate the market, whether willingly or not. In the case of MtGox, you can bet that the thief will want to unload the coins, albeit he'll probably do it smartly at small amounts at a time.

In short, Bitcoin doesn't work as a currency. The concept is interesting, but not mature enough for a currency.

Edit: Just to add, any business holding bitcoins can effectively be hacked and lose their bitcoins. However, the other concern is that since hacks are hard to prove/demonstrate, and that the funds can't easily be tied to a person, a lot of "hacks" were in fact inside jobs, people who just cleaned the customers funds, claimed a hack, closed shop and disappeared. One of the rare case where an inside job was proved was in the Bitcoinica case, which ended with roughly 45000 bitcoins stolen. The owners were eventually found out, sued in 2012, and the case is still pending in courts. People who had money there will likely not see any of their money back as laywer fees will eat up whatever was remaining.


----------



## richard

Eclectic12 said:


> I'm not saying there isn't risk to other currencies just that lauded advantage of it's virtuality & non-physicality don't make it risk free either.


It is no less risky than any small, valuable physical asset (although some technically-oriented people like to spend all day thinking up complicated encryption systems to create the perfect protection for their information). On the other hand you can't send a gold bar to someone in Australia in 1h at virtually no cost. The tradeoffs are real but the combination of them is new.

Another thing noted in a news story this morning is that no one expects a bailout for those who lost bitcoins. After the last decade I'm guessing a lot of people would find that appealing, even when it's not in their best interests.



MoreMiles said:


> If you think you know Bitcoin so much... tell us who created it and where are all those numbers now? You can't right?


Let's look at who created banknotes: http://en.wikipedia.org/wiki/John_Law_(economist). Seems too risky to use them right? 

In case that was a serious question, their origin mostly doesn't matter now because the way that new bitcoins are created is open and known to everyone. They are distributed at random among the people running the computers that help process transactions. The only way their origin could have an effect now is if the creator knows a secret flaw. 

Since the entire operation of the system is exposed for anyone to see and it's gotten a lot of attention, this is unlikely. The problem that Mt Gox had was known for 2 years and most other exchanges avoided it. They just decided it wasn't necessary to do anything about it until their accounts were so compromised and mixed up that they could barely complete a transfer if they wanted to.

I haven't personally verified the details but I trust that certain aspects of bitcoin security are guaranteed - the same way that online banking is secured so that someone in an airport can't steal your password without taking control of most of the computers in the world to crack the code. That security makes them useful as a way to conduct trade. The long-term demand for them can only come from the amount of trade that is done using bitcoins.

Nothing is completely secure though so once you've taken out one risk you need to know which other ones you are exposed to. Someone standing beside you can catch a password as you type it in, and someone who gets access to your digital information can spend your bitcoins.


----------



## fatcat

Eclectic12 said:


> What for?
> 
> I'm not saying there isn't risk to other currencies just that lauded advantage of it's virtuality & non-physicality don't make it risk free either.
> 
> 
> Cheers


excellent point and i agree completely ... 
i would go further and say their virtuality demands even greater attention to detail ... 

if you bury coins in the backyard and forget where they are you can at least get a metal detector (as can your neighbor of course) but with bitcoins, you can lose all your value by merely deleting a file that you didn't properly back up

or losing a usb or hard drive that you didn't back up

no question, bitcoin virtuality is an advantage that comes at the price of really knowing what you are doing


----------



## OptsyEagle

fatcat said:


> if you bury coins in the backyard and forget where they are you can at least get a metal detector (as can your neighbor of course) but with bitcoins, you can lose all your value by merely deleting a file that you didn't properly back up


This couple in California proved your very point.

http://www.ctvnews.ca/world/california-couple-find-gold-coins-worth-10-million-1.1703528


----------



## fatcat

OptsyEagle said:


> This couple in California proved your very point.
> 
> http://www.ctvnews.ca/world/california-couple-find-gold-coins-worth-10-million-1.1703528


right, except in this case the finders appear to be the equivalent of the "neighbors" 

what a mystery as to how they got there and why the depositer never came back (or perhaps will be coming back and be having a really, really bad day)

all these assets have risk in storage, transfer and usage


----------



## Longwinston

Longwinston said:


> I would advise anyone "invested" in bit coins to get out. This is going to crash down, hard and fast.
> Use your head and get out.


*ahem*

Anyways, the most important aspect for a currency is trust. 
If you don't have trust, then you don't have a viable currency.

Bitcoins are not trustworthy.


----------



## Eclectic12

[ off topic comments deleted ]



fatcat said:


> ... what a mystery as to how they got there and why the depositer never came back (or perhaps will be coming back and be having a really, really bad day) ...


If the owner really "socked them away as soon as they were put into circulation", with dates of 1847 to 1894 - there's lots of possibilities for a bad day (gunfight? thrown by a horse? illness?) and probably not all that likely to be coming back for them.


Cheers


----------



## richard

Anyone who saw it as an investment and put in more than they could afford to lose should never have done that in the first place.


----------



## fatcat

richard said:


> Anyone who saw it as an investment and put in more than they could afford to lose should never have done that in the first place.


i suspect they saw a hole in the ground as a bank more than an investment ... remember in those days banks went bust on a regular basis


----------



## richard

I meant Bitcoin - hopefully no one actually thought they could plant a money tree


----------



## MoreMiles

richard said:


> I meant Bitcoin - hopefully no one actually thought they could plant a money tree


But Bitcoin is a money tree, you can grow it out of nowhere from a computer?!

And nobody has an issue with that? If any country's currency can be mined (ie, printed) by a home computer by anyone... then why should still there be any value in that creation (eg, paper or digits), right?


----------



## richard

Like any currency, it is just a way of accounting for trade in real goods and services. What goes in has to equal what goes out. For anyone who buys and sells bitcoin on an exchange it doesn't produce anything on its own like all good long-term investments do and this was very clear from the beginning.


----------



## andrewf

MoreMiles said:


> But Bitcoin is a money tree, you can grow it out of nowhere from a computer?!
> 
> And nobody has an issue with that? If any country's currency can be mined (ie, printed) by a home computer by anyone... then why should still there be any value in that creation (eg, paper or digits), right?


