How To Use Bitcoin – The Most Important Creation In The History Of Man

[anduin]

Will bitcoin never die?

No. This is a pretty good explanation:

http://www.slate.com/blogs/moneybox/2013/04/10/bitcoin_s_deflation_problem.html

"As computers started looking more and more useful and demand for computers grew, the world started building more computers. Bitcoins are deliberately designed to represent a finite supply. So if over time more and more people want to use Bitcoins to conduct transactions of various kinds, then the price of bitcoins is going to have to rise and rise. The problem is that if the price of a bitcoin is on a steady upward trajectory, then nobody's actually going to want to spend a Bitcoin on anything. And if everyone's hoarding their Bitcoins, then the network is actually useless. Then, since it turns out to be useless, you get a crash. The funny thing is that once the upward spiral comes to an end, then the technological virtues of the Bitcoin platform come to the fore again. If nobody wants to hoard Bitcoins, then Bitcoin-as-platform looks like an attractive alternative to elements of the payment system. But when Bitcoin starts looking attractive again, you should get a renewed hoarding cycle."

 

[anduin]

Does that scale to bitcoin being widely accepted? The back of a fag packet maths so far makes it look as though if bitcoin did ever make it into the big time it would either have to change this, or fall over and die.

The way I understand it, the protocol can be changed to allow for future scalability. From the FAQ:
https://en.bitcoin.it/wiki/FAQ#If_e...cast_via_the_network.2C_does_Bitcoin_scale.3F

"The Bitcoin protocol allows lightweight clients that can use Bitcoin without downloading the entire transaction history. As traffic grows and this becomes more critical, implementations of the concept will be developed. Full network nodes will at some point become a more specialized service."

This is however, a feature that does not exist yet, so transaction times may go up as much as 1 hour.

To me the scalability issue is yet another huge problem with Bitcoin. We are told to believe a future client will solve it. As many things in the BTC universe, this is an item of faith.

 

[anduin]

Great, how much are you going to make by shorting them?

I will never put a single penny into Bitcoin. I don't trust anyone involved with it.

And by the way, the invitation to prove something by asking the person to short it is a childish argument. I could ask the same by asking you to buy at current prices and keep them.

It is possible to discuss the implications of something without participating in the market.

 

[Mister Earl]

Arent' bitcoins infinitely fractionable? Like you could transact one millionth of one bitcoin?

 

[Ferguson]

Arent' bitcoins infinitely fractionable? Like you could transact one millionth of one bitcoin?

Not infinitely, but yes you could transact a millionth, I believe the smallest transact-able unit is 0.00000001 BTC

 

[psionl0]

No. This is a pretty good explanation:

http://www.slate.com/blogs/moneybox/2013/04/10/bitcoin_s_deflation_problem.html

That is just the opinion of one person. There is no reason to assume that bitcoin would go through hoarding/trading cycles for ever more. A lot depends on how large the bitcoin economy becomes and whether the ownership of bitcoins becomes more evenly distributed.

I would guess that bitcoin will continue to be seen as a store of value rather than a medium of exchange but I wouldn't bet money on it.

 

[Mister Earl]

On a side note, there's a company manufacturing hardware specifically to mine bitcoins as efficiently as possible using ASIC (sp) processors. ~$275 for 25Ghash/sec. Doing the math on that, it would net you, on average, $30 a day.

#EDIT: Of course, that's at current difficulty and pricing. Subject to change.

 

[!Kaggen]

I will never put a single penny into Bitcoin. I don't trust anyone involved with it.

And by the way, the invitation to prove something by asking the person to short it is a childish argument. I could ask the same by asking you to buy at current prices and keep them.

It is possible to discuss the implications of something without participating in the market.

Emperors new clothes

 

[EGarrett]

And by the way, the invitation to prove something by asking the person to short it is a childish argument.

No it's not. It's inviting you to back up your claims.

I could ask the same by asking you to buy at current prices and keep them.

I already made a nice bonus by switching some of my online business to Bitcoins. Thanks for asking.

It is possible to discuss the implications of something without participating in the market.

You didn't discuss implications, you made a sweeping accusation that businesses who claim to take Bitcoins appear to have never done so, which is actually quite serious since you're accusing an entire group of people of dishonesty and even fraudulent activity...along with adding that you believe there's very little evidence that they exist for anything other than speculation, thus baldly contradicting tons of time and effort I and others have put into this thread explaining their actual utility. Clearly you are making a case for your opinion that they are baseless and thus inevitably a bubble, and you care little for what others have demonstrated at great patience and effort.

So, short away buddy.

