BitCoin Discussion
BitCoin has a lot of critics who call it a scam. It also has a lot of proponents who claim it has compelling advantages over existing fiat currencies.
For BitCoin:
It's an easy way to send payments over the internet with minimal or no fees.
Wealth can be generated by anyone who cares to run a GPU, the more people doing this the better for the network it is.
It can be cheaply and easily stored unlike physical assets.
It's semi-anonymous.
It has no central government control.
The crypto it's based on makes it the most secure form of money currently available.
Against BitCoin:
Wealth is initially allocated unfairly.
It's semi-anonymous.
It has no central government control.
The exchange rate varies wildly.
It's not backed by physical assets ( e.g. gold. )
It's too easy to steal.
Personally I believe BitCoin solves some major problems in the world. It could replace expensive money transfer services like paypal and western union with something very near to free. It could reduce the influence of corrupt bankers on the world and practically eliminate their ability to hold governments to ransom. It opens the tax loopholes that have always existed for the rich to the common man.
I accept it also has downsides. It facilitates transfers of wealth beyond any government or political control which helps organised crime and various forms of bribery.
What do you think?
85 Replies
@sednet:
Wealth can be generated by anyone who cares to run a GPU, the more people doing this the better for the network it is.
Why is this a positive?
@ericholtman:
@sednet:Wealth can be generated by anyone who cares to run a GPU, the more people doing this the better for the network it is.
Why is this a positive?
Because everyone is as entitled to receive wealth as everyone else.
The total amount of coins generated by the entire network is fixed. Anyone can get coins proportional to their share of the network's computing power. There isn't a central agency printing money so there is no risk that that agency will act unfairly.
In the non-BitCoin world these money printing agencies recently printed massive amounts of money and handed it to their banker friends. They rewarded the corrupt for their collective incompetence and in so doing devalued the currency held by everyone else. They robbed the poor to pay the rich. Such things are morally abhorrent as well as bad economics and would be quite impossible with BitCoin.
@sednet:
Because everyone is as entitled to receive wealth as everyone else.
The total amount of coins generated by the entire network is fixed.
Yes, I know how bitcoin works.
That wasn't my question.
The question is: why is it "better for the network" if 500 people are running mining rigs, versus just 5 people?
From an add about selling an Open Source FPGA Bitcoin Miner…
> At 80 MHps, I will need at least 3 of these to achieve a single 5830 hashrate.
That is $595.-x 3 = $1785.- at full price, vs. $190.- for the 5830.
Giving the 5830 is consuming $11.- a month in electricity, and assuming this board will consume zero electricity, it will take more than 145 months, or 12 years to recover the investment, always comparing to a 5830.
@sednet:
I started this topic to prevent another from going off on a wild tangent.
Well, given that this is /dev/random, everything is a wild tangent by definition.
> BitCoin has a lot of critics who call it a scam. It also has a lot of proponents who claim it has compelling advantages over existing fiat currencies.
It is an interesting social experiment, to say the least. I don't think it is necessarily good or bad, nor do I think it can be boiled down to "We should (support|destroy) bitcoin because (benefit|drawback)." So, I generally sit on the sidelines. I have a posted bitcoin address for receiving unsolicited bitcoin, but I don't (openly) accept it as payment for debts, nor do I plan to do anything but convert it to USD.
What I do like about it: it is, essentially, cash. You have it, until you don't. It can be irreversibly destroyed by your own storage mishaps, it doesn't earn interest, and nobody knows how much you have buried in the back yard.
From a practical standpoint, though, I've been hitching my wagon on Dwolla
What does Dwolla have that Bitcoin lacks? It is actual USD, so I don't have to deal with exchange rates: I can pay for a $1.99 coffee with $1.99, instead of translating the price to 0.38933 bitcoin. But I probably never would have that situation anyway, because Bitcoin is not presently usable in the brick-and-mortar world, where one might buy a cheeseburger or some PVC pipe. I don't think this is an absolute impossibility with Bitcoin, but it would be a lot of work for rather little gain.
I do think it is changing how we think about online currency, though, and that's a good thing. Ironically, while I don't think Bitcoin itself is going to go mainstream, it will likely inspire – or at least provide practical evidence in support of -- something that's better than our current situation.
@ericholtman:
Yes, I know how bitcoin works.