If you think bitcoin mining is so easy, you should try you. I think you'll be sorely disappointed.


----------



## MoreMiles

andrewf said:


> If you think bitcoin mining is so easy, you should try you. I think you'll be sorely disappointed.


The fact it is allowed in the first place makes it a joke. It's like Canadian Government allows its own citizens to legally print their currency from home computers, no matter how small / slow that amount may be. 

Right?


----------



## fatcat

MoreMiles said:


> The fact it is allowed in the first place makes it a joke. It's like Canadian Government allows its own citizens to legally print their currency from home computers, no matter how small / slow that amount may be.
> 
> Right?


wrong ... all kinds of communities print their own currency

http://www.shareable.net/blog/how-to-start-a-community-currency

my favorite is the lasqueti island mint: http://www.lasqueti.ca/lasquetimint

ps. the government of canada can neither allow nor disallow the creation of bitcoins, bitcoins are completely outside their purview ... do your research


----------



## PoolAndRapid

..


----------



## andrewf

Imagine printing $1 bills with resources (paper, ink, printer, electricity) that cost $0.97 apiece... or maybe even >$1.


----------



## cainvest

fatcat said:


> ps. the government of canada can neither allow nor disallow the creation of bitcoins, bitcoins are completely outside their purview ... do your research


But the government could make them illegal could they not?


----------



## kevinlk

The government could, if only to protect people from themselves. Owning and using bitcoins require the user to be an expert at IT security, which obviously very few people are. Otherwise, they'll end up losing everything they have, and businesses will continue to get hacked and have their bitcoins stolen. Including MtGox, over 1.5 millions bitcoins were stolen by businesses, which doesn't include the multiple people who lost their bitcoins because they lost their keys, got attacked by a virus and what not.

Some US senators are actually calling for a ban on Bitcoin, which imo would be a good thing. The technology is good, but to be used as "real money", it needs regulation and a better framework.


----------



## sags

PoolAndRapid said:


> It's not like that at all. The number of bitcoins that can be in circulation is fixed. Fiat monies are not. The fact that the central banks can fire up the printing presses as they see fit and print off an unlimited number of notes is more of a joke in my mind.


Bitcoins are sold in fractions and can be expanded to 8 decimal points.

Therefore, the conceived supply control of fixed bitcoins is a false one.

It is perpetrated by those who believe in bitcoin........not as a currency, but as a long term buy and hold that will gain expotential value.

The only difference between bitcoins and fractional fiat banking.............is which rich person holds all the wealth.

Some have convinced themselves that owning bitcoins will make them the new wealthy elite.

I think it is a sign of the times...........and how desperation has clouded their judgment.

It is a nice fantasy though. Would a person rather work their whole lives and scrape together a retirement......or buy a few bitcoins?


----------



## richard

The only way to ban Bitcoin would be to take away everyone's computers. Remember when music downloading was going to be shut down 15 years ago?


----------



## cainvest

richard said:


> The only way to ban Bitcoin would be to take away everyone's computers. Remember when music downloading was going to be shut down 15 years ago?


Not exactly, it would impact local businesses and kiosks the most though. And if you can't readily buy/spend it, locally that is, it'll never have a chance to gain widespread use.


----------



## kevinlk

You probably can't destroy from existence bitcoin, but you can certainly outlaw the use of it. Bitcoin would then go back to being used only in underground markets like Silk Road.

At this point, though, outlawing bitcoin will be more and more difficult a more mom and pop are buying into it and would hate to see the government make them lose their funds. From a government point of view, regulation will likely be the way to go.


----------



## andrewf

sags said:


> Bitcoins are sold in fractions and can be expanded to 8 decimal points.
> 
> Therefore, the conceived supply control of fixed bitcoins is a false one.


This is faulty reasoning. Growth of the money supply is constrained in BTC, and is totally unresponsive to changes in demand for money. This is what makes the value of BTC so unstable. It is inherently unstable.


----------



## fatcat

cainvest said:


> But the government could make them illegal could they not?


what does that even mean ? ... it is extremely hard for the government to even know who owns them ... very, very difficult but not impossible

second, on what grounds would they prosecute you ? ... what rationale ?

if you follow the same capital gains rules as you do for other currencies, what would be the rationale for prosecution ?

you own a string of numbers and that is somehow that makes you a criminal ?


----------



## fatcat

fatcat said:


> what does that even mean ? ... it is extremely hard for the government to even know who owns them ... very, very difficult but not impossible
> 
> second, on what grounds would they prosecute you ? ... what rationale ?
> 
> if you follow the same capital gains rules as you do for other currencies, what would be the rationale for prosecution ?
> 
> you own a string of numbers and that is somehow that makes you a criminal ?





> From a government point of view, regulation will likely be the way to go.


 and would that _regulation_ work ? ... it _can't_ be regulated

it can be exchanged person to person just like cash ... it can bought and then spent completely anonymously and privately


----------



## cainvest

fatcat said:


> what does that even mean ? ... it is extremely hard for the government to even know who owns them ... very, very difficult but not impossible
> 
> second, on what grounds would they prosecute you ? ... what rationale ?
> 
> if you follow the same capital gains rules as you do for other currencies, what would be the rationale for prosecution ?
> 
> you own a string of numbers and that is somehow that makes you a criminal ?


Don't really know what they'd do here, or if they'd even try to make it illegal ... just saying they could do it as other countries already have.
http://en.wikipedia.org/wiki/Legal_status_of_Bitcoin


----------



## kevinlk

> it can be exchanged person to person just like cash ... it can bought and then spent completely anonymously and privately


The transaction needs to happen at the blockchain, or else there is a risk you take the same bitcoins you just gave and simply scam the other person. Also, the blockchain is completely public to everyone, so anyone can trace your transactions. You may want to try to hide your tracks by creating proxy addresses for any transaction, but even then it won't be completely anonymous.