 

[EGarrett]

No. This is a pretty good explanation:

http://www.slate.com/blogs/moneybox/2013/04/10/bitcoin_s_deflation_problem.html

"As computers started looking more and more useful and demand for computers grew, the world started building more computers. Bitcoins are deliberately designed to represent a finite supply. So if over time more and more people want to use Bitcoins to conduct transactions of various kinds, then the price of bitcoins is going to have to rise and rise. The problem is that if the price of a bitcoin is on a steady upward trajectory, then nobody's actually going to want to spend a Bitcoin on anything. And if everyone's hoarding their Bitcoins, then the network is actually useless. Then, since it turns out to be useless, you get a crash. The funny thing is that once the upward spiral comes to an end, then the technological virtues of the Bitcoin platform come to the fore again. If nobody wants to hoard Bitcoins, then Bitcoin-as-platform looks like an attractive alternative to elements of the payment system. But when Bitcoin starts looking attractive again, you should get a renewed hoarding cycle."

Hoarding has a negligible or even non-existent effect on their utility in facilitating trades. Bitcoins are highly, highly divisible, so even if one becomes worth $100,000, you can still use a small fraction with an instant speed processing service (they exist and are growing) to get your morning coffee. Furthermore, it's also highly questionable how the individual coin value can skyrocket without anyone actually selling them to drive up the exchange values.

 

[anduin]

Arent' bitcoins infinitely fractionable? Like you could transact one millionth of one bitcoin?

The smallest fraction at the moment is a satoshi. 100 million satoshis make one Bitcoin.

 

[anduin]

No it's not. It's inviting you to back up your claims.

How is investing in something in which I have no confidence and interest in investing "backing up my claims"? I do not invest in currency markets, and if I did, I would do so in Forex and other reputable markets. I do not trust any part of the Bitcoin economy to place a single penny of my hard-earned money into it. Moreover, I don't want to encourage the ponzi scheme by fuelling the economy.

I already made a nice bonus by switching some of my online business to Bitcoins. Thanks for asking.

Good for you.

You didn't discuss implications, you made a sweeping accusation that businesses who claim to take Bitcoins appear to have never done so, which is actually quite serious since you're accusing an entire group of people of dishonesty and even fraudulent activity...along with adding that you believe there's very little evidence that they exist for anything other than speculation, thus baldly contradicting tons of time and effort I and others have put into this thread explaining their actual utility. Clearly you are making a case for your opinion that they are baseless and thus inevitably a bubble, and you care little for what others have demonstrated at great patience and effort.

I have not read a single post in this thread that even remotely makes the case for bitcoins. They are unstable, they are unwieldy, they are not widely adopted, they are not widely accepted as currency. I perfectly understand bitcoin.

All they are good for is for speculation.

By the way, I didn't make a sweeping accusation that all businesses do not take bitcoin, you are badly distorting what I said. I said that many of the merchants listed are individuals who will exchange services for BTC (in other words, it's barter). My other statement was that "I found many businesses listed that no longer seem to accept BTC, or do not have any facility or address to do so on their site, which leads me to believe that they have never actually taken any coins." I didn't mention that it was ALL businesses who did this, just that it was many of them.

My statement is easy to corroborate. just take a look at the merchant list. I have looked at it closely, and several of the listed businesses do not seem to accept btc. Do not believe me? I went ahead and looked at about 35 random sites listed (I was bored), and found all of these that do not have listed addresses, do not list ways to accept btc, or the links are down:

Horolotech
CookieEater Cookies
'Another Tree' on Etsy
Dear Husband Yarns
rasselzoo.ch
Quiggle Extracts
Shaman Scents
SUGAR
Electric Green, Inc
BTCFPGA
Windfire Chainmaille
Small Happy Eagle Enterprises
NoAgendaCardGame.com
Goldline
Prikachi

As I said, this is just a random sample from about 30 random clicks. I am sure a more concerted effort will produce a much longer list.

By the way, visiting all of those sites, even the ones accepting bitcoin, really filled me with confidence about the Bitcoin economy [sarcasm]

 

[anduin]

Hoarding has a negligible or even non-existent effect on their utility in facilitating trades. Bitcoins are highly, highly divisible, so even if one becomes worth $100,000, you can still use a small fraction with an instant speed processing service (they exist and are growing) to get your morning coffee. Furthermore, it's also highly questionable how the individual coin value can skyrocket without anyone actually selling them to drive up the exchange values.

There is no evidence that they are being used for commerce, why would anyone spend bitcoins when they are going up and down in price like a crazy roller-coaster? All evidence points towards it being used almost solely for speculation.