That wasn't my question.
The question is: why is it "better for the network" if 500 people are running mining rigs, versus just 5 people?
It wasn't totally clear to me what you were asking.
The miners are also the transactions processors and can decide what transactions to process and what fees they want to process them. It's far harder for 500 people to profiteer than it is for 5 as it only takes 1 dissenter to break the profiteering.
@sednet:
The miners are also the transactions processors and can decide what transactions to process and what fees they want to process them. It's far harder for 500 people to profiteer than it is for 5 as it only takes 1 dissenter to break the profiteering.
I don't think you need to be a miner to be a transaction processor.
That makes no sense.
@ericholtman:
I don't think you need to be a miner to be a transaction processor.
That makes no sense.
Only the miners are transaction processors, that is only they take a transaction and add it to the permanent record. Any client can generate a transaction and send it out to the network for a miner to process.
@zunzun:
@sednet:Because everyone is as entitled to receive wealth as everyone else.
Given that the maximum number of bitcoins is fixed and less than the number of existing people, your argument is then against bitcoins.
James
The maximum number is fixed but each coin is in principle infinitely divisible. The mining system doesn't allocate coins fairly among all members of the human race as there is no way of doing that. It is grossly unfair but then so is every other form of money that anyone has come up with.
@zunzun:
@sednet:Because everyone is as entitled to receive wealth as everyone else.
If you actually believe this, you have already shared every bit of your wealth with people poorer than yourself - even the thieving and those who refuse to work by their own choice, as they have the same entitlement that you do. Entitlement.
James
That phrase was only meant to cover newly created bitcoins not all existing wealth. I should have said 'everyone is equally entitled to receive the same share of the initial allocation of bitcoins'.
Of course that's not what actually happens but at least it's better than a central agency holding all the cash and allocating it in a grossly unfair way by giving massive payouts to their buddies.
I might say there's two ways to look at the value of currency: intrinsic vs. extrinsic. From the intrinsic standpoint, the $10 bill I have in my wallet is $10, which is more valuable than $5, and less valuable than $20. The accumulation of these results in an increase in value, and the inflationary tendency of the dollar is an everpresent force decreasing the value in its own right. Here, Bitcoin is a serious win: outside its exciting relationships with other currencies, it will reach a point where the value of a hoarded Bitcoin will increase due to the exhaustion of supply.
The extrinsic value is in what that $10 can do. This is usually how I operate, as someone who finds inflation and wealth micromanagement boring and pointless. (I also don't change my own oil.) I know that this $10 will get me a decent lunch tomorrow. However, I also know that this $10 will, on its own, NOT get me a $1.25 soda. Why not? The vending machines won't accept anything larger than a $5, so unless I break it into something the vending machines will accept, it won't have value anywhere in my building. This is a very time-invariant view of money, yes, but not even the richest king or shrewdest investor in the world could buy a soda without anything smaller than a $10.
… and I think I'm getting philosophical here. I don't really have a point, except that I'm going to be boned tomorrow unless I get change for this $10. Anyone?
It's a completely artificial product, when the game is over (i.e. all bitcoins are mined) it's more likely the value will fall to zero.
If they had any intrinsic value what so ever, why are the current bitcoins so cheap? Since it's a known limited supply, why wouldn't they have the value of their future finite supply now?
If I find a piece of land that has a gold vein with ore that can be processed into 15,000 ounces of gold in it, the first gold I mine isn't going to be worth (or sold) for way less then the last few ounces - even though the geologists have already calculated the total amount of gold in that land.
The fact that you have to "process" bits in order to end up with something that is already calculated and numbered, it's financial masturbation to say you're actually producing something.
In the end, bitcoins are nothing but a glorified "find waldo" event that people are dumb enough to assign real value to an imaginary product.
I can only imagine that PT Barnum is laughing his ass off at all the suckers born for this scam.
@vonskippy:
So when all the bitcoins are mined, people actually think their value will continue to increase?
It's just like real estate…. "They're not making any more land, you know".
That's why housing prices always go up.
Oh… wait.
Money has no intrinsic value. This is true for major currencies like USD, EURO, YEN just as it's true for BitCoins. Market value is derived from the ability to trade money for things that do have an intrinsic value. This isn't controversial, it's a known thing.