As for regulation, Bitcoin as is can hardly be regulated. A Bitcoin version 2.0, with core changes to the protocol, could, perhaps? It wouldn't be Bitcoin anymore and would render Bitcoin 0.8 worthless. If cryptocurrency becomes the way of the future, I wouldn't be surprised that the government launch their own at some point. There is no way that the government adopts Bitcoin as is with its current flaws.


----------



## andrewf

Cryptocurrencies are kind of inherently decentralized. I don't even know what it would mean for the government to start a cryptocurrency by any usual definition.

Never mind bitcoin 2.0, there are dozens of competing currencies. Litecoin, Dogecoin (so variety, much success), etc.


----------



## sags

If the goal is to create a better way to send money around the world, or to buy things online without revealing your identity to the website, something like the Mint Chip will do the job nicely. Spend dollars to buy dollars on the Mint Chip at a bank and use it to transfer money seamlessly. It would be backed by the Canadian government, secure and trustworthy for merchant acceptance.

If the goal is to overthrow and replace the current financial system, through a cryptocurrency, it won't be successful.

There is no reason for any government to ever accept a crytocurrency as legal tender.


----------



## Cal

Mt. Gox Files for bankruptcy:

http://www.cbc.ca/news/world/bitcoin-exchange-mt-gox-files-for-bankruptcy-1.2554834


----------



## sags

Interesting to see what the prices and volumes are today.

http://bitcointicker.co/


----------



## braintootired

There are people actually buying Dogecoin with real money?


----------



## andrewf

sags said:


> There is no reason for any government to ever accept a crytocurrency as legal tender.


You're right about that.


----------



## andrewf

braintootired said:


> There are people actually buying Dogecoin with real money?


Of course there are, otherwise it would be trading at $0.0000000


----------



## MoreMiles

There is a sucker born every minute.


----------



## sags

MoreMiles said:


> There is a sucker born every minute.


So true.............and for not taking advantage of that truth, and buying 100,000 bitcoins for 10 cents each......and selling them for $1000 each..........I could be buying an island in the sun right now, and declaring myself a soveriegn country.

I won't buy Dogecoin............The name sounds lame.

Wait for a good name.........something that sounds official and trustworthy.

Like..........oh I don't know........Goldman Sachs Coin?


----------



## fatcat

cainvest said:


> Don't really know what they'd do here, or if they'd even try to make it illegal ... just saying they could do it as other countries already have.
> http://en.wikipedia.org/wiki/Legal_status_of_Bitcoin


they made marijuana illegal in 1922

hows that working out for the government, let me answer, billions of dollars of wasted government money and citizens lives disrupted and even destroyed

the government has no ####ing business regulating bitcoin ... it's none of their business ... their job is to collect taxes and prosecute people who don't pay their taxes ...if i want to own gold coins or bitcoin that is my business ... if i make gains on either and don't report them, then i am liable for tax fraud

the mere ownership of bitcoin doesn't make anyone a criminal

the government can try to disrupt networks, mount attacks on servers and invade local exchanges with made up warrants and so on and they _will_ be able to connect coins to owners but if you KNOW what you are doing you can use bitcoin with what amounts to complete anonymity

idiots and uninformed fools should _really_ stay away from bitcoin especially if you intend to use it for something illegal ...



> It is considered pseudo-anonymous. With casual usage, it is not very anonymous at all. Transactions occur between cryptographic addresses and anyone can create any number of these addresses. However, Bitcoin transactions can be traced back to your IP address. The history of all transactions can be analyzed for spatial and temporal correlations. If one address can be linked to a person, then related transactions can be identified. I would say that bitcoin offers a degree of privacy not offered by other means of online payment, but for a sufficiently motivated entity, it is possible to reconstruct a person's bitcoin transaction activity. There are steps that one can take to make it more anonymous, but it is certainly not as anonymous as physical cash. And, you have to know what you're doing to use it in complete anonymity. I would not advise using bitcoin if you are seeking complete anonymity.


on the other hand, if you use tor and "clean" your coins you can probably get anonymity ... but is it worth it ? ... for most people it isn't ..

bitcoin offers the possibility to move money around the world very quickly for very low costs ... this is it's primary advantage ... all kinds of competing products will come and go in the meantime and bitcoin may last or it may fall by the wayside

it might be a good idea to dial back the hysteria and realize that there is money to be made in the field of virtual / electronic currency


----------



## richard

cainvest said:


> Not exactly, it would impact local businesses and kiosks the most though. And if you can't readily buy/spend it, locally that is, it'll never have a chance to gain widespread use.


Local trade is exactly where it can't be stopped. I know a lot of things happening locally that are a little outside the regulations. If they don't attract attention they will just keep happening.


----------



## richard

fatcat said:


> it might be a good idea to dial back the hysteria and realize that there is money to be made in the field of virtual / electronic currency


Nope, seashells are the way to go. This modern stuff just isn't built to last.


----------



## fatcat

richard said:


> Local trade is exactly where it can't be stopped. I know a lot of things happening locally that are a little outside the regulations. If they don't attract attention they will just keep happening.


precisely, gold, silver, cash, bitcoins ... all can be traded directly, person to person

the government is worried about people who anonymously get their money into bitcoin and then _live in a bitcoin world_ exactly like some people who this very day use only cash in all their dealings ...


----------



## richard

As long as it's a little inconvenient they don't need to worry much about it much. They're more likely to make noise than take action.


----------



## cainvest

fatcat said:


> they made marijuana illegal in 1922
> 
> hows that working out for the government, let me answer, billions of dollars of wasted government money and citizens lives disrupted and even destroyed
> 
> the government has no ####ing business regulating bitcoin ... it's none of their business ... their job is to collect taxes and prosecute people who don't pay their taxes ...if i want to own gold coins or bitcoin that is my business ... if i make gains on either and don't report them, then i am liable for tax fraud
> 
> the mere ownership of bitcoin doesn't make anyone a criminal
> 
> the government can try to disrupt networks, mount attacks on servers and invade local exchanges with made up warrants and so on and they _will_ be able to connect coins to owners but if you KNOW what you are doing you can use bitcoin with what amounts to complete anonymity
> 
> idiots and uninformed fools should _really_ stay away from bitcoin especially if you intend to use it for something illegal ...
> 
> 
> 
> on the other hand, if you use tor and "clean" your coins you can probably get anonymity ... but is it worth it ? ... for most people it isn't ..
> 
> bitcoin offers the possibility to move money around the world very quickly for very low costs ... this is it's primary advantage ... all kinds of competing products will come and go in the meantime and bitcoin may last or it may fall by the wayside
> 
> it might be a good idea to dial back the hysteria and realize that there is money to be made in the field of virtual / electronic currency


All they have to do is make it illegal for businesses to use them, that would pretty much kill their widespread use in the country that did so. 