The point about high divisibility completely ignores human nature. People simply do not understand decimal points, tell them that every bitcoin is divisible by 100 million and their eyes will glaze over. People like operating with whole numbers, which is precisely why the old trick of pricing something at €19.99 still works, people do not read €20, they read €19. Creating a currency that works against human nature is a recipe for failure.

 

[applecorped]

There is no evidence that they are being used for commerce, why would anyone spend bitcoins when they are going up and down in price like a crazy roller-coaster? All evidence points towards it being used almost solely for speculation.

The point about high divisibility completely ignores human nature. People simply do not understand decimal points, tell them that every bitcoin is divisible by 100 million and their eyes will glaze over. People like operating with whole numbers, which is precisely why the old trick of pricing something at €19.99 still works, people do not read €20, they read €19. Creating a currency that works against human nature is a recipe for failure.

This


Bitcoins are the new goldbugs

 

[EGarrett]

How is investing in something in which I have no confidence and interest in investing "backing up my claims"? I do not invest in currency markets, and if I did, I would do so in Forex and other reputable markets. I do not trust any part of the Bitcoin economy to place a single penny of my hard-earned money into it. Moreover, I don't want to encourage the ponzi scheme by fuelling the economy.

...do you know what shorting is?

Good for you.

Thanks. Rather than speak out in ignorance with no action, I simply paid attention and studied it then made a decision and carried it out. It worked out nicely and I've already booked the profit. But I'm not a speculator and I don't intend to do it often, I just understand and paid attention.

I have not read a single post in this thread that even remotely makes the case for bitcoins.

Another nice sweeping proclamation made out of total ignorance. Very impressive.

They are unstable, they are unwieldy, they are not widely adopted, they are not widely accepted as currency. I perfectly understand bitcoin.

All they are good for is for speculation.

Nice. So how much are you going to make by shorting them?

By the way, I didn't make a sweeping accusation that all businesses do not take bitcoin, you are badly distorting what I said.

Try reading what I actually said. I'll help you.

"you made a sweeping accusation that businesses who claim to take Bitcoins appear to have never done so, which is actually quite serious since you're accusing an entire group of people of dishonesty and even fraudulent activity"

You didn't just say that they don't anymore, you said they appear to have never done so, which is extremely sweeping and implies dishonesty and yes, even fraudulent activity if they are falsely propping up the market or misleading customers.

Now, what's funny is that your last post got INCREDIBLY sweeping. Delightfully and overwhelmingly so.

I said that many of the merchants listed are individuals who will exchange services for BTC (in other words, it's barter).

I don't think you understand the concept of barter...but go ahead.

My other statement was that "I found many businesses listed that no longer seem to accept BTC, or do not have any facility or address to do so on their site, which leads me to believe that they have never actually taken any coins." I didn't mention that it was ALL businesses who did this, just that it was many of them.

And you added...

"In short, there is very little evidence of bitcoins being used for anything other than speculation."

You didn't just say some businesses don't take Bitcoins any longer. You flat-out proclaimed that there's a lack of evidence for ANY business using them. Stand by your words or retract them, but don't pretend they're not there. You made accusations of fraudulent behavior and dishonesty. Don't slap and run, be an adult and take responsibility for your own claims.

 

[EGarrett]

There is no evidence that they are being used for commerce, why would anyone spend bitcoins when they are going up and down in price like a crazy roller-coaster?

...did you even read my post? I already explained this.

The point about high divisibility completely ignores human nature. People simply do not understand decimal points, tell them that every bitcoin is divisible by 100 million and their eyes will glaze over.

Really? Did you know that the services I referenced allow consumers to do Bitcoin business without even knowing what the current value of a Bitcoin is?

So much for your "perfect understanding." Try being polite and asking some questions instead of ignorantly insulting and making accusations against those of us who have actually researched this and find the concept to be interesting, solid and useful.

People like operating with whole numbers, which is precisely why the old trick of pricing something at €19.99 still works, people do not read €20, they read €19. Creating a currency that works against human nature is a recipe for failure.

Your claim is faulty.

 

[psionl0]

I do not trust any part of the Bitcoin economy to place a single penny of my hard-earned money into it.

Shorting is the opposite of investing. That is where you sell bitcoins in anticipation of a price collapse.

Moreover, I don't want to encourage the ponzi scheme by fuelling the economy.

After all your research, you still have a need to guild the lily.

If you were to use words like, "racism", "slavery", "genocide" etc to describe bitcoin you could make it seem even worse.

People like operating with whole numbers, which is precisely why the old trick of pricing something at €19.99 still works, people do not read €20, they read €19.

So, saying 1.99999 BTC wouldn't work the same way?