@vonskippy:
If I find a piece of land that has a gold vein with ore that can be processed into 15,000 ounces of gold in it, the first gold I mine isn't going to be worth (or sold) for way less then the last few ounces - even though the geologists have already calculated the total amount of gold in that land.
That's because nobody cares about your specific gold vein – they just care about the global gold market. When you run out, they'll just buy it from some other mine. I'm assuming you don't have the last mine on the planet, right?
Now, if every gold mine in the world ran out, that would get interesting.
If $10 gets me a nice lunch today and I put $10 in the bank today, when I go to the bank for my $10 + interest next year, if it cannot buy me a nice lunch at that time, then I have been robbed.
Any currency that can prevent that is a perfect currency in my eyes. So far, only gold and silver have come even close to that.
@nehalem:
If $10 gets me a nice lunch today and I put $10 in the bank today, when I go to the bank for my $10 + interest next year, if it cannot buy me a nice lunch at that time, then I have been robbed.
No, you haven't. It's just that your investment choices didn't happen to keep up with inflation.
@ericholtman:
No, you haven't. It's just that your investment choices didn't happen to keep up with inflation.
Why should I have to be worrying about investment choices? I just want to put my $10 in the bank! INVESTING IS THE SCAM
Anyway, this inflation thing doesn't make sense. Prices go up, I get paid more. It's just a waste to time and robbery for the people who are retired and have their life-savings turn into nothing.
At the end of the day, printing more money causes the value of the money to go down. So you are not better off than where you started. The only person who wins with this is the person who has the power to print the money and spend it before the market corrects their thieving.
@nehalem:
Why should I have to be worrying about investment choices? I just want to put my $10 in the bank! INVESTING IS THE SCAM
You do realize that if we go to a gold standard (which pretty much by definition kills off fractional reserve banking), that the entire world's capital structure just falls apart.
It's an idea that hasn't really been thought through by its proponents.
@ericholtman:
You do realize that if we go to a gold standard (which pretty much by definition kills off fractional reserve banking), that the entire world's capital structure just falls apart.
Oh, and the US and Eurozone capital structure isn't in the first stages of falling apart right as we speak.
@nehalem:
Oh, and the US and Eurozone capital structure isn't in the first stages of falling apart right as we speak.
Oh, it certainly is.
But vaporizing 6/7 of the world's money (assuming a 15% reverse requirement) isn't really going to fix that issue.
@ericholtman:
But vaporizing 6/7 of the world's money (assuming a 15% reverse requirement) isn't really going to fix that issue.
It's not going to fix the issue. My point is that we should not have left the gold standard in the first place.
@nehalem:
It's not going to fix the issue. My point is that we should not have left the gold standard in the first place.
Agreed. But keeping the gold standard would mean transfer of wealth to nations that mine gold. It must have been far too tempting for people who are, lets face it, self-interested sociopaths to base money on promises they can break later rather than something that physically exists. Now the governments of the world are so tied up in the fiat currencies that they must prevent a gold standard currency at almost any cost.
BitCoin is the new gold standard, except crypto not gold and without having to mess about with heavy pieces of metal. It's peer2peer so the fascists will have a really hard time getting rid of it.
@sednet:
BitCoin is the new gold standard, except crypto not gold and without having to mess about with heavy pieces of metal. It's peer2peer so the fascists will have a really hard time getting rid of it.
You don't really have to sweat getting rid of something that has zero traction.
@sednet:
It's peer2peer so the fascists will have a really hard time getting rid of it.
You're kidding right? All "they" have to do to get rid of it is ban it's use for any legit transaction.
Then have fun with your valueless arcade tokens.
Oh, wait….
@vonskippy:
@sednet:It's peer2peer so the fascists will have a really hard time getting rid of it.
You're kidding right? All "they" have to do to get rid of it is ban it's use for any legit transaction.
Then have fun with your valueless arcade tokens.
In most of the world "they" banned cannabis years ago. Possession even has a death penalty in some countries. It's still traded just about everywhere. The same with harder drugs. Banning things doesn't get rid of them.
All the governments can really do is refuse to take it to pay tax which is how current governments ensure people use their 'valueless arcade tokens' instead of some else's 'valueless arcade tokens.'