As far as bitcoin advantages go, I don't see any with the volatility it has.


----------



## andrewf

US did a good job of squishing online poker.


----------



## fatcat

andrewf said:


> US did a good job of squishing online poker.


 :very_drunk: :very_drunk: ... now that would be a mix for the really adventurous among us ... using bitcoin to play online poker !


----------



## marina628

First time I heard of bitcoin was a poker forum and I did get some very early and got out around $300. USA Thinks they killed online poker but there are still poker rooms and casinos taking and paying USA players.I purchased some bitcoin because many of my peers were doing so and we are all poker players online.I personally know somebody who lost 1 million dollars worth of bitcoin but his cash investment was $30,000.I just learned this about 1 hour ago and I told him how stupid he was not to pull his money out but then again he loses plenty due to greed.


----------



## andrewf

US is satisfied that they dissuaded the vast majority from playing online poker. Only the most persistent will find a way to fund an account/withdraw winnings.


----------



## kevinlk

There are actually online poker rooms accepting bitcoin/working exclusively in bitcoin. Over the risk of the feds closing online poker/bitcoin, there's also the risk that all the funds of the online poker place go poof just like MtGox. Not that it can't happen with real money, but the great is much greater with bitcoin.


----------



## sags

Fatcat..........it looks like Japanese regulators are taking the attitude you suggest, and saying the debacle "isn't our problem", to the hundreds of frantic people calling in to their offices, demanding they step in and help them recover their money.

I looks like the only thing they, and the FBI are interested in is if there was criminal activity such as theft or fraud involved.


----------



## sags

Some of the big online poker sites were caught stealing people's money..........but they quickly bounced back.

A couple of the sites knew what people's hands were...........and had shills betting against them, knowing they couldn't lose.

Other sites refused to pay out big winners or disappeared with the cash.

People are dumb.

I wouldn't trust any online gambling site, unless it was regulated by the Ontario or some Provincial government.

Having the regulator...........the gambling authority of Malta..........just doesn't do it for me.


----------



## fatcat

sags said:


> Fatcat..........it looks like Japanese regulators are taking the attitude you suggest, and saying the debacle "isn't our problem", to the hundreds of frantic people calling in to their offices, demanding they step in and help them recover their money.
> 
> I looks like the only thing they, and the FBI are interested in is if there was criminal activity such as theft or fraud involved.


it sure isn't their problem ... a too large percentage of the population has more money than brains ...


----------



## fatcat

a very good article on why goldman sachs likes bitcoin (or more properly, the _idea_ of bitcoin, since they properly question whether or not it will survive competitive pressure) ...

an excerpt says it very well:



> But according to Goldman Sachs, no one should cheer the decline because the world’s most popular virtual currency is in many ways superior to the way we pay for things currently. For one, paying with Bitcoin is a whole lot cheaper. For another, it’s much less vulnerable to cybercrime such as the recent attack on Target Corp.’s data base resulting in one of the largest thefts of customer credit card information in history.





> “The Bitcoin network uses the Internet to bypass some of the money transfer hurdles from traditional banking systems and national boundaries,” the 25-page report says. “As a result, the network could theoretically solve some of the pain points in the current payments and money transfer ecosystems,” enabling individuals “to transfer money as seamlessly as sending an email, while reducing money transfer and currency conversion fees.”





> The existing payment system, dominated by banks and financial service companies, is expensive and complex. Critics argue it is also outdated, resulting in a drag on the overall economy. Every time a consumer swipes his credit card, the credit card companies and the banks take a piece of the purchase price — typically around 3% or more — as a fee.


http://business.financialpost.com/2...aditional-currency-goldman-sachs-report-says/

this is precisely the value that bitcoin offers and whether or not it succeeds or some other system replaces it, it puts pressure and a demand for innovation on the current payment transfer options


----------



## andrewf

I'm skeptical that bitcoin is much cheaper. No one will actually want to hold bitcoins, so the transaction is going to be currency to bitcoin to currency, so there will be a spread. If you want any insurance against changes in bitcoin price during the transaction (bitcoins transfers can take 20 mins to confirm), some third party will have to operate as a middleman/market maker.


----------



## fatcat

andrewf said:


> I'm skeptical that bitcoin is much cheaper. No one will actually want to hold bitcoins, so the transaction is going to be currency to bitcoin to currency, so there will be a spread. If you want any insurance against changes in bitcoin price during the transaction (bitcoins transfers can take 20 mins to confirm), some third party will have to operate as a middleman/market maker.


i don't know if you read the article but this is exactly what sachs says and i agree ... bitcoin gets no respect ... if all it does is to create market pressure and competition to lower transaction fees, it will have been a success

as it now stands, all the big money middlemen, like visa, paypal and the big banks want to insert their grubby little fingers in between every transaction and we all pay for it

bitcoin can make the amount of money that lands in their middleman hands much smaller

there is a function for middlemen and they deserve to be paid a fair amount 

and there is also a market for payments that are direct and unmediated and bitcoin is ideal for these


----------



## Just a Guy

http://www.cringely.com/2014/03/12/bitcoin/


----------



## fatcat

Just a Guy said:


> http://www.cringely.com/2014/03/12/bitcoin/


exactly, it persists though all this stuff

it bears repeating that so far, all the problems are related to exchanges and user stupidity like the guy who lost the hard drive
the underlying mathematical integrity remains solid and has never been broken

bitcoin is proving to be extremely robust if erratic


----------



## sags

Without exchanges, people would be reduced to buying and trading bitcoins among themselves.