 

[anduin]

...do you know what shorting is?

I know perfectly well what shorting is, but I don't know of any way to short BTC without investing in the scheme and trusting shady intermediaries. I have read several articles on shorting bitcoins, but they all seem to have come to the same conclusion as me. The market is too volatile, the intermediaries not trustworthy enough, and some intermediaries that may allow one to short even have BTC requirements, eg. MPEX has a 30 Bitcoin registration fee.
http://mpex.co/faq.html

"you made a sweeping accusation that businesses who claim to take Bitcoins appear to have never done so, which is actually quite serious since you're accusing an entire group of people of dishonesty and even fraudulent activity"

You didn't just say that they don't anymore, you said they appear to have never done so, which is extremely sweeping and implies dishonesty and yes, even fraudulent activity if they are falsely propping up the market or misleading customers.

It is not dishonest and does not imply any illegal activity, we are talking about extremely unsophisticated small businesses that consist in the most part of a basic website with contact details. This leads me to believe that they have never taken a bitcoin in lieu of payment. This is a fair assumption to make given that a) there is very little evidence that BTC is being used for anything other than paying for drugs, and b) many of these merchants are no more than individuals offering services.

You didn't just say some businesses don't take Bitcoins any longer. You flat-out proclaimed that there's a lack of evidence for ANY business using them. Stand by your words or retract them, but don't pretend they're not there. You made accusations of fraudulent behavior and dishonesty. Don't slap and run, be an adult and take responsibility for your own claims.

I make two separate statements. One was that my own investigation into the merchants listed as taking bitcoins produced several sites that are down and that do not have the capacity to accept bitcoins. This is corroborated by the evidence I presented, you are welcome to check for yourself.

The second statement, which you should not conflate with the first, is that there is little evidence that BTCs are being used as currency, namely, that they are being used as payment. This is clear from the price volatility, and the evidence of hoarding presented in previous posts.

I stand by both statements. If you have evidence that BTCs are being used as currency, then it should be extremely easy for you to find evidence.

 

[anduin]

Really? Did you know that the services I referenced allow consumers to do Bitcoin business without even knowing what the current value of a Bitcoin is?

This is such a typical answer from bitcoin proponents. "There is a service that allows x, y, z" and solves all of your problems with Bitcoin. The issue with this line of reasoning is that it further serves to indicate that bitcoin is a niche interest that will never have the far reaching effect that they claim it will have.

Of course people will know what the current value of a Bitcoin is! Particularly if they are to invest in the system. Your assumption that these services will be widely adopted and accepted, but this is a big assumption.

So much for your "perfect understanding." Try being polite and asking some questions instead of ignorantly insulting and making accusations against those of us who have actually researched this and find the concept to be interesting, solid and useful.

Firstly, I would also like you to point out where have I insulted you.

I have read lots, I follow the developments because I find the subject interesting, but I would not consider my understanding in any way perfect. ETA: Reading back, I did use the words "perfectly understand". That is an idiom that I should stop using

This however brings me to another pet-peeve of mine in the Bitcoin discussion, and one that I believe serves as another indication of the reason why it has not taken off, and it will never be used as a currency.

People like you tend to jump immediately at critics accusing them of ignorance. "You don't understand bitcoin!" you protest. Yet, I and many critics understand it enough and do not like what we see. But let us assume that what you say is true and I don't understand BTC at all. I have put some considerable time in trying to understand the basics. If that still does not make me worthy enough of the BTC elite, then what hope does the scheme have with the mainstream?

In short, if you cannot sell BTC to a person who has put some time and effort in trying to understand it, how do you expect to sell it to your Average Joe?

I know what you'll answer... that all of the complexities will disappear once it becomes more widespread... the issue is, it is not really happening, is it? It still is a very niche interest.

 

[anduin]

Shorting is the opposite of investing. That is where you sell bitcoins in anticipation of a price collapse.

I cannot see any way at present to short BTC without making an initial investment first. Perhaps you know of a way, if so I would be interested in reading about it.

If you were to use words like, "racism", "slavery", "genocide" etc to describe bitcoin you could make it seem even worse.

Right now, Bitcoin is very similar to a ponzi scheme, only one with an advantage over other ponzi schemes, and it is the 8 decimal trick... This has been discussed ad nauseam above, but in a scheme where there are a few early adopters with huge stashes of coins, and where we know of people with enough BTC in one single address to destroy the price in one day, then yes, I would still call it a ponzi scheme.

At the moment the only thing keeping bitcoin in place is that there are thousands of people willing to speculate on the price.

So, saying 1.99999 BTC wouldn't work the same way?

Indeed, that is the point, isn't it?