The block having that happened a while back means that bitcoins are now being generated at half the rate ( 25 per block ). Over half the bitcoins that will ever exist exist already.
A few dedicated ASIC mining machines have been built and shipped to ensure the safety of the network. This will ramp up in the next few months.
No serious security threat to the bitcoin network has ever emerged although many bitcoins have been stolen from insecure sites or by old fashioned social engineering.
Bitcoin continues to pickup new users, new services, and gain more publicity every day.
The future looks rosy for bitcoin.
@Guspaz:
BitCoin is also an extremely volatile currency that makes it extremely risky for any business to accept. The value range in USD over the past 30 days is 14.45 - 27.60. How can any business set their prices based on that sort of madly fluctuating exchange rate?
With great difficulty I should imagine. This is currently a major issue but one that is gradually fixing itself as the bitcoin economy grows larger.
All currencies fluctuate in value, just in most it's at such a low level that normal people buying normal things don't even notice.
@Guspaz:
Most currencies don't fluctuate by 100% of their value in a 30 day time period, and this isn't unusual for BitCoin. Few serious businesses will have any interest in it until it stabilizes, which it has shown little evidence of doing so far.
Currently it's pretty unstable but it's getting better. Every time a new business uses bitcoin it gets a little more stable and new businesses are turning up almost daily. You can buy bitcoins at 7-eleven and walmart now so it has some serious traction.
I'm sure it will gain enough stability to be usable as a practical currency, but I can't say when.
@sednet:
I'm sure it will gain enough stability to be usable as a practical currency, but I can't say when.
Ok there Heisenberg.
With no regulation, nor any real government or business to be tied to, the likelihood of bitcoins becoming a practical currency is slim and none. If (and it's a huge super big if) it ever became even the slightest bit popular, then all types of regulation and legal hell will rain down until bitcoin is a mere damp spot on what used to be a ponzi-esque based hobby.
@vonskippy:
With no regulation, nor any real government or business to be tied to, the likelihood of bitcoins becoming a practical currency is slim and none. If (and it's a huge super big if) it ever became even the slightest bit popular, then all types of regulation and legal hell will rain down until bitcoin is a mere damp spot on what used to be a ponzi-esque based hobby.
Mister negative,
There are businesses, lots of them actually. Check out
Peer to peer networks route around legal issues. Maybe you noticed the corporate giants sinking a fortune into stopping torrent networks from stealing movies? All that money and influence is getting them nowhere. Torrent networks are not even fully peer to peer and they are still practically unstoppable.
Bitcoin is fully peer to peer and can be tunneled over any digital network.
Governments can't stop bitcoin without truly drastic measures, I expect they are intelligent enough to recognize and accept this. They will likely just treat bitcoins like any other non-physical asset when it comes to tax, they have no problem taxing shares denominated in foreign currency for example.
@sednet:
Governments can't stop bitcoin without truly drastic measures, I expect they are intelligent enough to recognize and accept this. They will likely just treat bitcoins like any other non-physical asset when it comes to tax, they have no problem taxing shares denominated in foreign currency for example.
snigger You used government and intelligent in the same sentence.
@sednet:
Peer to peer networks route around legal issues.
If major governments pass legislation declaring it illegal for a company to use or accept BitCoin, I'd like to see a company try to argue in court that they're not liable "because P2P!" when the government charges them with violation.
BitCoin's use of peer to peer networking has absolutely zero impact on legal issues. The mere fact that the government is already working on their own digital currency
@Guspaz:
@sednet:Peer to peer networks route around legal issues.
If major governments pass legislation declaring it illegal for a company to use or accept BitCoin, I'd like to see a company try to argue in court that they're not liable "because P2P!" when the government charges them with violation.
BitCoin's use of peer to peer networking has absolutely zero impact on legal issues. The mere fact that the government is already working on
which will be heavily regulated should be enough to illustrate how an unregulated digital currency won't be allowed to operate long. their own digital currency
If is the critical word here. If the major governments outlaw unix we will have to run our mail exchangers on windoze. It's not going to happen. Although the US government does have a history of robbing its citizens of their private assets, see the gold confiscation of 1933.
The Canadian effort won't work, although it's nice that they try to innovate.
@sednet:
Governments can't stop bitcoin without truly drastic measures, I expect they are intelligent enough to recognize and accept this. They will likely just treat bitcoins like any other non-physical asset when it comes to tax, they have no problem taxing shares denominated in foreign currency for example.