Most people aren't going to carry around thousands of dollars in cash to "meet up" with someone to buy their bitcoins.

Exchanges are both a key element of the bitcoin protocol and a central weak point.

Bitcoin "prices" are holding around the $650 USD mark..........but it has to be considered they have very low volume and are owned by very few people. I have seen estimates that 50 people own 30% of all the bitcoins mined.

The market is so small that tiny fractions of bitcoins........a couple of dollars worth.........can cause the price to rise or fall.

If I bought 1/1000th share of Apple for $10 dollars...........it wouldn't make Apple's shares worth $10,000.

If the bitcoins were poured into the "market".........the price would collapse.


----------



## fatcat

sags said:


> Without exchanges, people would be reduced to buying and trading bitcoins among themselves.
> 
> Most people aren't going to carry around thousands of dollars in cash to "meet up" with someone to buy their bitcoins.
> 
> Exchanges are both a key element of the bitcoin protocol and a central weak point.
> 
> Bitcoin "prices" are holding around the $650 USD mark..........but it has to be considered they have very low volume and are owned by very few people. I have seen estimates that 50 people own 30% of all the bitcoins mined.
> 
> The market is so small that tiny fractions of bitcoins........a couple of dollars worth.........can cause the price to rise or fall.
> 
> If I bought 1/1000th share of Apple for $10 dollars...........it wouldn't make Apple's shares worth $10,000.
> 
> If the bitcoins were poured into the "market".........the price would collapse.


https://localbitcoins.com/


----------



## Just a Guy

I just saw a local bar advertising a bit ion ATM.


----------



## sags

fatcat said:


> https://localbitcoins.com/


The meet up area in our city is in a high crime area. I wouldn't walk around there with a lot of cash.

The forum on the website already has people complaining about being scammed.

ATM machines require a lot of personal identification to complete transactions. Why would anyone willingly give all their ID to someone they don't know?

Currently, there is no easy and secure way to buy or sell bitcoins.

Perhaps if a big bank or other financial institution were to start an exchange..........or the TSX, but until then.........it is all fraud, theft and bad news for anyone trusting the untrustworthy.

I would venture a wild guess.....that more money has been stolen in the bitcoin scheme......than has legitimately been made.


----------



## andrewf

Also, the ATMs take a very healthy spread.


----------



## fatcat

sags said:


> The meet up area in our city is in a high crime area. I wouldn't walk around there with a lot of cash.
> 
> The forum on the website already has people complaining about being scammed.
> 
> ATM machines require a lot of personal identification to complete transactions. Why would anyone willingly give all their ID to someone they don't know?
> 
> Currently, there is no easy and secure way to buy or sell bitcoins.
> 
> Perhaps if a big bank or other financial institution were to start an exchange..........or the TSX, but until then.........it is all fraud, theft and bad news for anyone trusting the untrustworthy.
> 
> I would venture a wild guess.....that more money has been stolen in the bitcoin scheme......than has legitimately been made.


you need to free yourself from bitcoin .. liberate yourself from your obsession with all that is wrong with bitcoin ... forget bitcoin and think instead about the disruptive power of virtual, stateless, crypto currency and what that can do to change financial and political paradigms

every single problem you and others have raised about is solvable, virtually all of them are technological
when was the last time you asked for $100 at an ATM and it gave you $125 ?
atm's work mostly flawlessly as do pacemakers, jet engines and a host of other technological objects

forget bitcoin ... whatever happens to bitcoin is irrelevant

what bitcoin represents is what you need to understand 
and that is more powerful than any failure of mt. gox or any other crappy, badly designed software ecosystem

you need to let go of bitcoin sags ... just take a deep breath and look further down the road


----------



## cainvest

fatcat said:


> think instead about the disruptive power of virtual, stateless, crypto currency and what that can do to change financial and political paradigms


So in a nutshell, what can it do that is good (and legal) for everyone?


----------



## fatcat

cainvest said:


> So in a nutshell, what can it do that is good (and legal) for everyone?


put simply, it changes the relationship of the individual to the state, big business and big data and essentially moves more power in the direction of the individual and away from large institutions, this a potentially paradigm changing thing, 

first, it is a global currency, it crosses all borders and allows individuals to exchange value directly without any need of conversion to an intervening currency, this alone is enough since it eliminates huge costs of currency conversion ... this will put pressure on anyone who deals in the transfer of money to lower their costs and allows people to do so with a much higher degree of privacy than is currently available

in a very short time it has become an accepted currency and has survived disaster after disaster and all of this as a currency without any state backing, none, zero ... this is unprecedented and has put central banks (and goldbugs who are rightly critical and concerned about virtual currency) on notice that unless you handle your currency in a more transparent, smart and open way, it will have competition

bitcoin is open-sourced and crowd sourced and controlled by no person, state or organization ... this gives it a unique power and robustness

as a stateless currency, it has much in common with gold (and the gold bugs will tell you at length and in detail what central banks have done to manipulate gold prices because it serves as alternative currency to their fiat money) except it has none of gold's major weaknesses, 

portability, speed, anonymity and security make gold a very poor choice as a global currency 
bitcoin has none of these weaknesses ... (i am speaking of the bitcoin or its replacement that can and will emerge in a mature form)

like gold bitcoin shifts power away from the state and toward the individual, this has very profound implications for how we do business


----------



## cainvest

fatcat said:


> put simply, it changes the relationship of the individual to the state, big business and big data and essentially moves more power in the direction of the individual and away from large institutions, this a potentially paradigm changing thing,
> 
> first, it is a global currency, it crosses all borders and allows individuals to exchange value directly without any need of conversion to an intervening currency, this alone is enough since it eliminates huge costs of currency conversion ... this will put pressure on anyone who deals in the transfer of money to lower their costs and allows people to do so with a much higher degree of privacy than is currently available


Conversion isn't a huge cost but rather a small percentage. Of couse one would likely have to factor in the underlying currency (exchange rate) unless the cryptocurrency is used nearly everywhere.



fatcat said:


> in a very short time it has become an accepted currency and has survived disaster after disaster and all of this as a currency without any state backing, none, zero ... this is unprecedented and has put central banks (and goldbugs who are rightly critical and concerned about virtual currency) on notice that unless you handle your currency in a more transparent, smart and open way, it will have competition


Accepted currency? I think this is a big stretch, more like a fringe currency as I would have big trouble even trying to find a local store that would accept the currency here.



fatcat said:


> bitcoin is open-sourced and crowd sourced and controlled by no person, state or organization ... this gives it a unique power and robustness


But like any currency, it can be controlled (at least somewhat) by those having more of it.