Why would governments want to stop bitcoin? It's no different to "Sony PSN credit" (which can also be bought at major retailers). From a tax perspective (eg income tax) then it's a no brainer; the employer and employee have to state the earnings (eg in USD for US based employees) and "payment in bitcoin" would have to be converted to USD value for reporting purposes at the time of payment (same as with any other type of "payment in kind"… shares, gold bars, ruppees, etc).
From a consumer perspective, the day I can walk into Walmart and buy a flatscreen TV with 20 bitcoins then it becomes interesting; otherwise it's a PITA with limited use… no different to PSN or Microsoft credits.
Bitcoin: all the hype, none of the utility.
Well if Kim DotCom and Mega are willing to take BitCoins
Bwahahahahahahaha.
The difference between Bitcoin and the other "in-house" currency (like Sony PSN credits or Amazon's upcoming Kindle credits) is what lawyers call the "lawsuit test". With Sony & Amazon credits, you can sue those company's, but with Bitcoins, if the Scheiße hits the fan, who can you sue???
You can't sue the Internet in exactly the same way you can't sue the government. Therefore your 'someone to sue' argument is flawed.
Despite the negative feelings from the esteemed members of this forum the utility of bitcoins measured by the number of people and companies using them keeps increasing. The price of bitcoins also keeps increasing. It's an experiment but it's taking off.
Lets check back in 6 months to a year and see if it's collapsed as a bad joke or taken off like a rocket.
@sednet:
The price of bitcoins also keeps increasing.
Epic math fail.
@ericholtman:
@sednet:The price of bitcoins also keeps increasing.
Epic math fail.
No, I'm pretty sure sednet was right.
…it's really quite simple as far as math goes, and took less than 5 minutes to fact check… The value (either as a commodity, or parity with fiat currency, or otherwise defining "the value of bitcoin") really has increased:
Price is higher than it was a year ago.
@kuzetsa:
fiat currency
Heh. I love that phrase. Instant marker for "crazy-talk".
@kuzetsa:
@ericholtman:
@sednet:The price of bitcoins also keeps increasing.
Epic math fail.
No, I'm pretty sure sednet was right.
Ericholtman is clearly mentally sub-normal. He can't even form a sentence never mind an argument. Obviously $27 > $5.
Lots of people on here are worth arguing with because there is knowledge and thought behind their arguments. People like Ericholtman are just extras from idiocracy who bring the IQ average down.
@sednet:
Lots of people on here are worth arguing with because there is knowledge and thought behind their arguments. People like Ericholtman are just extras from idiocracy who bring the IQ average down.
Which part of "people need a stable currency" are you having trouble with?
I can explain it to you, but I can't understand it for you.
@zunzun:
@ericholtman:I can explain it to you, but I can't understand it for you.
If I understand the core logical basis of his reasoning correctly, it is
"you're stupid". If I might respectfully add to that, nyah nyah nyah thppffpthttt-thhfpppt.
James
You also forgot "paper gold" and "hyper-inflation"
@ericholtman:
You also forgot "paper gold" and "hyper-inflation"
ericholtman, Go back to trolling twitter with your inane banter. You can't keep up with the pace of conversation here.
Anyway.. Lets look again at where bitcoin is in 6 months to a year. I think it's got a good chance of going up, plenty think it's going down.
@sednet:
Anyway.. Lets look again at where bitcoin is in 6 months to a year. I think it's got a good chance of going up, plenty think it's going down.
I think the price of Bitcoin in USD is irrelevant. Doesn't matter if it goes up or down. Until I can buy a TV with it in Walmart then it's of zero utility to me; it puts it somewhere in the region of PSN credits but without fixed pricing.
My bet is that things won't appreciably change in 6 months. It'll still be another fringe experiment with no mainstream pick up. Banks won't deal with it as a currency; bricks'n'mortar stores won't take it; it'll be limited to minor websites who are willing to gamble. Maybe the odd investment banking trader will gamble on it as well. Basically, just like today.
@sweh:
@sednet:My bet is that things won't appreciably change in 6 months. It'll still be another fringe experiment with no mainstream pick up. Banks won't deal with it as a currency; bricks'n'mortar stores won't take it; it'll be limited to minor websites who are willing to gamble. Maybe the odd investment banking trader will gamble on it as well. Basically, just like today.