----------



## sags

Bitcoins rely on the internet to send funds. Email money transfers rely on the internet to send funds.

The "problem"..........if there is one, is that email transfers aren't widely adopted or available yet.

Bitcoins won't have an impact on credit cards. Credit cards offer "credit"........the ability to buy things and pay later. 

Bitcoins are more like a debit card, which already exist.

The main "features" of bitcoins.......the ability to transfer funds with anonymity and without taxation have failed. The inventor failed to conceive of the illegal use of the protocol, which would bring about government intervention.

The inventor of bitcoins produced a protocol that could only be successful in a world without criminals.

A successful digital currency in the future will more represent an improvement on the current system..........rather than a full scale revamp of it.


----------



## sags

Unless there is a conversion to local currency, bitcoins (or any other crypto-currency) would have no value.

They are priced in USD or the local currency.

How could any cryto-currency replace the local currency?

Would the number of alt-currency required to buy a house in Vancouver............be the same number of alt-currency required to buy a house in Zimbabwe?

Of course not.........they will always require conversion to the local currency..........not replace it.

If alt-currencies aren't a currency.........they are simply another way to transfer fiat.

A better Paypal..........or more robust email cash transfer.......cheaper Money Gram.........whatever.

But as long as business is created to make a profit..........I wouldn't count on cheaper anything.


----------



## fatcat

looks like dark wallet is one of several new technologies to make bitcoin transactions absolutely anonymous 
http://www.wired.com/2014/04/dark-wallet/

the big money backers like marc andreesen want to make money by making it un-anonymous 
the little money backers want to make money by making it anonymous


----------



## kevinlk

The fun part about the dark wallet is that Amir Taaki one of the people behind it. He used to be in the Bitcoinica project, along with someone named Zhouthong and someone else, which ended up losing all the investors money as the Zhouthong account drained the accounts, who then quickly blamed a "mysterious chinese relic collector" of the theft. Last I've read, the case was still pending in court, but moving at a snail's pace due to the lack of cooperation from the Bitcoinica group. Meanwhile, Amir, as well as Zhouthong, do work on other projects, such as dark wallet, and it seems that bitcoin investors have no memory of the previous thefts. True also that new investors don't make their due diligence in looking up the past of the different people behind projects, too.


----------



## sags

Lots of shady characters........and people with zero business experience operating in the Bitcoin world.

Until a level of the highest trust is attained, I can't see most people getting involved in bitcoins.

IF bitcoins were a currency that could be used directly for buying goods and services........it would be a game changer.

But, they are nowhere near that level now........and may possibly not survive long enough to ever be.

The businesses who accept bitcoin payments today..........immediately convert them to US dollars or the local currency.

Thin margins and high price volatility could put a business.........right out of business.

Imagine investor reaction..........if Walmart said........."we lost 10 million last quarter due to bitcoin transaction volatility"

The CEO would be looking for new employment.


----------



## fatcat

sags said:


> Lots of shady characters........and people with zero business experience operating in the Bitcoin world.
> 
> Until a level of the highest trust is attained, I can't see most people getting involved in bitcoins.


really ? seriously ? ... we must read different newspapers because i see virtual currencies as one of the hottest tech spaces on the board ...

google "virtual currency start ups" and look at the results, everyone and his brother is trying to crack this nut

carl icahn is yelling at ebay to split off paypal ... there are dozens of serious bitcoin competitors

but you can't see most people getting involved ? ... OK


----------



## marina628

Interesting read Four years later  Show of hands who bought coins back then?


----------



## new dog

JP Morgan CEO Jamie Dimon says Bitcoin is a fraud and another Tulip bulb mania.

https://www.cnbc.com/2017/09/12/jpm...es-20-percent-fall-for-the-third-quarter.html


----------



## marina628

Well it spends like real money for me


----------



## new dog

I suppose the way to say it is that it is real until it isn't. Jamie figures if enough governments and central banks want to shut it down then it will become worthless.


----------



## fatcat

i give him credit at the beginning where he seperates the blockchain from bitcoin ... when we talk about "bitcoin" some of us are talking about bitcoin the currency and some are talking about the blockchain

he is right, as a speculative investment, bitcoin is no better or worse than going to the dogtrack, it's a very risky investment that offers a very good way to lose a lot of money

the blockchain on the other hand is a whole other technology which will likely be highly disruptive

its also worth noting that jp morgan and bitcoin are direct competitors when it comes to moving money around


----------



## marina628

People think this may go to $10,000 ,$50,000 or even more and I was shocked it got up even to $2000 .I cashed all of mine out as stated in previous posts with exception of 1 coin and i put around $7500 USD in to bittrex to do some trading and not much to write about that experience .I consider it a gamble and seriously not 'investing' but I did make out ok because of online gambling sites paying my wins in bitcoin .


----------



## sags

Rumor is that China has banned all bitcoin exchanges and the price dropped $900.....an almost 25% drop.


----------



## sags

Consider that the NSA has been using previously unknown technology to intercept and filter all cellular traffic and then think about the fact they published papers about blockchain technology well before it was "invented" by the mysterious Satoshi Nakamota.


----------



## nathan79

new dog said:


> JP Morgan CEO Jamie Dimon says Bitcoin is a fraud and another Tulip bulb mania.
> 
> https://www.cnbc.com/2017/09/12/jpm...es-20-percent-fall-for-the-third-quarter.html


Pretty worthless argument. You might as well ask Coke what they think of Pepsi... "It's not the real thing"... lol.


----------



## new dog

Jamie Dimon is a bit of a snake so it is to be expected coming from him. 