But but but but
libertarian utopia! The end of fiat currency! Truly anonymous drug, sex, and gambling deals!
@zunzun:
That would put a lot of Italians out of work.
As long as they still make pizza, the world is safe.
Yes there is a car company with the same name but you can find multiple meanings for almost any short word.
@sednet:
Fiat is the correct term for money that derives its value from government mandate.
http://en.wikipedia.org/wiki/Fiat_money Yes there is a car company with the same name but you can find multiple meanings for almost any short word.
@sednet:
Yes there is a car company with the same name but you can find multiple meanings for almost any short word.
Whoooooooshhhhhh!!!!
@zunzun:
@sednet:…that derives its value from government mandate.
Supreme executive power derives from a mandate from the masses, not from some farcical aquatic ceremony.
James
Python is all very amusing but if you quote it at least try and make it appropriate to the situation.
Bitcoin is exactly the mandate from the masses that Dennis would have approved of. The central banks of the world are the moistened bints lobbing scimitars around the place. They exploit the workers by hanging on to outdated imperialist dogma which perpetuates the economic and social differences in our society.
@sednet:
Python is all very amusing
What do implementation languages have to do with this? I imagine Ruby or even C would have similar issues when attempting to grow to web-scale workloads, even on non-Fiat currency.
- Les
@sednet:
@zunzun:
@sednet:The central banks of the world
The unintentional comedy meter just went to 11.
@zunzun:
@sednet:…at least try and make it appropriate to the situation.
That sounds exactly like something Hitler would have said.
Isn't there some corollary to Godwin's law that you can't invoke it on purpose?
@zunzun:
@sednet:…at least try and make it appropriate to the situation.
That sounds exactly like something Hitler would have said.
James
Your Momma…
@sweh:
OK, I'm coming around to the idea that buying bitcoins might be safer than putting your money into a Cypriot bank
:-) :-) :-)
Buying beer, drinking beer, and keeping the bottles for the deposit value would be a better investment than putting your money into a Cypriot bank.
Cyprus will be begging Africa to put on an aid concert for them the way they are going.
Buh Bye Bitcoin.
BitCoin isn't even the first digital currency, it's just the first that got big enough for the US gobberment to care about. Linden dollars have been convertible to cash for a very long time.
If the US government want to fight the criminality behind the drugs trade that's good for the world, but I think they might better do that by making some drugs legally obtainable. Right now Americans can legally buy tools of mass murder but they can't buy weed, I can't be the only one who thinks that is messed up.
in the USA, you get 2 years for rape, and 3 years for accessing a public website of a phone company, not hack mind you, just opening urls that are publicly available.
since bitcoins can be anonymous, hard to trace, easily washed, and can be exchanged worldwide, i doubt the criminals will care about some law in the USA.
@zunzun:
@chesty:since bitcoins can be anonymous, hard to trace, easily washed, and can be exchanged worldwide, i doubt the criminals will care about some law in the USA.
My understanding is that the new rules only apply for entities that convert bitcoins to "hard currency". If you and I trade only in bitcoins it is not regulated I think… Can anyone verify this? Anyway, neither Wal-Mart nor the local electric power company accept bitcoins, so neither do I - just curious though.
James
I can't answer your question for sure but I suspect these are just the same $10k reporting rules that every bank already follows. If you deposited $10k cash at your bank that you obtained legally you would be reported and may be investigated. If you are a normal guy you would likely never know about it.
These regulations are only to stop money laundering, tax avoidance, and serious criminal use. They are not meant to stop people conducting legal trade.
BTW You can get prepaid credit cards for bitcoins that you can use in Wal-Mart. The cards themselves are actually denominated in USD and it's converted when you add credit.
Feds reveal the search warrant used to seize Mt. Gox account
> In the warrant, a special agent with Homeland Security Investigations (HSI), states that there's probable cause to believe Mt. Gox is engaging in "money transmitting" without a license, a crime punishable by a fine or up to five years in prison.
Well that sucks.
It is worth noting that Dwolla's ToS pretty much prohibits anything even remotely Mt. Gox
It was seized because they are transmitting USD without a proper license.