My take on it is if you make some good money like marina did and cashed out like anything that goes straight up then you did well. As far as using it for money, like the dollar or any other major currency, it is way to volatile for that.


----------



## sags

Bitcoin price is crashing again in what looks like panic selling.

http://bitcointicker.co/


----------



## sags

Jamie Dimon's comments, China crack down, and North Koreans hacking bitcoin exchanges.......bitcoin down $1000 in 7 days.


----------



## nathan79

I just don't see any of those having a lasting impact.

Bitcoin has died 160 times


----------



## sags

Perhaps Jamie Dimon's comments are based on knowledge that isn't publicly available. He probably has access to the top levels of the Trump administration.

CNBC is running a story that North Korea has been caught mining bitcoins and may be selling them to Chinese partners to raise cash and skirt sanctions.

The US may be leaning hard on China to shut bitcoin down.

https://www.cnbc.com/2017/09/13/bit...h-korea-to-generate-funds-for-the-regime.html


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## Johnred

Funny that a guy being sued for fraud would say that. Must be getting worried that BTC is gaining on him.

Why is JPM trying to patent it then? 175 times?

http://www.zerohedge.com/news/2013-12-15/jpmorgans-bitcoin-alternative-patent-rejected-175-times


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## nathan79

JP Morgan Securities Ltd one of the largest buyers of Bitcoin today...
https://twitter.com/IamNomad/status/908831764457672709?s=09


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## sags

Those are bitcoin derivatives............20 equal 1 bitcoin, so while it looks like thousands of bitcoins JP Morgan is processing sales of a few hundred for some clients.

Jamie Dimon is happy to accept the commission if clients insist on buying bitcoins. He said he will fire any JPM trader who trades in them though.


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## Johnred

JPM is hilarious. Such a classic bait and switch. Wouldn't doubt if an ETF is on the horizon. It must be bad if they're still trying to actively build their own right?


https://www.indeed.com/m/viewjob?jk=01fc4d9895cf5f59&from=serp


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## sags

JPM isn't interested in bitcoins. They are testing and exploring the blockchain.


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## fatcat

sags said:


> JPM isn't interested in bitcoins. They are testing and exploring the blockchain.


yet bitcoin is by far the most well-known and easily the most robust demonstration of blockchain we have so far seen

jpm is clearly talking down the oppositions book .... if they acknowldege via their research that the blockchain is solid and worthy of implementation .... what is their problem with bitcoin ?

the answer is simple: bitcoin is much faster, its much, much less expensive ... and most important, it can function peer to peer which gives tremendous user control and privacy, jpm can;t come close to matching that

of course jpm is going to shite on bitcoin, it's a direct competitor with in some way, a much better business model


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## Johnred

Exactly and well said.


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## OnlyMyOpinion

Here's someone who's not afraid to 'roll the dice' :eek2::
*This 39-year old sold everything he had for bitcoin: house, car and children's toys - now he lives on a campsite waiting for the ultimate cryptoboom*
https://ca.finance.yahoo.com/news/39-old-sold-everything-had-124023536.html


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## forrory1

New all time high today. ~5200 USD / ~6500 CAD.

Been following this tech for about 5 years now. Was hook after reading the original white paper. Gambled 1% of my portfolio on it at the time. That 1% has outperformed the rest of my portfolio to date which has seen 7+% yearly gains. 

It is easy to look at the tech and decide it doesn't really have any significant uses. I get this response from a lot of the people around me. We live in Canada a nation famous for having a stable economy/government and rock solid banking system. The rest of the world minus a few counties is not so fortune this is easy to forget. These are the people who will benefit the most from this type of technology. 
- 2.2 billion people of Africa who have no access to any banking services but carry mobile phones.
-1.3 billion India of India whose government recently cancelled high denomination bill last year.
-1.4 billion people of China who government imposes capital controls on their currency.
-32 million people living in Venezuela whose government is devaluing the local currency in an attempt to control the country. 

Bitcoin knows no borders or holds no political opinion.

Ignore the misinformed talking heads on TV. You would not ask your mailman about email in 1975 (even today) so why would take the banks word on a new disruptive technology like Bitcoin? The financial industry is long over due for disruption. We got Uber, AirBnB, Tesla.... where is the banking killer app?

I might be time to start talking about what roll Bitcoin should play in our portfolios.

R


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## sags

Bitcoins are worthless digital numbers until they are turned into the local currency, so none of the problems listed are solved by bitcoins.


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## sags

Rich people own the financial institutions. They make the rules. 

Bitcoin has no value to them. If the blockchain has any value they will strip it out and use it themselves.


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## marina628

I have been in bitcoin a while in fact I think it was probably created with gambling in mind because it seems going back 2010 -2011 only people I knew in that circle even heard of it.I have been around it since when it was worth $3.60 .Here is some known facts from my own experience ,until two weeks ago I had several ways to cash out bitcoin and convert it to cash in my hand.I have no choice but accept bitcoin payments from 1-2 programs i work with in the gambling niche so every month i receive around 1-2 bitcoins even now and it is easy to buy bitcoin from Canada but very difficult to withdraw to a Canadian bank account.Ironically I sent to my friend in USA and they have atm cards to get cash in a flash .I did a test $400 transfer into coinsquare and although it says transfer date was October 5 it has not been deposited in my bank acct yet.I would be interested to hear more about people's cashout expenses after October 1 at various exchanges if possible.


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## forrory1

sags said:


> Bitcoins are worthless digital numbers until they are turned into the local currency, so none of the problems listed are solved by bitcoins.


99% of the local currency is digital. Or as you put it "worthless digital numbers". 

The future is a digital one. Even if you refuse to accept it. You did not sending me a hand written note...

R


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## new dog

If a digital currency is the way of the future it will be run and managed by governments and central banks. What will become of the digital currencies outside the system I am not sure of a we will have to wait and see what they will be worth.


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## fatcat

..


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## forrory1

new dog said:


> If a digital currency is the way of the future it will be run and managed by governments and central banks. What will become of the digital currencies outside the system I am not sure of a we will have to wait and see what they will be worth.



Anyone is free to change the bitcoin code and run their version. What the free market decides to follow will ultimately prove what is "successful". I am aware the Government of Canada has tried a "CanadaCoin" or something to that tune.

Given the choice and ability to freely exchange one digital currency for another I don't see the advantage in holding "'Merica-coin" for example. Risk affects value. Value of such a coin would fluctuate based on the current climate of political unrest, war mongering or infirm leadership.

A currency "back" by a government was the best form of security we could offer in the past. And before that it was back by gold but we abandon that. I think it had something to do with the functionality?

A currency backed by cryptography and open programming source code while difficult to understand/accept is just numbers in the end and will by definition consistently produced a calculated outcome. 

R


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## new dog

If the world gets together sometime in the future and decides on a new reserve currency using the digital currency platform is a go what will become of these digital currencies?

Most of the world could get together and decide that anything other then the reserve digital currency or sanctioned local digital currencies can be used legally. Any other platforms can be made illegal and you could be arrested for having it on any of you electronics or whatever. Is it possible for governments if they agree to get together on this to basically snuff out these currencies?


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## boingboing

Way back in 2012 i remember a company giving away free bitcoins for just signing up. It was like 3 BTC. I signed up but never thought to keep my private key so i lost it all. Bravo to several of you who had the foresight to get in early and hold. As i look through the transaction lists its astonishing to see some trading $300m worth of BTC in one go. Not sure if that is legit with early adopters, or just drug cartels doing their thing.


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## forrory1

new dog said:


> If the world gets together sometime in the future and decides on a new reserve currency using the digital currency platform is a go what will become of these digital currencies?
> 
> Most of the world could get together and decide that anything other then the reserve digital currency or sanctioned local digital currencies can be used legally. Any other platforms can be made illegal and you could be arrested for having it on any of you electronics or whatever. Is it possible for governments if they agree to get together on this to basically snuff out these currencies?


Definitely something to consider.
https://www.cnbc.com/2017/10/13/bit...ital-currency-imf-christine-lagarde-says.html

I question governments ability to control a technology like this. It would be similar to trying to control the internet but harder. Ex great firewall of China.

What is the likelyhood of governments coming to an agreement on a global currency. I won't hold my breath on this EU being the example that comes to mind.

R


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## fatcat

new dog said:


> If the world gets together sometime in the future and decides on a new reserve currency using the digital currency platform is a go what will become of these digital currencies?
> 
> Most of the world could get together and decide that anything other then the reserve digital currency or sanctioned local digital currencies can be used legally. Any other platforms can be made illegal and you could be arrested for having it on any of you electronics or whatever. Is it possible for governments if they agree to get together on this to basically snuff out these currencies?


first, it is unlikely that the world would decide on a digital reserve currency, control of currency has huge implications for the health and welfare of any nation state, which is why britain maintained the british pound even though they joined the european market

i have read about things like denial of service attacks to essentially block access to digital currencies but really don’t how well cryptocurrencies can route around this kind of attack

at the moment, most if the action involves getting into and out of these currencies in local paper currency but if any digital currency gains momentum then business, trading, buying and selling can all take place within the currency itself with no need to leave, so the challenge then is to simply find entry into the currency and that can by simply meeting someone in person and buying coins

as bitcoin wallets become easier to understand and use, the system will become more robust and widespread and harder to control

it is possble though very difficult to track down bitcoin owners and there are people working on methods of keeping the entire currency completely occult

so, the question of nation states ability to control these currencies sucessfully is still very much open


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## sags

Unless the public demands retailers accept bitcoins as legal tender, I don't see much use or future for the idea.

Why would a retailer accept the extra cost of dealing with another currency ? Cash, debit or credit card are enough options.

Email transfers are possible for anyone who has internet access and a bank account. The system can be expanded worldwide.

Without internet or a bank account, bitcoins wouldn't be of any use to people either.

Bottom line is..........I have yet to hear a valid argument of why the world needs bitcoins.


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## sags

JP Morgan moves $6 Trillion dollars a day through their financial institution. They move the digital money all over the world. 

It seems bitcoin fans don't understand what is already available and hope to get rich reinventing the wheel.


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## new dog

Here is the big problem as I see it and that is volatility. If a business is using it like cash they would have to move it into a major currency like the Euro or the dollar or they would face a huge risk in holding Bitcoin. So the business would have to convert it quickly and bring it back into the system.


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## fatcat

new dog said:


> Here is the big problem as I see it and that is volatility. If a business is using it like cash they would have to move it into a major currency like the Euro or the dollar or they would face a huge risk in holding Bitcoin. So the business would have to convert it quickly and bring it back into the system.


bitcoin is only 8 years old, ethereum is brand new, it takes time to to stabilize a currency and build trust ... again, look at the concept of the block chain and the power of digital decentralized currencies


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## forrory1

An interview with Kevin O'leary talking about Bitcoin. He makes some interesting points about what a currency is to him.

https://www.google.ca/url?sa=t&rct=...=pkO2kQW79u8&usg=AOvVaw2QB6ajPjGW8_8tN83uE5S-

Video becomes a lot more interesting when notice it was filmed in 2013. Bitcoin market cap (poor measure) is just under 100 Billion today.

R


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## fatcat

forrory1 said:


> An interview with Kevin O'leary talking about Bitcoin. He makes some interesting points about what a currency is to him.
> 
> https://www.google.ca/url?sa=t&rct=...=pkO2kQW79u8&usg=AOvVaw2QB6ajPjGW8_8tN83uE5S-
> 
> Video becomes a lot more interesting when notice it was filmed in 2013. Bitcoin market cap (poor measure) is just under 100 Billion today.
> 
> R


yeah, he said he might just “dabble”, i hope for his sake he dabble-dabbled-do cuz he will be doing well

i do like the political point he makes which is that part of what drives bitcoin is mistrust of central banks

bitcoins are capped at 21 million coins and get harder to mine as more come into existence

the analogy to gold and the mining of gold is direct and unmistakeable
bitcoin is a backdoor way to get us back on the gold-standard


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